Lurie v. Commonwealth Land Title Co.
558 S.W.3d 583 (2018)
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Rule of Law:
An insured's unexcused failure to provide prompt notice of a claim or litigation, as required by an insurance policy, will terminate the insurer's liability if the insurer is prejudiced by the lack of timely notice.
Facts:
- On August 5, 1998, Robert Lurie purchased a home and an Owner's Policy of Title Insurance from Commonwealth Land Title Company, LLC.
- The Policy protected Lurie from defects, encumbrances, or liens in title and obligated Commonwealth to pay costs, attorney's fees, and expenses incurred in defense of title, requiring prompt written notice of claims or litigation.
- In July 2003, Lurie's back yard neighbor, Michael Polinsky, replaced the fence between their homes, which Lurie believed encroached onto his property.
- On July 24, 2008, Lurie filed a lawsuit against Polinsky, demanding he remove the fence.
- On December 10, 2010, after dismissing the first lawsuit, Lurie filed a second lawsuit against Polinsky for the same issue.
- The parties, Lurie and Polinsky, privately settled their dispute without judicial determination after Lurie dismissed the second lawsuit.
- Lurie incurred $68,740.25 in attorney's fees from initiating and pursuing his lawsuits against Polinsky.
- In 2015, Lurie sought reimbursement of that expenditure from Commonwealth under the Policy's coverage of third-party challenges to title.
Procedural Posture:
- Robert Lurie filed a lawsuit against Michael Polinsky on July 24, 2008, which was dismissed without prejudice on December 16, 2009.
- Robert Lurie filed a second lawsuit against Michael Polinsky on December 10, 2010, which was dismissed without prejudice on June 29, 2012.
- On August 25, 2015, Robert Lurie sued Commonwealth Land Title Company, LLC in trial court, alleging breach of contract, unjust enrichment, and vexatious refusal to pay.
- During the pendency of Lurie's lawsuit against Commonwealth, Lurie submitted a claim to Commonwealth for his attorney's fees on March 1, 2016.
- Commonwealth denied the claim on July 6, 2016, due to Lurie's failure to provide timely notice.
- Both Robert Lurie and Commonwealth Land Title Company, LLC moved for summary judgment in the trial court.
- The trial court granted summary judgment in favor of Commonwealth Land Title Company, LLC on all three counts, finding that Lurie's unexcused failure to provide timely notice prejudiced Commonwealth.
- Robert Lurie (Appellant) appealed the trial court's summary judgment to the Missouri Court of Appeals, Eastern District.
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Issue:
Does an insured's failure to provide prompt notice of a property dispute and subsequent lawsuits, as required by a title insurance policy, relieve the insurer of liability for attorney's fees when the insurer is prejudiced by the lack of timely notice?
Opinions:
Majority - Sherri B. Sullivan, P.J.
Yes, an insured's failure to provide prompt notice of a property dispute and subsequent lawsuits, as required by a title insurance policy, does relieve the insurer of liability for attorney's fees when the insurer is prejudiced by the lack of timely notice. The court affirmed the trial court's summary judgment, finding that Robert Lurie failed to provide prompt notice to Commonwealth as a matter of law, and that this failure was unexcused and prejudiced Commonwealth. The policy explicitly required prompt written notice of any claim or litigation that might cause loss, stating that liability would terminate if such notice was not given and prejudice resulted. Lurie notified Commonwealth seven and five years, respectively, after initiating his lawsuits, and more than three years after dismissing the second. The court concluded there could be no reasonable determination that this notice was prompt. Lurie offered no valid excuse for non-compliance, such as incapacity or substantial compliance. Commonwealth was prejudiced because it was deprived of its specifically expressed contractual rights under the Policy to direct the litigation, pursue settlement, and select counsel, as the policy specifically stated Commonwealth would not be liable for fees of any other counsel. The court rejected Lurie's argument that 'prompt notice' was vague, citing established Missouri case law that such provisions are vital, enforceable, and go to the essence of the insurance contract. Consequently, Commonwealth was not unjustly enriched and its refusal to pay was not vexatious, as it had a reasonable cause based on the policy's terms and the demonstrated prejudice.
Analysis:
This case reinforces the critical importance of prompt notice provisions in insurance contracts under Missouri law. It clarifies that such provisions are essential, enforceable, and not vague, providing guidance on how courts will interpret 'promptness' as a matter of law when delays are significant. The decision also underscores that an insurer's prejudice can arise from the loss of control over litigation and choice of counsel, even if the underlying claim might have been covered. This case will likely serve as a strong precedent for insurers in defending against claims where insureds have failed to adhere to notice requirements, emphasizing the insured's burden to prove compliance or a valid excuse.
