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Michael v. Stock

Superior Court of Pennsylvania

April 11, 2017

GEORGE E. MICHAEL
v.
JUDITH STOCK JUDITH STOCK
v.
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND EDWARD J. MORRIS, ESQUIRE GEORGE E. MICHAEL
v.
TOHICKON ABSTRACT COMPANY APPEAL OF: JUDITH STOCK

         Appeal from the Order Entered April 17, 2013 In the Court of Common Pleas of Bucks County Civil Division at No(s): 2007-10687-19-1

          BEFORE: OLSON, J., SOLANO, J., and FITZGERALD, J.[*]

          OPINION

          SOLANO, J.

         Appellant Judith Stock appeals from the order denying her motion for partial summary judgment and granting a cross-motion for summary judgment by Appellee Commonwealth Land Title Insurance Company ("Land Title"). For the reasons that follow, we vacate the trial court's order and remand for further proceedings.

         This case arose out of a failed real estate transaction. Stock attempted to sell to George Michael property in the Borough of Bristol, Bucks County, that was comprised of two lots (A and B). Stock and Michael initially believed that Stock held title to both lots, but, in fact, she did not hold title to Lot B. When Michael discovered the title problem, he withdrew from the transaction and sued Stock, seeking compensation for money he spent in reliance on the contract of sale. Stock then filed a third-party complaint against Land Title, which had issued her a title insurance policy and provided other services when she purportedly purchased Lots A and B. Stock and Land Title filed cross-motions for summary judgment. Stock now appeals the trial court's order denying her motion and granting that of Land Title.

         The property at issue is located at 4 Mill Street in Bristol, and is currently identified for tax purposes as Bucks County Tax Map Parcel Number 4-18-28. Trial Ct. Op., 4/22/13, at 1.[1] The trial court explained:

[T]he subject property is comprised of two parcels. The first parcel ("Lot A") contains a three-story building and a freestanding, one-story garage. The three-story building has been operated as a hotel and restaurant. The title of Lot A is marketable. Daniel T. Pezzola, Jr., Alfred T. and Elaine G. Pezzola, and Daniel D. and Janet Pezzola (collectively "Pezzolas") held title to Lot A until they conveyed it to Stock in 1999.
The history of the second lot ("Lot B") is as follows: The Borough of Bristol transferred Lot B, in fee, to the Pezzolas by deed dated May 9, 1994. Lot B was a portion of the larger Tax Map Parcel Number 4-18-29 that the Borough of Bristol owned. The transaction severed Lot B from Parcel Number 4-18-29. On January 23, 1995, the Bucks County Board of Assessment updated its tax map parcel records to reflect that Lot B merged with Lot A, and both collectively became known as Bucks County Tax Map Parcel Number 4-18-28. However, the metes and bounds descriptions contained in the deeds to Lot A and B were not updated to reflect this merger. Lot B is unimproved.[2]

Id. at 2-3. Thus, as of 1999, the Pezzolas owned both Lots A and B. They had acquired Lot A through a series of transfers, the last of which were recorded in deeds dated 1991 and 1998. They acquired Lot B in 1994, but the deeds for the two properties were not formally merged at that time. Trial Ct. Op., 5/25/16, at 10.

         On February 26, 1999, the Pezzolas entered into an Agreement to sell to Stock "the hotel liquor business located on 4 Mill Street, Borough of Bristol, Bucks County, Pennsylvania . . . ." Second Am. Third-Party Compl., Ex. A ¶ 1.[3] The Agreement provided, "[s]eller further agrees to sell and the Buyer agrees to purchase all real estate located and connected to the aforesaid property . . . ." Id. ¶ 3.[4] The Pezzolas agreed to convey title to the property that was "good and marketable and such as will be insured at regular rates by any title company recognized in the Commonwealth of Pennsylvania." Id. ¶ 14. Stock agreed to "immediately, upon execution of this Agreement, order the necessary title insurance search" and to "pay for the title insurance, title search and title certificate." Id. ¶ 18.

         Stock alleges that she then entered into a contract under which Land Title agreed to provide "real estate transactional services" - including title searches and the drafting and filing of a deed - for her purchase of the property, and to issue a policy insuring title to the property. Second Am. Third-Party Joinder and Compl. ¶¶ 5-6, 8, 53. On May 3, 1999, Stock obtained a Title Insurance Commitment from Land Title. Trial Ct. Op., 4/22/13, at 3. The Commitment stated:

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, COMMONWEALTH LAND TITLE INSURANCE COMPANY . . . insures, as of Date of Policy shown in Schedule A, against loss or damage, not exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title; 4. Lack of a right of access to and from the land.

Id. at 12.

Schedule A of the Commitment provided, in relevant part:
The land referred to in this Commitment is described below and in Schedule C attached hereto and made a part hereof.
Note For Information Only:
The land referred to in this Commitment is commonly known as:
4 Mill Street
Bristol Borough
Bucks County, Pennsylvania.

         Trial Ct. Op., 4/22/13, at 12, quoting Title Insurance Commitment, Sched. A. Schedule C contained the following description:

ALL THAT certain messuage, restaurant, Hotel Property, Store and other buildings, and Lot of land, situate in the First Ward of the Borough of Bristol, in the County of Bucks and State of Pennsylvania, bounded and described according to a survey thereon made by John P. Taylor C.E., on February 15, 1928 as follows, to wit:
BEGINNING at a point in the Southwest side of Mill Street, at a corner of land now or late of Lewis J. Bevan, thence along the said side of Mill Street, South 52 degrees 35 minutes East 96.60 feet to an angle, thence still along the same, South 40 degrees 19 minutes 35 seconds East 27.83 feet more or less to a stone set for a corner in land now or late of the Delaware Division Canal Company of late the Canal Basin, thence following the line of what was formerly the line of the said Canal Basin and now land of the said Canal Company in a circular direction the following courses and distances: South 53 degrees 02 minutes West 31.60 feet to an angle, thence South 54 degrees West 34.40 feet to an angle; thence South 66 degrees 59 minutes West 132.00 feet to a corner in the said Canal Basin, thence along the Canal Basin, North 46 degrees 16 minutes West 43.10 feet to a corner in land now or late of Lewis J. Bevan, thence along same North 37 degrees 59 minutes East 180.40 feet to the place of beginning.
BEING LOT NUMBER 4 on said Plan[5]
COUNTY PARCEL NUMBER 4-18-28.

         Title Insurance Commitment, Sched. C. It is undisputed that the metes and bounds set forth in Schedule C describe only Lot A. Trial Ct. Op., 4/22/13, at 3. In fact, the description of the property in the Commitment, including the metes and bounds and the lot number and County Parcel Number references, is the same as that in a 1991 deed by which the Pezzolas obtained title to the property at 4 Mill Street - at a time when that property did not yet include Lot B.[6] Stock claims that when she received that description in Schedule C, she did not know that it encompassed only Lot A.

         On June 21, 1999, Stock received a deed conveying the property from the Pezzolas to Stock. Stock alleges that Land Title was responsible or shared responsibility for preparing that deed. Second Am. Third-Party Compl. ¶ 8. The deed contained the same metes and bounds description, lot number, and parcel number as that in the Title Insurance Commitment. Trial Ct. Op., 4/22/13, at 3; Plaintiff's Compl. Ex. C (1999 deed). Stock claims that she did not know that this description included only Lot A.

         After the closing of the transaction between Stock and the Pezzolas, Land Title issued a Title Policy to Stock. The Policy[7] insures against "[t]itle to the estate or interest described in Schedule A being vested other than as stated therein." Owner's Policy of Title Insurance, p. 1. Schedule A to the Policy is a description of the property that is identical to Schedule C of the Title Commitment, and, like the Commitment, it covers "ALL THAT certain messuage, restaurant, Hotel Property, Store and other buildings, and Lot of land" described by a metes and bounds recitation that encompasses only Lot A. With some circularity, the policy defines the term "land" as -

the land described or referred to in Schedule A, and improvements affixed thereto which by law constitute real property. The term "land" does not include any property beyond the lines of the area described or referred to in Schedule A . . . .

         Trial Ct. Op., 4/22/13, at 13 (quoting policy). Schedule B to the policy lists exceptions to coverage, including a "survey exception" that applies to "[u]nrecorded easements, discrepancies or conflicts in boundary lines, shortages in area and encroachments which an accurate and complete survey would disclose." Appellant's Brief at 22; Appellee's Brief at 34 (quoting policy).

         On August 1, 2006, Stock and Michael entered into an agreement whereby Stock would sell to Michael "all that certain tract or parcel of land, including any buildings and other improvements located thereon, being Tax map Parcel No. 4-18-028, " for $2.2 million. Agreement of Sale ¶¶ 1-2. At that time, Stock and Michael believed that both Lots A and B were included in the property to be conveyed. Michael paid Stock $120, 000 in deposits and incurred additional expenses to obtain approvals for his planned development of the property. Trial Ct. Op., 4/22/13, at 3-4.

         Prior to the closing, on March 27, 2007, Michael advised Stock that the 1999 deed had not transferred Lot B to Stock. Stock contacted Land Title, and a Land Title employee suggested that Stock cure the defect in title through a Deed of Confirmation. However, on June 8, 2007, Michael informed Stock that the Deed of Confirmation would not cure the defect. On September 17, 2007, Stock provided Land Title with a written notice of a claim under the Title Insurance Policy. On September 25, 2007, Michael withdrew from the sale due to the lack of clear title. On October 5, 2007, Land Title denied Stock's insurance claim. Trial Ct. Op., 4/22/13, at 4. In February 2008, the Pezzolas executed a Deed of Confirmation that stated that their 1999 deed was intended to convey both Lots A and B to Stock. Id.[8]

         On December 20, 2007, Michael sued Stock, seeking the return of his $120, 000 deposit and repayment of expenses he incurred in reliance on the Agreement of Sale. Stock then filed a third-party complaint against Land Title and Edward J. Morris, Esquire, who represented her in the 1999 purchase of the property from the Pezzolas. With respect to Land Title, Stock's pleading (as amended) asserted the following claims: breach of the Insurance Policy and Commitment (Count I); bad faith (Count II); breach of a contract to provide professional services (Count III); negligence (Count IV); and indemnification (Count VII).[9]

         On August 6, 2012, Stock filed a motion for partial summary judgment against Land Title, seeking entry of judgment in her favor with respect to Counts I (breach of the Insurance Policy and Commitment) and II (bad faith). On August 30, 2012, Land Title filed a cross-motion for summary judgment, seeking judgment in its favor with respect to all claims Stock had brought against it.

         After a hearing on February 6, 2013, the trial court issued an order dated April 17, 2013, denying Stock's motion and granting that of Land Title.[10] In an opinion dated April 22, 2013, the trial court explained:

[Land Title] did not breach the Commitment. [Land Title] did not have any obligation to Stock to indemnify or defend her title to Lot B because the Commitment insured only Lot A. . . . Additionally, Stock cannot recover on her claims for negligence and bad faith because [Land Title] had no duty to insure the title to Lot B.

         Trial Ct. Op., 4/22/13, at 14.

         On April 6, 2016, Stock filed a praecipe to mark her remaining claims against Morris "settled, discontinued and ended."[11] On April 20, 2016, Stock filed a ...


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