Murnan Spring Hill Trust v. Stewart Title Guaranty Co. , 374 F. App'x 459 ( 2010 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1490
MURNAN SPRING HILL TRUST,
Plaintiff – Appellant,
and
ALEXANDRA P. MURNAN, Trustee,
Plaintiff,
v.
STEWART TITLE GUARANTY COMPANY,
Defendant – Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. T. S. Ellis, III, Senior
District Judge. (1:08-cv-00002-TSE-JFA)
Argued: January 26, 2010 Decided: March 31, 2010
Before TRAXLER, Chief Judge, and SHEDD and DAVIS, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
Kenneth A. Martin, THE MARTIN LAW FIRM, PLLC, McLean, Virginia,
for Appellant. F. Douglas Ross, III, ODIN, FELDMAN & PITTLEMAN,
PC, Fairfax, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Alexandra P. Murnan appeals the order granting summary
judgment against her on her breach of contract claim. We
affirm.
Summary judgment is appropriate “if the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). We review the district court's order
granting summary judgment de novo. Jennings v. Univ. of North
Carolina, 482 F.3d 686, 694 (4th Cir. 2007) (en banc). In doing
so, we view the facts in the light most favorable to the
nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
Murnan created the Murnan Spring Hill Trust (“the Trust”)
under which she is the sole holder of the right to revoke the
trust as well as the sole beneficiary of the Trust for the
duration of her life. After a series of real estate
transactions, Murnan acquired a piece of property in McLean,
Virginia, on the Trust’s behalf. Before closing on the purchase
contract, Murnan, as trustee, purchased a title insurance policy
from Stewart Title Guaranty Co. There were multiple federal tax
judgments pending against Murnan in her individual capacity when
the policy was issued.
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Pursuant to the title insurance policy, Stewart Title
agreed to insure “against loss or damage . . . sustained or
incurred by the insured by reason of . . . [a]ny defect or
encumbrance on the title [or] [u]nmarketability of title.” J.A.
128. However, the policy excludes from coverage “defects,
liens, encumbrances, adverse claims or other matters . . .
created, suffered, assumed or agreed to by the insured
claimant.” J.A. 128. The policy listed three items which were
specifically excluded from coverage: a deed of trust securing a
loan, taxes subsequent to the year 2002, and a water main
easement.
Less than a year after she purchased the property, Murnan
entered into a contract to sell the property to a third party.
Murnan claims that the sale foundered because the tax judgments
against her in her individual capacity attached to the property
in the form of tax liens when she purchased the property as
trustee, and, as a result, the potential buyer could not obtain
title insurance on the property. Murnan then filed a claim with
Stewart Title for coverage, and her claim was denied. Murnan
defaulted on her mortgage payments, and the lender foreclosed on
the property. Murnan later brought this action claiming that
Stewart Title breached the policy by failing to provide
coverage.
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On cross-motions, the district court granted summary
judgment in favor of Stewart Title. First, the court held that
the federal tax liens against Murnan in her personal capacity
attached to the property pursuant to 26 U.S.C. § 6231 when she
purchased it as trustee. Additionally, the court held that the
tax liens were excluded from coverage under the policy because
Murnan, as trustee, “suffered” the liens on the property by
accepting title on behalf of the Trust. Murnan challenges this
second ruling on appeal, contending that the court misconstrued
the policy.
Although Murnan correctly notes that we construe
ambiguities in an insurance policy against the insurer, Lincoln
Nat’l Life Ins. Co. v. Commonwealth Corrugated Container Corp.,
327 S.E.2d 98, 101 (Va. 1985), the policy’s exclusion of liens
suffered by the insured is not susceptible to more than one
construction. “Suffer” has only one meaning in this context.
As the district court noted, the Sixth Circuit examined a
provision excluding risks “created, suffered, assumed or agreed
to” by the insured, which is identical to the language used in
the policy here, and it explained that “the term ‘suffered’ has
been interpreted to mean consent with the intent that ‘what is
done is to be done,’ . . . and has been deemed synonymous with
‘permit,’ which implies the power to prohibit or prevent the
claim from arising. . . .” Am. Sav. & Loan Ass'n v. Lawyers
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Title Ins. Corp., 793 F.2d 780, 784 (6th Cir. 1986) (citations
omitted); see also Black’s Law Dictionary (8th ed. 2004)
(defining “suffer” to include “to allow or permit (an act,
etc.)”).
The district court rejected Murnan’s argument that the
inquiry is whether she, as trustee, caused the tax liens to
arise in the first place. Instead, it identified the key issue
to be whether Murnan, as trustee, permitted the liens to attach
to the property. It then explained that Murnan, as trustee,
suffered the liens on the property when she purchased the
property because (1) she was aware of the IRS tax judgments
against her when she purchased the property; (2) those judgments
automatically became liens on all property held by her,
including her rights to trust property; and (3) she knew that
she held expansive rights to the trust property as the lifetime
beneficiary and grantor with the unconditional right to revoke
the trust. Therefore, the court concluded that the tax liens
were excluded from coverage. *
*
The district court did not rule on Murnan’s argument that
Stewart Title waived, or is estopped from asserting, the
exclusion provision at issue. However, to the extent that these
arguments are properly before us, they fail under the facts of
this case. See Sharp v. Richmond Life Ins. Co., 183 S.E.2d 132(Va. 1971) (holding that although the insurer issued the policy
with knowledge of the insured’s health problems but failed to
specifically exclude them, the insurer could later deny coverage
under a general exclusion provision relating to pre-existing
(Continued)
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Having reviewed and considered the record, briefs, oral
arguments, and applicable law, we are persuaded that the
district court reached the correct result on Murnan’s claims.
Accordingly, we affirm the order granting summary judgment based
substantially on the reasoning of the district court. See
Murnan Spring Hill Trust v. Stewart Title Guaranty Co., No.
1:08-cv-00002 (E.D. Va. April 1, 2009).
AFFIRMED
conditions); Employers Commercial Union Ins. Co. of Am. v. Great
Am. Ins. Co., 200 S.E.2d 560, 562 (Va. 1973) (stating that
waiver requires the intentional relinquishment of a known
right).
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