Chi. Title Ins. Co. v. Jen

249 Md.App. 246

245 A.3d 150

CHICAGO TITLE INSURANCE CO.

v.Allynnore M. JEN

No. 2015, Sept. Term, 2019

Court of Special Appeals of Maryland.

January 28, 2021

Argued by: Ira Lee Oring (Feder and Garten Professional Association of Owings Mills, Maryland, Michael W. Tompkins, and Fidelity National Law Group of Vienna, Virginia on the briefs), for Appellants.

No brief filed by appellee.

Amicus Curiae Brief filed by: Thomas C. Valkenet, Ian T. Valkenet, and Young & Valkenet all of Baltimore, Maryland, for the Maryland Land Title Association.

Panel: Graeff, Berger, Deborah S., Eyler, Senior Judge, Specially Assigned, JJ.

Berger, J.

This case involves an administrative appeal from the Maryland Insurance Administration ("MIA") relating to the denial of coverage to the insured, Allynnore Jen and Charles Shuler ("Jen-Shulers"), under a title insurance policy provided by the insurer, Chicago Title Insurance Company ("Chicago Title").¹ The Jen-Shulers sought coverage and litigation expenses under their title insurance policy from Chicago Title under the provision protecting against a "lack of a right of access," due to a dispute with their neighbors, Dennis and Teresa Bull ("Bulls"), over the use of a shared driveway leading to their property.

After an investigation, an MIA Enforcement Officer issued a letter on March 23, 2017 directing Chicago Title to treat the Jen-Shulers as covered for their claim under the title insurance policy and to issue payment of all benefits due. Chicago Title requested a hearing from the MIA on April 24, 2017. A hearing was held on August 15, 2017. On September 28, 2017, the Insurance Commissioner issued a Memorandum and Final Order finding that Chicago Title had not violated Sections 4-113 and 27-216 of the Insurance Article of the Maryland Annotated Code. The Insurance Commissioner further found that Chicago Title had violated Section 27-303 of the Insurance Article, and directed Chicago Title to pay the Jen-Shulers' defense costs from a counterclaim in an underlying lawsuit. Both parties filed a petition for judicial review in the Circuit Court for Baltimore County. The circuit court reversed the determination of the Insurance Commissioner and remanded the case to the MIA to reinstate the findings of the letter dated March 23, 2017, finding in favor of the Jen-Shulers on all three issues.

Chicago Title noted a timely appeal to this Court presenting two questions for our review, which are as follows:

I. Whether the Insurance Commissioner's determination that Chicago Title did not violate Md. Code Ann., Ins. § 4-113(b)(5) and § 27-216(a) was legally correct and supported by substantial evidence.

II. Whether the Insurance Commissioner's determination that Chicago Title violated Md. Code Ann., Ins. § 27-303 was legally correct and supported by substantial evidence.

For the reasons stated herein, we shall reverse and remand the judgment of the circuit court with directions to reinstate the September 28, 2017 decision of the Insurance Commissioner in its entirety.

FACTS AND PROCEEDINGS

On May 28, 1998, the Jen-Shulers purchased 20 Edelweiss Way in Parkton, Maryland. Thereafter, the Jen-Shulers purchased a standard American Land Title Association ("ALTA") Owner's Policy of Title Insurance from Chicago Title (the "Policy"), effective June 8, 1998. Among other things, the Policy insured against a "[l]ack of a right of access to and from the land." In the Policy, "land" is defined as:

the land described or referred to in Schedule A, and improvements affixed thereto which by law constitute real property. The term "land" does not include any property beyond the lines of the area described or referred to in Schedule A, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing herein shall modify or limit the extent to which a right of access to and from the land is insured by this policy.

Schedule A of the Policy specifically identified the land referred to in the Policy as:

BEING KNOWN AND DESIGNATED as Lot No. 7, as shown on the plat entitled, "Plat One, Section Two, Chalet De La Rance," which Plat is recorded among the Land Records of Baltimore County in Plat Book EHK, Jr., No. 37, folio 123.

The improvements of such land are known as No. 20 Edelweiss Way.

Lot 7, owned by the Jen-Shulers, is an irregularly shaped parcel with a rectilinear piece abutting Edelweiss Way for a distance of fifteen feet. The Lot runs perpendicular to that piece for about 155 feet, then the Lot opens into an unevenly shaped area where the house on the property is located. The neighboring lot, Lot 8, is owned by the Bulls. Lot 8 consists of a matching panhandle strip that abuts both Edelweiss Way and Lot 7's panhandle before opening up into an area where the house on the Lot is built. There is a paved driveway, serving both properties, running mostly up the panhandle of Lot 8, but a small portion of such driveway is on the panhandle of Lot 7 as well. The developer-built utilities for both properties run mostly up the panhandle of Lot 7. A Plat of the properties was introduced in the proceedings below which demonstrates the positions of Lots 7 and 8 in relation to one another:²

The Jen-Shulers and the Bulls disputed whether the Jen-Shulers could drive on the Bulls' paved portion of the driveway to access their home. After the initial disagreement and confrontation, the Bulls constructed and placed obstacles on the driveway to prevent the Jen-Shulers from any access to the Bulls' portion of the driveway. On June 25, 2013, the Jen-Shulers filed suit against the Bulls seeking an injunction allowing them to use the Bulls' portion of the driveway to access their residence.³

Seven months later, on January 28, 2014, the Jen-Shulers made a claim to Chicago Title seeking coverage under the Policy. The Jen-Shulers asserted that the denial of access to the Bulls' portion of the driveway due to the Bulls' building of a fence denied them access to their own property. On February 7, 2014, after reviewing the claim, Chicago Title denied coverage. The Jen-Shulers filed several more requests for coverage and requests for reconsideration, each of which was considered by Chicago Title and subsequently denied.⁴

On June 12, 2014, the Bulls filed a counterclaim against the Jen-Shulers. The Jen-Shulers informed Chicago Title of the counterclaim in their Request for Reconsideration dated June 29, 2015. In their counterclaim, the Bulls sought damages from the Jen-Shulers for unjust enrichment, alleging that the Jen-Shulers used the Bulls' portion of the driveway without their permission. The Bulls asserted that they had paid for and maintained the driveway at their sole expense, including all expenses for snow removal until 2014, without any contribution from the Jen-Shulers. The unjust enrichment claim by the Bulls requested damages totaling $7,200.00. The Bulls also alleged defamation per se . They claimed that the Jen-Shulers defamed Mr. Bull by claiming in their complaint that Mr. Bull had committed bankruptcy fraud. Neither party asserts that Chicago Title should reimburse the Jen-Shulers for the payment of expenses related to the defense of the claim of defamation. On November 5, 2014, the Bulls agreed to dismiss the counterclaim with prejudice.

On July 1, 2015, the Jen-Shulers filed a complaint against Chicago Title with the MIA. The Jen-Shulers supplemented that complaint on July 10, 2015. Both parties briefed the matter before the MIA.⁵ On March 23, 2017, an MIA Enforcement Officer issued a determination letter directing Chicago Title to cover the Jen-Shulers' claim. On April 24, 2017, Chicago Title requested an evidentiary hearing.

On August 15, 2017, the evidentiary hearing was held before the Director of Hearings. Chicago Title and the MIA both presented evidence and witnesses to testify at the hearing. On September 28, 2017, the Insurance Commissioner ("Commissioner") issued a comprehensive written opinion reversing the Enforcement Officer's decision. The Commissioner found that Chicago Title investigated the claim prior to the denial of coverage, as well as upon receipt of each of the Jen-Shulers' requests for reconsideration. Additionally, the Commissioner found that by completing diligent investigations upon receipt of each claim, Chicago Title had not violated Md. Code Ann., Ins. § 4-113(b)(5) (" § 4-113(b)(5)"). The Commissioner relied on testimony from John Nielsen, an expert witness presented by MIA, who testified based on his extensive experience in the title insurance industry. The Commissioner found credible Mr. Nielsen's testimony and characterization that "right of access" did not include vehicular access or equate to vehicular access.

The Commissioner further addressed whether Chicago Title willfully collected a premium for insurance and did not provide coverage in violation of Md. Code Ann., Ins. § 27-216(a) (" § 27-216(a)"). At the evidentiary hearing, Mr. Nielsen testified that title insurance carriers had spent millions of dollars to defend the right of access of insureds whose properties were landlocked and had no right of access to a public road. The Commissioner was persuaded by that testimony and determined that Chicago Title had not violated § 27-216(a) because it had paid out substantial sums in instances when a property was actually landlocked.

Finally, the Commissioner considered whether Chicago Title's decision not to defend the Jen-Shulers against the Bulls' counterclaim was arbitrary and capricious, pursuant to Md. Code Ann., Ins. § 27-303(2) (" § 27-303(2)"). The Commissioner considered venerable Maryland case law holding that there is a duty to defend if there is a potentiality that the claim could be covered by the Policy. The Commissioner determined that because there was a possibility that the Jen-Shulers could face a challenge to their access to a portion of their own land, Chicago Title had a duty to defend the Jen-Shulers against the...