Lester v. Old Republic draws a sharp line between what a homeowner may own under Massachusetts law and what a title insurer agreed to cover with regard to title insurance.
A useful reminder for insurance professionals with regard to title insurance
A Massachusetts Appeals Court decision issued April 10th offers a useful reminder for insurance professionals: in title insurance, ownership and coverage are not always the same thing. In Lester v. Old Republic Title Insurance Company, the court held that Old Republic had no duty to defend Westport homeowners in a neighbor dispute over a stone wall because the disputed strip, though owned by the homeowners under the derelict fee statute, was not within the land described in the title policy and fell within the policy’s Schedule B exclusion.
The case arose from a long-running dispute on Hillcrest Acres Lane in Westport. Douglas Scott Lester and John Tyler Mandeville bought their property in 2013 and obtained an owner’s title policy from Old Republic at the same time. According to the appellate briefs, the homeowners restored an existing stone wall in 2015. In 2019, neighboring property owners sued, claiming the wall interfered with asserted easement rights along Hillcrest Acres Lane and seeking, among other relief, removal of the wall. Old Republic denied the homeowners’ request for a defense.
The coverage fight turned on the policy’s description of the insured land
The Appeals Court’s analysis began with the policy language. The insured land was described in Exhibit A as property “on the northerly side of Hillcrest Acres Lane, so called, (private way – min 40 feet wide).” The court held that this wording unambiguously fixed the boundary of the insured parcel at Hillcrest Acres Lane and treated that way, for policy purposes, as at least 40 feet wide. Because the land under the stone wall lay beyond the metes-and-bounds description and within the bounds of Hillcrest Acres Lane as described in the policy, the court concluded it was outside the policy’s coverage.
That holding mattered because the homeowners had already won an important point in the underlying land case. In that earlier litigation, a Superior Court judge ruled that they owned the land under the stone wall in fee simple by operation of G.L. c. 183, § 58, the derelict fee statute. The plaintiffs argued that because the policy description followed the deed, and because Massachusetts law construes deeds abutting a way to carry the grantor’s fee interest in the way absent a contrary reservation, the title policy necessarily covered the same strip. The Appeals Court rejected that argument, holding that the statute governs instruments passing title to real estate, not the scope of a separate insurance contract. In the court’s words, the statute may vest the insured with more ownership than appears in the deed, but it does not thereby vest the insured with more insurance than is described in the policy.
Schedule B exclusion supplied a second basis for the denial
The court did not stop with the definition of the insured land. It also held that Schedule B independently barred coverage. The policy excluded disputes concerning “[t]itle to and rights of the public and others entitled thereto in and to those portions of the insured premises lying within the bounds of Hillcrest Acres Lane and the adjoining streets and ways.” The homeowners argued that the actual traveled lane was only about 10 to 12 feet wide, not 40 feet, and that the wall sat north of the road itself. But the Appeals Court held that the policy’s own description controlled and that the disputed strip still fell within Hillcrest Acres Lane as defined in the policy.
The homeowners also invoked Covered Risk No. 23, which applies when an insured is forced to remove an existing structure that encroaches onto an easement or over a setback line, even if the easement or setback is excepted in Schedule B. The Appeals Court found that provision did not help because the policy’s defined terms limited it to structures located on the insured “Land,” and the disputed strip under the wall was not part of the insured land described in Exhibit A. The court therefore held that Covered Risk No. 23 did not create a duty to defend the Dromsky action.
Related contract and business-practice claims failed with the coverage claim
Once the Appeals Court determined there was no coverage, the rest of the insureds’ claims largely fell with it. The court affirmed summary judgment for Old Republic not only on the declaratory judgment and breach of contract counts, but also on the claims for breach of the covenant of good faith and fair dealing, unjust enrichment, and violations of G.L. c. 176D. It also affirmed the denial of the plaintiffs’ postjudgment motions for reconsideration and to amend the judgment.
The motion to amend had sought to add a c. 93A theory based on 940 C.M.R. § 3.16, arguing Old Republic should have disclosed that the land the homeowners would own under the derelict fee statute would not necessarily be covered by the policy. The Appeals Court rejected that argument as well, ruling that nondisclosure liability under c. 93A requires knowledge of a material fact at the time of the transaction, not merely suspicion or likelihood. The insureds’ briefs had framed the issue as one of consumer expectation, arguing that reasonable homeowners would assume all land they owned in fee simple would be covered or that they would have shopped for different coverage if told otherwise. The court did not accept that view.
A concurrence flagged a possible policy gap
Although the panel unanimously affirmed judgment for Old Republic, Justice Wood wrote a separate concurring opinion to say the case revealed a possible mismatch between Massachusetts property law and title insurance practice. He said it was understandable that the homeowners might assume their policy covered the narrow strip between their deeded boundary and the traveled way, particularly where they did in fact own that strip under the derelict fee statute. He suggested that the Legislature or the Commissioner of Insurance might consider whether title insurance should be required to extend to ancillary rights and titles that attach to ownership by operation of law. That suggestion was not part of the court’s holding, but it may be the part of the decision that draws the most attention from lawyers and title insurers.
For Massachusetts insurance professionals, the decision’s practical lesson is clear. Lester confirms that a title policy remains a contract tied to the land and risks described in the policy itself. A homeowner may establish fee ownership of an abutting strip under G.L. c. 183, § 58, and still be outside title coverage if that strip is not within the insured parcel as written and is separately excepted from coverage. In this case, the Appeals Court held exactly that.
View more insurance coverage law articles by Owen Gallagher here.
Owen Gallagher
Insurance Coverage Legal Expert/Co-Founder & Publisher of Agency Checklists
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