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Commonwealth Land Title Insurance Co. v. Sun Valley Credit, LLC

United States District Court, D. Idaho

February 26, 2015

COMMONWEALTH LAND TITLE INSURANCE COMPANY, Nebraska corporation, Plaintiff,
v.
SUN VALLEY CREDIT, LLC., an Indiana limited liability company, Defendant.

MEMORANDUM DECISION AND ORDER

EDWARD J. LODGE, District Judge.

INTRODUCTION

Pending before the Court in the above-entitled matter are Motions for Partial Summary Judgment filed by both sides. (Dkt. 33, 34.) The parties have filed their responsive briefing and the matters are ripe for the Court's consideration. Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this Court without oral argument.

FACTUAL AND PROCEDURAL BACKGROUND

On October 6, 2008, Plaintiff Commonwealth Land Title Insurance Company ("Commonwealth") issued a lender's policy of Title Insurance (the "Policy") to the Defendant, Sun Valley Credit, LLC ("Credit"). The Policy was issued in relation to Credit's issuance of a loan to DeNovo Independence, LLC ("DeNovo") who intended to use the loan to purchase certain real property (the "Property") located in Blaine County, Idaho.

The face value of the Policy was $8, 000, 000. That amount was increased by endorsements to $12, 000, 000 - the Policy included a Zoning Endorsement and an Access Endorsement. DeNovo defaulted on its payments to Credit and Credit secured foreclosure and became the owner of the Property. Thereafter, on or about December 20, 2012, Credit made a claim upon Commonwealth for payment under the Policy. Commonwealth has denied the claim asserting that Credit has not suffered any loss or damage covered under the Policy. Commonwealth brought this declaratory action seeking a judgment from this Court declaring that the Policy does not provide coverage for Credit's claimed damages and losses. (Dkt. 1.) Credit filed counterclaims for declaratory judgment and breach of contract alleging the Policy does cover Credit's claim. (Dkt. 8.)

Commonwealth's Motion for Partial Summary Judgment seeks a ruling on the question of the proper valuation date of the Policy - whether it is the date Credit foreclosed on the Property or the date the loans were issued. (Dkt. 33.) Credit's Motion seeks partial summary judgment on its declaratory judgment and breach of contract claims declaring that coverage exists under both the Zoning and Access Endorsements to the Policy. (Dkt. 34.)

STANDARD OF REVIEW

Motions for summary judgment are governed by Rule 56 of the Federal Rules of Civil Procedure. Rule 56 provides, in pertinent part, that judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

The Supreme Court has made it clear that under Rule 56 summary judgment is mandated if the non-moving party fails to make a showing sufficient to establish the existence of an element which is essential to the non-moving party's case and upon which the non-moving party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the non-moving party fails to make such a showing on any essential element, "there can be no genuine issue of material fact, ' since a completely failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323.[1]

Moreover, under Rule 56, it is clear that an issue, in order to preclude entry of summary judgment, must be both "material" and "genuine." An issue is "material" if it affects the outcome of the litigation. An issue, before it may be considered "genuine, " must be established by "sufficient evidence supporting the claimed factual dispute... to require a jury or judge to resolve the parties' differing versions of the truth at trial." Hahn v. Sargent, 523 F.3d 461, 464 (1st Cir. 1975) (quoting First Nat'l Bank v. Cities Serv. Co. Inc., 391 U.S. 253, 289 (1968)). The Ninth Circuit cases are in accord. See, e.g., British Motor Car Distrib. V. San Francisco Automotive Indus. Welfare Fund, 883 F.2d 371 (9th Cir. 1989).

According to the Ninth Circuit, in order to withstand a motion for summary judgment, a party

(1) must make a showing sufficient to establish a genuine issue of fact with respect to any element for which it bears the burden of proof; (2) must show that there is an issue that may reasonably be resolved in favor of either party; and (3) must come forward with more persuasive evidence than would otherwise be necessary when the factual context makes the non-moving party's claim implausible.

Id. at 374 (citation omitted).

Of course, when applying the above standard, the court must view all of the evidence in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Hughes v. United States, 953 F.2d 531, 541 (9th Cir. 1992).

ANALYSIS

1. Credit's Motion for Partial Summary Judgment

Credit's Motion seeks partial summary judgment on its declaratory judgment and breach of contract counterclaims finding, as a matter of law, that coverage exists under both the zoning endorsement and the access endorsement. (Dkt. 34 at 2.)

A. Zoning Endorsement

The Zoning Endorsement states:

1. The Company insures against loss or damage sustained by the Insured in the event that, at Date of Policy,
a. According to applicable zoning ordinances and amendments, the Land is not classified as: A portion of said land is Rural Remote RR-40, and a portion of said land is Residential R-10, and a portion of said land is Mid-density residential, and a portion of said land is Residential 10 (UIB):
b. The following use or uses are not allowed under that classification: A portion of said land is Rural Remote RR-40, and a portion of said land is Residential R-10, and a portion of said land is Mid-density residential, and a portion of said land is Residential 10 (UIB);
...
> 2. There shall be no liability under this ...

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