The Missouri Supreme Court on Tuesday affirmed a $1.3 million jury verdict for a business whose lakefront development plan was thwarted by a land title problem.
In 2003, Randy Spalding bought 419 acres of property in the city of Lake Winnebago in Cass County. The land was in a flood plain, and Spalding planned to develop it into lakefront homes. The property was covered by a $1.7 million title insurance policy by Stewart Title Guaranty Company. In 2006, Spalding discovered that someone else held title to a 1-acre tract within the property, derailing the development plans. Stewart Title accepted coverage for the title defect — it had issued title insurance to both owners. However, the company offered just $10,000 to resolve the claim, which it said covered the diminution in value of Spalding’s land.
Spalding rejected the offer and, after failing to persuade the insurer to buy the 1-acre parcel outright, filed suit for breach of contract and vexatious refusal to pay on the title insurance policy. In late 2012, a Jackson County jury sided with Spalding, awarding him $1.1 million on the policy, as well as a penalty of $110,150 and $81,000 in attorneys’ fees. (The jury’s original penalty was $171,150, but Judge Michael Manners ruled in early 2013 that the amount exceeded the statutory cap for vexatious refusal damages.) The verdict was the 69th highest plaintiffs’ victory of 2012, as tracked by Missouri Lawyers Weekly’s Verdicts & Settlements database.
On appeal, Stewart Title argued, among other things, that Spalding brought his suit too late. He was on notice that there was a possible title defect in early 2006, but he didn’t file suit until June 2011. Stewart Title argued that a five-year statute of limitations should apply.
But in a unanimous ruling, the Supreme Court said the policy at issue promised to compensate for “actual monetary loss or damage” due to a title defect. Spalding didn’t have cause to sue until the insurer made the inadequate offer of $10,000 in July 2007. Judge Zel Fischer wrote for the court that “in light of the term of this title insurance policy and the particular facts of this case, the mere existence of a possible title defect did not give rise to any cause of action against Stewart Title.” The court also upheld the jury’s assessment of the damages.
Spalding was represented on appeal and at trial by Matt Bartle and David Marcus of Bartle & Marcus in Kansas City. Stewart Title was represented on appeal by John A. Koepke of Jackson Walker in Dallas, Texas, and at trial by John T. Coghlan and Justin Nichols of Lathrop & Gage.