Title insurer once again insulated from error by contract language
In an Emmet County case filed by Brian Ludlow, the Court was forced to adjudicate the relative rights to Block 16 in a Carp Lake Township platted subdivision. The Defendants in the case, who were accused of selling more than they owned [specifically abandoned roadways], joined their title insurers in the action as third-party defendants. The latter defendants, Petoskey Title Company and Lawyer's Title Insurance Corporation, argued that they should be dismissed because their contract did not insure against the Plaintiff's claims.
The Court of Appeals upheld summary disposition based on the policy language excluding any "land" that involved title or interest in or to "abutting streets, roads, avenues or alleys." Given this exclusion, the Court ruled that since the original parties were disputing ownership of theoretically abandoned roads, the defendants had no basis to argue that the title policy had insured such ownership. Therefore, even if the insurers were negligent in examining title to the subject property, the policy holders could not pursue a claim against them.