Mansur Props. LLC v. First Am. Title Ins. Co.

635 F.Supp.3d 1116

MANSUR PROPERTIES LLC, Plaintiff, v. FIRST AMERICAN TITLE INSURANCE COMPANY, Defendant.

CASE NO. C21-05491-LK

United States District Court, W.D. Washington, at Tacoma

Signed October 18, 2022

Jesse D. Conway, Conway Law, PLLC, Vancouver, WA, for Plaintiff.

Courtney J. Olson, Thomas F. Peterson, Socius Law Group PLLC, Seattle, WA, for Defendant.

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

Lauren King, United States District Judge

This matter comes before the Court on First American Title Insurance Company's motion for summary judgment. Dkt. No. 34. The Court held oral argument on the motion on October 17, 2022. Dkt. No. 40. For the reasons set forth below, the Court grants the motion.

I. BACKGROUND

This insurance dispute arises out of Plaintiff Mansur Properties LLC's purchase of a parcel of land in Vancouver, Washington in 2020 for the purpose of turning it into a used car lot. Dkt. No. 26 at 2. Mansur obtained an insurance policy from First American and claims that under the policy, First American is liable for the losses Mansur incurred as a result of its discovery that it might not own the entire parcel of land it thought it had purchased. Id.; Dkt. No. 37-1 at 1. Specifically, Mansur discovered that a third party may own a section that consists of parking spaces in the back of Mansur's property—spaces that Mansur contends are critical to its ability to park inventory for its used car business, rendering the diminished property unusable for its intended purpose. Dkt. No. 26 at 3; Dkt. No. 37-1 at 1-2. First American paid the claim, but Mansur alleges that it engaged in unreasonable delay in the process and ultimately underpaid the claim. Dkt. No. 26 at 3.

A. The Insurance Policy

First American issued Mansur an "ALTA Commitment for Title Insurance" (the "Commitment") in 2020, offering to issue a title insurance policy for the real property located at 8312 E. Mill Plain Boulevard, Vancouver, WA 98664 (the "Property"). Dkt. No. 35 at 1, 5-15. It offered to issue the policy "[s]ubject to the Notice[,]" which in turn provides that the Commitment "is not an abstract of title, report of the condition of title, legal opinion, opinion of title, or other representation of the status of title." Id. at 12.

Pursuant to the Commitment, First American issued Mansur an "Owner's Policy of Title Insurance" (the "Policy"). Id. at 17-25. Subject to certain exclusions and exceptions, First American agreed to insure Mansur against loss or damage up to $490,000 incurred due to, among other things, (1) "[t]itle being vested other than as stated in Schedule A," or (2) "[a]ny defect in or lien or encumbrance on the Title." Id. at 17. Schedule A includes a legal description of the Property boundaries. Id. at 22-23.

B. Mansur's Insurance Claim

In January 2021, Mansur provided notice to First American that it was making a claim under the Policy due to First American's alleged "flawed search in its review of the chain of title for The Property." Id. at 27. Mansur explained that it had discovered a 1965 statutory warranty deed transferring a rectangular portion of the Property to a third party, creating an overlap in the legal descriptions for their respective deeds. Id.¹ Mansur offered to accept $105,000 in settlement, id., and cited an attached opinion letter from a commercial real estate broker estimating the resulting loss in value to the Mansur Property at $89,840—resulting from $27,140 in appraised value of the overlap and $62,700 in "loss of value" due to "a reduction in the functionality" of the property, id. at 34.

First American responded to the Notice of Claim on March 18, 2021, accepting coverage under the Policy's "Covered Risk 1." Id. at 38-39. Covered Risk 1 "provides coverage against loss or damage, sustained, or incurred by the Insured by reason of Title being vested other than as stated in Schedule A." Id. at 39. As to Mansur's offer to settle the Claim for $105,000, First American explained its rights under the Policy:

When the Company learns of a claim that is covered, Conditions 5 and 7 of the Policy provide that the Company has various choices under the Policy and may choose one or more of those options. The Company has elected to exercise its option to retain counsel to represent you in negotiating with the neighbor to resolve the potential overlap created by the various deeds.

Id. (emphasis in original). First American provided contact information for the attorney it had retained to represent Mansur, Katie Jo Johnson. Id. Ms. Johnson met with Mansur's member and manager, Fatima Magomadova, about the claim in April 2021. Dkt. No. 37-1 at 2. Over the following months, Ms. Johnson attempted to negotiate with the current and prior owners of the neighboring property without success. Dkt. No. 35 at 57-63, 76-78.

When the negotiations broke down, First American elected to exercise its option under Condition 7(b)(ii) of the Policy to pay the loss attributable to the property overlap:

[P]ursuant to Condition 7(b)(ii) and in accordance with Condition 8(a)(ii), the Company will engage the services of a professional appraiser to conduct a diminution of value appraisal accounting for the difference between value of a fee simple ownership interest in the Land as insured, versus the value of the Land less the Rectangular Area. [First American's Corporate Claims Analyst] will provide the contact information for the appraiser once [she has] confirmed their commission. After payment of the actual loss, Condition 7 provides that the Company's obligations to the Insured with respect to the claim end, including any liability or obligation to defend, prosecute, or continue any litigation.

Id. at 80. First American then engaged Richard P. Herman, MAI, FRICS, to conduct the diminution of value ("DIV") appraisal. Id. at 86-245. On January 24, 2022, First American informed Mansur of the engagement and provided Mr. Herman's contact information. Id. at 83-84.

Mr. Herman concluded that the DIV attributable to the legal description overlap was $23,700. Id. at 88.² On March 10, 2022, First American issued a check to Mansur for that amount, id. at 250, and sent Mansur's counsel a letter stating that "as previously outlined[,] after the payment of the actual loss reflected in the DIV appraisal, Condition 7 [of the Policy] provides that the Company's obligations to the Insured with respect to the claim end," id. at 247.

C. Mansur Files Suit

In June 2021, Mansur filed suit in Clark County Superior Court, alleging that First American "was negligent in [its] review of the chain of title for the Property," and that it "breached a duty to Plaintiff[ ] in providing an accurate legal description of the Property before it was purchased and when the statutory warranty deed was filed on September 23, 2020." Dkt. No. 1-1 at 3. First American removed the case, Dkt. No. 1, and fileda motion for summary judgment, Dkt. No. 13. Mansur then filed a motion for leave to file an amended complaint. Dkt. No. 18. The Court granted Mansur's motion to amend and denied as moot the motion for summary judgment. Dkt. No. 25 at 4.

Mansur's amended complaint, filed in October 2021, reasserted its negligence claim and added a breach of contract claim. Dkt. No. 26 at 3. The breach of contract claim alleges that First American "elected to utilize Conditions 5 and 7 of [its] Owner's Policy of Title Insurance" so it was "obligated to ensure that the Insured's rights are not violated and that a timely resolution is pursued." Id. According to Mansur, First American breached this duty by "unreasonably delaying and failing to otherwise settle the matter" and "failing to provide a reasonably accurate title assessment." Id. First American moves for summary judgment on both claims. Dkt. No. 34.

II. DISCUSSION

A. Jurisdiction

First American contends that this Court has diversity jurisdiction under 28 U.S.C. § 1332(a). Dkt. No. 1 at 2. Because First American is a Nebraska corporation with its principal place of business in California, id. at 3, and Mansur is an LLC with its member and manager located in Oregon,³ the parties are diverse. See Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) ("[L]ike a partnership, an LLC is a citizen of every state of which its owners/members are citizens.").

To determine whether the jurisdictional amount in controversy has been satisfied, courts may consider "facts presented in the removal petition as well as any summary-judgment-type evidence relevant to the amount in controversy at the time of removal." Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (per curiam) (cleaned up). A defendant who removes a case "may point to many different types of evidence" to establish the amount in controversy, and "[a] particularly powerful form of evidence is the plaintiff's own statements about the damages they seek." Flores v. Safeway, Inc., No. C19-0825-JCC, 2019 WL 4849488, at *3 (W.D. Wash. Oct. 1, 2019). Such statements can include settlement demands. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (per curiam); see also Segar v. Allstate Fire & Cas. Ins. Co., No. C21-1526-JLR, 2022 WL 102035, at *3 (W.D. Wash. Jan. 11, 2022) ("The court treats [plaintiff's] pre-litigation demand as relevant evidence of the damages that he seeks—namely, the full $100,000 UIM policy limit.").

In this case, both versions of the complaint seek the "economic and non-economic damages sustained" by Mansur as well as attorney's fees and costs, but do not specify the amount of damages sought. Dkt. No. 1-1 at 3; Dkt. No. 26 at 4. Mansur's January 2021 notice of claim letter to First American offered to settle the matter for $105,000, asserting that its "loss in property value and expenses incurred" exceeded $89,840. Dkt. No. 35 at 27. Mansur's settlement demand "appears to reflect a reasonable estimate of the plaintiff's claim." Cohn, 281 F.3d at 840. Therefore, it is evident that the amount in controversy is more...