148 Wn.2d 788, Michak v. Transnation Title Ins. Co.

(1) Did anything in the Commitment preclude Transnation from amending the legal description of the property in Schedule A prior to issuing its Policy?

(2) If not, by initialing at closing the one-page legal description of the property that had been attached to the Supplemental, did Michak accept Transnation's amendment of the legal description in Schedule A?

ANALYSIS

Standard of Review. The trial court dismissed on summary judgment Michak's breach of contract claim against Transnation. Appellate review of summary judgment is de novo; the reviewing court engages in the same inquiry as the trial court and views the facts and the reasonable inferences from those facts in the light most favorable to the nonmoving party. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). A motion for sum

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mary judgment is properly granted where "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." CR 56(c). Where the moving party brings forth admissible evidence supporting its claimed absence of any issue of material fact, the "adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." CR 56(e) (emphasis added). A court weighing a summary judgment motion thus places "the emphasis . . . upon facts" and regards a fact as "an event, an occurrence, or something that exists in reality." Grimwood v. Univ. of Puget Sound, Inc., 110 Wn.2d 355, 359, 753 P.2d 517 (1988) (citing WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 813 (1976)).

Permissibility of Transnation's Amendment of Schedule A. Transnation argued in its summary judgment motion that Michak could not rely for coverage on the original Commitment because she had initialed at closing the one-page legal description of the property that had been attached to the Supplemental, amending Schedule A. But Michak countered that Transnation had failed to "inform [her] of any change in the Commitment," CP at 142, and had thus changed the Commitment unilaterally.«4» Having failed to persuade the trial court, Michak argued to the Court of Appeals that "Transnation had a contract obligation under the Commitment . . . to provide her a Title Policy consistent with the property described in its Schedule A or as amended by Supplement." Br. of Appellant at 7. To support her point that Transnation was not entitled to amend the Commitment, she quoted the following stipulation found in the Commitment:

"(2) If the proposed insured has or acquires actual knowledge of any defect, lien, encumbrance, adverse claim or other matter

«4» Although Michak asserted no negligence claim in her complaint, she argued in her summary judgment memorandum and to the Court of Appeals that Transnation had breached a duty to use reasonable care in communicating the new information to her. See CP at 143; Br. of Appellant at 13-14.

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affecting the estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule B hereof, and shall fail to disclose such knowledge to the Company in writing, the Company shall be relieved from liability for any loss or damage resulting from any act of reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed insured shall disclose such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse claim or other matter, the Company at its option may amend Schedule B of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurred pursuant to paragraph 3 of these Conditions and Stipulations."

Id. at 9 (quoting CP at 7).

Stipulation 2, however, has nothing at all to do with Transnation's amendment of the legal description of the property in Schedule A. As "essential elements" of a preliminary title commitment, "[t]he legal description of the land" is an element distinct from "[t]he title defects that the title company would not be willing to eliminate if the policy were then being written." 3 WASH. STATE BAR ASS'N, WASHINGTON REAL PROPERTY DESKBOOK § 39.10, at 39-15 (3d ed. 1996) (listing the seven "essential elements of any commitment"). The legal description is a component of Schedule A, while the exceptions - "that is, matters that the title company will not insure" - are enumerated in Schedule B. Id. at 39-18, 39-20. Schedule B in the Commitment thus sets forth the exceptions to be contained in Schedule B of the Policy, unless the matters giving rise to those exceptions were resolved to the company's satisfaction prior to the Policy's issuance.«5»

Stipulation 2, which Michak quoted, did not contractually obligate Transnation to treat the newly discovered information regarding the easement as a Schedule B exception. Rather, Stipulation 2 placed a burden on the insured

«5» Compare Commitment's Supplement B, CP at 10, with Policy's Supplement B, CP at 67-68.

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and conferred an option on the insurer. First, the stipulation imposed on the insured a duty to disclose to the insurer "any defect, lien, encumbrance, adverse claim or other matter affecting the estate or interest or mortgage thereon covered by this Commitment." CP at 7. Second, the stipulation gave the insurer the "option" to limit its exposure under the anticipated policy by "amend[ing] Schedule B," if the insured disclosed (or the insurer otherwise acquired) such knowledge. Id. (emphasis added). Assuming the information concerning the reduction in the 60-foot easement may be described as knowledge of some "other matter affecting the estate . . . covered byth[e] Commitment," it was nonetheless not the type of information that would have prompted Transnation to amend Schedule B. Because Transnation's receipt of actual knowledge of the recorded document left no doubt about the nature of the easement benefiting the subject property, the document did not cloud the title or otherwise create any doubt as to whether an adverse claimant could come forward. That half the easement had been legally extinguished was a fact. Indeed, had Transnation simply added an exception to Schedule B (excepting from coverage the formally extinguished 30 feet of the easement), the company would arguably have been taking a misleading step - one implying its uncertainty about the validity of the extinguishment of half the width of the easement. Again, there was no such uncertainty.

In sum, Transnation has produced cogent evidence that it issued the Supplemental on August 1, 1997, amending the legal description of the property in Schedule A, see CP at 45-46, 106, 109, and Michak has cited no provision in the Commitment precluding Transnation from amending the Schedule A description.«6» Stipulation 2 pertains to Schedule

«6» Indeed, the implication that Transnation was not at liberty to correct the legal description once it had, in Michak's words, "failed to uncover the release of this easement when it prepared its Commitment," CP at 4, runs counter to this court's recent decision in Barstad v. Stewart Title Guaranty Co., 145 Wn.2d 528, 39 P.3d 984 (2002). There, this court made clear that "a preliminary commitment is not a representation of the condition of title, but a 'statement of terms and conditions upon which the issuer is willing to issue its title policy, if such offer is accepted.' " Id. at 536 (quoting RCW 48.29.010(3)(c)). As Transnation has observed, by permitting no correction of the legal description, the Court of Appeals majority effectively "transformed Transnation's preliminary commitment into an abstract of title, a guarantee of the condition of the title," and "impose[d] duties upon Transnation which exist neither by statute[n]or in the applicable document itself." Suppl. Br. of Pet'r at 8-9. Similarly, the concurrence in the present case maintains that, "[e]ven if Transnation had expressly, and without factual dispute, informed Ms. Michak of its decision to insure less than the property described in the preliminary commitment, that would not change its responsibility to live up to the legal obligation it assumed in the preliminary commitment." Concurrence at 802.

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B and simply has no bearing on Transnation's amendment of the legal description in Schedule A.«7»

Effect of Michak's Initialing the Corrected Legal Description at Closing. The undisputed fact is that at closing, prior to the issuance of the Policy, Michak initialed the second page of the Supplemental, which contained the correct legal description of the property, showing the easement's width as 30 feet. Because Michak contends that she was not shown the first page of the Supplemental, the precise question on summary judgment is whether, absent proof that she had also been given the Supplemental's cover page, her initials were a sufficient indication that she had accepted Transnation's amendment to Schedule A.«8» We conclude that they were.

«7» Stipulation 2 was a red herring that drew the Court of Appeals majority far from the beaten path. The majority took two notably false steps: it applied a stipulation pertaining to the amendment of Schedule B to Transnation's amendment of Schedule A, and it defied rules of grammar and logic by insisting that "or" meant "and" in that inapplicable stipulation. The dissent aptly noted that the majority had "modifie[d] the contract language" when it concluded that Transnation could amend the Commitment only after the insured acquired actual knowledge of a potential title defect. Michak, 108 Wn. App. at 429 (Armstrong, C.J., dissenting).

«8» Given that Transnation issued an amendment to Schedule A, a question that need not be answered here is whether Transnation was obligated to seek Michak's acceptance of its correction of the legal description. The Washington Real Property Deskbook contains the following caution:

[The legal description of the land in Schedule A] generally will be the same as contained on the recorded conveyances or mortgages in the chain of title, but may not be. If the description is changed from the record, or from that supplied with the application for insurance, the commitment will usually point this out and request that the parties confirm the use of a different description.

WASHINGTON REAL PROPERTY DESKBOOK, supra, § 39.10(2)(b), at 39-18 (emphasis added). Among its "Practice Tips" for handling closings, the Deskbook offers the following advice: "Read the legal description. The title company may not advise the parties that the description in the commitment differs from the description submitted with the application or from the record title." Id. § 39.11, at 39-21 (emphasis added). While these comments are directed toward differences between the descriptions the insured submitted and the insurer then used in the preliminary commitment, they suggest that the insurer has no contractual obligation to mirror the insured's initial request.

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The legal significance of Michak's initialing the correct legal description of the property is settled: "It is a general rule that a party to a contract which he has voluntarily signed will not be heard to declare that he did not read it, or was ignorant of its contents." Nat'l Bank of Wash. v. Equity Investors, 81 Wn.2d 886, 912, 506 P.2d 20 (1973) (citing Perry v. Cont'l Ins. Co., 178 Wash. 24, [28,] 33 P.2d 661 (1934)). In National Bank the issue was whether a person was bound by an agreement subordinating his lien on a piece of real property to another lender. This court directed the superior court to enter judgment against him because he had signed the agreement. Id. at 913. This follows the traditional duty to read in contract law: "[A] party who signs an instrument manifests assent to it and may not later complain about not reading or not understanding." JOHN D. CALAMARI & JOSEPH M. PERILLO, THE LAW OF CONTRACTS 376 (4th ed. 1998); see also Retail Clerks Health & Welfare Trust Funds v. Shopland Supermarket, Inc., 96 Wn.2d 939, 943-44, 640 P.2d 1051 (1982). The rule would be different had Michak been "deprived of the opportunity to read" the revised legal description or had she been a victim of "fraud, deceit, or coercion." Yakima County (W. Valley) Fire Prot. Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 389, 858 P.2d 245 (1993). But she asserts no such defenses to the enforcement of the contract. In sum, under Washington law, because Michak initialed the correct legal description of the property to be insured, she cannot disavow assent to Transnation's amendment of the legal description in Schedule A.

CONCLUSION

Michak has identified no provision in the Commitment that precludes Transnation from amending the legal de

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scription of the property in Schedule A prior to issuing the Policy. Recalling that a fact is "an event, an occurrence, or something that exists in reality," Grimwood, 110 Wn.2d at 359, we rest our resolution of Transnation's summary judgment motion on two facts: (1) that Transnation issued its Supplemental prior to the transaction's closing and the issuance of its Policy and (2) that Michak initialed at closing the corrected legal description that Transnation had originally attached to its Supplemental. On these facts, Michak has no viable claim that Transnation breached its commitment to provide title insurance. The Commitment's legal description of the property was properly corrected prior to issuance of the Policy, Michak acknowledged the corrected description, and Transnation's Policy insured the property that Michak purchased.

The Court of Appeals decision is reversed, and the trial court's order granting Transnation's motion for summary judgment is reinstated.

ALEXANDER, C.J., JOHNSON, MADSEN, IRELAND, BRIDGE, and CHAMBERS, JJ., and SMITH, J. PRO TEM., concur.

SANDERS, J. (concurring) - The parties to this action dispute the lawful right of the title insurance company, if any, to change the legal description of the property to be actually insured in the final policy from the description of the property described in the preliminary commitment. However whether the insured had notice, much less consented to modify the preliminary commitment, is academic under the facts of this case which lends itself to a far simpler resolution.

Nothing could be more axiomatic than the fundamental proposition that a title insurer need not insure title to more property than that purportedly conveyed to its insured. D. BARLOW BURKE, JR., LAW OF TITLE INSURANCE § 3.2.3, at 3:27-28 (2d ed. 1993). "An insured cannot insure what he [or she] does not own, no matter what the policy says: In the quaint

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phrase of the law, the stream can rise no higher than its source." Id.

Transnation committed "to issue its policy or policies of title insurance, as identified in Schedule A, in favor of the proposed insured named in Schedule A, as owner or mortgagee of the estate or interest covered hereby . . . ." Clerk's Papers (CP) at 6 (emphasis added). Schedule A to the preliminary commitment contained a property description that included a 60-foot easement. Id. at 9. However, Ms. Michak ultimately purported to purchase property with only a 30-foot easement. Id. at 135. Transnation cannot be faulted for refusing to issue a policy insuring title to a portion of an easement its insured never purchased any more than it could be faulted for not issuing a title policy if the whole deal fell through.

But our majority looks to the closing documents for all the wrong reasons. Relying on National Bank of Washington v. Equity Investors, 81 Wn.2d 886, 506 P.2d 20 (1973), it treats Ms. Michak's purchase of the property as consent to modify her contract with Transnation. See majority at 798-99. On the contrary, National Bank relates exclusively to imputed knowledge between two contracting parties, i.e., the purchaser and the seller.

It is a general rule that a party to a contract which he has voluntarily signed will not be heard to declare that he did not read it, or was ignorant of its contents. . . . The whole panoply of contract law rests on the principle that one is bound by the contract which he voluntarily and knowingly signs.

Id. at 912-13 (emphasis added). Ms. Michak's signature on the closing documents imputes knowledge as to her contract with the seller; it has no bearing on her contract with Transnation. It certainly does not serve as an implied or express agreement to modify the preliminary commitment contract with Transnation,«9» see majority at 799, any more than Transnation could be compelled to issue title insur

«9» The record, moreover, does not support the majority's assertion that Transnation delivered a supplemental to its preliminary commitment to Ms. Michak's real estate agent or the "undisputed fact" she initialed the second page of the supplemental at closing. Majority at 792-93, 798-99.

Transnation does not deny the two real estate agents who received the supplemental, see CP at 109, represented the seller, not Ms. Michak. Supplemental Br. of Resp't at 2; Wash. State Supreme Ct. oral argument, Michak v. Transnation Title Ins. Co., No. 71783-4 (June 11, 2002), audio recording by TVW, Washington State's Public Affairs Network, available at http://www.tvw.org. Susan Jo Bane, title officer for Transnation, admits the title insurance department did not deliver the supplemental to Ms. Michak, CP at 111, and there is no evidence that any other department delivered the supplemental to her.

Ms. Michak admits she signed a document with a legal description of the property, but asserts it was presented to her as a single sheet separate from any other pages - not as a part of a supplement to the preliminary commitment. CP at 144; majority at 798. This is consistent with the peculiar appearance of the supplemental, which consists of three pages, whereby the second and third pages - both designated as page "2" - are identical but for Ms. Michak's initials on the third page and only the third page is initialed. CP at 90-92. This is also consistent with the declaration of Ms. Delimont, escrow officer for Transnation, stating the escrow policy was to have all documents initialed at closing. CP at 116.

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ance for more property than was described in the preliminary commitment if the insured purchased additional parcels at closing with notice to its insurer. Even if Transnation had expressly, and without factual dispute, informed Ms. Michak of its decision to insure less than the property described in the preliminary commitment, that would not change its responsibility to live up to the legal obligation it assumed in the preliminary commitment. Had the insured actually purported to purchase a 60-foot easement, rather than a 30-foot one, this would be an entirely different case. But Transnation got lucky.

For the reasons stated above I agree the trial court's order should be affirmed.

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