Smeaton v. Fidelity National Title

Opinion

NICHOLSON, J.

Tony Smeaton appeals from a judgment following a bench trial in favor of defendant Fidelity National Title in this lawsuit founded upon a title insurance policy. The court found the statute of limitations barred any recovery. On appeal, Smeaton contends the limitations period for claims founded upon a title insurance policy cannot begin to run until the policy is issued. We agree and reverse the judgment.

Factual and Procedural Background

Smeaton retained Fidelity to handle the escrow and title insurance in connection with his purchase of approximately 693 acres of real property in El Dorado County. Smeaton claims Fidelity “orally represented to Smeaton that it had confirmed the requisite access easements for the property, and that Fidelity would issue a title insurance policy to Smeaton that included reference to these access easements.” Escrow closed on May 5, 1993, but Fidelity did not issue the title insurance policy until August 1993.

Smeaton acknowledges, and the trial court found, that as of July 17, 1993, he knew the necessary access easements did not exist. On August 6, 1993, Fidelity issued the title insurance policy, and on August 12, 1993, Smeaton’s

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attorney wrote to Fidelity to make a claim under the title policy for lack of road easements. Smeaton claimed without the access easements, the property was not suitable for development as he had planned, causing him to lose his investment. On August 26, 1993, Fidelity denied Smeaton’s claim, stating the title policy did not insure appurtenant easement rights. Smeaton sued Fidelity on August 18, 1995; the trial court found the action barred by the two-year statute of limitations.

Discussion

Smeaton argues the trial court misapplied the two-year statute of limitations for claims founded upon a policy of title insurance, and erroneously applied the same two-year limitations period to his fraud claims. We find merit in Smeaton’s first contention, and thus need not reach the latter.

Smeaton’s third amended complaint sets forth four causes of action. The first cause of action, entitled “Intentional Tort,” alleges in pertinent part: “The defendants, and each of them, intentionally granted plaintiff title insurance to the property described as Assessor’s Parcel No. 62-010-22, located in El Dorado County, CA, through Escrow No. 9445301-PAR knowing that appropriate easements were essential for the successful sale and development of said property as plaintiff had previously informed defendants that it was his intent that the property be [subdivided and developed. . . . Defendants granted plaintiff title insurance, representing to him that the requested easements were in place. Defendants did not perform an adequate search regarding easement and Plaintiff purchased the property relying on the representations made to him by the defendants.”