Chicago Title Ins. v. Jen

Chicago Title Insurance Co. v. Allynnore M. Jen, Case No. 2015, September Term 2019. Opinion filed on January 28, 2021, by Berger, J. INSURANCE - COVERAGE – TITLE INSURANCE – TITLE DEFECTS – RIGHT OF ACCESS In a case where property abuts a public road, by any length of the property, there is no title defect equating to a lack of right of access. Right of access as insured by title insurance companies does not equate to reasonable access nor vehicular access. The Maryland Insurance Administration did not err in determining that a legal right of access exists when the property in question is next to a public roadway in any capacity.

INSURANCE - COVERAGE – TITLE INSURANCE - PREMIUMS – NON- PAYMENT OF PREMIUMS FOR COVERAGE CHARGED A title insurance provider’s decision not to provide coverage under a certain provision does not rise to the level of non-payment of premiums not permitted under Md. Code Ann., § 27-216(a). So long as the Maryland Insurance Administration had evidence before it to determine that payments had previously been made under the same provision, non-payment under one insured’s claim does not violate § 27-216(a). INSURANCE - DUTY TO DEFEND – DETERMINATION OF DUTY – POTENTIALITY OF COVERAGE The insurer’s decision not to provide coverage under a duty to defend was arbitrary and capricious. When there is a potentiality of coverage that an underlying lawsuit may affect the insured’s title for which they have a policy through their insurer, the insureds are entitled to a defense from their insurer.

The insurer must review all new information presented to it when making its decision of whether to provide coverage. Circuit Court for Baltimore County Case No. 03-C-18-001953 and 03-C-17-010553 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2015 September Term, 2019 ______________________________________ CHICAGO TITLE INSURANCE CO. v. ALLYNNORE M. JEN ______________________________________ Graeff, Berger, Eyler, Deborah S. (Senior Judge, Specially Assigned), JJ. ______________________________________ Opinion by Berger, J. ______________________________________ Filed: January 28, 2021 Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. Suzanne Johnson 2021-01-28 13:22-05:00 Suzanne C. Johnson, Clerk This case involves an administrative appeal from the Maryland Insurance Administration (“MIA”) relating to the denial of coverage to the insured, Allynnore Jen and Charles Shuler (“Jen-Shulers”), under a title insurance policy provided by the insurer, Chicago Title Insurance Company (“Chicago Title”). 1 The Jen-Shulers sought coverage and litigation expenses under their title insurance policy from Chicago Title under the provision protecting against a “lack of a right of access,” due to a dispute with their neighbors, Dennis and Teresa Bull (“Bulls”), over the use of a shared driveway leading to their property.

After an investigation, an MIA Enforcement Officer issued a letter on March 23, 2017 directing Chicago Title to treat the Jen-Shulers as covered for their claim under the title insurance policy and to issue payment of all benefits due. Chicago Title requested a hearing from the MIA on April 24, 2017. A hearing was held on August 15, 2017. On September 28, 2017, the Insurance Commissioner issued a Memorandum and Final Order finding that Chicago Title had not violated Sections 4-113 and 27-216 of the Insurance Article of the Maryland Annotated Code.

The Insurance Commissioner further found that Chicago Title had violated Section 27-303 of the Insurance Article, and directed Chicago Title to pay the Jen-Shulers’ defense costs from a counterclaim in an underlying lawsuit. Both parties filed a petition for judicial review in the Circuit Court for Baltimore County. The circuit court reversed the determination of the Insurance Commissioner and remanded 1 Subsequent to the commencement of this action, Charles Shuler passed away. We will still refer to the appellee as the Jen-Shulers as the case was originally filed by both Charles and Allynnore Shuler and the parties used this term throughout the litigation below. the case to the MIA to reinstate the findings of the letter dated March 23, 2017, finding in favor of the Jen-Shulers on all three issues.

Chicago Title noted a timely appeal to this Court presenting two questions for our review, which are as follows: I. Whether the Insurance Commissioner’s determination that Chicago Title did not violate Md. Code Ann., Ins. § 4-113 (b)(5) and § 27-216(a) was legally correct and supported by substantial evidence.

II

Whether the Insurance Commissioner’s determination that Chicago Title violated Md. Code Ann., Ins. § 27 - 303 was legally correct and supported by substantial evidence. For the reasons stated herein, we shall reverse and remand the judgment of the circuit court with directions to reinstate the September 28, 2017 decision of the Insurance Commissioner in its entirety. FACTS AND PROCEEDINGS On May 28, 1998, the Jen-Shulers purchased 20 Edelweiss Way in Parkton, Maryland. Thereafter, the Jen-Shulers purchased a standard American Land Title Association (“ALTA”) Owner’s Policy of Title Insurance from Chicago Title (the “Policy”), effective June 8, 1998.

Among other things, the Policy insured against a “[l]ack of a right of access to and from the land.” In the Policy, “land” is defined 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, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but 2 nothing herein shall modify or limit the extent to which a right of access to and from the land is insured by this policy. Schedule A of the Policy specifically identified the land referred to in the Policy as: BEING KNOWN AND DESIGNATED as Lot No. 7, as shown on the plat entitled, “Plat One, Section Two, Chalet De La Rance,” which Plat is recorded among the Land Records of Baltimore County in Plat Book EHK, Jr., No. 37, folio 123. The improvements of such land are known as No. 20 Edelweiss Way.

Lot 7, owned by the Jen-Shulers, is an irregularly shaped parcel with a rectilinear piece abutting Edelweiss Way for a distance of fifteen feet. The Lot runs perpendicular to that piece for about 155 feet, then the Lot opens into an unevenly shaped area where the house on the property is located. The neighboring lot, Lot 8, is owned by the Bulls. Lot 8 consists of a matching panhandle strip that abuts both Edelweiss Way and Lot 7’s panhandle before opening up into an area where the house on the Lot is built.

There is a paved driveway, serving both properties, running mostly up the panhandle of Lot 8, but a small portion of such driveway is on the panhandle of Lot 7 as well. The developer-built utilities for both properties run mostly up the panhandle of Lot 7. A Plat of the properties was introduced in the proceedings below which demonstrates the positions of Lots 7 and 8 in relation to one another: 2 2 In the reproduction of the Plat below, Lot 7, owned by the Jen-Shulers, is identified in light gray and appears on the left side of the Plat. For the ease of viewing and differentiating between the properties, Lot 8, owned by the Bulls, is colored in dark gray and is identified on the right side of the Plat. 3 4 The Jen-Shulers and the Bulls disputed whether the Jen-Shulers could drive on the Bulls’ paved portion of the driveway to access their home.

After the initial disagreement and confrontation, the Bulls constructed and placed obstacles on the driveway to prevent the Jen-Shulers from any access to the Bulls’ portion of the driveway. On June 25, 2013, the Jen-Shulers filed suit against the Bulls seeking an injunction allowing them to use the Bulls’ portion of the driveway to access their residence. 3 Seven months later, on January 28, 2014, the Jen-Shulers made a claim to Chicago Title seeking coverage under the Policy. The Jen-Shulers asserted that the denial of access to the Bulls’ portion of the driveway due to the Bulls’ building of a fence denied them access to their own property. On February 7, 2014, after reviewing the claim, Chicago Title denied coverage.

The Jen-Shulers filed several more requests for coverage and requests for reconsideration, each of which was considered by Chicago Title and subsequently denied. 4 On June 12, 2014, the Bulls filed a counterclaim against the Jen-Shulers. The Jen- Shulers informed Chicago Title of the counterclaim in their Request for Reconsideration dated June 29, 2015. In their counterclaim, the Bulls sought damages from the Jen-Shulers for unjust enrichment, alleging that the Jen-Shulers used the Bulls’ portion of the driveway 3 See Jen v. Bull, Circuit Court for Baltimore County, Case No. 03-C-13-007203 OC. 4 The Jen-Shulers filed requests for reconsideration on March 3, 2014; June 5, 2014; and June 29, 2015. Each request was denied by Chicago Title on April 29, 2014; July 11, 2014; and July 7, 2015. 5 without their permission.

The Bulls asserted that they had paid for and maintained the driveway at their sole expense, including all expenses for snow removal until 2014, without any contribution from the Jen-Shulers. The unjust enrichment claim by the Bulls requested damages totaling $7,200.00. The Bulls also alleged defamation per se. They claimed that the Jen-Shulers defamed Mr. Bull by claiming in their complaint that Mr. Bull had committed bankruptcy fraud.

Neither party asserts that Chicago Title should reimburse the Jen-Shulers for the payment of expenses related to the defense of the claim of defamation. On November 5, 2014, the Bulls agreed to dismiss the counterclaim with prejudice. On July 1, 2015, the Jen-Shulers filed a complaint against Chicago Title with the MIA. The Jen-Shulers supplemented that complaint on July 10, 2015.

Both parties briefed the matter before the MIA. 5 On March 23, 2017, an MIA Enforcement Officer issued a determination letter directing Chicago Title to cover the Jen-Shulers’ claim. On April 24, 2017, Chicago Title requested an evidentiary hearing. On August 15, 2017, the evidentiary hearing was held before the Director of Hearings. Chicago Title and the MIA both presented evidence and witnesses to testify at the hearing.

On September 28, 2017, the Insurance Commissioner (“Commissioner”) 5 On February 3, 2017, the Jen-Shulers filed a complaint in the Circuit Court for Baltimore County against Chicago Title alleging breach of contract and requesting a declaratory judgment. See Jen v. Chi. Title Ins. Co., Circuit Court for Baltimore County, Case No. 03-C-17-001117 CN.

The case was dismissed for lack of jurisdiction on August 10, 2017. The Jen-Shulers maintained that they had not been properly notified of the dismissal and filed a Motion to Vacate on October 27, 2017. The Motion was denied on December 18, 2017. This Court heard the Jen-Shulers’ appeal of the denial and affirmed the decision of the Circuit Court for Baltimore County.

See Jen v. Chi. Title Ins. Co., No. 2265, Sept. Term 2017 (filed April 2, 2019). 6 issued a comprehensive written opinion reversing the Enforcement Officer’s decision. The Commissioner found that Chicago Title investigated the claim prior to the denial of coverage, as well as upon receipt of each of the Jen-Shulers’ requests for reconsideration.

Additionally, the Commissioner found that by completing diligent investigations upon receipt of each claim, Chicago Title had not violated Md. Code Ann., Ins. § 4-113 (b)(5) (“§ 4-113(b)(5)”). The Commissioner relied on testimony from John Nielsen, an expert witness presented by MIA, who testified based on his extensive experience in the title insurance industry. The Commissioner found credible Mr. Nielsen’s testimony and characterization that “right of access” did not include vehicular access or equate to vehicular access. The Commissioner further addressed whether Chicago Title willfully collected a premium for insurance and did not provide coverage in violation of Md. Code Ann., Ins. § 27-216 (a) (“§ 27-216(a)”).

At the evidentiary hearing, Mr. Nielsen testified that title insurance carriers had spent millions of dollars to defend the right of access of insureds whose properties were landlocked and had no right of access to a public road. The Commissioner was persuaded by that testimony and determined that Chicago Title had not violated § 27-216(a) because it had paid out substantial sums in instances when a property was actually landlocked. Finally, the Commissioner considered whether Chicago Title’s decision not to defend the Jen-Shulers against the Bulls’ counterclaim was arbitrary and capricious, pursuant to Md. Code Ann., Ins. § 27-303 (2) (“§ 27-303(2)”). The Commissioner considered venerable Maryland case law holding that there is a duty to defend if there is a 7 potentiality that the claim could be covered by the Policy.

The Commissioner determined that because there was a possibility that the Jen-Shulers could face a challenge to their access to a portion of their own land, Chicago Title had a duty to defend the Jen-Shulers against the counterclaim. On October 27, 2017, the Jen-Shulers filed a Petition for Judicial Review of the September 28, 2017 decision of the Commissioner with the Circuit Court for Baltimore County. The Jen-Shulers alleged they were aggrieved by the Commissioner’s decision that Chicago Title had not violated § 4-113 or § 27-216. On October 27, 2017, Chicago Title also filed a Petition for Judicial Review of the same decision of the Commissioner with the Circuit Court for Baltimore City.

Chicago Title alleged it was aggrieved by the Commissioner’s decision that Chicago Title had violated § 27-303. That case was transferred to the Circuit Court for Baltimore County and consolidated with the Jen- Shulers’ Petition for Judicial Review. The Circuit Court for Baltimore County reversed the September 28, 2017 decision of the Commissioner and remanded the case to the MIA to reinstate the MIA Enforcement Officer’s March 23, 2017 decision. This appeal followed. 6 6 On July 15, 2020, this Court ordered that the Jen-Shulers’ brief as the appellee was due on August 28, 2020 and Chicago Title’s reply as the appellant was due on October 2, 2020.

The Jen-Shulers did not file a brief with this Court. On the day of oral argument, the appellee sent a facsimile to the Clerk of the Court and filed a motion for an extension of time to submit a brief and to postpone the oral argument scheduled for that morning. This Court proceeded with oral argument and hereby denies appellee’s request to submit a late-filed brief. On August 28, 2020, the Maryland Land Title Association (“MLTA”) filed a Motion for Leave to File Amicus Curiae Brief, along with its Amicus Curiae brief.

We granted the Motion on September 11, 2020. 8 DISCUSSION Standard of Review “In an appeal from judicial review of an agency action, we look through the decision of the circuit court and review the agency’s decision directly.” W. Montgomery Cnty. Citizens Ass’n v. Montgomery Cnty. Plan. Bd. of the Md.-Nat’l Park & Plan.

Comm’n, 248 Md. App. 314 , 332–33 (2020) (citing Clarksville Residents Against Mortuary Def. Fund, Inc. v. Donaldson Props., 453 Md. 516, 532 (2017)). Our review of the Commissioner’s Memorandum Opinion is “limited to determining if there is substantial evidence in the record as a whole to support the [Commissioner’s] findings and conclusions, and to determine if the [Commissioner’s] decision is premised on an erroneous conclusion of law.” Clarksville Residents, supra, 453 Md. at 532 . When determining if there is “substantial evidence,” we must “decide ‘whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.’” W. Montgomery Cnty.

Citizens Ass’n, supra, 248 Md. App. at 333 (quoting Clarksville Residents, supra, 453 Md. at 532 ). We owe no deference to the Commissioner’s conclusions regarding findings of law. Lillian C. Blentlinger, LLC v. Cleanwater Linganore, Inc., 456 Md. 272 , 293–94 (2017). Nonetheless, we cannot substitute our judgment for that of the Commissioner when reviewing findings of fact.

Id. Notably, we “give considerable weight to the agency’s interpretation and application of the statute which the agency administers.” Mayor of Rockville v. Pumphrey, 218 Md. App. 160, 194 (2014) (citation and quotation marks omitted). 9 Additionally, “a reviewing court may not uphold an agency’s decision if a record of the facts on which the agency acted or a statement of reasons for its action is lacking.” Becker v. Anne Arundel Cnty., 174 Md. App. 114, 138 (2007). The Commissioner’s “[f]indings of fact must be meaningful and cannot simply repeat statutory criteria, broad conclusory statements, or boilerplate resolutions.” Id. at 139 (citation omitted). I. The Insurance Commissioner’s determination that Chicago Title did not violate Md. Code Ann., Ins. § 4-113 (b)(5) or § 27-216(a) was legally correct and supported by substantial evidence.

The Jen-Shulers claimed coverage from Chicago Title under the section of the Policy insuring against a “[l]ack of a right of access to and from the land.” The Jen-Shulers argued that they did not have a right of access to their land without obtaining an easement from the court to access the common driveway on the panhandle strip of Lots 7 and 8. The Jen-Shulers further alleged that access through the other public road abutting their land was not feasible and that they were prohibited from paving and making their portion of the panhandle strip into a driveway by Baltimore County rules and regulations. Chicago Title argued that the Jen-Shulers’ inability to use the driveway was not covered by the Policy. Chicago Title claimed that the Jen-Shulers had a legal right to access their land from either the panhandle strip or from the public road on the opposite side of the parcel.

Essentially, Chicago Title claimed that if the Jen-Shulers can access their land in any way from a public road, they are not covered under the lack of a right of access provision of the Policy. Additionally, Chicago Title argued that the dispute between the Jen-Shulers and the Bulls fell under multiple exclusions of the Policy which declines 10 to provide coverage for matters arising from any law, ordinance, or governmental regulation. A. Chicago Title’s determination that the Jen-Shulers’ claim was not covered under the policy was not without just cause in violation of Md. Code Ann., Ins. § 4-113 (b)(5). Section 4-113(b)(5) of the Insurance Article of the Maryland Code provides: The Commissioner may deny a certificate of authority to an applicant or, subject to the hearing provisions of Title 2 of this article, refuse to renew, suspend, or revoke a