Preservation Capital v. First American

In December 2004, Atlantic Carolina Retail, LLC loaned $3,075,000 to Monarch Development, LLC. Atlantic collateralized the loan by taking a mortgage on three properties. Atlantic purchased a title insurance policy from First American Title Insurance Company to insure these mortgage interests against potential title defects. Subsequently, Atlantic assigned the mortgages and secured debt to Preservation Capital Consultants, LLC. In 2008, Monarch Development sold its parcel and paid Preservation Capital money to release its lien on that property. Then, Monarch defaulted on its loan agreement with Preservation Capital. Preservation Capital discovered Monarch Development never owned the parcel; instead, Monarch Holdings owned it. Monarch Holdings later transferred the property to a third party without payment or notice to Preservation Capital. Preservation Capital ultimately foreclosed. Atlantic purchased the property at the foreclosure sale by way of a credit bid. After foreclosing on the parcel, Monarch Development owed Preservation Capital a remaining balance. Preservation Capital filed a claim under its policy with First American for the amount it was unable to collect on the one of the other parcels due to the title defect. First American denied coverage. Preservation Capital filed this action when First American refused its claim. Both parties moved for summary judgment. First American Title Insurance Company appealed the circuit court's order granting summary judgment in favor of Preservation Capital. First American argued the circuit court misconstrued the terms of the title insurance policy in finding Preservation Capital was entitled to recover under the policy. Finding the circuit court properly granted summary judgment in favor of Preservation Capital, the Supreme Court affirmed.View "Preservation Capital v. First American" on Justia Law