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Stewart Title Guaranty Co. v. Machado Family Limited Partnership No. 1

United States District Court, M.D. Florida, Orlando Division

April 19, 2018




         This matter comes before the Court without a hearing on the Motion for Summary Judgment (Doc. 34) filed by the Plaintiff, Stewart Title Guaranty Company (henceforth, “Stewart Title”), and the Motion for Partial Summary Judgment (Doc. 38) filed by the Defendant, Machado Family Limited Partnership No. 1 (“Machado”), as well as the responses and replies to those motions.

         I. Background

         In 2007, CenterState Bank Central Florida, N.A. (“CSB”) made a loan to Joseph O'Berry and Marsha O'Berry secured by a mortgage (the “Mortgage”) on approximately 1, 300 acres they owned in Osceola County (the “O'Berry Property”).[1] In connection with the transaction, Stewart Title issued a lenders title insurance policy (the “Policy”) to CSB. Both the Mortgage and the Policy contained errors in the legal description of the O'Berry Property. The effect of the errors was that one parcel did not “close”.

         In 2008, Machado bought the loan and the Mortgage from CSB and became the insured under the Policy. The loan went into default, and in June of 2011 Machado sued the O'Berrys[2] to foreclose the Mortgage. Machado's foreclosure complaint included a count to reform the Mortgage to correct the errors in its legal description. (Doc. 34-1 at 37).

         In July 2012, the O'Berrys filed a Chapter 11 bankruptcy petition.[3] After mediation, the O'Berrys entered into a settlement agreement with Machado. Under the terms of the agreement, the O'Berry Property would be put up for sale on December 1, 2012, for no more than six months, with the proceeds going first to pay the O'Berrys' creditors. (Doc. 34-1 at 45-49). If the O'Berry Property failed to sell, the O'Berrys would be required to deed it over to Machado. (Doc. 34-1 at 46).

         The O'Berry Property did not sell during the allotted time. The Bankruptcy Court ordered Machado to prepare a warranty deed to transfer the property. Machado did so, but the O'Berrys rejected the deed. Among other things, the O'Berrys argued that (1) the settlement agreement only required them to transfer the portion of the property subject to the Mortgage, and (2) because of the errors in the legal description of the Mortgage, there were approximately 160 acres of their property that was not subject to it, and which they were therefore entitled to keep.

         Machado set about trying to get the legal description corrected. It contacted CSB, which in late March 2014 provided some documents about the underlying loan. CSB also provided a copy of a title claim (Doc. 22-8 at 1), dated March 24, 2014, which it had made on the Policy. In the claim, CSB had demanded that Stewart Title pay any costs incurred by the bank related to curing the defect in the Mortgage.[4] (Doc. 22-8 at 1). CSB also informed Stewart Title that Machado, as the current mortgagee, might make a demand pursuant to the Policy. (Doc. 22-8 at 1). The record does not reflect that Machado submitted such a written demand to CSB while the litigation with the O'Berrys was ongoing.[5]

         In October 2014, Machado filed a motion in the Bankruptcy Court to compel the O'Berrys to comply with the terms of the settlement agreement. The Bankruptcy Court held an evidentiary hearing on the motion in March 2015. In September 2015, the Bankruptcy Court ruled in favor of Machado on its motion, rejecting the O'Berrys' position and requiring the conveyance of the disputed 160 acres along with the remainder of the O'Berry Property. A month later, Machado recorded the deed to the O'Berry Property. Stewart Title contends, and Machado does not dispute, that the Bankruptcy Court's order and the resulting deed fully cured the problems with the legal description of the Mortgage and the Policy. (Doc. 34 at 6).

         Stewart Title also contends, and Machado also does not dispute, that Machado provided its first standalone demand for attorneys' fees to Stewart Title in May 2016. (Doc. 34 at 6). The figure Machado requested - $230, 987.06 - included fees incurred in the months after the litigation concluded. (Doc. 34 at 6). Stewart Title requested that Machado provide the figure for fees incurred in the curative litigation, only. On September 27, 2016, Machado provided that figure: $207, 243.06. Within two weeks, Stewart Title tendered that amount to Machado.

         Machado however sought to recover fees incurred after the conclusion of the curative litigation, as well as consequential damages incurred while it was pending. Stewart Title filed the instant action, seeking a declaration that it was not liable for any additional payments pursuant to the Policy. By way of the instant motion, Stewart Title contends that it is entitled to summary judgment because (1) the title defect has been cured and (2) it fully paid for the litigation needed to do so. (Doc. 34 at 9). In its motion for partial summary judgment, Machado argues that Stewart Title breached the Policy by failing to act diligently to cure the errors in the legal description. (Doc. 38 at 13-14).

         II. Legal Standard

         A party is entitled to summary judgment when the party can show that there is no genuine issue as to any material fact. Fed.R.Civ.P. 56(c). Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513.

         When a party moving for summary judgment points out an absence of evidence on a dispositive issue for which the non-moving party bears the burden of proof at trial, the nonmoving party must “go beyond the pleadings and by [his] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex Corp., 477 U.S. at 324, 106 S.Ct. at 2553. Thereafter, summary judgment is mandated against the nonmoving party who fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. The party opposing a motion for summary judgment must rely on more than conclusory statements or ...

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