Hatch v. First American Title Insurance

William and Melissa Hatch (plaintiffs) purchased a home in Rowley, Massachusetts. For that purchase, the Hatches bought title insurance from First American Title Insurance Company (First American) (defendant). The policy prohibited the Hatches from making a claim if First American successfully removed any title defects within a reasonable time. The policy also prevented the Hatches from making a claim if there was litigation about the title, unless and until a court entered a judgment finding that there was a problem with the title. The next year, the Hatches entered into a contract to sell their Rowley home for $136,000. Before the Rowley sale was final, the Hatches bought another home in Wayland, Massachusetts. The Hatches financed the Wayland purchase with a loan for $29,000 that they planned to pay off with the proceeds from the Rowley sale. However, the sale of the Rowley house fell through. The prospective buyers discovered that the Rowley house’s title was defective because an outdated town ordinance gave the town the right to graze cattle on the property. First American filed a petition in the Massachusetts Land Court to establish that the Hatches held clear title to the property. More than five years elapsed before the Land Court entered a judgment in favor of the Hatches, giving them clear title to the Rowley property. The Hatches submitted a claim to First American arguing that the title defect had caused them damages in the amount of: (1) $136,000 for lost value on their Rowley home and (2) $20,000 for interest paid on the loan they used to finance their Wayland property. First American refused to pay the Hatches’ claims. The Hatches sued First American for breach of their title insurance contract. First American moved for summary judgment.