A Title Insurance Policy was rescinded on the facts in the record in Nourachi v. First Am. Title Insurance Co., Download Nourachi v. First American Title Insurance Co. (Fla. 5th DCA Case No. 5D09.2554, Opinion Filed August 6, 2010) PUBLIC ACCESS also published as 2010 WL 305662 (Fla. 5th DCA August 6, 2010)(Westlaw subscription required to access Westlaw). The basis for the Court's holding in this 2-to-1 decision was succinctly stated in the majority opinion:
Where a party does not rely on a title insurance company to advise it of encumbrances prior to acquiring title to property, it may not recover on a material title defect of which it had actual knowledge and which it failed to disclose to the insurer at the time it applied for the title policy.
Nourachi v. First American Title, 2010 WL 3056602 at *1. [Emphasis in original.]
So far, so good. Then the Court went farther: "Our decision is also consistent with the general principle that a party may not insure against a loss that he knows has already occurred and that he fails to disclose to the insurer." Id. at *5. The concurring opinion seems to be in accord. The dissent focused instead on the actual language of the insurance policy before the Court in that case. Id. at *9.
There was no "known loss" Exclusion in the Policy in that case. There generally if not always is no such Exclusion to be found in any Insurance Policy in any case. Is it the fact that the loss for which Coverage is claimed is "known" that defeats the role of Insurance, or is it the fact that there was a previous "loss" that occurred before the Insurance Policy was issued to insure against a risk of something that had already happened and which Insurance will not be allowed by public policy to pay for?
Or is the "failure to disclose to the insurer at the time it applied for the policy" that forms the basis for Rescission? The dissent in this case pointed out that "[a]lthough the policy [at issue there] contains an exclusion for known and undisclosed claims, it expressly excepts from that exclusion claims that may be discerned from the public record." Id. at *9. [Emphasis added.] The Policy at issue in that case was, after all, a Title Insurance Policy. The Title Insurance Company's Underwriters apparently had no problem with effectively requiring their employer to search the public records before issuing Policies. The majority in this case did have a problem with that, however, and in the face of clear Policy language relied on by the dissenting Judge, two Judges affirmed the Trial Court's Rescission Judgment anyway.
Sometimes the facts are egregious enough in the eyes of Courts to manifestly require a certain result in order to do justice in their eyes if not in the eyes of most reasonable people, for that matter, that the facts will sometimes overwhelm Insurance Policy language, with or without an analysis of the Policy itself. This is a lesson that is not lost on experienced Insurance Coverage practitioners.
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