TOSTE v. FIRST AMERICAN TITLE INSURANCE COMPANY - Undisclosed Easement
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In June 1999, the
Tostes purchased property in Pollock Pines consisting of a home on about one
acre. First American issued a title insurance policy on the property. The policy
failed to note the property was encumbered by an easement held by the
Smedbergs.2
FACTUAL AND PROCEDURAL BACKGROUND
In May 2006, the
Tostes made a claim under the policy after the Smedbergs notified the Tostes
they were going to construct a driveway on the easement. That same month, the
Tostes (among other things) piled obstructions on the easement, scared off the
Smedbergs' contractors with growling dogs, and removed erosion control devices
on the easement.
On June 1, 2006,
First American wrote the Tostes a letter acknowledging the easement. The letter
explained that First American would pay for the actual loss the Tostes incurred
because of the easement, which was to be determined by an independent appraiser
based on the difference in value of the property with the easement and without
it.
TOSTE v. FIRST AMERICAN TITLE INSURANCE COMPANY
GERALD TOSTE et al., Plaintiffs and
Appellants,
v.
FIRST AMERICAN TITLE INSURANCE
COMPANY, Defendant and Respondent.
No. C067520.
Court of Appeals of California, Third District, El
Dorado.
Filed March 28, 2012.
ROBIE,
J.
This is the fifth
appeal involving an easement on land owned by plaintiffs Gerald and Robin Toste
(the Tostes) for the benefit of their neighbors, the Smedbergs. In the first, we
affirmed an award of compensatory and punitive damages against Gerald Toste for
willfully interfering with the easement. (Smedberg v. Toste (Dec. 10,
2008, C056578) [nonpub. opn.].) In the second, we sanctioned the Tostes and
their attorney, Charles Kinney, for filing a frivolous appeal that "recycl[ed]
the same arguments" from the first appeal. (Smedberg v. Toste (Sept. 28,
2009, C058031) [nonpub. opn.].) In the third, we affirmed the dismissal of the
El Dorado Superior Court as a party in the Tostes' action for inverse
condemnation. (Toste v. Superior Court (Oct. 27, 2009, C058938) [nonpub.
opn.].) In the fourth appeal, we affirmed an order denying Gerald Toste's
challenge of the denial of his claim of exemption to the Smedberg's wage
garnishment. (Smedberg v. Toste (Mar. 6, 2012, C068218) [nonpub.
opn.].)
This fifth appeal
fares no better for the Tostes. Here, the Tostes claim the trial court erred in
granting summary judgment in favor of defendant First American Title Company
(First American) in a lawsuit the Tostes filed against First American. The
preliminary title report First American issued on the Tostes' property missed
the easement encumbering the Tostes' property. The lawsuit alleged breach of
contract against First American. The trial court granted summary judgment in
favor of First American. The Tostes appeal from the resulting judgment. They
contend the court erred in granting summary judgment because triable issues of
material fact existed. As best we can discern, the Tostes develop seven
issues.1 Finding no merit in them, we affirm the
judgment.
In June 1999, the
Tostes purchased property in Pollock Pines consisting of a home on about one
acre. First American issued a title insurance policy on the property. The policy
failed to note the property was encumbered by an easement held by the
Smedbergs.2
In May 2006, the
Tostes made a claim under the policy after the Smedbergs notified the Tostes
they were going to construct a driveway on the easement. That same month, the
Tostes (among other things) piled obstructions on the easement, scared off the
Smedbergs' contractors with growling dogs, and removed erosion control devices
on the easement.
On June 1, 2006,
First American wrote the Tostes a letter acknowledging the easement. The letter
explained that First American would pay for the actual loss the Tostes incurred
because of the easement, which was to be determined by an independent appraiser
based on the difference in value of the property with the easement and without
it.
On June 6, 2006,
the Smedbergs wrote a letter to First American informing the insurance company
that the Tostes had physically blocked access to the easement and threatened
litigation.
On June 15, 2006,
First American wrote a letter to the Tostes reiterating its decision to pay for
the actual loss caused by easement on their property, thus eliminating any duty
to defend the Tostes if they were sued. However, the letter also stated, "If the
Smedbergs bring a legal action against you, please send [First American] copies
of the summons and complaint promptly so that we can evaluate the allegations
for any potential obligation to defend you."
On July 3, 2006,
the Smedbergs filed a lawsuit against the Tostes to quiet title and to allege
trespass and nuisance causes of action based on the Tostes' interference with
the use of the easement.
After the
Smedbergs filed their lawsuit, the Tostes hired attorney Kinney to defend them
in that lawsuit.
On July 8, 2006,
Kinney wrote First American a letter stating he had been retained by the Tostes
to defend them in the Smedbergs' lawsuit and included the complaint and other
documents relating to the lawsuit. It was the Tostes' and Kinney's position that
the Tostes had adversely possessed the easement. Kinney also stated that he had
already filed a declaration and opposition to the Smedbergs' motion for
preliminary injunction.
On July 13, 2006,
the El Dorado Superior Court granted the preliminary injunction enjoining the
Tostes from interfering with the Smedbergs' use of the easement.
Later that month,
Kinney filed an answer and cross-complaint on behalf of the Tostes.
In August 2006,
First American wrote Kinney a letter stating that it had reconsidered its
decision to pay the Tostes for their loss from the easement and would instead
defend them in the Smedbergs' action. It warned, however, that it would not pay
to prosecute the cross-complaint. First American retained attorney William
Barnes to defend the Tostes against the Smedbergs' lawsuit. The title insurance
policy stated, "We have the right to choose the attorney when [w]e bring or
defend a legal action on [y]our behalf." "We are required to repay [y]ou only
those . . . attorneys' fees . . . that [w]e approve in advance."
In April 2007, the
El Dorado County Superior Court found Gerald Toste guilty of 12 counts of
contempt for violating the preliminary injunction. Thereafter, the court ordered
Gerald Toste to serve 60 days in jail for violating the preliminary injunction
and awarded costs to the Smedbergs in response to their memorandum of
costs.
In May 2007,
Kinney filed a lawsuit on behalf of the Tostes against El Dorado County alleging
the county had created a dangerous condition by approving construction of the
Smedbergs' driveway on the easement and later amended the complaint to add a
cause of action for inverse condemnation against the El Dorado County Superior
Court.
The Smedbergs'
lawsuit and Tostes' cross-complaint went to trial in June 2007. Both attorneys
Barnes and Kinney were at the trial and the Tostes elected to have Kinney handle
the examination of witnesses and argument to the jury. A jury rejected the
Tostes' claim of adverse possession and found Gerald Toste liable for nuisance
and trespass and awarded the Smedbergs $65,000 in compensatory damages and
$40,000 in punitive damages.
Kinney filed a
notice of appeal on behalf of the Tostes. First American did not authorize the
appeal, instead choosing to pay the Tostes the loss they incurred based on the
difference in value of the property with and without the easement. The policy of
title insurance stated, "We can appeal any decision to the highest level," but
provided for other options also. Those options included "[p]ay the claim." When
this option is exercised, First American's obligations for the claim ends,
including its obligation to defend any legal action. Two days after the jury's
verdict, First American sent the Tostes a check for $54,000, which represented
the loss caused by the easement as determined by an independent appraiser. The
Tostes' first appeal was unsuccessful.
In January 2008,
Kinney filed a second notice of appeal on behalf of the Tostes challenging the
award of costs. First American did not authorize the second appeal or approve
Kinney's attorney fees. We deemed this second appeal frivolous because "[u]nder
the guise of challenging the cost order, the Tostes raise[d] two issues
considered and disposed of in [their] previous appeal." We sanctioned the Tostes
and Kinney $9,875 payable to the Smedbergs for their attorney fees and $2,500
payable to the clerk of this court for the cost of processing the
appeal.
In March 2008, the
trial court entered judgment in favor of El Dorado Superior Court after
sustaining without leave to amend the El Dorado Superior Court's demurrer in the
inverse condemnation lawsuit.
In May 2008,
Kinney filed a third notice of appeal on behalf of the Tostes challenging the
dismissal of the superior court from the lawsuit. First American did not
authorize the third appeal or approve Kinney's attorney fees. On appeal, we
affirmed the judgment dismissing the Tostes' action against the El Dorado
Superior Court.
While the appeals
and other litigation were ongoing, the Tostes sued First American in August
2007. The lawsuit alleged breach of contract against First American. The Tostes'
theory was that First American "refused to pay for legal services for a full and
complete defense as provided by [Kinney], and for a cross-complaint . . . and
for other litigation filed by the same attorney . . . ." They sought a
"determination of the rights and obligations regarding . . . the title insurance
policy, which contain[ed] an option to go to arbitration, but for which [First
American] waived that right by [its] refusal to defend [the Tostes] when the
litigation noted was filed." They requested declaratory relief "as to the rights
and duties under the preliminary title report and title insurance policy." And
they requested injunctive relief "as to the payment for legal services regarding
the defense and cross-complaint and appeal thereof, and the damages awarded, in
the litigation by the Smedbergs, and the new litigation regarding the
Easement."
The trial court
granted summary judgment in favor of First American. The court "f[ound] that
[First American]'s performance under the title insurance policy contract by
covering the claim of [the Tostes], providing and paying for defense counsel for
the Smedbergs' action, paying for the actual loss to [the Tostes'] property
incident to the Smedbergs' easement and paying for covered costs awarded the
Smedbergs as the prevailing party [wa]s supported by the moving party's evidence
and constitute[d] a full and complete defense to [the Tostes'] breach of
contract action." The Tostes'"opposition [to the summary judgment motion]
fail[ed] to provide evidence of any breach of the title insurance contract by
[First American] while, at the same time, offer[ed] argument that [First
American] had [a] myriad [of] duties to [the Tostes] which were not met giving
rise to `waiver' by [First American] and liability for all of [the Tostes']
litigation losses, including punitive damages. [The Tostes] offer[ed] no
evidence in support of their position and their position d[id] not conform to
their complaint for breach of contract. Thus, no triable issue of material fact
remain[ed] . . . ."
The Tostes filed a
timely notice of appeal from the ensuing judgment.
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