First American Title Insurance Co v. Johnson Bank

Summary

The court held that, when an undisclosed title defect prevents the property's known intended use and causes the borrower to default, loss under a lender's title insurance policy is generally measured as of the policy-issuance date rather than the foreclosure date. The policy was ambiguous because it did not specify a valuation date, and construing the ambiguity against the insurer supported the policy-date measure under these circumstances. Because the record did not establish that the title defect caused the default and foreclosure, the court reversed and remanded for further proceedings on causation.