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Adam Leitman Bailey, P.C. Gets Action Dismissed Against Major Title Insurance Company Arguing No Duty to Find a Lis Pendens Filed Against an Unrelated Property

Reason for Retaining Adam Leitman Bailey, P.C.:

This case involved a direct claim against the client for a declaration that the client was obligated to defend and indemnify former owners of a beachfront property, the insureds, in a lawsuit commenced by the title company involving property located in a different county. The client had issued a title insurance policy on a beachfront property in favor of the insureds, A and W. The insureds purchased the beachfront property for approximately $850,000 in early 2000 and later sold the beachfront property in May 2001 for approximately 1.7 million dollars.

The title company commenced its action against your insureds, after having paid on a title insurance policy issued on an unrelated property, which unrelated property had been owned by the same sellers of the beachfront property, one of whom was allegedly involved in various financial schemes in the 1990s. The title company sought to recover the profits from the sale of the beachfront property, claiming that the purchase price originally paid by the insureds was fraudulent, and the insureds brought this action against the client in seeking indemnification. The client denied coverage, arguing, in relevant part, that the allegation of the complaint alleged improper actions by the insureds, thus voiding policy coverage.


Adam Leitman Bailey, P.C. was retained to defend the client’s denial of coverage. During preliminary investigation, Adam Leitman Bailey, P.C. noted that the title company asserted its claim notwithstanding the fact that the sale of the beachfront property to the insureds was approved by the U.S. attorney’s office. Additionally, there was no coverage available, as the insureds sold the property well prior to both the initiation of the title company’s action and to the request for defense and indemnification submitted by the insureds to the client.

In order to prevent the client from paying out, Adam Leitman Bailey, P.C. strategized that there was no duty on the part of the client to search outside of the beachfront property’s chain of title and, more specifically, no duty to find a lis pendens filed against an unrelated property also owned by the sellers of the beachfront property. Adam Leitman Bailey, P.C. victoriously moved for summary judgment to dismiss the declaratory judgment action arguing that even if the client had and breached such a duty, the commitment of title insurance merged with the policy, thus foreclosing any claim arising from any alleged negligent search.

Adam Leitman Bailey, P.C. prevailed on causing the insured’s action brought against the client to be dismissed in its entirety, and summary judgment was even granted in favor of the insureds in the underlying action brought by the title company. Notably, the judge’s decision directly cited to language taken straight from Adam Leitman Bailey, P.C.’s motion papers. Adam Leitman Bailey, P.C. successfully prevented the client from paying out on the claims of its insureds after making only a single motion to the court.

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