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Keywords

attorneymotionsummary judgmentwillbankruptcymotion for summary judgment

attorneywillbankruptcy

Related Cases

Knapp v. Commonwealth Land Title Ins. Co., Inc., 932 F.Supp. 1169

Facts

In 1988, Robert J. Knapp obtained title insurance from Commonwealth for land purchased from a bankruptcy estate. After a title dispute arose, Commonwealth defended Knapp under a reservation of rights, indicating it would seek reimbursement for costs if coverage was denied. Knapp lost the title dispute and subsequently sought summary judgment against Commonwealth for losses he claimed were covered by the Title Policy. The court ruled that no coverage existed, leading Commonwealth to seek reimbursement for the attorney fees incurred during the defense.

In 1988, Knapp applied for, and was granted, title insurance (“Title Policy”) from Commonwealth for land that he had purchased from a bankruptcy estate. … Commonwealth proceeded to defend Knapp against the title dispute to land which Knapp claimed was within the scope of the Title Policy.

Issue

1) Whether an insurer can recover expenses incurred defending an insured pursuant to a 'reservation of rights' letter; 2) If a right to reimbursement exists, whether Commonwealth is entitled to such reimbursement based on the facts; and 3) Whether the amount of attorney's fees and costs incurred in defense of the insured is reasonable.

There are three issues in this case: 1) whether an insurer can recover expenses incurred defending insured pursuant to a “reservation of rights” letter; 2) if a right to reimbursement exists, whether Commonwealth is entitled to such reimbursement based upon the facts herein; and 3) whether the amount of attorney's fees and costs incurred in defense of the insured is reasonable.

Rule

An insurer has a duty to defend where any part of a claim is arguably within the scope of a policy's coverage, but if facts extrinsic to the complaint establish that the policy does not provide coverage, the insurer will not be required to defend the action. An insurer may seek reimbursement for attorney's fees and costs if it has made an adequate reservation of rights.

It is established law in Minnesota that an insurer has a duty to defend where only part of a claim is arguably within the scope of a policy's coverage. … When facts extrinsic to the complaint establish that the policy does not provide coverage, however, the insurer will not be required to defend the action.

Analysis

The court found that Commonwealth had properly reserved its right to seek reimbursement in its reservation of rights letter. Despite Knapp's argument that parts of his claims were covered, the court determined that no coverage existed based on the previous ruling. Therefore, since Commonwealth had met its duty to defend and subsequently successfully challenged the coverage, it was entitled to reimbursement for the attorney fees and costs incurred.

Commonwealth argues that even though it considered the claims outside the scope of the policy coverage, it met its duty to defend and clearly indicated to Knapp in its reservation of rights letter that it would seek reimbursement for fees and costs incurred by it in defense of the claims.

Conclusion

The court granted Commonwealth's motion for summary judgment, determining that it was entitled to reimbursement for attorney fees and costs in the amount of $14,298.14.

Based on the foregoing, IT IS HEREBY ORDERED that: … Judgment shall be entered in favor of Commonwealth Land Title in the amount of $14,298.14 for attorney's fees and costs.

Who won?

Commonwealth Land Title Insurance Company prevailed in the case because it successfully established that there was no coverage for Knapp's claims and had properly reserved its right to seek reimbursement.

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