Durbano & Garn Investment v. First American Title Insurance

1. The Honorable Russell W. Bench, Senior Judge, sat by special
assignment as authorized by law. See generally Utah Code Jud.
Admin. R. 11-201(6).
2014 UT App 150
_________________________________________________________
THE UTAH COURT OF APPEALS
DURBANO & GARN INVESTMENT COMPANY, LC,
Plaintiff and Appellant,
v.
FIRST AMERICAN TITLE INSURANCE COMPANY,
Defendant and Appellee.
Opinion
No. 20120943-CA
Filed June 26, 2014
Second District Court, Layton Department
The Honorable Thomas L. Kay
No. 040600157
Jacob D. Briggs, Douglas M. Durbano, and
L. Miles LeBaron, Attorneys for Appellant
Ronald G. Russell and Matthew J. Ball, Attorneys
for Appellee
JUDGE GREGORY K. ORME authored this Opinion, in which JUDGE
MICHELE M. CHRISTIANSEN and SENIOR JUDGE RUSSELL W. BENCH
concurred.1
ORME, Judge:
¶1 Durbano & Garn Investment Company filed a title
insurance claim based on a title discrepancy on property that it
previously owned. When First American Title Insurance Company
denied its claim, Durbano & Garn sued. The district court ruled in
favor of First American on the parties’ cross motions for summary

Durbano & Garn v. First American Title
2. In reviewing a district court’s decision to grant or deny summary
judgment, we view “the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.”
Higgins v. Salt Lake County, 855 P.2d 231, 233 (Utah 1993). Because
the district court ultimately granted First American’s motion for
summary judgment and denied Durbano & Garn’s, we recite the
facts, which are essentially undisputed, in the light most favorable
to Durbano & Garn.
20120943-CA 2 2014 UT App 150
judgment and denied Durbano & Garn’s motion for leave to amend
its pleadings. We affirm.
BACKGROUND2
¶2 In 1993, Durbano & Garn purchased a parcel of real
property (the Property). First American issued a title insurance
policy to Durbano & Garn in connection with this purchase. The
policy listed Durbano & Garn as the insured.
¶3 The next year, Durbano & Garn decided that it would no
longer buy and sell real estate. As part of its change in operations,
Durbano & Garn executed a quitclaim deed to the Property in favor
of Durbano Properties. In 2002, approximately eight years after
receiving the Property, Durbano Properties contracted to sell it.
Prior to closing the sale, however, Durbano Properties discovered
that an adjacent property owner held superior title to a strip of
land that Durbano Properties believed was part of the Property.
This strip of land was included in the property description in the
deed given to Durbano & Garn, in the title policy that First
American furnished to Durbano & Garn, and in the deed that
Durbano & Garn gave to Durbano Properties. The real estate
contract was amended to delete the strip of land from the property
to be conveyed, and Durbano & Garn filed a claim with First
American. When First American denied the claim, Durbano & Garn
sued for breach of contract.
¶4 After discovery, Durbano & Garn moved for summary
judgment, and First American responded with its own motion for

Durbano & Garn v. First American Title
20120943-CA 3 2014 UT App 150
summary judgment. Durbano & Garn also moved to amend its
pleadings to add Durbano Properties as a plaintiff. The district
court ruled on all three motions in a single order. The district court
determined that Durbano & Garn’s coverage under the policy
terminated in 1994 when it conveyed the Property to Durbano
Properties. The court therefore concluded that Durbano & Garn
lacked standing to sue on the contract and ruled for First American
on the parties’ cross motions for summary judgment. The district
court also denied Durbano & Garn’s motion to amend the
pleadings, concluding that it would be futile to add Durbano
Properties as a plaintiff because Durbano Properties was never
insured under the policy. Durbano & Garn appeals.
ISSUES AND STANDARDS OF REVIEW
¶5 Durbano & Garn challenges the district court’s
interpretation of the title insurance policy. “Interpretation of an
insurance contract presents a question of law.” Viking Ins. Co. v.
Coleman, 927 P.2d 661, 663 (Utah Ct. App. 1996). Thus, we “‘accord
the trial court’s legal conclusions regarding the contract no
deference but review them for correctness.’” Id. (quoting AOK
Lands, Inc. v. Shand, Morahan & Co., 860 P.2d 924, 925 (Utah 1993)).
¶6 We review the district court’s ultimate grant or denial of
summary judgment for correctness. Orvis v. Johnson, 2008 UT 2, ¶ 6,
177 P.3d 600. And we review the court’s “denial of leave to amend
for an abuse of discretion.” Hudgens v. Prosper, Inc., 2010 UT 68,
¶ 15, 243 P.3d 1275.
ANALYSIS
I. Durbano & Garn Is Not Insured Under the Policy.
¶7 Durbano & Garn first contends that the district court
“should have concluded that Durbano & Garn retained its status as
an ‘insured’ under the Policy. We disagree.

Durbano & Garn v. First American Title
20120943-CA 4 2014 UT App 150
¶8 The policy provided that Durbano & Garn would retain
coverage only so long as it “retain[ed] an estate or interest in the
land” or so long as it had “liability by reason of covenants of
warranty” made upon transfer of its interest. When Durbano &
Garn conveyed the Property to Durbano Properties by quitclaim
deed, Durbano & Garn retained no interest in the Property and
made no warranties to Durbano Properties. See Black’s Law
Dictionary 477 (9th ed. 2009) (defining a quitclaim deed as a “deed
that conveys a grantor’s complete interest or claim in certain real
property but that neither warrants nor professes that the title is
valid”). See also Johnson v. Bell, 666 P.2d 308, 312 (Utah 1983) (“A
grantee under a quitclaim deed acquires only the interest of his
grantor ‘be that interest what it may.’”) (quoting Nix v. Tooele
County, 118 P.2d 376, 377 (Utah 1941)). Therefore, by the terms of
the policy, Durbano & Garn’s coverage ended in 1994 when it
conveyed the Property to Durbano Properties through a quitclaim
deed.
II. Durbano Properties Was Not Insured Under the Policy.
¶9 Durbano & Garn also argues that the district court erred in
concluding that “Durbano Properties never obtained or acquired
any rights under the Policy” and that it would therefore be futile to
amend the complaint to add Durbano Properties as a plaintiff. The
title insurance policy defines “insured” as the person or entity
named in the policy—Durbano & Garn—and “those who succeed
to the interest of the named insured by operation of law as
distinguished from purchase including, but not limited to, heirs,
distributees, devisees, survivors, personal representatives, next of
kin, or corporate or fiduciary successors.” Durbano & Garn
contends that Durbano Properties is insured under the policy
because it obtained its title by operation of law, either as a
distributee or as a corporate successor. We disagree.
¶10 “Title insurance is an unusual type of insurance . . . . [I]t is
not a recurring policy: There is only a single premium, and a title
insurance policy written on behalf of an owner theoretically
remains outstanding forever to protect him or her from claims
asserted by others.” Black’s Law Dictionary 875 (9th ed. 2009)

Durbano & Garn v. First American Title
20120943-CA 5 2014 UT App 150
(citation and internal quotation marks omitted). Therefore, parties
to a title insurance contract “are free to define the exact scope of the
policy’s coverage and may specify the losses and encumbrances the
policy is intended to encompass.” Pacific Am. Constr. v. Security
Union Title, 1999 UT 87, ¶ 5, 987 P.2d 45 (citation and internal
quotation marks omitted).
¶11 “Insurance policies are generally interpreted according to
rules of contract interpretation.” Utah Farm Bureau Ins. Co. v. Crook,
1999 UT 47, ¶ 5, 980 P.2d 685. As with ordinary contract
interpretation, we “look to the writing itself to ascertain the parties’
intentions.” Jones v. ERA Brokers Consol., 2000 UT 61, ¶ 12, 6 P.3d
1129. And we “interpret words in insurance policies according to
their usually accepted meanings and in light of the insurance policy
as a whole.” Utah Farm Bureau, 1999 UT 47, ¶ 5.
¶12 While the terms “distributee” and “corporate successor”
might be susceptible to multiple interpretations when taken in
isolation, a “‘word is given more precise content by the
neighboring words with which it is associated.’” Thayer v.
Washington County Sch. Dist., 2011 UT 31, ¶ 15, 285 P.3d 1142
(quoting United States v. Williams, 553 U.S. 285, 294 (2008)). “That
several items in a list share an attribute counsels in favor of
interpreting the other items as possessing that attribute as well.”
Beecham v. United States, 511 U.S. 368, 371 (1994). Here, all of the
neighboring words listed in the policy—heirs, devisees, survivors,
personal representatives, next of kin, and fiduciary successors—are
descriptive of one who “succeed[s] to the interest of the named
insured” regardless of the successor’s intent.
¶13 And while this type of transfer is generally not complete
absent some affirmative act on the part of the successor—e.g.,
accepting delivery of an executor’s deed to effect a devise of
property as called for in a will—the underlying rights and
obligations to the property or interest “come to the transferee
without any act or cooperation on [its] part.” See Aurora Credit
Servs., Inc. v. Liberty West Dev., Inc., 970 P.2d 1273, 1277 (Utah 1998)
(defining “operation of law”) (alteration in original) (citation and
internal quotation marks omitted). See also Black’s Law Dictionary

Durbano & Garn v. First American Title
20120943-CA 6 2014 UT App 150
1201 (9th ed. 2009) (defining “operation of law” as the “means by
which a right or a liability is created for a party regardless of the
party’s actual intent”). Because the underlying rights and
obligations devolve automatically by operation of law, the modest
steps required to complete the transfer are merely confirmatory.
¶14 Durbano & Garn contends that even under this reading of
“distributee” or “corporate successor,” Durbano Properties took
the Property by operation of law because it succeeded to Durbano
& Garn’s interest by virtue of a corporate dissolution. But Durbano
& Garn does not point to any evidence, aside from several
indistinct references in an affidavit submitted by a principal in
Durbano & Garn, that Durbano & Garn was ever actually dissolved
or that Durbano Properties was a shareholder of Durbano & Garn.
Nor does it explain how, as such a shareholder, Durbano Properties
would be entitled to succeed by operation of law to all of Durbano
& Garn’s right, title, and interest in the Property. In the absence of
a demonstrated dissolution, the transfer of a deed in this case
evidences an agreement between the parties to voluntarily convey
the Property rather than suggesting a merely confirmatory act
memorializing a transfer that had already occurred by operation of
law. Therefore, on the record before us, it cannot be concluded that
Durbano Properties succeeded to the interest of Durbano & Garn
by operation of law as either a distributee or corporate successor as
those terms are used in the policy, and the district court did not
abuse its discretion in concluding that it would be futile for
Durbano & Garn to amend its complaint to add Durbano
Properties as an additional plaintiff.
CONCLUSION
¶15 We affirm the district court’s ruling in favor of First
American on the parties’ cross motions for summary judgment
because Durbano & Garn ceased to be insured under the policy in
1994 when it transferred the Property by quitclaim deed to
Durbano Properties. Additionally, we affirm the district court’s
denial of Durbano & Garn’s motion to amend because Durbano

Durbano & Garn v. First American Title
20120943-CA 7 2014 UT App 150
Properties was never insured under the policy and it therefore
would have been futile to add it as a plaintiff.