Shah v. Fidelity Nat. Title Ins. Co. CA6

Filed 9/19/16 Shah v. Fidelity Nat. Title Ins. Co. CA6 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

JAY C. SHAH, H038521 (Santa Clara County Plaintiff and Appellant, Super. Ct. No. 1-11-CV-203571)

v.

FIDELITY NATIONAL TITLE INSURANCE COMPANY,

Defendant and Respondent.

The allegations in this case illustrate the very purpose of title insurance. Plaintiff Jay C. Shah filed a claim with defendant Fidelity National Title Insurance Company after discovering that the purported fee simple interest he purchased and for which he obtained title insurance was actually a life estate. Defendant denied plaintiff’s claim, contending that the policy had terminated when plaintiff transferred his entire interest in the property through multiple conveyances, all occurring after the life tenant died. Plaintiff appeals from a judgment entered after the trial court sustained defendant’s demurrer without leave to amend. Plaintiff argues that the trial court erred when it determined he failed to state causes of action for breach of contract and breach of the covenant of good faith and fair dealing arising from defendant’s refusal to pay plaintiff’s claim. For the reasons stated here, we will reverse the judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND This factual summary is based on plaintiff’s first amended complaint (Complaint) as well as recorded conveyances for the subject property.1 A. ORIGINAL GRANT DEED AND TITLE INSURANCE POLICY (1995) In December 1995, Mary R. Silva transferred her interest in certain grazing property via grant deed to “Jay C. Shah, Living Trust Dated June 8, 1993.”2 Plaintiff believed he was obtaining fee simple title to the property and paid $350,000, which, according to the Complaint, represented the fair market value for fee simple title. Unbeknownst to plaintiff, Silva held only a life estate in the property; her children held the remainder interest. To insure his purchase, plaintiff obtained a title insurance policy from defendant. Much of the original insurance policy was lost or destroyed, but Schedules A and B of the original policy were located in defendant’s records. For the missing portions of the policy, the parties agree that the general terms were taken from the California Land Title Association Standard Policy – 1990 Form (CLTA 1990 Form). Section 1(a) of the CLTA 1990 Form’s Conditions and Stipulations defines “insured” as “the insured named in Schedule A, and, subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors.” Schedule A lists “Jay C. Shah, Living Trust Dated June 8, 1993” as both the insured party and the party to whom “[t]itle to the estate or