White v. Western Title Insurance Co.
Supreme Court of California
710 P.2d 309 (1985)
White (plaintiff) hired Western Title Insurance (defendant) to prepare a preliminary title report for property White was interested in purchasing. The title report did not reveal a recorded easement granting River Estates Mutual Water Company the right to construct a water pipeline and drill wells upon the property. Based upon the title report, White purchased the property and paid for two title insurance policies issued by Western Title Insurance. Six months after closing, the water company notified White that it intended to exercise its easement rights. White objected and the water company filed suit to enforce its easement rights. The water company ultimately chose not to pursue the easement and dismissed its lawsuit. White hired an appraiser to determine the depreciation in property value resulting from the prospective loss of groundwater. White demanded that Western Title Insurance pay more than $62,000 in compensation. Western Title Insurance refused to pay the claim. White filed suit alleging breach of the insurance contract and negligence in preparing the preliminary title report. Western Title Insurance hired an appraiser who valued White’s claim at $2,000. Western Title Insurance made two offers to settle the claim, which White rejected. White amended his complaint to incorporate claims based upon breach of the implied covenant of good faith and fair dealing. The trial court held separate trials on the issues of liability and damages. The trial court found Western Title Insurance liable for breach of contract and negligence. The remaining issues proceeded to jury trial. The jury awarded White $8,400 for loss of property value and compensatory damages of $20,000 for breach of the covenant of good faith and fair dealing. Western Title Insurance appealed and petitioned the supreme court for review of particular questions of law.
Rule of Law
Holding and Reasoning (Broussard, J.)
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