Rhode Island District Court Grants Summary Judgment in Title Insurance Coverage Appeal

The United States District Court for the District of Rhode Island recently granted a title insurance company’s motion for reconsideration, holding that the insured did not suffer a loss when it lost title to two properties upon which it could not build improvements. See IDC Properties, Inc. v. Chicago Title Ins. Co., 2021 WL 4355259 (D.R.I. 2021). The case involved an insured who obtained a $10 million title insurance policy when it purchased three properties that it planned to develop. As a result of rulings from the Rhode Island Supreme Court, the insured lost its title in two of the parcels of land (the “South and West Units”). The insured brought a claim, which the title insurance company denied. The insured then brought this lawsuit, arguing that it lost title as well as its right to construct improvements, including residential properties, on those pieces of property. The title insurer moved for summary judgment, but the Court denied the motion, finding that there were issues of fact as to the insured’s damages. In making this conclusion, however, the Court did not consider the Rhode Island Supreme Court’s earlier determination that the insured could not build houses on the units as improvements.

The title insurer moved for reconsideration, and the Court granted the motion. In doing so, the Court accepted its argument that “‘when [the insured] lost title to the South and West Units, [the insured] did not lose an ‘improvement’ right to construct new single-family residences in the airspace over portions of the common elements of the Goat Island South Condominium [because] it never had such a right. . . . Without the ability to construct improvements in the airspace that comprised the units, their economic value is zero.’” The Court acknowledged that it had made a clear error of law, that there was no genuine issue of material fact, and that the title insurer was entitled to judgment as a matter of law as to coverage of the South and West units.