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First Am. Title Ins. Co. v. Lane Powell PC

United States Court of Appeals, First Circuit

August 22, 2014

LANE POWELL PC, Defendant, Appellant


John R. Neeleman, with whom Lane Powell PC and Steven A. Ross were on brief, for appellant.

Jason A. Manekas, with whom Bernkopf Goodman LLP was on brief, for appellee.

Before Torruella, Circuit Judge, Souter,[*] Associate Justice, and Thompson, Circuit Judge.


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TORRUELLA, Circuit Judge.

Defendant-Appellant Lane Powell PC (" Lane Powell" ) appeals the District Court of Massachusetts' grant of summary judgment

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in favor of Plaintiff-Appellee First American Title Insurance Company (" First American" ). Lane Powell, a Washington-based law firm, contracted with First American for the latter to provide title insurance on two mortgages that Lane Powell took as security from Charles Crovo (" Crovo" ), a client who was indebted to Lane Powell for a considerable amount of attorney's fees. Though the letter of the insurance policies in question seemingly provides coverage for priority liens, First American denied Lane Powell coverage upon foreclosure of liens that were superior to those of Lane Powell.

Upon Lane Powell's request for indemnification, First American sought declaratory judgment in Massachusetts state court, essentially arguing that coverage for priority liens was never intended by either party. Lane Powell removed the action to federal district court. On cross-motions for summary judgment, the district court granted judgment in favor of First American. Ruling from the bench, the district court found that because Lane Powell was aware of the prior mortgages, it could not expect to receive coverage it did not bargain for. We agree.

I. Background

Charles Crovo and others engaged Lane Powell for legal representation regarding a number of commercial disputes that are unrelated to this matter. As Lane Powell's unpaid invoices for attorney's fees accumulated, Lane Powell and Crovo entered into an amended fee arrangement in April of 2011. By way of the arrangement, Crovo granted mortgages to Lane Powell over two properties in Massachusetts as security for payment of the fees owed -- the West Tisbury Mortgage and the Newton Mortgage.

There was some discussion between Crovo and Lane Powell regarding the equity on the West Tisbury and Newton properties, as well as regarding liens on both properties that would be superior to Lane Powell's mortgages. Lane Powell understood that these superior liens would take priority over its mortgages and accepted the inferior positions.

In August of 2011, Lane Powell retained a Massachusetts firm, Coogan Law Office (" Coogan" ), to examine title to the West Tisbury and Newton properties, to assist Lane Powell with recording a mortgage over each property, and to facilitate the issuance of a lender's policy of title insurance for each property in favor of Lane Powell. For purposes of the tasks requested of Coogan, paralegal Kate Iiams (" Iiams" ) of Lane Powell, and employees Lori Pfingst and Jennifer Cutrer of Coogan handled most communications. There was apparently little or no direct dialogue between the attorneys of each firm.

Coogan carried out the title searches for each property and reported to Lane Powell that the West Tisbury property was encumbered by a mortgage in favor of ING Bank (" ING Mortgage" ), and the Newton property was encumbered by two mortgages -- one in favor of JP Morgan Chase Bank (" Chase Mortgage" ) and one in favor of Raymond C. Green, Inc. (" Green Mortgage" ).

On or about September 7, 2011, Coogan provided Lane Powell with a commitment for title insurance (" West Tisbury Commitment" ) and a draft title insurance policy for the West Tisbury Property (" Draft West Tisbury Policy" ). The West Tisbury Commitment identifies the ING Mortgage as an encumbrance to be discharged. The Draft West Tisbury Policy, however, does not specifically except the ING Mortgage from coverage.

On September 7, 2011, Iiams of Lane Powell wrote Coogan to inform him that

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Lane Powell did not " expect the existing lien of $1,950,000 with ING Bank to be paid off or released on the [West Tisbury] property." Jennifer responded on behalf of Coogan that " if that mortgage is remaining and the mortgage we are putting on will be in addition to that one then we have to charge the full rate." On September 13, 2011, First American, by way of its agent Coogan, issued the West Tisbury policy of title insurance (" West Tisbury Policy" ) to Lane Powell. Like the West Tisbury ...

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