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Sonnett v. First American Title Ins. Co.

Supreme Court of Wyoming

September 13, 2013

George M. SONNETT, Jr. and Wendy Z. Burgers Sonnett, Husband and Wife, Appellants (Plaintiffs),
v.
FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, and First American Title Insurance Company of Sublette County, a Wyoming corporation, Appellees (Defendants).

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Representing Appellants: George M. Sonnett, Jr. and Wendy Z. Burgers Sonnett of Washington, Virginia, pro se. Argument by Mr. Sonnett and Ms. Burgers Sonnett.

Representing Appellees: Stuart R. Day and Keith J. Dodson of Williams, Porter, Day & Neville, P.C., Casper, Wyoming. Argument by Mr. Day.

Before KITE, C.J., and HILL, VOIGT, BURKE, and DAVIS, JJ.

VOIGT, Justice.

[¶ 1] The appellants, George M. Sonnett, Jr. and Wendy Z. Burgers Sonnett, filed a complaint against the appellees, First American Title Insurance Company and First American Title Insurance Company of Sublette County (collectively " First American" ). In their complaint, the Sonnetts alleged that First American breached the terms of the title insurance policy, was negligent, and acted in bad faith when it determined that damages the Sonnetts claimed they incurred due to a " Master Plan" associated with their property was not covered under the title insurance policy. After the parties filed competing motions for summary judgment, the district court granted summary judgment in favor of First American and dismissed the Sonnetts' complaint. The Sonnetts now appeal that decision and other procedural matters.

ISSUES

[¶ 2] 1. Did the district court err when it granted summary judgment in favor of First

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American regarding the Sonnetts' breach of contract claim?

2. Did the district court err when it granted summary judgment in favor of First American regarding the Sonnetts' bad faith denial of coverage claim?

3. Did the district court err when it granted summary judgment in favor of First American regarding the Sonnetts' claims of negligence?

4. Did the district court abuse its discretion when it considered a decision letter it previously issued in a different civil action involving the Sonnetts and the same property at dispute in the present case?

5. Did the district court abuse its discretion when it struck portions of the Sonnetts' affidavits that were attached to their motion for summary judgment?

6. Did the district court err when it granted First American's motion for summary judgment despite the fact that it had already ordered the parties to mediate the case?

FACTS

[¶ 3] This Court previously discussed in depth the facts surrounding the property that was purchased by the Sonnetts:

Harold and Leda Reach owned a substantial tract of property in Sublette County, Wyoming. In 1989, they applied to the county to change the zoning on a twenty-acre parcel of that property from Agricultural to Recreational, with the stated purpose of developing a lodge for resort use. In order to gain approval of the application during the hearing process, the Reaches offered a set of restrictive covenants entitled the " Proposed Masterplan of Elk Ridge Lodge Development." This proposed Master Plan restricted the use and development of the property more than the standard limitations placed on property with Recreational Zoning. The County accepted the Master Plan and approved the zoning change application. The Master Plan and the County's resolution approving the zoning change were recorded with the County Clerk in Sublette County's property records.
The Reaches later sold the twenty-acre parcel to Elk Ridge Lodge, Inc., a corporation owned by their son, Terry Reach, and another person, Daniel Fox. In the fall of 1989, Elk Ridge began operating a resort facility on the property, offering lodging, a restaurant with a beer liquor license, gasoline sales, outfitting, and a gift shop. Over the next several years, Elk Ridge made several improvements to the property, and continued operating the resort lodge.
In the [s]pring of 2001, Elk Ridge entered into a contract to sell the property to the Sonnetts. Prior to closing, the Sonnetts obtained title insurance [from First American]. The policy listed a number of easements and other restrictions on the property, but did not mention the Master Plan. The Sonnetts contend that they were unaware of the existence of the Master Plan. The Sonnetts further contend that Elk Ridge had been operating the resort lodge for several years in a manner consistent with its Recreational Zoning, but contrary to some of the restrictions contained in the Master Plan.
The Sonnetts learned of the Master Plan in 2006. In May of that year, they received a letter from the county informing them that they were violating the Master Plan by offering a restaurant and tavern to the public, renting snowmobiles, and plowing the property's driveway to allow public access during the winter. In subsequent correspondence with the county, the Sonnetts were informed that they could face substantial penalties if they failed to comply with the Master Plan. Based on their perception that the lodge could not be operated successfully within the limitations of the Master Plan, the Sonnetts closed the lodge in the summer of 2007.

Elk Ridge Lodge, Inc. v. Sonnett, 2011 WY 106, ¶¶ 4-7, 254 P.3d 957, 959 (Wyo.2011).

[¶ 4] Before closing the lodge, the Sonnetts sent First American a certified letter containing a " Legal Notice of Claim Without

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Prejudice." The Sonnetts claimed that the limitations contained in the zoning resolution (i.e., Master Plan) made the property unmarketable. The Sonnetts also claimed that there was a cloud on their title to the property because of a lack of legal access. A representative of First American responded to the Sonnetts' letter, explaining that the limitations in the resolution were not insurable pursuant to the policy because the policy specifically excluded the Sublette County Zoning Resolution and any amendments thereto fro coverage. Further, First American concluded that the policy did not cover the lack of access claim. Thereafter, the Sonnetts filed a complaint against First American, claiming a breach of the terms of the title insurance policy, negligence, and bad faith.

STANDARD OF REVIEW

[¶ 5] In several of their claims on appeal, the Sonnetts allege that the district court erred when it granted summary judgment in favor of First American and dismissed the complaint. When reviewing a district court's order granting ...


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