In the case Zarkasha Enterprise, Inc. v. Old Republic Title Insurance Company, Zarkasha appeals a trial court's summary judgment favoring Old Republic. The dispute arises from a title insurance policy related to a 3.9-acre tract purchased by Zarkasha in 2009. The Moores, who bought an adjacent 18.162-acre tract in 2017, filed a lawsuit against Zarkasha to quiet title, claiming Zarkasha's interest in their property created a cloud on their title. They argued that Zarkasha's interest, recorded in a different county, was invalid under Texas Property Code section 13.003, as they had no prior knowledge of it when purchasing their property. Zarkasha sought defense from Old Republic based on their title insurance policy, but after Old Republic's amended motion for summary judgment was granted, Zarkasha appealed, asserting there were factual disputes that should prevent summary judgment. The appellate court affirmed the trial court's decision.
The legal description begins at a 2 1/2 inch iron pipe marking the Northwest corner of the described tract, shared with the Northwest corner of a 103.1-acre property along the West line of Montgomery County and the East line of Waller County, Texas. It details a series of directional bearings and distances: first, S 86°31'28"E for 300.33 feet to a Northeast corner marked by a 1 1/4 inch iron pipe; then S 00°38'35"W for 2606.33 feet to the Southeast corner marked by a 1 1/4 inch iron rod; next, N 88°57'03"W for 305.65 feet to the Southwest corner marked by a 1 1/4 inch iron rod; and finally, N 00°46'02"E for 2619.01 feet back to the starting point, enclosing an area of 18.162 acres.
Zarkasha filed an Answer denying the allegations and asserting that the plaintiff's petition lacked specifics regarding the claimed cloud on title. Zarkasha identified deficiencies in the petition, including the specific property portion affected, the nature of the claim, the timing of the claim's assertion, and the location of the alleged claim. Affirmative defenses cited included the Moores’ actions contributing to the unenforceability of their contract, Zarkasha’s adverse possession, and the Moores’ estoppel due to failure to investigate Zarkasha's claims. An amended answer included a not guilty plea to the Moores’ trespass to try title claim, asserting that the Moores’ claims were barred by statutes of limitations due to Zarkasha's continuous possession since July 31, 2009, alongside the payment of applicable taxes. Zarkasha also sought a venue transfer from Montgomery County to Waller County, asserting the property is located in Waller County, and filed a Third-Party Petition against Old Republic Title Company of Conroe in October 2018.
Zarkasha purchased a 3.9083-acre tract in Waller County in July 2009 and obtained a title insurance policy through Old Republic-Conroe, which managed the closing and recorded the deed. Zarkasha conducted a survey confirming the property's location and an electric easement at the boundary with Montgomery County. Following a lawsuit from the Moores, Zarkasha filed a title insurance claim with Old Republic-Conroe, which allegedly ignored the claim, prompting Zarkasha to assert a breach of contract for failing to defend against the Moores' allegations regarding acreage discrepancies and misfiled deeds. Zarkasha sought a declaratory judgment affirming the validity of its title policy, entitlement to damages and attorney’s fees, and indemnification from Old Republic-Conroe.
Zarkasha counterclaimed against the Moores for a declaration of rightful ownership and continuous possession of the property since July 2009, asserting its claims to ownership rights and attorney’s fees. Old Republic-Conroe responded with a general denial, arguing that Zarkasha's claims were barred due to its choice to forgo area and boundary coverage in the title insurance policy. It also claimed to act as an agent for Old Republic National Title Insurance Company, which it stated is not liable for the contract claims. Zarkasha's amended petition later included Old Republic-National as a third-party defendant, maintaining claims of breach of contract and seeking indemnification. Old Republic-National echoed Old Republic-Conroe's defense, asserting Zarkasha's claims were barred due to the lack of coverage for area discrepancies.
The policy from Old Republic-National excludes coverage for any overlap of fences along the easterly property line and specifically pertains to a tract of land in Waller County, Texas. Old Republic-National asserts it is not required to defend Zarkasha against claims from Plaintiffs because the disputed property is located in Montgomery County, which is not covered by Zarkasha’s title insurance policy. The policy only covers 3.9083 acres in Waller County, as described in the warranty deed. Old Republic filed a joint motion for summary judgment, arguing that since the Moores' claims relate to property in Montgomery County, which is outside the policy coverage, they are entitled to judgment as a matter of law. The motion included supporting documents, including the title insurance policy, warranty deed, and the Moores’ original petition, confirming the legal description of Zarkasha’s property and its location in Waller County.
The legal document outlines a dispute regarding the ownership and location of a 3.9083 acre tract of land, with Zarkasha asserting its property is in Waller County while the Moores claim it lies in Montgomery County. Zarkasha contests the Moores' claims, citing a lack of definitive survey confirmation and indicating that Old Republic Title Company filed the deed for the property in Waller County. Zarkasha argues that the failure to properly file the deed in Montgomery County is the basis for the Moores' claims. Additionally, Zarkasha references a title policy from Old Republic that includes coverage for improperly filed documents and asserts that Old Republic has a duty to defend against the Moores' claims under the eight-corners rule, which dictates that a duty to defend is based on the allegations in the complaint relative to the policy provisions.
Old Republic counters by stating that the duty to defend is a legal question based solely on the allegations in the complaint, and insists that the facts of the case do not fall under the coverage of the title policy. Old Republic maintains that the Moores' allegations pertain specifically to property in Montgomery County, which does not trigger a defense obligation under the policy. They emphasize that Zarkasha purchased a title policy for property in Waller County, supported by surveys confirming its location, and that all relevant deeds were recorded in Waller County.
Old Republic argues that it filed instruments correctly under Texas law, which mandates that real property-related instruments be recorded in the corresponding county. Zarkasha contends that the validity of the Moores' claims remains unresolved, specifically regarding whether the property is in Waller or Montgomery County. Zarkasha asserts that its policy with Old Republic covers any defects, liens, or encumbrances on the title, with no exclusions applicable if the land is determined to be in Montgomery County. It claims coverage for issues related to filing deeds in the incorrect county, which is central to the Moores’ claims.
In May 2019, the trial court rejected Old Republic’s initial summary judgment motion. In October 2019, Old Republic filed an amended motion, arguing that the policy specifically excludes coverage for discrepancies in boundary lines and matters arising after the policy date. Old Republic contends that the dispute pertains to the boundary lines between the Moores' and Zarkasha's properties, asserting that the properties lie entirely in separate counties, thus negating any coverage under the policy.
In response, Zarkasha noted a settlement agreement reached with the Moores and invoked the eight-corners rule, claiming that Old Republic had a duty to defend and potentially indemnify Zarkasha against the Moores’ claims. Zarkasha highlighted that the Moores’ petition alleges improper recording of Zarkasha’s deed in Waller County, arguing that the title insurance policy covers risks related to improper filing. Zarkasha maintained that without a definitive determination of the property’s county, it is premature for Old Republic to deny coverage. Zarkasha emphasized that the underlying dispute concerns the location of its property rather than the boundary line itself, asserting that Old Republic must ascertain the property’s location before declining coverage.
Zarkasha contended that Old Republic's assertion regarding policy exclusion for claims arising after the policy's effective date was unreasonable and undermined the purpose of title insurance. Zarkasha claimed this exclusion was ambiguous and should favor coverage. Zarkasha provided supporting documents, including the title policy, the Moores’ Original Petition, correspondence between Old Republic and Zarkasha, an expert report from Robert Philo, and an affidavit confirming the authenticity of these exhibits. Philo opined that Old Republic was obligated to defend Zarkasha, noting the Moores’ allegations questioned the county line between Montgomery and Waller Counties, impacting Zarkasha’s claim to property under a deed in Waller County. He emphasized the dispute was more than a simple boundary issue, indicating it concerned ownership of land described in Zarkasha’s title insurance policy.
In its reply, Old Republic accused Zarkasha of misrepresenting the policy and the Moores’ petition, highlighting that the Moores’ property description did not claim any land in Waller County. Old Republic pointed out that the legal descriptions in both the Moores’ and Zarkasha’s deeds supported that their respective properties were solely in Montgomery County. Old Republic argued that the boundary line between the two counties was central to the dispute and noted Zarkasha did not address its limitations argument. In a sur-reply, Zarkasha stated that the main issue was whether the Old Republic title policy covered land irrespective of its location in Waller County.
Zarkasha contended that the Moores' claims threatened its title, asserting that it had not been established whether its land was in Waller or Montgomery County. Zarkasha claimed that the title insurance policy did not have an exception that would relieve Old Republic of its duty to defend if it was later determined that the property was in Montgomery County, emphasizing that the policy covers claims related to incorrect county filings. In response to Old Republic's Motion to Strike Expert Testimony, Zarkasha defended the relevance of expert Robert Philo's report, which Old Republic argued was restricted to legal opinions and irrelevant due to the Moores' settlement. Zarkasha maintained that Philo’s insights were based on factual matters, including Old Republic's knowledge of the property's location and the nature of the dispute with the Moores.
Zarkasha further argued that Philo's testimony on the ambiguity of the title policy was permissible because it raised factual questions regarding policy exceptions and exclusions. Zarkasha asserted that the term "boundary-line" in the policy was ambiguous and that the settlement with the Moores did not eliminate Old Republic's liability; rather, it clarified the damages owed. Old Republic countered that legal issues regarding policy interpretation were solely for the court and that Zarkasha had not claimed policy ambiguity. Ultimately, on November 6, 2019, the trial court granted Old Republic's Amended Motion for Summary Judgment, ruling that Zarkasha take nothing.
Zarkasha filed a motion for reconsideration regarding the disputed property and asserted that Old Republic had a duty to investigate the property’s location. The trial court issued a Final Judgment that dismissed all claims between the Moores and Zarkasha, ruled that Zarkasha would take nothing from Old Republic, and resolved all parties' claims. Subsequently, Zarkasha filed a Motion for New Trial, highlighting a factual dispute regarding the insurer's obligations under the title insurance policy. On appeal, Zarkasha contended that the trial court improperly granted summary judgment, claiming that genuine material facts existed concerning the Appellees' duty to defend Zarkasha under the eight-corners rule. Zarkasha argued that the court failed to establish a factual basis for the claims, particularly concerning the property’s location and the boundaries in dispute, which were purportedly about half an acre. Zarkasha maintained that the title policy did not exempt the disputed land and was ambiguous regarding coverage for claims post-policy issuance, including the failure to record Zarkasha's deed. Zarkasha further contended that the underlying issue was not merely a boundary dispute and argued that the claims existed prior to the policy's purchase. Citing relevant Florida case law, Zarkasha asserted that summary judgment was inappropriate when a land overlap arose from a recorded deed. In a second issue, Zarkasha claimed that there were also genuine issues of material fact concerning Appellees' duty to indemnify under the title insurance policy, asserting that indemnification should be determined by a jury. The standard for reviewing summary judgments involves a de novo approach, where the moving party must prove no genuine issues of material fact exist, shifting the burden to the nonmovant to present evidence of a material fact dispute. The trial court considers all competent evidence at the summary judgment hearing, taking favorable evidence for the nonmovant as true and resolving doubts in their favor.
The trial court's order for summary judgment must be affirmed if any theories presented are valid, as it did not specify its grounds. Old Republic's initial motion for summary judgment was denied, and summary judgment was granted based on its amended motion, which supersedes the earlier motion. Therefore, only the grounds in the amended motion are considered. If a party objects to summary judgment evidence and the court does not rule on the objection, the evidence remains part of the record. The determination of whether an insurer has a duty to defend is a legal question reviewed de novo, focusing on the insurance policy's language, which reflects the parties' intentions. The policy terms are interpreted using their ordinary meanings unless indicated otherwise. When terms allow for multiple reasonable interpretations, they are construed in favor of coverage. Courts only construe ambiguous policies against the insurer if ambiguity persists after applying standard interpretative rules. Ambiguity is a legal question determined by examining the contract as a whole and the context at the time of the agreement, where a contract is considered ambiguous if its meaning is uncertain or open to various interpretations.
An ambiguity in a contract does not arise merely from differing interpretations by the parties; it exists only if the contract lacks a clear and definite legal meaning. If a contract is ambiguous, summary judgment is inappropriate as the interpretation is a factual issue. In assessing an insurer's duty to defend, the eight-corners rule is applied, which considers only the plaintiff's pleadings and the insurance policy's terms, disregarding the truth of the allegations. Insurers rely solely on these pleadings and policy terms to determine their duty to defend; if the pleadings do not allege facts within the policy's coverage, there is no duty to defend. The duty to indemnify is distinct from the duty to defend, arising from actual proven facts rather than the allegations in pleadings. The duty to indemnify is activated only if the plaintiff prevails on a claim covered by the policy. Under certain circumstances, the pleadings may negate both the duty to defend and indemnify if they make it impossible for the insured to demonstrate coverage based on extrinsic evidence. If a policy does not cover a claim, the insurer has no obligation to indemnify.
Zarkasha bore the initial burden to prove that a claim made by the Moores triggered coverage under their title insurance policy with Old Republic. Zarkasha asserted that the Moores’ claim, which involved a dispute over property boundaries due to alleged misfiling of deeds in Waller County, constituted a "covered event" under the policy. Zarkasha contended that Old Republic was obligated to cover the risk of improperly filed documents. In response to Old Republic's motion for summary judgment, Zarkasha maintained that its policy included coverage for such risks.
Old Republic, however, denied Zarkasha's claims and argued that two exclusions applied, which exempted it from providing a defense: 1) discrepancies, conflicts, or shortages in area or boundary lines; and 2) defects, liens, encumbrances, or adverse claims arising after the policy's effective date. Old Republic claimed that the boundary dispute exception was relevant, as the Moores’ petition indicated their property was in Montgomery County, while Zarkasha's property was located in Waller County, with no potential for overlap according to the property descriptions in the title policy.
Once Old Republic established the applicability of the exclusion, the burden shifted to Zarkasha. Zarkasha argued that the lack of a definition for "boundary-line exception" rendered the policy ambiguous, which is a factual question. However, the court concluded that whether a contract is ambiguous is a legal issue. Zarkasha failed to demonstrate that the term "boundary line" was ambiguous or open to multiple interpretations. The policy explicitly excluded coverage for losses arising from discrepancies or conflicts in boundary lines, and Zarkasha did not show that this exclusion was ambiguous as a matter of law.
Identical language in the title policy is deemed unambiguous. Zarkasha asserts a factual dispute regarding the property's location and the amount of land at issue, arguing that a correct survey and determination by a fact-finder is necessary. Zarkasha relies on Robert Philo's report, attached to its response to Old Republic’s summary judgment motion. However, under the eight-corners rule, the court considers only the title policy and Moores' petition, excluding Philo's report. The Moores’ claim revolves around the physical location of the boundary line, with the title insurance policy and petition indicating the county boundary as the dividing line. The case is classified as a boundary dispute since both parties' deeds state a common boundary. Previous cases establish that even without a specific plea for a boundary discrepancy, claims related to overlapping property are excluded under the title insurance policy's boundary dispute exclusion. Old Republic successfully demonstrated that this exclusion applies, and Zarkasha failed to prove the boundary line exception governed the claims under the eight-corners rule.
Additionally, Old Republic contends that the title insurance policy excludes coverage for adverse claims arising after the policy date. The Moores acquired their property in 2017 and filed their petition in 2018, making their claim subsequent to the 2009 policy date. The policy explicitly excludes defects or claims created after its effective date. Zarkasha counters that any claims by the Moores existed prior to the title policy's purchase, arguing the land discrepancy was present when Zarkasha acquired its tract.
Old Republic was determined not to have a duty to defend Zarkasha in a case concerning title insurance policies, specifically due to discrepancies related to boundary exceptions. The court noted that older policies included phrases indicating that a "correct survey" would not relieve the insurer from liability for losses arising from discrepancies not revealed by such surveys. The court referenced legal treatises and case law to support this understanding.
The ruling affirmed that Old Republic had no duty to indemnify Zarkasha, especially since Zarkasha settled with the Moores prior to any adjudicated facts being established in the underlying litigation. The court concluded that the lack of a duty to defend directly negated any obligation to indemnify. Consequently, both of the appellant's issues were overruled, and the trial court's judgment was affirmed.
