The United States District Court for the District of Maryland recently found that there is no coverage under a title insurance policy when the insured's neighbor brings a claim due to water runoff from the insured property. See Batstone v. Chicago Title Ins. Co., No. 2020 WL 6393164 (D. Md. Nov. 2, 2020). Plaintiffs purchased their home in 2018 and obtained a homeowners' title insurance policy from the defendant title insurance company. After closing, plaintiffs' neighbors informed them that the placement of plaintiffs' driveway caused excessive water runoff onto the neighbors' property, and that the neighbors were planning to bring a lawsuit against plaintiffs and the home builder. Plaintiffs then submitted a claim to defendant, who denied the claim. After the neighbors filed their lawsuit, plaintiffs again submitted a claim and, after defendant denied it, brought this lawsuit. The parties then cross-moved for summary judgment.
The Court granted defendant's motion. Plaintiffs first argued that their claim was covered under the policy's Covered Risk 5, which covers the risk that "[s]omeone else has a right to limit Your use of the Land." Under plaintiffs' argument, the neighbors were seeking to force plaintiffs to take affirmative action on plaintiffs' land to stop the flow of water, which falls under this covered risk. The Court disagreed, finding that the neighbors' lawsuit challenged plaintiffs' right to affect the neighbors' property, not plaintiffs'. "When a neighbor seeks to stop a continuing trespass by another neighbor, that effort to enforce their rights is not a limitation on the trespasser's use of his land." Second, plaintiffs argued that their claim was covered because title was defective. The Court rejected this argument outright, holding that no one was challenging plaintiffs' title to the property. Finally, the Court found that the policy's exclusions bar coverage for any claims arising from flooding.
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