Opinion
No. 37129-4-II.
April 28, 2009.
Appeal from a judgment of the Superior Court for Kitsap County, No. 05-2-01357-7, Leonard W. Costello, J., entered November 16, 2007.
Affirmed by unpublished opinion per Bridgewater, J., concurred in by Penoyar, A.C.J., and Armstrong, J.
Following a bench trial, Gregg and Patricia Jordshaugen (Jordshaugens) appeal the trial court's dismissal of their claims against First American Title over their neighbor's garage, which fell within the boundaries reflected in the legal description of the
Jordshaugens' deed. Because the Jordshaugens did not discover a property line discrepancy until two years after purchasing the property, they did not bargain for the property on which the neighbors' garage was located, and they never used the disputed garage or the property on which it sat, we affirm.
FACTS
The Jordshaugens purchased a townhouse in the Ludlow Bay Village development from seller/builder Port Ludlow Associates (PLA) in August 2002. They intended to use the property as a weekend/vacation home and to eventually retire there. The Jordshaugens' property, lot TH-17, included their townhouse (unit 402) and their detached single car garage (garage 402). As a part of their purchase agreement, First American Title Insurance Company issued the Jordshaugens their title insurance. The policy did not guarantee the metes and bounds.
A few months later, James and Linda Brown purchased the unit next door to the Jordshaugens' townhouse. Their unit is known as Lot TH-16 and included a townhouse (unit 403) and a detached single car garage (garage 403). Similar to the Jordshaugens, the Browns obtained a First American Title Insurance policy for their property. At closing, First American had the Browns sign a statement of awareness, indicating that a boundary line adjustment would be performed and that First American was not liable to the Browns for boundary disputes. The Jordshaugens neither received nor signed any similar document at their closing.
In any event, the Browns and the Jordshaugens enjoyed their respective properties without complaint or incident. The Jordshaugens used and enjoyed garage 402 and understood it to be on their lot. They did not believe that garage 403 was on their property, lot TH-17, and they never used garage 403. Likewise, the Browns used only garage 403 and never used garage 402.
In July 2004, the Jordshaugens were researching future development plans for Ludlow Bay Village when they learned that the Browns' garage — garage 403 — was actually on lot TH-17 and not lot TH-16. Upon discovering the apparent boundary discrepancy, the Jordshaugens discussed the matter with the Browns and obtained counsel. Through their counsel, the Jordshaugens sent a letter, dated October 6, 2004, to First American purporting to "tender the defense of [their] title against the claims of the Browns and whatever claim their seller [PLA] may make against their title." Ex. 138.
On November 1, 2004, First American's Regional Counsel, John Dahl, contacted the Jordshaugens' counsel by telephone. He confirmed their conversation in a letter that he sent two days later. Dahl acknowledged receipt of the Jordshaugens' purported tender, but he stated that there were no claims, allegations, or facts against which First American could defend.
Meanwhile, the Browns filed a claim with First American on September 8, 2004, in regard to the property line discrepancy. Dahl denied their claim, citing the statement of awareness they had signed at closing that indemnified First American from any action that might result from failure to complete the boundary line adjustment. By all accounts, the Browns believed that the boundary discrepancy was First American's inadvertent mistake and wished to reform their deed and the Jordshaugens' deed to correct it.
The Jordshaugens, however, did not agree. Instead, they filed a complaint on December 9, 2004, seeking to quiet title to the portion of lot TH-17 on which garage 402 sat. They named the Browns and PLA, among others, as defendants. During discovery, the Jordshaugens learned that First American required the Browns to sign the statement of awareness regarding the boundary line adjustment. After discovering this information, the Jordshaugens sent a second letter to First American on March 24, 2005. At that time, PLA had already named First American as a third party defendant in the lawsuit. In their second letter, the Jordshaugens again purported to submit a claim under their title insurance policy and tender the defense of their title in the pending lawsuit. The letter accused Dahl of conflicts of interest, issuing a false plat certificate, being "singularly secretive, if not deceitful," and having "a much greater commitment to illicit undertakings than to its lawful duties." Ex. 151. First American did not respond to this letter, maintaining that the facts had not changed since the Jordshaugens' first purported tender and that no one claimed any interest in, or encumbrance on, the legitimate lot TH-17.
Thereafter, the Jordshaugens amended their complaint to include claims against First American for failing to defend or insure, bad faith, and failing to respond to their claims and tenders. On October 26, 2006, the Jordshaugens sent a final letter to First American, requesting, once again, that First American confirm its acceptance of their tender of defense of the claims made against their title. On November 30, 2006, First American sent a letter to the Jordshaugens' attorneys, again stating that the allegations did not give rise to a claim under the Jordshaugens' title insurance policy.
On August 13, 2007, the parties began a six-day bench trial. Throughout trial, First American maintained, as it had since the beginning of the dispute, that because no party made a legitimate claim against the Jordshaugens' title, their title insurance policy did not cover their purported claim. Simply stated, the Jordshaugens' suffered no loss or damage to the property they believed they were purchasing.
During the trial, there was evidence that in 2002, due to changes in the design and construction of Ludlow Bay Village, PLA determined that a boundary line adjustment was necessary for some of the development's units. Some of the boundary line issues were not resolved when units in building 400, including unit 402 on lot TH-16 and unit 403 on lot TH-17, were made available for sale. To remedy the unresolved boundary issues, PLA and First American agreed that First American would advise purchasers that a boundary line adjustment was in process and would be completed sometime after closing to conform to the actual occupancy and location of the affected lots. First American prepared a statement of awareness explaining the boundary issues and was to provide this statement to purchasers at closing. First American, on its own admission, inadvertently and mistakenly failed to provide the Jordshaugens with the statement of awareness at closing. Nevertheless, at closing, the Jordshaugens believed they were purchasing lot TH-17, including unit 402 and garage 402. At no time did they believe they were purchasing the property on which garage 403 sat. Likewise, the Browns believed they were purchasing lot TH-16, including unit 403 and garage 403.
The trial court entered judgment in favor of PLA, awarding it attorney fees and expenses. It rendered all claims against First American and the remaining defendants moot. The trial court also reformed the property description leaving the disputed garage with the Browns. The Jordshaugens do not appeal these decisions. The Jordshaugens do, however, appeal the trial court's dismissal of all claims against First American. They ask us to reverse the trial court and remand to determine the amount of attorney fees and expenses they incurred to defend their title, damages for the reduction in the size of their lot, and attorney fees and costs on appeal. We decline to do so.
ANALYSIS
When a trial court enters findings of fact and conclusions of law following a bench trial, our review is limited to determining whether substantial evidence supports the findings, and, if so, whether they support the trial court's conclusions of law and judgment. Saviano v. Westport Amusements, Inc., 144 Wn. App. 72, 78, 180 P.3d 874 (2008) (citing Sunnyside Valley Irrigation Dist. v. Dickie, 111 Wn. App. 209, 214, 43 P.3d 1277 (2002), aff'd, 149 Wn.2d 873, 73 P.3d 369 (2003)). "Evidence is substantial if it is sufficient to persuade a fair-minded person that the declared premise is true." Sunnyside Valley, 111 Wn. App. at 214. We review only those findings to which appellants assign error; we treat unchallenged findings as verities on appeal. Nordstrom Credit, Inc. v. Dep't of Revenue, 120 Wn.2d 935, 941, 845 P.2d 1331 (1993).
Here, the Jordshaugens failed to assign error to any finding of fact. Therefore, our review is limited to determining whether the findings of fact support the trial court's conclusions of law. Fenton v. Contemporary Dev. Co., 12 Wn. App. 345, 347, 529 P.2d 883 (1974), review denied, 85 Wn.2d 1007 (1975). We review questions of law de novo. Ed Nowogroski Ins., Inc. v. Rucker, 137 Wn.2d 427, 436-37, 971 P.2d 936 (1999).
A. First American's Duty to Respond
The Jordshaugens first contend that First American breached its duty to respond to their repeated letters purporting to tender a defense of their title against the claims of the Browns and their seller (PLA). They imply that First American's alleged failure to respond constitutes bad faith under WAC 284-30-330(2), (5), and (13). Their argument is misguided.
WAC 284-30-330 Specific unfair claims settlement practices defined.
The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance, specifically applicable to the settlement of claims:
. . . .
(2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
. . . .
(5) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
. . . .
(13) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
Under WAC 284-30-330(5), an insurer engages in unfair or deceptive acts when it fails "to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed." Here, there is no evidence that the Jordshaugens' produced proof of loss statements. Indeed, one of the trial court's unchallenged findings is that the Jordshaugens suffered no damages or harm.
Nonetheless, Dahl responded to the Jordshaugens' October 6, 2004 letter within 30 days of receiving it. By phone call and letter, Dahl stated:
At this time there is nothing specific against which to defend. There is no pending litigation and I have seen no allegations by the Browns which are covered under the four insuring clauses in the policy. I do, however, acknowledge that this dispute may ripen into a matter which may be covered or require a defense under the terms and conditions of the policy and appreciate your early notice of the situation.
Ex. 140.
It is unfortunate that the Jordshaugens interpreted this language to mean that they had to file a lawsuit in order to establish coverage, but the language neither expressly nor impliedly stated their conclusion. Dahl merely stated that, should a party claim loss or damage on the Jordshaugens' title, their title insurance policy may be triggered and First American may be required to tender a defense. Thus, contrary to the Jordshaugens' contention, First American did respond to their purported tender of defense and did so in a timely fashion. See WAC 284-30-370 (stating that generally an insurer shall complete investigation of a claim within 30 days after notification of a claim). The fact that they did not like the response and/or misinterpreted their title insurance policy is of no consequence.
It is also of no consequence that the Jordshaugens sent two more letters, dated March 24, 2005 and October 26, 2006, again purporting to tender a defense even though the relevant facts had not changed. Moreover, the Jordshaugens' reliance on Truck Ins. Exchange v. VanPort Homes, Inc., 147 Wn.2d 751, 58 P.3d 276 (2002), to support its contention that First American acted in bad faith for failing to respond to its March 24, 2005 letter is misplaced.
In Truck Insurance Exchange, VanPort, Truck's insured, was a construction company sued by several of its customers for violations of the Consumer Protection Act, the Consumer Credit Protection Act, misrepresentation, usury, breach of contract, and negligence. Truck, 147 Wn.2d at 756. VanPort tendered the lawsuits to Truck, which denied coverage approximately one year later. Truck, 147 Wn.2d at 757. When VanPort requested a meeting with the insurer to discuss the denial, Truck never responded. Truck, 147 Wn.2d at 757. Truck did not explain its denial of coverage until almost two years later when it filed for a declaratory judgment. Truck, 147 Wn.2d at 757. The Washington Supreme Court held that Truck had denied coverage in bad faith under WAC 284-30-330(13). Truck, 147 Wn.2d at 764. It cited Truck's "unconscionable delay in responding" to VanPort's tender to support its holding. Truck, 147 Wn.2d at 764.
Truck is distinguishable for at least one primary reason. Here, no one — not the Browns, not PLA, not any other party — claimed interest in, or encumbrance on, the legitimate lot TH-17 or its garage, garage 402. Rather, the Jordshaugens had filed a claim, seeking title to property that they did not believe they purchased until two years after closing.
In sum, no party, at any time throughout this action, has made a legitimate claim to the Jordshaugens' legitimate title. First American communicated this to the Jordshaugens within 30 days of receiving their first letter. Thus, there was no bad faith. See WAC 284-30-330 . First American did not breach its duty, contractual or otherwise, to respond to the Jordshaugens' purported tender of defense. See WAC 284-30-330(5).
B. Duty to Defend
The Jordshaugens next contend First American breached its duty to defend their quiet title action. Again, their argument is misguided.
In general, insurers who have reserved the right and duty to defend are obligated to defend any suit that alleges facts wherein, if proven, would render the insurer liable. State Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 486, 687 P.2d 1139 (1984). But when the policy clearly does not cover the alleged claims, the insurer has no right or duty to defend. State Farm, 102 Wn.2d at 486. The Jordshaugens' title insurance policy is comprised of four clauses that insure against:
[L]oss or damage . . . sustained or incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land.
Ex. 77. In addition, their policy includes an exclusion stating: "Defects, liens, encumbrances, adverse claims or other matters . . . (c) resulting in no loss or damage to the insured claimant." Ex. 77. Their policy clearly states that in order for it to be effective, a claim against the property must result in loss or damage.
Again, the trial court found that the Jordshaugens suffered no damages or harm. No party made any legitimate claims against the Jordshaugens' property that resulted in loss or damage. The Browns, PLA, and all other parties only sought to reform the Jordshaugens' and Browns' deeds to reflect the proper legal descriptions of the properties that the Jordshaugens and Browns intended to purchase. Because the Jordshaugens suffered no loss or damage to the property that they admittedly intended to purchase, First American had no duty to defend their claims. State Farm, 102 Wn.2d at 486.
The Jordshaugens did not challenge any findings of fact, including finding 24 which states they suffered no damages or other harm. As noted, this finding is a verity on appeal. Nordstrom, 120 Wn.2d at 941.
C. Estoppel
Finally, the Jordshaugens contend that First American is estopped from denying their coverage because of its bad faith refusal to defend. Because there is no showing that First American's refusal to defend was in bad faith and First American breached no duty, estoppel does not compel it to defend the Jordshaugens' claim. See Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 564, 951 P.2d 1124 (1998).
ATTORNEY FEES
The Jordshaugens request costs and reasonable attorney fees for this appeal, but they neither cite a specific statute nor explain the grounds for their request. RAP 18.1(b) requires more than a bald request for costs and attorney fees on appeal. See Thweatt v. Hommel, 67 Wn. App. 135, 148, 834 P.2d 1058, review denied, 120 Wn.2d 1016 (1992). The rule requires argument and citation to authority to advise the court of the appropriate grounds for an award of costs and attorney fees. Wilson Court Ltd. P'ship v. Tony Maroni's, Inc., 134 Wn.2d 692, 711 n. 4, 952 P.2d 590 (1998). Therefore, we deny the Jordshaugens' request for costs and attorney fees on appeal.
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
ARMSTRONG, J. and PENOYAR, A.C.J., concur.