A recent decision by the D.C. Court of Appeals gives title insurance underwriters a degree of satisfaction, perhaps tempered by the Court's invitation to review the matter en banc.

In John Stevens v. United General Title Ins (D.C. App. No. 00-CV-1235) decided last week, the court upheld a lower court ruling that the underwriter had no duty to defend if, upon comparison of the a) policy and b) the allegations of the complaint filed against the insured (the "eight corners test") the allegations of the underlying complaint fall within a policy exclusion.

In the case, the underlying complaint against the insured had material inaccuracies (the complaint was eventually dismissed after the insured sought private counsel), some of which may have been discovered by an examination of public records. The insured argued that the duty to defend, being broader than the duty to indemnify, was triggered by imputed knowledge of the public records.

Alternatively, the insured claimed that the court should recognize a less-rigid factual test exception applicable to those cases where, regardless of the allegations of the underlying complaint, the true facts would have triggered coverage under the policy. While affirming the lower court's ruling in favor of the underwriter, the court added "While there may be merit to [the insured's] advocacy of the factual exception to the "eight corners' traditional duty to defend rule, and merit also to the countervailing considerations of maintaining the "eight corners" rule, these matters are best considered by our en banc court rather than a division of the court". The dissenter, Judge Schwelb, had the last word when he said ".... the present case may warrant en banc consideration". Click Here for slip opinion of Stevens v. United General

Reminder: D.C. Companies Must Get Master Business Licenses

Until now, title companies and other businesses did not need to be licensed in D.C. That has changed. All businesses in D.C. that earn more than $2000/yr (including non-profits) will be required to secure such a license. The online application process does not work, but the site has some helpful information at: www.brc.dc.gov. There is a $500 penalty for non- compliance. You will need a Certificate of Occupancy ("C of O") number if you are operating in the District of Columbia. If you are an out-of-state entity transacting business in DC without a District address, insert this number as your C of O number: 212345. The deadline for application varies: if you are a newly registering entity, the deadline is August 31, 2002. If you are an existing licensee with expiration after August 31, you may wait until your license expiration date. If you are an existing licensee with an expiration date before June 30, you must renew by June 30, 2002. If your expiration date is between July 1, 2002 and August 31, 2002, you must renew by expiration date.

The State of California recently issued a cease and desist order against the providers of the Radian coverage, siding with the ALTA position that the product is nothing more than title insurance, to be sold only by licensed title insurance underwriters.

We are advised that the Honorable Sharon Ambrose of the DC Council is currently circulating draft legislation for review and comment prior to introducing new legislation covering foreclosures in the District of Columbia. The DC Land Title Association, through the coordinating efforts of Elisabeth Zajic (First American) and David H. Cox (Jackson & Campbell, P.C.) will be responding to this welcomed opportunity. At first blush, the draft legislation appears to be a far more attractive statutory scheme than that pushed through - -- and then hastily rescinded --- last year.

Please feel free to circulate this newsletter to others in the industry, both within and outside your office.

Sincerely,

Real Property and Asset Management Group
Jackson & Campbell P.C.