By Sam Knef | Sep 10, 2018

CAPE GIRARDEAU – U.S. District Judge Stephen Limbaugh recently entered judgment in favor of Fidelity National Title Insurance in a dispute involving a failed $21-million condominium project. 

In an order dated Aug. 30 in the U.S. District Court for the Eastern District of Missouri, Limbaugh granted Fidelity's request for $157,490.30 in costs in a case in which the 8th U.S. Circuit Court of Appeals vacated a $6 million jury verdict in favor of Captiva Lake Investments.

According to background information in the ruling, Captiva bought interest in the condo project after the original developer, Majestic Pointe, defaulted on its payments to National City Bank of the Midwest and went bankrupt.

The ruling stated that National had purchased a title insurance policy from Fidelity which had an exclusion of coverage arising from defects, liens, encumbrances, adverse claims ... created, suffered, assumed or agreed to by the insured claimant.

And before Majestic defaulted, the original contractor and 13 subcontractors filed mechanics' liens claiming they were owed more than $7 million.

At trial the one remaining claim for the jury to decide was breach of contract for failure to indemnify arising from the unmarketability of title and additional damages for Fidelity's "vexatious refusal" to pay, the order states.

The trial court did not allow Fidelity to present its exclusion defense, and the jury found that Fidelity breached the title insurance policy. The appeals court then found that the district court did not apply the correct legal standard in deciding the particular exclusion did not apply to the mechanics' liens at issue.

"It appears to this court that the Eighth Circuit has foreclosed Captiva from bringing its unmarketability of title breach of contract claim – the policy simply did not provide coverage for the unmarketability of which Captiva complained," Limbaugh wrote. "There could thus be no vexatious refusal to pay claim based on the same."

Therefore, the ruling said, "Fidelity’s motion for entry of final judgment is granted."

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