Jericho State Capital Corp. of Florida v. Chicago Title Insurance Company

In 2002, the council of Horry County, South Carolina, adopted an ordinance to amend its official map, adding a right-of-way in anticipation of a new coastal roadway. In 2006, Peachtree Properties of North Myrtle Beach, LLC (Peachtree) purchased land that included the planned right-of-way. Peachtree planned a residential development and mortgaged the property to Jericho State Capital Corporation of Florida and Lynx Jericho Partners, LLC (collectively, Jericho) (plaintiff). Jericho obtained title insurance from Chicago Title Insurance Company (Chicago Title) (defendant). The policy protected against title defects, liens or encumbrances predating the policy, and unmarketability of title. These protections were subject to exclusions for (1) laws or ordinances affecting use of the land, (2) rights of eminent domain, and (3) any defects or liens arising after the effective date of the policy. Peachtree defaulted. Jericho foreclosed and took title. The South Carolina Department of Transportation then used eminent domain to acquire several acres of the property for the right-of-way. Jericho submitted title-insurance claims to Chicago Title, which denied them all. Jericho sued Chicago Title for breach of contract, breach of the covenant of good faith and fair dealing, and bad-faith refusal to pay out valid claims. A special referee granted summary judgment in favor of Chicago Title, holding that (1) the ordinance did not create a title defect or encumbrance, (2) the ordinance did not render title to the property unmarketable, (3) the policy’s exclusions barred coverage, and (4) Chicago Title did not act in bad faith by denying Jericho’s claims. Jericho appealed.