In Findlay v Chicago Title Ins. Co., 2022 IL App (1st) 210889 (2022), the Appellate Court of Illinois, First Division (“the Court”), endorsed and adopted the reasoning of several outside jurisdictions in holding that title insurance claims were exempt from Illinois’ “complete defense rule,” due to the unique characteristics inherent to title claims and title insurance as a whole.

The matter involved a ten lot residential vacation community located near the shore of Lake Michigan. Lots 1 through 7 possessed their own designated private beach areas, while Lots 8 through 10 were landlocked without a private beach. Originally, the community contained a beach easement on the edge of Lot 5 which allowed access to Lake Michigan and the Lake’s beach area (“the Beach Easement”), which was used by the owners of Lots 8 through 10 to obtain beach access. In the 1990s, the community erected a gate near the easement access point which, when closed, only allowed the landlocked owners to access the Beach Easement by cutting across a portion of Lot 5.

In 2007, Plaintiff James Findlay (“Plaintiff”) purchased Lot 5, and post-purchase began objecting to the other lot owners cutting across his property to access the Beach Easement. This led to a lawsuit between Plaintiff and the owners of Lots 8 and 9 (“the Lot Owners”), with the Lot Owners seeking a declaratory judgment that an implied ingress-egress easement existed on Lot 5. Both Plaintiff and the Lot Owners possessed title insurance through Defendant Chicago Title Insurance Company (“Chicago Title”), with both parties having submitted respective claims to Chicago Title prior to the commencement of litigation.

Pre-litigation, Chicago Title retained one attorney to represent both parties, in hopes of amicably settling the dispute. When settlement efforts failed and the Lot Owners brought suit, Chicago Title provided Plaintiff with a new attorney, but only agreed to defend and indemnify Plaintiff on two of the Lot Owners’ four total counts. At the same time Chicago Title accepted the Lot Owners’ tender and paid for their attorney, thus footing the bill for the attorneys of both parties. During the litigation process, Plaintiff fired his appointed counsel and retained new counsel without Chicago Title’s approval or consent. Ultimately, Plaintiff prevailed in the lower court, which held that no implied easement existed.

Following the conclusion of this first suit, Plaintiff then sued Chicago Title, alleging it had breached its contractual duty to defend by: (1) creating a conflict of interest by paying for both his attorney and the Lot Owners’ attorney; (2) failing to provide coverage for all four counts of the Lot Owners’ action; and (3) failing to approve his retention of a new replacement attorney. Plaintiff ultimately failed on each of these claims before the trial court, appealing the dismissal of his action to the Court.

On appeal, the Court first considered Plaintiff’s conflict of interest claim, noting it was well established that “not every potential conflict of interest automatically triggers the right to independent counsel at [an] insurer’s expense” and that the “mere fact that opposing parties are insured by the same insurance provider does not necessarily entitle the insured to paid-for independent counsel.” Based on this precedent, the Court thus held that Chicago Title paying for both parties’ attorneys did not create a conflict of interest, as the payment alone could not create such a conflict, and as there was no evidence in the record demonstrating that Chicago Title had directed Plaintiff’s counsel how to litigate the case. As a practical matter, Chicago Title had also provided Plaintiff with a replacement attorney upon the start of litigation, thereby effectively providing both Plaintiff and the Lot Owners with “separate and independent counsel” which served to even further obviate any potential conflict.

The Court then turned to the more interesting and salient issue: Plaintiff’s contention that by refusing to defend and indemnify all four counts of the Lot Owners' action, Chicago Title had breached Illinois’ “complete defense rule,” which generally imposes an obligation upon an insurer “to provide a complete defense in a suit or action against its insured even if only one or some of the claims are potentially covered.” While the Court acknowledged that this doctrine was valid, it held that “the complete defense rule does not apply in the context of title insurance,” citing as examples opinions from other jurisdictions in Wisconsin, Pennsylvania, Colorado, and Massachusetts. The Court explained that this exception derives from several unique characteristics of title insurance, namely that it acts in a “retrospective rather than prospective” manner by protecting against defects arising prior to the issuance of coverage, and that its claims are easily bifurcated. Thus, the Court ultimately held “that the complete defense rule does not apply in the context of title insurance.”

Finally, the Court found that Plaintiff’s remaining claim was barred by title policy Condition 5(a), which provided that Chicago Title had “the right to select counsel of its choice (subject to the right of [Plaintiff] to object for reasonable cause) [and Chicago Title] shall not be liable for and will not pay the fees of any other counsel.” As Plaintiff had never provided any “reasonable cause” to object to his original attorney’s representation, this claim thus also failed.

As Plaintiff’s claims were each found defective, the Court affirmed the lower court’s denial.


This matter has potentially broad application, as it is the most recent in what appears to be a growing trend of jurisdictions wholly exempting title insurance from the “complete defense rule” or any other similar state analog using a different name. When faced with a such a claim, this opinion, used in conjunction with the various holdings of other states summarized within, can potentially form the basis of a good faith motion to dismiss or motion for summary judgment.