Thursday, September 06, 2012
Ind. Decisions - 7th Circuit decides one Indiana case today, a reversal
In Home Federal Savings Bank v. Ticor Title Ins. (SD Ind., Magnus-Stinson), a 23-page opinion, Circuit Judge Hamilton writes:
This case concerns a title insurance policy covering a construction project. The plaintiff is the insured party, Home Federal Savings Bank, which agreed to lend up to $95.5 million to finance the construction of a new ethanol production plant. When the developer of the plant ran into serious trouble finishing the project, the bank did not disburse the final $8 million of the loan amount. The developer defaulted on the debt to the bank and fired its general contractor, which then filed a mechanic’s lien on the property to recover $6 million allegedly owed it. When the bank sought to foreclose on its mortgage, the general contractor counterclaimed, asserting that its lien had priority over, or at least parity with, the bank’s mortgage. The plaintiff bank tendered its defense to the defendant title insurer under a policy that required the insurer to defend the bank against a “claim . . . alleging a defect, lien or encumbrance or other matter insured against by this policy.” The policy contained an exclusion from coverage for claims “created, suffered, assumed, or agreed to” by the insured. On cross-motions for summary judgment, the district court ruled in favor of the title insurer. We reverse and remand. The undisputed facts show that the title insurer breached its duty to defend the bank on the contractor’s claim that its mechanic’s lien had priority over or parity with the mortgage. * * *
The judgment of the district court is REVERSED and REMANDED with instructions (a) to enter summary judgment for plaintiff Home Federal on the issue of liability on its claim that defendant Ticor breached its duty to defend under the policy and on defendant’s counterclaim for a declaratory judgment, and (b) to conduct further proceedings consistent with this opinion.
Posted by Marcia Oddi on September 6, 2012 01:50 PM
Posted to Ind. (7th Cir.) Decisions