MARK D. PFEIFFER, Judge.
A jury found in favor of Ryan J. Fischer ("Fischer") on his claims against First American Title Insurance Co. ("First American") for breach of the contractual terms of a title insurance policy and on his derivative claim for vexatious refusal to pay. First American filed a motion for a judgment notwithstanding the verdict, which was granted by the Circuit Court of Jackson County, Missouri. Fischer appeals.
We affirm.
Fischer bought a house at 2141 Belleview Avenue, in Kansas City, Missouri. The house located at 2141 Belleview was situated on Lots 9 and 10 in Block 1 of Thayer's Addition ("Lots 9 and 10"). In 2009, Fischer bought a house at 2139 Belleview Avenue, which was located on Lot 8 ("Lot 8"), adjacent to Lot 9, also in Block 1 of Thayer's Addition.
Fischer purchased title insurance for Lot 8 from First American ("the Title Policy"). The Title Policy covered any loss or damage for any "defect in or lien or
In pertinent part, the Schedule B exceptions to the Title Policy exclude coverage for losses or damages that arise by reason of "[r]ights or claims of parties in possession not shown by the Public Record" ("parties in possession exception").
Fischer's plan for Lot 8 was to tear down the existing structures on Lot 8 and build a pool. As part of the project, Fischer tore down a chain link fence that had been built near the northern edge of Lot 8, which was closest to the boundary line of Lot 7 — owned by Teresa Rivera ("Rivera"). Fischer then hired a surveyor to mark the boundary lines of Lot 8, and the results of that survey suggested that the fence had been located approximately 3 feet and 7 inches inside the property line boundary for Lot 8 ("the Disputed Parcel").
The fence was originally built in 1952 and was made of wood. Subsequently, Banks Stevenson, owner of Lot 8 at the time, converted the wood fence to a chain link fence, and he used the fence to grow grapevines.
Rivera's grandparents owned Lot 7 beginning in the 1940s. Rivera's father owned Lot 7 from 1958 until deeding Lot 7 to his daughter, Rivera, in 1992. Rivera's father used the Disputed Parcel for "picnics and family gatherings" and mowed the Disputed Parcel. After Rivera acquired Lot 7 from her father, she would later testify in a separate lawsuit that she continued to visibly and openly possess, control, and use the Disputed Parcel in like fashion as her father had done at all times prior to Fischer's purchase of Lot 8.
In the summer of 2009, Fischer began excavation for the pool and buried utility lines on Lot 8, including the Disputed Parcel.
In October 2009, Rivera filed a two-count petition against Fischer, asserting adverse possession and boundary by acquiescence claims relating to the Disputed Parcel ("the Rivera lawsuit"). Fischer tendered the defense of the Rivera lawsuit to First American and, in the event that he lost, to indemnify him under the Title Policy. First American rejected the tendered defense of the Rivera lawsuit, citing the parties in possession exception. Fischer then provided First American photos of the chain link fence on Lot 8 that were taken prior in time to him tearing the fence down and again tendered the defense of the Rivera lawsuit to First American. First American again rejected the tendered defense for, among other reasons, the parties in possession exception.
Fischer retained legal counsel and incurred legal fees in excess of $46,000 unsuccessfully defending the Rivera lawsuit.
The jury entered judgment in Fischer's favor, awarding him $57,971.71 on his breach of insurance policy claim and $24,000 on his vexatious refusal to pay claim. First American filed a motion for a judgment notwithstanding the verdict ("JNOV").
The trial court granted First American's JNOV motion. In so doing, the trial court explained:
The trial court vacated the jury's verdict and entered judgment in First American's favor.
Fischer appeals.
We review the trial court's grant of a JNOV motion in favor of the defendant de novo and will determine whether the plaintiff made a submissible case. Koppe v. Campbell, 318 S.W.3d 233, 239 (Mo.App. W.D.2010). "To make a submissible case, a plaintiff must present substantial evidence that tends to prove the facts essential to plaintiff's recovery." Id. (internal quotation omitted). Evidence is viewed in a light most favorable to the jury's verdict, and the reviewing court must give the prevailing party all reasonable inferences from the verdict. Id. However, the interpretation of an insurance policy, as with any other contract, "is generally a question of law, particularly in reference to the question of coverage." D.R. Sherry Constr., Ltd. v. Am. Fam. Mut. Ins. Co., 316 S.W.3d 899, 902 (Mo. banc 2010). Further, "[t]he issue of coverage becomes a jury question only when the court determines that the contract is ambiguous and that there exists a genuine factual dispute regarding the intent of the parties." Id. "[W]e will affirm the trial
In his first point, Fischer argues that the trial court erred in granting First American's JNOV motion because he had established a prima facie case for breach of the Title Policy and it was a question of fact whether the parties in possession exception applied.
The Title Policy covers claims for "[a]ny defect in or lien or encumbrance on the [insured's] title." In the Rivera lawsuit, Rivera claimed she had ownership rights to the Disputed Parcel on Fischer's property, which would be a defect or encumbrance on his title to Lot 8. While the insured bears the burden of proving coverage under an insurance policy, Truck Ins. Exch. v. Prairie Framing, LLC, 162 S.W.3d 64, 80 (Mo.App. W.D.2005), First American does not dispute that Rivera's Disputed Parcel ownership claim falls under coverage of the Title Policy were it not for the exceptions to coverage. The dispute lies in whether the Rivera lawsuit claims fall within an exception to coverage under the Title Policy. The insurer bears the burden of proving the applicability of its policy exclusion. Id. at 80. The Title Policy's parties in possession exception to coverage states:
Fischer argues that the parties in possession exception is ambiguous because it fails to define "parties in possession," and the issue was thus properly submitted to the jury. However, "[t]he failure of a policy to define a term does not, in and of itself, render it ambiguous." Trainwreck W. Inc. v. Burlington Ins. Co., 235 S.W.3d 33, 40 (Mo.App. E.D.2007). "`An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the [contract].'" Vest v. Kansas City Homes, L.L.C., 288 S.W.3d 304, 310 (Mo.App. W.D. 2009) (quoting Gulf Ins. Co. v. Noble Broad., 936 S.W.2d 810, 814 (Mo. banc 1997)). "[W]hen a policy does not define a term, a court is free to give the term a reasonable construction." Dibben v. Shelter Ins. Co., 261 S.W.3d 553, 557 (Mo.App. W.D.2008). In so doing, "the trial court must consider the whole document and the natural and ordinary meaning of the language." Maritz Holdings, Inc. v. Fed. Ins. Co., 298 S.W.3d 92, 99 (Mo.App. E.D. 2009).
Though no Missouri case has previously discussed the "party in possession" exception, we have not found case precedent — nor has Fischer cited us to any such precedent — concluding that this policy exception to coverage is ambiguous. To the contrary, there are numerous cases across the country and treatises that conclude the opposite. Zimmerman v. Chicago Title Ins. Co., 28 S.W.3d 584, 586 (Tex.App. 1999) (concluding that the parties in possession exception is "a standard exception from coverage specifically relating to claims such as adverse possession"); Boyadjiev v. Transnation Title Ins. Co., No. 257618, 2005 WL 3556156 (Mich.Ct.App. Dec. 29, 2005) (parties in possession exception to coverage found unambiguous and designed to except from coverage unrecorded property possessory claims such as
We will not create an ambiguity where one does not exist. Eldridge v. Columbia Mut. Ins. Co., 270 S.W.3d 423, 426 (Mo. App. W.D.2008). None exists here. The plain and ordinary meaning of the parties in possession exception for coverage is:
First American's duty to defend Fischer is distinct from First American's duty to indemnify Fischer, and it is broader than its duty to indemnify him. Penn-Star Ins. Co. v. Griffey, 306 S.W.3d 591, 596 (Mo.App. W.D.2010). Yet, "[w]here there is no duty to defend, there is no duty to indemnify." Trainwreck W., 235 S.W.3d at 44 (internal quotation omitted).
An insurer's duty to defend is triggered when the insured is exposed to potential liability "based on the facts known at the outset of the case, no matter how unlikely it is that the insured will be found liable."
Notably, though, "liability" is not the sole question; rather, the pertinent question is whether the insured is subject to liability from a claim(s) that falls under the coverage provisions of the insurance policy based on either the allegations in the petition or the known and ascertainable facts. Trainwreck W., 235 S.W.3d at 44. Therefore, even though an investigation of the facts may have led First American to believe that Fischer would not be liable to Rivera,
First American's duty to defend Fischer is determined (1) "initially by comparing the relevant policy provisions with the allegations of liability in the petition," and then (2) by considering facts the insurer "knew or could reasonably have ascertained" at the time the action is commenced. Penn-Star Ins., 306 S.W.3d at 597. If Rivera's petition "merely alleges facts that give rise to a claim potentially within the policy's coverage, the insurer has a duty to defend." Am. States Ins. Co. v. Herman C. Kempker Constr. Co., 71 S.W.3d 232, 236 (Mo.App. W.D.2002) (internal quotation omitted).
Here, Rivera's lawsuit claims were both based upon her allegations of possession that required no publicly recorded documentation of ownership. Both of Rivera's claims relating to the Disputed Parcel were based upon unrecorded yet alleged "visible and exclusive possession, control and use of the Disputed Parcel."
In the Rivera lawsuit, Rivera claimed possessory rights to the Disputed Parcel through adverse possession and/or boundary by acquiescence. The "rights" of each of these claims, however, are different. Adverse possession is a "title" claim; boundary by acquiescence is a "boundary" claim. In the context of "title" insurance, this is a distinction with a difference.
In an adverse possession lawsuit, once adverse possession is established, the record owner — whose ownership would be shown in the public record — is divested of ownership, and the adverse possessor — whose ownership would not be shown in the public record — is vested with "title" to the land. Kitterman v. Simrall, 924 S.W.2d 872, 876 (Mo.App. W.D.1996).
Conversely, a boundary by acquiescence exists if there is an uncertain boundary and the landowners fix the boundary by an "agreement that is presumed as a result of long acquiescence." Weiss v. Alford, 267 S.W.3d 822, 827 (Mo. App. E.D.2008). In a boundary by acquiescence claim, "[a]n agreement as to a boundary line, `may be proved by an express agreement or by acquiescence in a fence as a boundary for a period of time sufficient to evidence a mutual acceptance of the dividing line as the common boundary by the adjoining owners.'" Shoemaker v. Houchen, 994 S.W.2d 40, 45 (Mo.App. W.D.1999) (quoting Conduff v. Stone, 968 S.W.2d 200, 204 (Mo.App. S.D.1998)). Notably, acquiescence establishes a boundary, not title to land. Id. Once there is an express agreement or acquiescence on the part of the landowners, possession becomes adverse for the purpose of running the statute of limitations period for adverse possession.
Thus, pursuant to these allegations, Rivera was claiming that she and her predecessors in interest had acquired "possession" of the Disputed Parcel via adverse possession either by way of an acquiescence over time by the previous owner of Lot 7 or by open and hostile adverse possession
Even considering the facts First American knew or could have ascertained outside the pleadings, the result is no different. The facts that First American knew or could have known included the fact that the chain link fence was built, shortly after 1952, for the purpose of growing grapes on the fence. When the fence's original use is considered, its placement makes sense: Stevenson, who built the fence for his grapevines, would probably need access to both sides of the fence to successfully maintain the grapes. It would have made little sense for him to place the fence along the actual border between Lot 7 and Lot 8 — if he had done so, he would only have access to one side of his grape fence. By building the fence inside his own lot, he was able to access both sides of the fence and care for the grapes. But these facts change nothing. The only thing these facts demonstrate is that First American's insured might have had a reasonable argument in response to Rivera's possessory ownership claim. It does not change the fact that the basis of Rivera's ownership claim to the Disputed Parcel still revolved around a possessory interest in land that was not recorded in public records.
Rivera's claim of ownership to the Disputed Parcel was both based on a claim of possession to the Disputed Parcel and alleged legal theories (adverse possession and boundary by acquiescence) that would not appear in the public record; Rivera's claims were not potentially or possibly covered by the Title Policy; Rivera's claims were, as a matter of law, excepted from the Title Policy's coverage through the parties in possession exception. As a matter of law, First American's duty to defend was not triggered, and the trial court did not err in granting First American's JNOV.
Point I is denied.
In his second point on appeal, Fischer argues the trial court erred in granting First American's JNOV motion because he made a submissible case on his claim against First American for vexatious refusal to pay an insurance claim. To establish his claim for vexatious refusal to pay, Fischer would have to prove that: (1) he had an insurance policy with First American, (2) First American refused to pay under the policy, and (3) First American's refusal was without reasonable cause or excuse. Dhyne v. State Farm Fire & Cas. Co., 188 S.W.3d 454, 457 (Mo. banc 2006).
However, where an insurer had no duty to defend or indemnify under the insurance policy, there cannot be a claim for vexatious refusal to defend or indemnify. See Valentine-Radford, Inc. v. Am. Motorists Ins. Co., 990 S.W.2d 47, 54 (Mo. App. W.D.1999) (declining to discuss a vexatious refusal claim after finding the insurer had no duty to defend).
Because we have concluded that the trial court correctly concluded, as a matter of
Point II is denied.
The trial court did not err in granting First American's JNOV motion and, accordingly, the judgment of the trial court is affirmed.
JOSEPH M. ELLIS, Presiding Judge, and ALOK AHUJA, Judge, concur.
