The Supreme Judicial Court of Maine recently affirmed a lower court’s judgment in favor of defendant title insurance company and the denial of plaintiff’s cross-motion for summary judgment in an action for coverage and indemnification under a title insurance policy on the ground that plaintiff failed to identify any cloud on its title or any other title defect that would implicate defendant’s duty to defend. See Osprey Landing, LLC v. First Am. Title Ins. Co., 2017 WL 931383 (Me. March 9, 2017). In the case, plaintiff acquired a parcel of oceanfront property and purchased a title insurance policy from defendant. After the transfer of the parcel, plaintiff sued the owners of a lot abutting the property, claiming that a deeded easement over the neighboring lot permitted passage of motor vehicles. The neighbors counterclaimed, asserting the existence of a private prescriptive easement over plaintiff’s property. Although plaintiff filed a claim with defendant at that time, the neighbors subsequently dismissed their claim with prejudice. In connection with that litigation, however, the prior owner of the insured property was deposed, and he expressed his knowledge of a history of public use of a path over the insured property. He also executed an affidavit with the same claim. Plaintiff then filed a claim with defendant, alleging a prescriptive easement over the insured property. Defendant declined, and procured a second affidavit from the prior owner, in which the prior owner stated that he asserted no claim to a prescriptive easement over the property himself and knew of no one who could do so. Plaintiff filed the instant action to enforce defendant’s purported duty to defend and indemnify plaintiff. The trial court granted defendant’s motion for summary judgment as to all counts and denied plaintiff’s cross-motion for summary judgment.
On appeal, the Court noted that each of plaintiff’s three arguments were an iteration of a single issue: plaintiff believes that the prior owner’s deposition and affidavit create the risk of a future public prescriptive easement claim adverse to plaintiff’s title and, therefore, the policy requires defendant to take some action to either clear plaintiff’s title or compensate plaintiff for this perceived title defect. The Court affirmed the lower court’s judgment and rejected plaintiff’s argument that the prior owner’s statements created a “triggering event” requiring defendant to take any action. The Court further determined that the language of the policy is unambiguous, and the policy only imposes an obligation on defendant to “provide for the defense” of plaintiff’s title upon plaintiff’s request when a third party makes a claim adverse to plaintiff’s title. The Court noted that the neighbors’ counterclaim was dismissed with prejudice, and therefore there is currently no known claim against plaintiff’s title. Further, plaintiff could not identify any specific “loss or damage” within the meaning of the policy caused by the alleged easement. Accordingly, the Court held that “[n]o obligation is imposed on [defendant] under these circumstances to preemptively indemnify [plaintiff] despite the lack of proof of the existence of an easement or litigation claiming one. We have never before held that the mere possibility of future claims for public easements renders title unmarketable, and will not do so here.”