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Title insurer had duty to defend

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The 7th Circuit Court of Appeals found that Ticor Title Insurance Co. breached its duty to defend Home Federal Savings Bank on a counterclaim brought by a general contractor on the failed ethanol plant in Cloverdale.

Altra Indiana LLC got a $95.5 million loan from Home Federal Savings Bank to construct the ethanol plant. Home Federal obtained a mortgage on the property and purchased title insurance from Ticor. The policy included a mechanic’s lien endorsement, which obligated Ticor to defend Home Federal in litigation in which a third party asserts a claim …alleging a ... lien …”

In September 2008, F.A. Wilhelm Construct Co. filed a mechanic’s lien on the property after Altra fired the contractor. Wilhelm claimed it was owed $6 million for work on the project. An October 2008 title search by Ticor revealed the lien. Ticor declined to defend Home Federal on its claim that its attempt to foreclose on the plant property took priority over the lien.

Home Federal and Wilhelm eventually settled for $1.8 million, with no contribution from Ticor. Home Federal then sued Ticor alleging the company acted in bad faith and breached its duties to defend against Wilhelm’s counterclaim that its mechanic’s lien had priority or was equal to the mortgage, and failed in not indemnifying the bank for the settlement and attorney fees.

U.S. Judge Jane Magnus-Stinson ruled in favor of Ticor, relying on the policy exclusion for any “Defects, liens, encumbrances, adverse claims or other matters … created, suffered, assumed or agreed to or by the Insured claimant.”

Ticor did have a duty to defend under the policy, Judge John Tinder wrote in Home Federal Savings Bank v. Ticor Title Insurance Co., 11-3446. The exclusion relied on the by the District Court to grant summary judgment for Ticor does not apply, the judges ruled, rejecting Ticor’s numerous claims. Ticor argued that Home Federal “created, suffered assumed or agreed to the Wilhelm Lien” because the bank “made the conscious decision not to distribute the remaining loan funds and chose not to pay Wilhelm. It also argued the bank breached a duty to Ticor to distribute the entirety of the loan proceedings and that the “created or suffered” exclusion applies because the bank sought to obtain an inequitable windfall.

The judges ordered summary judgment be entered for Home Federal and for further proceedings on the issue of damages to be awarded to the bank.

 

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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