In re Sec. Title Guarantee Corp. of Balt.

1

IN THE MATTER OF THE PETITION OF THE SECURITY TITLE GUARANTEE CORPORATION OF BALTIMORE

No. 600-2023

Court of Special Appeals of Maryland

October 29, 2024

IN THE APPELLATE COURT OF MARYLAND ^[*]

Circuit Court for Baltimore City Case No. 24-C-22-004607

Beachley, Kehoe, S., Wright, Alexander, Jr. (Senior Judge Specially Assigned), JJ.

OPINION

WRIGHT, J.

This case stems from an administrative appeal from the Maryland Insurance Administration ("MIA") regarding the denial of insurance coverage to Roxbury View, LLC ("Roxbury View") by Security Title Guaranty Corporation of Baltimore ("Security Title"). Property owned by Roxbury View had been the subject of litigation, and Roxbury View had sought litigation expenses under a title insurance policy provided by Security Title in relation to Roxbury View's property. After Security Title denied the claim, Roxbury View filed a complaint with the MIA. Following a hearing at the Office of the Insurance Commissioner (the "Commission" or "Insurance Commission"), the Commission found that Security Title had a duty to defend Roxbury View in the pending litigation, and the Commission ordered Security Title to pay Roxbury View's litigation costs. After Security Title filed a petition for judicial review in the Circuit Court for Baltimore City, the circuit court affirmed.

In this appeal, Security Title presents three questions for our review. For clarity, we have rephrased and consolidated those questions as a single issue:

Was the Insurance Commission's determination that Security Title had a duty to defend Roxbury View legally correct and supported by substantial evidence?

For reasons to follow, we affirm.

BACKGROUND

At issue in the instant case is a large tract of land that sits adjacent to Roxbury Road in Howard County. The land was formerly owned by George and Mary Chase (the "Chases"). At the time, the land was divided into two lots. The first lot ("Lot 1") encompassed the majority of the land and was bordered, on its eastern edge by Roxbury Road, a public road. The second lot ("Lot 2") was much smaller and was located toward the western part of the land. Lot 2 was connected to Roxbury Road by a long driveway that ran through Lot 1. The following plat shows both lots at the time they were owned by the Chases^[1]:

(Image Omitted)

In 1979, Lot 1 was conveyed to Charles and Linda Zepp (the "Zepps") by way of a deed (the "Zepp Deed") recorded among the Land Records of Howard County. The Zepp Deed subjected the Zepps to a 12-foot-wide right of way (the "12 foot ROW") that ran through Lot 1 and along the center line of the driveway connecting Lot 2 to Roxbury Road.

Per the terms of the Zepp Deed, the 12 foot ROW was "reserved by the [Chases] herein for ingress and egress to and from Roxbury Road[.]"

In 1994, Denise and Charles Sharp (the "Sharps") acquired Lot 1 by way of a deed recorded among the Land Records of Howard County. The Sharps thereafter subdivided Lot 1 into three smaller lots ("Lot 3," "Lot 4," and "Lot 5"). In 2012, the Sharps conveyed all three lots to Sharp's Wild Horse Meadow, LLC ("Sharp's Meadow"). Sharp's Meadow thereafter subdivided Lots 3 and 5 into three new lots ("Lot 6," "Lot 7," and "Lot 8").

As for Lot 2, the Chases retained ownership of that parcel until 1987, at which point the parcel was gifted to a third party. In 2017, Lot 2 was acquired by Edward and Leslie McCauley (the "McCauleys").

In 2018, Roxbury View acquired Lots 4, 7, and 8 from Sharp's Meadow. All of the foregoing conveyances were subject to the 12 foot ROW set forth in the Zepp Deed. The following plat shows the state of the properties at the time Roxbury View acquired Lots 4, 7, and 8^[2]:

(Image Omitted)

As the above image indicates, Lots 4 and 8, both of which were owned by Roxbury View, sat adjacent to Roxbury Road and were separated by the 12 foot ROW, which ran through the two lots from Roxbury Road. The 12 foot ROW continued toward Lot 2, running between Lot 7, which was owned by Roxbury View, and Lot 6, which was owned by Sharp's Meadow. Thus, in order for Roxbury View to access Lot 7 from Roxbury Road, it would need to either traverse Lot 8 or the 12 foot ROW. A significant portion of the 12 foot ROW passed through land owned by Roxbury View.

In May 2018, around the time that it obtained Lots 4, 7, and 8, Roxbury View purchased an owner's title insurance policy (the "Policy") from Security Title. The Policy provided title insurance coverage for Lots 4, 7, and 8, subject to certain terms and conditions. Those terms and conditions were, in relevant part, as follows:

COVERED RISKS

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS, THE SECURITY TITLE GUARANTEE CORPORATION OF BALTIMORE, a Maryland corporation (the "Company") insures as of Date of Policy and, to the extent stated in Covered Risks 9 and 10, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the insured by reason of:

* * *

3. Unmarketable Title. 4. No right of access to and from the Land. * * *

The Company will also pay the costs, attorneys' fees, and expenses incurred in defense of any matter insured against by this Policy, but only to the extent provided in the Conditions.

* * * CONDITIONS * * * 5. DEFENSE AND PROSECUTION OF ACTIONS

(a) Upon written request by the Insured, . . . the Company, at its own cost and without unreasonable delay, shall provide for the defense of an Insured in litigation in which any third party asserts a claim covered by this policy adverse to the Insured. This obligation is limited to only those stated causes of action alleging matters insured against by this policy. The Company shall have the right to select counsel of its choice (subject to the right of the Insured to object for reasonable cause) to represent the Insured as to those stated causes of action. It shall not be liable for and will not pay the fees of any other counsel. The Company will not pay any fees, costs, or expenses incurred by the Insured in the defense of those causes of action that allege matters not insured against by this policy.

* * * EXCEPTIONS FROM COVERAGE

This policy does not insure against loss or damage, and the Company will not pay costs, attorneys' fees or expenses, that arise by reason of:

1. Rights or claims of parties in possession not shown by the Public Records.

2. Easements, or claims of easements, not shown by the Public Records.

* * *

6. Taxes and special assessments which become due and payable subsequent to Date of Policy.

* * *

As to Lots 4, 7 and 8:

* * *

o) Subject to a 12 foot Right of Way reserved in a Deed dated December 19, 1979 by and between George Howland Chase and Mary Hale Chase and Charles Gerald Zepp and Linda Collins Zepp and recorded among the Land Records of Howard County, Maryland in Liber 998, folio 219.

In October 2019, the McCauleys, owners of Lot 2, filed a lawsuit against Roxbury View and various other parties. The McCauleys alleged, among other things, that they, as the owners of Lot 2, had exclusive rights to the 12 foot ROW and that Roxbury View had been using the 12 foot ROW without the McCauleys' permission to access Lots 4, 7, and 8. Based on those allegations, the McCauleys sought various relief, including: a preliminary and permanent injunction enjoining Roxbury View from using the 12 foot ROW for any purpose; a declaratory judgment establishing the McCauleys' exclusive rights to the 12 foot ROW; and, an award of monetary damages and attorneys' fees and expenses.

Shortly after the lawsuit was filed, Roxbury View submitted a claim to Security Title asking Security Title to provide a defense to the lawsuit. Around the same time, Roxbury View received a letter from a lender, MidAtlantic Farm Credit, regarding a loan that Roxbury View was trying to secure in relation to Lots 4, 7, and 8. The letter informed Roxbury View that MidAtlantic was "not able to continue to process your loan request at this time due to the pending litigation that was initiated against you by [the McCauleys]." The letter stated further that the "action in the courts raises the issue as to the use of the property, and the ability for MidAtlantic Farm Credit, ACA to have a clear lien position for our proposed loan."

On November 1, 2019, counsel for Security Title sent an internal email regarding Roxbury View's claim. In that email, counsel stated that the McCauleys' lawsuit "may fall under Covered Risk #4 - no right of access to and from the land" because "[e]xclusive use would prevent [Roxbury View] from reaching at least Lot 7."

On November 6, 2019, Security Title sent a letter to Roxbury View denying the claim. The letter included the following relevant explanation for Security Title's decision:

There is no mention of McCauley or his predecessors in interest having an exclusive right to use the 12 foot right of way nor is there any other document that we have found that would support McCauley's allegation of the right to exclusive use. However, the determination of coverage under a title insurance policy is not determined by the validity of the allegations of the complaint but by the allegations themselves and whether those allegations fall within the coverage afforded under the policy.

* * * The Owner's Title Policy referenced takes exception to the 1978 Easement, the 12 foot Right of Way reserved in the 1979 Deed as well as the 2001 Clarification. See Schedule B No. 6 o) &p) of the Policy. The Policy also contains an exception as to the plat which shows the easement. See Schedule B No. 6 f). Therefore any allegation and prayer for relief based upon those recorded documents would be excepted from coverage under the terms of the Policy.

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