US BANK, N.A., AS LEGAL TITLE TRUSTEE FOR TRUMAN 2013 SC3 TITLE TRUST, Plaintiff, Appellant,
HLC ESCROW, INC.; FIRST AMERICAN TITLE INSURANCE COMPANY, Defendants, Appellees.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MAINE [Hon. George Z. Singal, U.S. District Judge]
Benjamin P. Campo, Jr., with whom Douglas McDaniel &
Campo LLC PC was on brief, for appellant.
A. Soley, with whom Glenn Israel, James G. Monteleone, and
Bernstein Shur were on brief, for appellee First American
Title Insurance Company.
P. Polansky, with whom Christine M. Kingston and Nelson
Mullins Riley Scarborough LLP were on brief, for appellee HLC
Howard, Chief Judge, Selya and Lipez, Circuit Judges.
Sara and Douglas Trask refinanced their mortgage in 2007,
their new mortgage incorrectly identified a parcel of
unimproved land, rather than the adjacent parcel of improved
land that encompassed their residence. The current holder of
the 2007 mortgage -- U.S. Bank -- sued the closing agent --
HLC Escrow, Inc. -- and the title insurer -- First American
Title Insurance Company ("First American") -- in
2016. U.S. Bank's complaint included causes of action for
negligence and "duty of care" against HLC Escrow,
and negligence, unilateral mistake, and violation of
Maine's Unfair Claims Settlement Practices Act
("UCSPA") against First American. The district
court dismissed the complaint, declining to apply Maine's
twenty-year statute of limitations for personal actions on
certain types of contracts and financial instruments, and
further concluding that Maine's six-year limitations
period for civil actions barred the bank's claims.
See Me. Rev. Stat. Ann. tit. 14, §§ 751,
affirm the district court's judgment in substantial part,
vacating only its dismissal of U.S. Bank's UCSPA claim
against First American. With respect to that claim, we
conclude that it was timely filed.
Trasks entered into a mortgage agreement with Sun Mortgage
New England, Inc. in February 2005. The parties agree that
the mortgage encumbered an improved parcel of land along
Stream Road in Winterport, Maine. In April 2007, the Trasks
refinanced their mortgage with Home Loan Center Inc. d/b/a
LendingTree Loans. The property description in the 2007
mortgage identifies a far less valuable parcel of unimproved
land also along Stream Road, and also owned by the Trasks.
HLC Escrow acted as the closing agent for the transaction,
and First American insured the title of the encumbered
property. First American also supplied the legal property
description for the mortgage. Following a series of
assignments, U.S. Bank took ownership of the 2007 mortgage in
defaulting on the 2007 mortgage, the Trasks filed a Chapter 7
petition for bankruptcy in December 2009. Three months later,
the Trasks filed an adversary complaint against U.S. Bank,
asking the bankruptcy court to limit U.S. Bank's mortgage
lien to the unimproved parcel. Subsequently, U.S. Bank filed
an insurance claim with First American. The insurance claim
asserted coverage based on the mortgage's errant
identification of the unimproved parcel. In its letter
denying the insurance claim on May 10, 2010, First American
explained that the policy did not cover the improved parcel,
and insured only the parcel actually identified by the
mortgage -- that is, the unimproved parcel. U.S. Bank filed
another insurance claim in early 2011. First American denied
this second claim in February of that year, offering the same
explanation as it did in denying the first claim.
10, 2011, the bankruptcy court entered a judgment concluding
that the trustee of the Trasks' bankruptcy estate had an
interest in the improved parcel superior to U.S. Bank's.
The Bankruptcy Appellate Panel for the First Circuit affirmed
that ruling in December 2011. See In re Trask, 462
B.R. 268 (B.A.P. 1st Cir. 2011). U.S. Bank filed a
foreclosure action on the unimproved parcel in December 2013,
obtained a favorable judgment in December 2014, and took
title to the unimproved parcel following a public sale in
April 2015. It then filed its third insurance claim with
First American in February 2016. First American denied the
claim on May 13, 2016, noting its previous denials, and
reasserting its prior interpretation of the policy.
responded to First American's latest denial by filing
suit in state court on August 9, 2016. As noted above, the
complaint alleges counts of negligence and duty of care
against HLC Escrow,  and negligence, unilateral mistake, and
violation of the UCSPA against First American. The UCSPA
claim asserts that First American "failed to effectuate
prompt, fair, and equitable settlement" of U.S.
Bank's 2016 insurance claim, "where liability was
reasonably clear," and "knowingly misrepresented to
U.S. Bank pertinent facts or policy provisions relating to
coverage at issue." The complaint does not mention U.S.
Bank's earlier-filed insurance claims.
Escrow removed the case to federal court, and both defendants
filed motions to dismiss under Federal Rule of Civil
Procedure 12(b)(6). The motions asserted, inter alia, that
U.S. Bank's claims were time-barred by Maine's
six-year statute of limitations for civil actions.
See Me. Rev. Stat. Ann. tit. 14, § 752. First
American took the position that U.S. Bank's claims
against it accrued no later than May 10, 2010, the date on
which it denied U.S. Bank's initial insurance claim.
Included as attachments to First American's motion to
dismiss were copies of U.S. Bank's 2010 claim letter,
First American's letter denying that claim, and First
American's letters denying U.S. Bank's 2011 and 2016
insurance claims. First American did not include copies of
U.S. Bank's 2011 and 2016 claim letters.
opposed the motions to dismiss by arguing that Maine's
twenty-year limitations period for personal actions on
certain types of contracts and financial instruments applied
to its causes of action against both defendants, making them
timely. See Me. Rev. Stat. Ann. tit. 14, § 751.
As to its claims against First American, U.S. Bank
alternatively argued that Maine's six-year statute of
limitations did not begin to run until First American denied
its 2016 insurance claim. According to U.S. Bank, the denial
of its 2010 insurance claim did not trigger the statute of
limitations because that claim was premature. The bank did
not "experience damages that would demonstrate a
cognizable loss" until it took title to the unimproved
parcel in April 2015, following the foreclosure proceedings.
When it then filed its 2016 insurance claim, "the scope
of U.S. Bank's damages was realized," its insurance
claim "was no longer hypothetical," and "the
remedy of payment on the policy was in place."
district court granted the motions to dismiss. It rejected
U.S. Bank's contention that Maine's twenty-year
limitations period applied, and found all of U.S. Bank's
claims barred by the six-year statute of limitations. As to
the bank's claims against First American, the district
court rejected U.S. Bank's argument that its claims did
not accrue until First American denied its 2016 insurance
claim. Without addressing the bank's prematurity
argument, the court reasoned that the limitations period was
not "tolled or extended every time U.S. Bank filed the
same claim and received a denial on the same basis from
[First American]." US Bank N.A. v.
HLC Escrow Inc., No. 1:16-cv-00453, 2016 WL 7480269,
at *3 (D. Me. Dec. 29, 2016).
appeal, U.S. Bank contends that the district court erred by
failing to apply Maine's twenty-year statute of
limitations. It again alternatively argues that its causes of
action against First ...