In 2011, Triple Properties Detroit, LLC purchased undeveloped condominium units that were subject to a Master Deed containing a ten-year deadline. The Deed required the developer to either complete construction or withdraw the undeveloped units by March 2014, or else the rights to those units would revert to the condominium association. Triple Properties was aware of this clause when it acquired the units but chose to hold them without developing or withdrawing them. When the deadline passed in 2014, the units legally reverted to the association. Despite this, Triple later attempted to sell the units to third-party buyers, including PCJ Investments, without disclosing the reversion or the association's claim. When the buyers discovered the title defect, they sued Triple. Triple sought defense coverage from its title insurer, First American, which denied the claim based on a policy exclusion for defects the insured created or assumed. The district court granted summary judgment to First American, and Triple appealed.
The Sixth Circuit applied de novo review under Michigan law, which requires enforcing clear and unambiguous contract language as written. The court focused on Exclusion 3(a) of the title insurance policy, which excludes coverage for defects, liens, or claims that the insured 'created, suffered, assumed, or agreed to.' The court interpreted these terms based on established precedent: 'created' implies a conscious, deliberate act; 'suffered' means to permit or allow; 'assumed' requires knowledge of the defect; and 'agreed to' requires full knowledge of the claim. The court found that Triple 'suffered' the loss of title by failing to act within the ten-year window when it had the power to prevent the reversion. Furthermore, Triple 'created' the lawsuit by selling the units to PCJ with full knowledge of the title defect and the association's claim. Because the loss was the direct result of Triple's deliberate acts and knowledge, the exclusion applied. The court rejected Triple's arguments regarding the duty to defend, noting that insurers are not required to defend claims specifically excluded from coverage. Triple's alternative argument that the policy was breached at issuance was barred by the six-year statute of limitations for contract claims.
The decision reinforces the strict application of 'created, suffered, assumed, or agreed to' exclusions in title insurance policies. Insureds who are aware of title defects or deadlines and fail to act, or who sell property with known defects, cannot shift the financial burden of resulting litigation to their insurers. The ruling stands as a warning that title insurance does not cover losses resulting from an insured's own inaction or deliberate concealment of title issues. There are no remand instructions as the judgment is affirmed.
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