Real Property – Title Insurance – Damages – Valuation Date – Ambiguity – Certified Question

Whitlock v. Stewart Title Guaranty Co. (Lawyers Weekly No. 010-092-12, 7 pp.) (John W. Kittredge, J.) (Costa M. Pleicones, J., dissenting) On certification from the U.S. District Court for South Carolina. S.C. S. Ct.  Full-text opinion.

Holding: Pursuant to a question certified to this court by the U.S. District Court for the District of South Carolina, we hold that where, as here, a title insurance contract does not clearly identify a date for measuring the diminution in value of the insured property or otherwise unambiguously provide for the method of valuation as a result of a title defect, such ambiguity requires a construction allowing for the measure of damages most favorable to the insured. Because the parties’ policy does not define “actual loss” or provide any guidance for determining the valuation date, the insured’s damages should be measured as of the date of purchase of the property.

On the other hand, if a title insurance contract does unambiguously identify a date for measuring the diminution in value of the insured property or otherwise unambiguously provide for the method of valuation as a result of the title defect, such date or method is controlling.

In this case, the insurance contract is ambiguous, and the property’s value has diminished due to a market downturn. Therefore, construing the ambiguity in favor of the insured, the diminution in value should be measured from the date of purchase.

Dissent

(Pleicones, J.) An insured suffers no actual loss until the defect is discovered; until that juncture, the insured’s loss is unrealized. Since only a loss that is actualized is insured, I would adopt the majority rule and find that the date of discovery of the title defect is the proper date upon which to measure the diminution in the property’s value.