RCN Capital, LLC v. Chicago Title Ins. Co.

Syllabus

The plaintiff, R Co., sought to recover damages from the defendant, C Co., a mortgage title insurance company, for, inter alia, breach of contract in connection with its failure to pay a claim on a policy that it had issued. The policy insured R Co.'s interests, as a mortgagee, in certain real property that secured a note executed by S Co. in exchange for a commercial loan. S Co. defaulted on the note and R Co. commenced foreclosure proceedings, during which R Co. discovered that its rights in the property were subordinate to the interests of a superior mortgage held by M. The property also became subject to a tax foreclosure action, and R Co.'s and M's mortgages were found to be subordinate to the interests of the municipality that brought the tax foreclosure action. R Co. purchased the property for $150,000, pursuant to the tax foreclosure by sale. As a result of that sale, M received approximately $108,000, which represented the total purchase price of $150,000 less committee expenses and the satisfaction of the tax lien. Thereafter, R Co. com- menced the present action after C Co. failed to pay money damages to R Co. due to M's superior encumbrance on the property. The trial court rendered judgment in favor of R Co. and awarded it $108,000, which represented R Co.'s loss in equity had its mortgage been superior to that of M. On appeal, R Co. claimed that the trial court improperly calculated the damages award by using the tax foreclosure sale price of the property instead of the estimated fair market value of the property at the time it commenced its foreclosure action. Held that the trial court did not err in calculating R Co.'s damages to be $108,000, which was the actual amount R Co. did not receive as a result of having to satisfy M's superior mortgage; R Co.'s claim that the damages should have been calculated as approximately $270,000, measured as the fair market value of the property as determined in the foreclosure action less the satisfac- tion of the t