C.A. 5th;
F072789

The Fifth Appellate District affirmed a judgment. The court held that coverage under a seller's title insurance policy terminated, under the express language of the policy, upon the transfer of the real property to the purchasers.

David and Linda Hovannisian purchased property from Wells Fargo Bank at a foreclosure sale. Several months later they discovered there was a first priority deed of trust on the property that was not extinguished by the foreclosure. The Hovannisians sued Wells Fargo for intentional and negligent misrepresentation based on a statement in Wells Fargo's deed of trust that it was a first deed of trust. Wells Fargo tendered defense of the action to its title insurer, First American Title Insurance Company, which refused to indemnify or defend Wells Fargo. Wells Fargo assigned its claims against First American to the Hovannisians, who sued First American for breach of contract and breach of the implied covenant of good faith and fair dealing.