FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, Plaintiff/Appellee,
JOHNSON BANK, a Wisconsin bank registered in Arizona, Defendant/Appellant
Appeal from the Superior Court in Maricopa County. No. CV2013-003634. The Honorable Robert H. Oberbillig, Judge.
Lake & Cobb, P.L.C., Tempe, By Richard L. Cobb, Joseph J. Glenn, Counsel for Plaintiff/Appellee.
Ridenour Hienton, P.L.L.C., Phoenix, By William G. Ridenour, Damien R. Meyer, Counsel for Defendant/Appellant.
Judge Lawrence F. Winthrop delivered the opinion of the Court, in which Presiding Judge Kent E. Cattani and Judge Peter B. Swann joined.
[¶1] Johnson Bank appeals the superior court's order granting summary judgment in favor of First American Title Insurance Company (" First American" ). Johnson Bank alleges the superior court erred when it determined the date for calculating loss under a lender title insurance policy as the date of foreclosure. For the following reasons, we reverse the superior court's grant of summary judgment and remand for proceedings consistent with this opinion.
FACTS AND PROCEDURAL HISTORY
[¶2] First American issued two title insurance policies to Johnson Bank on December 2, 2005, and June 19, 2006. These policies insured Johnson Bank's interest in two properties held by The Equitable Troon K, LLC (" Troon K property" ) and Three Sticks Management Group LLC (" Troon H property" ) (collectively, " the owners" ). The policies insured the Troon K property for $1,000,000 and the Troon H property for $1,050,000, which reflected the exact amounts Johnson Bank loaned to the owners. First American issued separate title insurance policies to the owners of the properties.
[¶3] In 2008, the owners sued First American to recover damages under their owners' title insurance policies, alleging certain undisclosed covenants, conditions, and restrictions (" CC& R's" ) existed that prohibited commercial development on both properties. The owners then defaulted on their obligations to Johnson Bank, and on September 22, 2010, Johnson Bank obtained title to the two parcels through foreclosure credit bids of $55,000 for Troon K and $47,000 for Troon H. In October 2011, Johnson Bank provided First American with notice of title claims under its lenders' title insurance policies, asserting the CC& R's prevented both properties from being developed for commercial purposes, and that these CC& R's were not listed exceptions to the title insurance policies.
[¶4] The parties agreed to arbitrate the damages claims, but could not agree on the comparative starting date for calculating the alleged diminution in value of the subject parcels. Johnson Bank argued that the date the loans were issued should be the date used to calculate any diminution in value,
whereas First American argued that the date of foreclosure should be utilized for this calculation. In April 2013, First American sought declaratory relief in superior court to determine the proper date to measure diminution in value to foreclosed properties under lender's title insurance policies in Arizona. Johnson Bank answered and filed a counterclaim seeking the same declaratory relief.
[¶5] The parties filed cross motions for summary judgment and, following oral argument, the superior court determined the date of comparative valuation for diminution of value of the two parcels was the date of foreclosure. After entry of a stipulated final judgment, Johnson Bank timely appealed. We have jurisdiction pursuant to ...