Opinion
14-P-883
09-01-2015
SUSAN M. VEEDER & another v. OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
This insurance coverage dispute arises from a title insurance policy that contained a homeowner extended coverage endorsement (endorsement). The complaint alleged that the endorsement covers the loss of the plaintiffs, Susan Veeder and James L. Veeder, Jr., because a properly recorded order of conditions issued by the conservation commission of Ashland was omitted from the title search conducted on their property prior to their purchase. On the defendant's motion to dismiss, the judge ordered judgment for the insurer, ruling that the title insurance policy and the endorsement do not cover the plaintiffs' alleged loss. We affirm.
Background. On April 6, 2005, the plaintiffs purchased their home at 6 Esther Lane in Ashland. At the same time, they also purchased a title insurance policy from the defendant, Old Republic National Title Insurance Company (insurer). Afterwards, the plaintiffs discovered that the property was subject to a conservation commission order of conditions that was properly recorded, but not discovered by the title search prior to their purchase. The order of conditions at issue is not referenced anywhere on the property description attached as exhibit A to schedule B of the policy, showing the liens, easements, and orders of condition to which the property is subject.
The Veeders also purchased an "Owner Policy Endorsement Homeowner Extended Coverage" which increased the policy amount and provided additional coverage.
As the Superior Court judge noted, the conservation commission conditioned its approval of the subdivision project containing the Veeder's property on several conditions "which it deemed necessary to prevent pollution, protect the wildlife habitat, and to protect the groundwater supply."
The Veeders allege that the order of conditions, which contains a restriction from building that covers most of their property, limits the use of the property. Specifically, they allege that the order of conditions limits "new work on the [p]roperty on areas within the jurisdiction of the Ashland Conservation Commission, which significantly diminishes the [p]roperty's use and value." When the insurer refused to compensate the Veeders pursuant to the title insurance policy based on the alleged restriction, the Veeders filed a complaint in Superior Court alleging a breach of contract and seeking a declaratory judgment that the endorsement covered the diminished use and value of their property.
The insurer moved to dismiss pursuant to Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), arguing that the plaintiffs' title is not unmarketable because an order of conditions does not affect a landowner's title and that the facts alleged do not trigger any coverage under the policy. The judge, in a thoughtful and well-reasoned memorandum of decision and order, agreed with the insurer that the order of conditions does not affect the title because it does not affect the marketability of title, because there is no actual conservation restriction on the land, and because the risk was excluded from coverage where the conservation restriction did not exist at the time the policy was created.
The plaintiffs filed a motion for partial summary judgment over two months after the insurer filed its motion to dismiss. The insurer opposed the motion. The Superior Court judge ordered entry of judgment on the motion to dismiss, rendering the motion for summary judgment moot. The judge relied on the order of conditions attached to the motion for summary judgment solely because the parties agreed that it was the only copy of the order at issue in the record.
Discussion. A motion to dismiss pursuant to rule 12(b)(6) must establish that the plaintiffs are not entitled to relief. "While a complaint attacked by a . . . motion to dismiss does not need detailed factual allegations . . . a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008) (quotation omitted). "[A] dispute concerning the proper interpretation of an insurance policy raises only a question of law." Somerset Sav. Bank v. Chicago Title Ins. Co., 420 Mass. 422, 427 (1995). Title insurance coverage is "narrow" because it "is not directed at future risks." GMAC Mort., LLC v. First Am. Title Ins. Co., 464 Mass. 733, 740, 742 (2013). Rather, "title insurance narrowly covers defects in, or encumbrances on, titles that are in existence when a policy issues." Id. at 740.
The complaint alleges coverage under the endorsement. Specifically, the Veeders allege that "two of the 'Covered Risks' provided by [the insurer] to the Veeders" by the endorsement were: "'6. [t]here are restrictive covenants limiting your use of the land' and, '10. [the] title is unmarketable, which allows another person to refuse to perform a contract to purchase, to lease or make a mortgage loan.'"
The Veeders assert that at the time of the closing, the order of conditions was a defect on the title that required a conservation restriction "acceptable to the Ashland Conservation Commission, the Town of Ashland and the Executive Office of Environmental Affairs on the [property]" and that issuance of a certificate of compliance is dependent upon recording of the conservation restriction on the property. In their view, the order requires a conveyance of legally recognized property rights to a third party (the town of Ashland) and "thus, directly affects legally recognized rights and incidents of ownership." They further allege that "[t]he absence of a [c]ertificate of [c]ompliance for the [o]rder of [c]onditions means that neither the Veeders nor any subsequent purchaser can perform new work on the [p]roperty in areas within the jurisdiction of the Ashland Conservation Commission, which significantly diminishes the [p]roperty's use and value."
The order was recorded in the Middlesex Registry of Deeds.
The insurer denied coverage, arguing that the order of conditions is not a covered risk under the policy, and that, even if it were a covered risk, the policy exclusions preclude coverage under that policy. Specifically, the order of conditions required that the developer do certain work on the property within three years of its issuance on June 10, 2002. Had the work been completed, the conservation commission would have issued a certificate of compliance, which would include a conservation restriction on the property. It is uncontested that a certificate of compliance was never issued.
An order of conditions is, "in effect, a wetland permit that allows the property owner to perform work which . . . may benefit the property when completed." Lyon v. Duffy, 77 Mass. App. Ct. 860, 866 (2010). It places a restriction on the use of the land. It does not create a restriction on the title to the property. See Somerset Sav. Bank v. Chicago Title Ins. Co., 420 Mass. at 428. It "is not a defect or lien or encumbrance on the title and it does not constitute unmarketability of title." Lyon v. Duffy, supra, quoting from Chicago Title Ins. Co. v. Kumar, 24 Mass. App. Ct. 53, 56 (1987). As a result, although the endorsement provides more coverage for certain title problems, term number 10, which provides coverage if "[y]our title is unmarketable" does not protect the plaintiffs from loss due to the unfulfilled order of conditions. The policy covers only "actual loss resulting from any title risks covered by this policy."
The plaintiffs also assert that endorsement number 6 provides coverage because the order of conditions is a restrictive covenant within the meaning of the policy. This argument fails on two grounds. First, the order of conditions did not create a restrictive covenant. A restrictive covenant is defined as "[a] private agreement usu[ally] in a deed or lease, that restricts the use or occupancy of real property, esp[ecially] by specifying lot sizes, building lines, architectural styles, and the uses to which the property may be put." Black's Law Dictionary 421 (9th ed. 2009). The plaintiffs' assertion that the order of conditions constitutes a restrictive covenant fails because the order is silent on what would actually be restricted. In fact, the order of conditions does not create any restrictions, but, rather, states that "[t]he [a]pplicant shall provide a Conservation Restriction acceptable to the Ashland Conservation Commission, the Town of Ashland and the Executive Office of Environmental Affairs on the land outside the limit of work as shown on the plan." This condition is not a restrictive covenant; rather, it is part of the order and requests a future conservation restriction, which clearly would be excluded because it would occur after the policy was issued.
Second, the order of conditions expired by its own terms, three years from the date of its issuance in 2002. The plaintiffs argue that it has not expired due to certain conditions that purport to extend its time period. However, that argument overlooks the statutory limitations period that requires any enforcement of an order of conditions to occur within three years of the issuance of the order. G. L. c. 131, § 40. The statute provides in pertinent part:
"Any person who purchases, inherits or otherwise acquires real estate upon which work has been done in violation of the provisions of this section or in violation of any order issued under this section shall forthwith comply with any such order or restore such real estate to its condition prior to any such violation; provided, however, that no action, civil or criminal, shall be brought against such person unless such action is commenced within three years following the recording of the deed or the date of theG. L. c. 131, § 40, as amended by St. 1974, c. 818, § 1.
death by which such real estate was acquired by such person" (emphasis supplied).
There is, in fact, no conservation restriction on the property created by the order of conditions. Where the terms of the insurance policy are unambiguous, "we do not look beyond the four corners of the policy concerning whether coverage is customarily available." Somerset Sav. Bank v. Chicago Title Ins. Co., 420 Mass. at 429. We see no error.
Any argument raised by the plaintiffs regarding a future imposition of a conservation restriction is without merit.
Judgment affirmed.
By the Court (Cypher, Hanlon & Agnes, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: September 1, 2015.