Wade v. Stewart Title Guaranty Co.

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Appellate Court Date: 2017.10.04
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Wade v. Stewart Title Guaranty Co., 2017 IL App (1st) 161765

Appellate Court JOSEPHINE WADE, Plaintiff-Appellant, v. STEWART TITLE
Caption GUARANTY COMPANY, Defendant-Appellee.

District & No. First District, Fifth Division
Docket No. 1-16-1765

Filed June 30, 2017

Decision Under Appeal from the Circuit Court of Cook County, No. 13-L-14015; the
Review Hon. James E. Snyder, Judge, presiding.

Judgment Affirmed.

Counsel on David A. Epstein, of D.A.E. Law Office, of Chicago, and Gary A.
Appeal Weintraub, of Gary A. Weintraub, P.C., of Northfield, for appellant.

John D. Burke and Nicholas A. Castro, of Ice Miller LLP, of Chicago,
for appellee.

Panel PRESIDING JUSTICE GORDON delivered the judgment of the
court, with opinion.
Justices Hall and Lampkin concurred in the judgment and opinion.
 OPINION

¶1 The instant appeal arises from a breach of contract dispute regarding a title insurance
policy for a multi-unit residential building in Chicago, Illinois. Plaintiff, Josephine Wade, the
purchaser of the property, filed suit against defendant, Stewart Title Guaranty Company,
alleging that defendant failed to timely remove defects on the property’s title. Plaintiff claimed
that defendant’s delay in curing the title defects resulted in the demolition of the property
because plaintiff was unable to obtain a loan to rehabilitate the property to comply with the
City of Chicago’s building code. Following a bench trial, the trial court found in favor of
defendant, finding that defendant did not breach any duties it owed to plaintiff under the
policy. Plaintiff appeals the judgment entered by the trial court. We affirm.

¶2 BACKGROUND
¶3 I. Complaint
¶4 On December 11, 2013, plaintiff filed a two-count complaint1 against defendant, alleging
that plaintiff purchased a title insurance policy from defendant on December 6, 2006, in
conjunction with plaintiff’s purchase of a two-unit, residential property located on Washington
Street in Chicago (Washington property). Under the terms of the policy, defendant agreed to
provide plaintiff title insurance in the amount of $187,200 against any loss or damages
resulting from any defects on the title to the Washington property. The complaint alleges that
defendant represented in the policy that the only defects on the title were the mortgage plaintiff
had secured to purchase the Washington property and unpaid real estate taxes from 2005 and
2006. Relying on these representations in the policy, plaintiff closed on the property on
November 21, 2006.2
¶5 The complaint alleged that subsequent to the closing, plaintiff learned of two additional
defects to the title of the property. First, she learned that on September 29, 2006, the City of
Chicago had instituted a housing court action due to building code violations on the property
and had recorded a lis pendens on the property. Additionally, she learned that on October 3,
2007, Deutsche Bank had filed a foreclosure action on the Washington property due to the
seller’s default on a second mortgage dated May 23, 2003, that had been unknown to plaintiff.3
The complaint alleges that defendant eventually paid off the second mortgage to Deutsche
Bank under the policy in order to remove the Washington property’s title defects. However,
the complaint alleges that the unpaid second mortgage on the title prevented plaintiff from
obtaining a loan to finance required repairs to the property. Due to plaintiff’s inability to
finance the repairs, the complaint alleges that the progression of the housing court action
resulted in a demolition order entered on July 2, 2012, against the Washington property. The

1
An amended complaint was filed on February 4, 2014, correcting defendant’s name to “Stewart
Title Guaranty Company.”
2
We note that defendant did not issue its title policy until December 6, 2006, after the closing.
However, defendant had issued a title commitment on November 7, 2006, prior to the November 21,
2006, closing. It is presumably this title commitment that plaintiff allegedly relied on, rather than the
subsequently issued title policy.
3
The seller was plaintiff’s son.

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 complaint alleges that plaintiff would not have closed on the Washington property had she
been aware of the two defects against the title of the property.
¶6 The complaint set forth two counts. Count I was for breach of contract and alleged that
defendant “breached its obligations under the Policy by failing to reimburse plaintiff for her
direct losses in the value of the Property and the cost of its demolition due to the undisclosed,
existing and insured (a) Deutsche Bank lien and (b) Housing Court Action.” Plaintiff alleged
she fully performed her premium payment obligations. Plaintiff alleged she suffered damages
as a result of defendant’s breach of the policy in excess of $100,000.
¶7 Count II was for a violation under section 155 of the Illinois Insurance Code (Insurance
Code) (215 ILCS 5/155 (West 2012)). Plaintiff alleged that despite multiple requests to pay the
amounts owed to Deutsche Bank and the housing court action under the policy to remove the
title defects, defendant refused to pay and, instead, pursued litigation. The complaint alleged
that “defendant has acted vexatiously and unreasonably” and had acted in bad faith in violation
of the Insurance Code.
¶8 Attached to the complaint was the title insurance policy issued to plaintiff, dated December
6, 2006. Under the policy, defendant agreed to insure plaintiff against “loss or damage, not
exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by the Insured
by reason of any defect in or lien or encumbrance on the title.” The policy excluded from
coverage “defects, liens, encumbrances, adverse claims or other matters created, suffered,
assumed or agreed to by the insured claimant.”
¶9 Section 3 of the policy was titled “Notice of Claim to be given by Insured Claimant” and
provided, in relevant part:
“The insured shall notify the Company promptly in writing[ 4 ]: *** (ii) in case
knowledge shall come to an insured hereunder of any claim of title or interest which is
adverse to the title to the estate or interest, as insured, and which might cause loss or
damage for which the Company may be liable by virtue of this policy.”
Section 17 of the policy provided that “all notices required to be given to the Company and any
statement in writing required to be furnished the Company shall include the number of this
policy and shall be addressed to the Company at P.O. Box 2029, Houston, Texas,
77252-2029.”
¶ 10 Section 4 was titled “Defense and Prosecution of Actions; Duty of Insured Claimant to
Cooperate” and provided, in relevant part:
“Upon written request by the insured and subject to the options contained in Section 6
of these Conditions and Stipulations, the Company, at its own cost and without
unreasonable delay, shall provide for the defense of an insured in litigation in which
any third party asserts a claim adverse to the title or interest as insured, but only as to
those stated causes of action alleging a defect, lien or encumbrance or other matter
insured against by this policy.”
¶ 11 Section 4 further stated: “The Company shall have the right, at its own costs, to institute
and prosecute any action or proceeding or to do any other act which in its option may be

4
Plaintiff argued in oral arguments that the policy did not contain a provision for written
notification.

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 necessary or desirable to establish the title to the estate or interest, as insured, or to prevent or
reduce loss or damage to the Insured.”
¶ 12 Section 6, which was titled “Options to Pay Or Otherwise Settle Claims; Termination of
Liability,” provided additional options for defendant in the event a claim under the policy
arose. Specifically, section 6(a) provided the option:
“To pay or tender payment of the amount of Insurance under this policy together with
any costs, attorneys fees and expenses incurred by the insured claimant, which were
authorized by the company up to the time of payment or tender of payment and which
the Company is obligated to pay.”
¶ 13 Section 6(b) provided defendant the option to pay or otherwise settle with parties other
than the insured. Section 6(b) allowed defendant to:
“(i) pay or otherwise settle with other parties for or in the name of an insured claimant
any claim Insured against, under this policy, together with any costs, attorneys’ fees
and expenses incurred by the insured claimant, which were authorized by [the]
Company up to the time of payment and which [the] Company is obligated to pay; or
(ii) to pay or otherwise settle with the insured claimant the loss or damage provided for
under this policy, together with any costs, attorneys fees and expenses incurred by the
insured claimant which were authorized by [the] Company up to the time of payment
and which [the] Company is obligated to pay.”
¶ 14 Section 9, titled “Limitation of Liability,” then provided:
“If the Company establishes the title, or removes the alleged defect, lien or
encumbrance *** in a reasonably diligent matter by any method, including litigation
and the completion of any appeals therefrom, it shall have fully performed its
obligations with respect to that matter and shall not be liable for any loss or damage
caused hereby.”
¶ 15 Plaintiff additionally attached to the complaint an “Agreed Order of Injunction and
Judgment” entered on December 1, 2009, against the Washington property in connection with
the housing court action. The order dismissed the housing court action on the Washington
property provided that plaintiff did not “rent, use, lease, or occupy the subject premises and
shall keep the same vacant and secure until further order of the court.” Further, the order
required plaintiff to notify the City of Chicago and the court 30 days after any sale, transfer, or
change in ownership. The order required plaintiff to schedule an inspection by June 1, 2010, to
verify compliance with the order.
¶ 16 Also attached to the complaint was an “Order of Demolition,” entered on July 2, 2012, in
which the housing court found the Washington property “dangerous, hazardous, unsafe and
beyond reasonable repair under the Unsafe Building Statute, 65 ILCS 11-31-1 (1996).” The
City of Chicago was ordered to demolish the building located on the property. The order also
granted the City of Chicago costs for the demolition.

¶ 17 II. Motion to Dismiss
¶ 18 On March 4, 2014, defendant filed a motion to dismiss plaintiff’s amended complaint
pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West
2012)). Defendant argued count I of plaintiff’s complaint failed to allege sufficient facts to
state a cause of action for breach of contract. Further, defendant argued count II of plaintiff’s

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 complaint should be dismissed, as section 155 of the Insurance Code did not apply to
defendant as a title insurance company.
¶ 19 On June 6, 2014, the trial court granted defendant’s motion to dismiss in part. The trial
court denied defendant’s motion to dismiss count I of plaintiff’s amended complaint, finding
plaintiff alleged sufficient facts to state a cause of action for breach of contract. However, the
trial court dismissed count II of plaintiff’s amended complaint with prejudice. The trial court
found that plaintiff could not bring a claim under section 155 of the Insurance Code against
defendant, as the Insurance Code did not apply to title insurance companies.

¶ 20 III. Amended Complaint and Third-Party Complaint
¶ 21 On August 10, 2015, plaintiff filed a second amended complaint. Count I of the second
amended complaint contained an identical breach of contract cause of action as previously
alleged in plaintiff’s prior complaint. The second amended complaint included under the
dismissed second count’s heading, “Count II was dismissed and is not pled in this Amended
Complaint.” Plaintiff also included a third count for breach of contract. The new count alleged
that defendant failed to provide any payments to plaintiff or for the benefit of the property for
three years. The complaint alleged that this failure amounted to a breach of the title insurance
policy, which required defendant to correct defects in the title “in a reasonably diligent
manner.” The complaint further alleged that defendant’s delay caused plaintiff’s inability to
secure a rehabilitation loan to prevent the demolition of the Washington property.
¶ 22 On August 19, 2015, defendant filed a third-party complaint against Victor Love, the son
of plaintiff and the person from whom plaintiff had purchased the property. While the
third-party complaint is not at issue on appeal, we nevertheless briefly discuss it, since the
parties went to trial on both complaints. The third-party complaint contained one count for
subrogation, which alleged that Love had failed to disclose the second mortgage and the
housing court action to defendant at the closing of the property. Defendant sought
compensation from Love after defendant paid $15,000 to remove the second mortgage lien
from the Washington property’s title.

¶ 23 IV. Motion to Dismiss
¶ 24 On September 11, 2015, defendant filed a motion to dismiss count III of plaintiff’s second
amended complaint pursuant to section 2-615 of the Code, arguing that count III was
duplicative of count I of plaintiff’s complaint as both were claims for breach of contract and
were supported by the same allegations. On October 7, 2015, the trial court granted
defendant’s motion without prejudice. The trial court did not provide its reasoning.

¶ 25 V. Third Amended Complaint
¶ 26 On October 14, 2015, plaintiff filed her third amended complaint. The new complaint
consisted only of one count for breach of contract. The complaint alleged that defendant was
obligated under the title insurance policy to insure plaintiff against any losses resulting from
title defects in the Washington property. The complaint alleged that after the closing, plaintiff
learned of two defects in the title of the Washington property: the Deutsche Bank lien and the
housing court action. Defendant had an obligation under the policy to remove these defects in
the title in a “reasonable diligent manner,” and the complaint alleged that the three-year period

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 for defendant to remove the title defects constituted a breach of the title insurance policy. The
delay in defendant’s removal of the title defects resulted in plaintiff’s inability to obtain a
rehabilitation loan to make necessary repairs to the property. The complaint alleged that the
delay additionally caused the ultimate deterioration of the Washington property and the loss of
the value of the property in an amount in excess of $150,000 due to the demolition of the
property. The earlier count II, arising under the Insurance Code, was not pled, and the third
amended complaint specifically stated that “Count II was dismissed and is not pled in this
Amended Complaint.” On November 20, 2015, defendant filed its answer to count I of
plaintiff’s third amended complaint, denying the allegations.

¶ 27 VI. Bench Trial
¶ 28 On April 19, 2016, the trial court conducted a one-day bench trial on plaintiff’s third
amended complaint and defendant’s third-party complaint. The trial court heard testimony
from plaintiff and third-party defendant Victor Love, as well as from Eleanor Sharp,
defendant’s claims counsel. The parties stipulated to the admission of several documents into
evidence, including defendant’s title commitment and title policy issued to plaintiff.

¶ 29 A. Plaintiff
¶ 30 Plaintiff testified that she had worked as a part-time mortgage broker since the 1980s. She
testified that she had purchased approximately 15 to 20 properties within Chicago and
currently owned several properties, including a commercial property, two houses, one
condominium, and the land for the Washington property. Plaintiff first discussed purchasing
the Washington property from her son, Love, in May 2006. Plaintiff testified she knew Love
had experienced difficulties with prior tenants that had damaged the Washington property.
Plaintiff observed the property prior to the purchase only from the outside, but plaintiff
testified she only noticed the broken and boarded-up windows.
¶ 31 Plaintiff desired to assist her son, and Love provided plaintiff with the contact information
for his mortgage company. Upon contacting the mortgage company, plaintiff learned Love
was behind in mortgage payments in the amount of $13,000. Plaintiff then provided $13,000 to
Love in order to pay off the past-due amount. Plaintiff testified that to the best of her
knowledge, Love paid this amount to the mortgage company.5
¶ 32 Plaintiff testified that she then entered into an agreement with Love to purchase the
Washington property. Plaintiff planned to purchase the Washington property in order to assist
her son and to rehabilitate the property as an investment. In order to finance the purchase of the
Washington property, plaintiff obtained a mortgage loan from Amalgamated Bank in the
amount of $77,470. Plaintiff also acquired $111,000 in cash from Amalgamated Bank upon
refinancing an additional property owned by plaintiff, which she also used towards the
purchase of the Washington property. Plaintiff provided Amalgamated Bank with a copy of the
title commitment issued by defendant. At the closing of the property on November 21, 2006,
plaintiff understood that the funds from the purchase price were used to pay off the mortgages

5
We note that this testimony conflicts with the testimony of Love, who testified that plaintiff
provided the payment directly to the mortgage company, not to him.

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 taken out by Love that appeared on the title commitment.6 Plaintiff testified that at the closing
on the Washington property, she was only aware of her own mortgage on the property from
Amalgamated Bank.
¶ 33 However, plaintiff became aware of an additional mortgage on the Washington property
when a representative from Amalgamated Bank contacted her approximately three weeks after
the closing. Plaintiff learned that her son, Love, had previously obtained an undisclosed
mortgage from Deutsche Bank in the amount of $39,000.7 After receiving this information,
plaintiff testified that she went to defendant’s office on Southwest Highway in December
2006, where she was told she would have to retain an attorney. Plaintiff testified she was given
a claim number, but had no further communications with defendant.
¶ 34 Plaintiff testified that she attempted to obtain additional financing for the rehabilitation of
the property from Amalgamated Bank, but was unsuccessful due to the undisclosed Deutsche
Bank lien. She also testified that she was unable to obtain a rehabilitation loan from either
Illinois Federal Savings or Highland Community Bank. However, plaintiff subsequently
testified that she was able to obtain a $20,000 rehabilitation loan in April 2007 from Illinois
Federal Savings to replace the windows on the second floor and in the basement of the
property. Plaintiff also testified she hired an architect for $7000 to draw plans for the
rehabilitation of the Washington property. Plaintiff additionally testified she hired an
individual to decorate the condominium for $4000. Plaintiff maintained the landscaping;
however, no other rehabilitation efforts were completed. Plaintiff testified she attempted to sell
the property in either 2009 or 2010. Although plaintiff received offers for the property,
plaintiff never reached an agreement with any prospective buyers.
¶ 35 On cross-examination, plaintiff admitted that she inspected the inside of the property as
well as the outside of the property prior to the closing. She testified that she knew the property
required a substantial amount of work. Plaintiff denied that she was aware of the code
violations at the time of the purchase. However, plaintiff reviewed the appraisal for the
property on the stand and agreed with a majority of the dilapidated descriptions of the property.
¶ 36 Further on cross, plaintiff first denied that she attempted to sell the Washington property as
early as the summer of 2007. However, upon viewing a contract for the Washington property
dated June 12, 2007, for the amount of $380,000, plaintiff retracted her testimony. Plaintiff
testified that she entered into a contract with a prospective purchaser for the Washington
property. Plaintiff then admitted that the building code violations were disclosed to the

6
The closing statement and HUD settlement statement, which were stipulated to by the parties and
admitted into evidence, indicated that the purchase price of $184,500 was used to pay off Love’s debt
owed to Litton Loan Servicing in the amount of $174,671.55 and Chicago Community Ventures in the
amount of $5000. No additional mortgage loans were listed on the documents. Love conveyed the
Washington property to plaintiff in a warranty deed, dated November 21, 2006, and recorded December
5, 2006, which was also stipulated to and admitted into evidence.
7
The record demonstrates that, in order to finance his initial purchase of the Washington property,
Love acquired two mortgages on the property with Chapel Mortgage on May 23, 2003: one mortgage in
the amount of $146,250 and one mortgage in the amount of $39,000. The first mortgage was paid off
during the closing of the Washington property on November 21, 2006. The second mortgage was, at
some point, sold or transferred to Wilshire Mortgage Company as the servicer for Deutsche Bank. This
second mortgage loan was not paid off in the closing of the Washington property and did not appear in
defendant’s title commitment or title policy.

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 prospective buyer. Plaintiff testified that the prospective buyer under the contract rescinded
due to the inability to obtain proper financing.
¶ 37 Plaintiff additionally admitted that she was aware that Deutsche Bank filed a lawsuit
against Love and his wife, as well as Amalgamated Bank, concerning the Washington property
in the fall of 2007. Plaintiff testified that her attorney notified defendant by letter, disclosing
the existence of the Deutsche Bank second mortgage and building code violations. Plaintiff
testified she was unaware that defendant responded to the letter.
¶ 38 Additionally, plaintiff testified that defendant retained an attorney to represent plaintiff in
the housing court action. Plaintiff approved of the attorney and was pleased with his efforts.
Plaintiff testified that the housing court action was dismissed on December 1, 2009, on the
condition that plaintiff would keep the property secured and vacant until the multiple code
violations were satisfied. Plaintiff was shown a City of Chicago’s emergency motion brought
against her to reinstate the demolition of the Washington property when the City discovered
that the property was not kept secure and was open and fire-damaged with holes in the interior
floors. Plaintiff then admitted she went to court and was told of the new violations, and
admitted that she made no effort to satisfy the code violations from 2009 through 2012.
¶ 39 Plaintiff testified she knew that defendant eventually paid Deutsche Bank to remove the
mortgage lien from the title of the Washington property. Plaintiff also testified that she knew
that defendant paid Amalgamated Bank to remove her own mortgage lien from the title of the
Washington property. However, plaintiff testified that she did not become aware that the
Deutsche Bank mortgage was not paid off until November 2011.

¶ 40 B. Victor Love, Third-Party Defendant
¶ 41 Third-party defendant Victor Love testified that he and plaintiff, his mother, had regular
contact as they worked together in a restaurant. Love testified that he originally purchased the
Washington property as an investment property and that this was his first real estate investment
property. Love rented the Washington property to tenants as two separate units. Love
experienced difficulties with the tenants, including drug use and damage to the property. The
Washington property eventually became vacant and was further vandalized and damaged.
¶ 42 Love testified that he discussed these difficulties with plaintiff, who then expressed a
desire to assist Love. Love gave plaintiff the information to contact his mortgage company.
Love testified that plaintiff and Love did not discuss or agree to a price for the sale of the
Washington property; the sale price was set by the mortgage company. Love testified that it
was his understanding that plaintiff made payments to the mortgage company, including the
payments Love had missed, to bring his mortgage on the Washington property current. Love
testified that plaintiff did not personally pay him $13,000 for the defaulted mortgage. Love
testified that he was not aware of the second mortgage on the property from Deutsche Bank at
the time he issued a deed to the Washington property to plaintiff at the closing. As a result, he
did not disclose the second mortgage from Deutsche Bank to plaintiff.
¶ 43 On cross-examination, Love testified that prior tenants vandalized the Washington
property prior to the transfer of ownership to plaintiff. He testified that the tenants vandalized
the plumbing, windows, and toilets. Love denied that plaintiff viewed the interior portions of
the property prior to purchase, despite impeachment from his deposition testimony that
indicated she did make a visual inspection. Additionally, Love denied that he received the
complaint filed by the City of Chicago concerning the Washington property in September

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 2006. Love testified that he was not at the property on July 11, 2006, when an inspection by the
City occurred, and testified that the last time he visited the property was in 2005. Love
reviewed the document that indicated a notice was issued regarding the dangerous and unsafe
conditions to the property. However, Love testified he never received this notice, though he
admitted the notice was sent to his correct post office box.
¶ 44 Love was shown a court order dated November 14, 2006, which required him to be present
for an inspection of the property. Love testified he did not recall being present at the court
hearing. Love admitted that the court order read, “Victor Love is granted 28 days to answer,”
and further that default was not entered against him. Love also admitted that his signature was
on a document, titled “Affidavit of Title, Covenant and Warranty,” dated November 21, 2006.
Love testified that he truthfully signed the affidavit because at the time of the signing he had
not received notice of the housing court action. Love testified that he believed he signed the
documents at defendant’s office; however, he admitted it was possible that it could have been
at the office of another title company.

¶ 45 C. Eleanor Sharp, Claims Counsel for Defendant
¶ 46 Eleanor Sharp testified that she worked for defendant as a claims counsel and was the
claims attorney assigned to plaintiff’s claim. Sharp testified that defendant’s policy requires
insureds to provide written notice of the title defects to be sent to the address listed on the
policy. Sharp testified she received a written notice of the title defects in a letter from
plaintiff’s attorney, dated December 27, 2007. The letter contained defendant’s incorrect
address; however, Sharp eventually came into possession of the letter. Sharp issued a letter in
reply upon receipt, dated January 15, 2008. The letter indicated that defendant would begin
processing plaintiff’s claim.
¶ 47 Sharp testified that she first determined that the Deutsche Bank mortgage was covered
under the terms of plaintiff’s title insurance policy and that an exclusion did not apply. Sharp
testified that Love did not disclose the second mortgage from Deutsche Bank on the
Washington property. Sharp did not suspect any collusion between plaintiff and Love because
she was unaware that Love was plaintiff’s son. Sharp testified she did not personally examine
the title search that defendant conducted on the Washington property.
¶ 48 Sharp testified that defendant cured all of the title defects on the Washington property by
December 2009. She further testified that defendant asserted an equitable subrogation claim on
behalf of Amalgamated Bank. This claim formed the basis of defendant’s settlement with
Deutsche Bank to remove the lien against the property. Additionally, an appraisal of the
Washington property was conducted in May 2009, wherein it was valued between $25,000 and
$35,000. Sharp testified that defendant came to an agreement for the removal of the Deutsche
Bank mortgage in the amount of $15,000 in July 2009. Defendant also retained an attorney to
represent plaintiff in the housing court action, and defendant paid $17,000 in attorney fees. The
housing court action was resolved on December 1, 2009. Sharp additionally testified that
payments were also made in the amount of $44,000 to Amalgamated Bank to pay off plaintiff’s
own mortgage on the property.
¶ 49 Sharp relayed the information regarding the curing of the title defects on the property to
plaintiff’s attorney in either 2009 or early 2010. Sharp also testified that if plaintiff had given
defendant notice that she desired to obtain a rehabilitation loan, defendant could have provided
an indemnity letter to Amalgamated Bank. This would have allowed defendant to obtain the

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 rehabilitation loan. Yet, plaintiff failed to do so.

¶ 50 D. Trial Court’s Findings
¶ 51 On May 19, 2016, the trial court entered judgment in favor of defendant and judgment in
favor of Love. The court found that plaintiff failed to provide evidence to establish the required
elements of her breach of contract claim, including that defendant’s conduct constituted a
breach of the title insurance policy, proximate cause, and cognizable damages. The trial court
recognized that plaintiff argued that the three-year period in which defendant cured the defects
constituted a breach of contract, but found that plaintiff failed to provide evidence to establish
when this period commenced and concluded. The court found plaintiff’s arguments merely
attempted to place the burden on defendant to prove that the title defect claims were resolved
within a reasonable period of time under the policy. As a result, plaintiff failed to prove by a
preponderance of the evidence that defendant’s conduct constituted a breach of the insurance
policy.
¶ 52 Furthermore, the court found that plaintiff did not prove damages proximately caused by
the breach. The trial court noted that plaintiff argued she sustained damages in the amount of
$110,000. However, the trial court found that the evidence did not establish a basis for this
amount other than the amount pertained to plaintiff’s investment expenses in the property.
These amounts included window replacements in the amount of $20,000; architect fees in the
amount of $7000; condominium attorney fees in the amount of $4000; and other attorney fees
in the amount of $6000. The trial court found that these expenses were merely related to
plaintiff’s commercial real estate investment in the property and were not recoverable damages
for the alleged breach of the title insurance policy. The court noted that, to the extent plaintiff’s
damages included plaintiff’s loan used to obtain the property, the evidence indicated that
defendant had already paid that amount. Additionally, the court denied plaintiff’s claims of
$441,000 in exemplary damages, as plaintiff failed to offer any basis for the award of these
damages. Therefore, plaintiff failed in her burden of proof to satisfy the preponderance of the
evidence standard for her claim against defendant for breach of the title insurance policy.
¶ 53 On June 16, 2016, plaintiff filed her notice of appeal from the order of the trial court on
May 19, 2016, entering judgment in favor of defendant and against plaintiff. This appeal
follows.

¶ 54 ANALYSIS
¶ 55 On appeal, plaintiff raises a number of arguments with respect to the trial court’s findings
on plaintiff’s breach of contract claim. Plaintiff challenges the trial court’s holding with
respect to the finding that plaintiff failed to prove a breach of the title insurance policy
requiring defendant to remove defects in a “reasonably diligent manner.” Plaintiff also contests
the trial court’s finding that plaintiff failed to prove proximate cause and damages. Plaintiff
additionally raises new issues that were not addressed in the bench trial, including the
applicability of section 155 of the Insurance Code and the implied covenant of good faith and
fair dealing.

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¶ 56 I. Standard of Review
¶ 57 The parties disagree as to our standard of review of the trial court’s decision. Defendant
contends that the “manifest weight of the evidence” is the proper standard, while plaintiff
argues that the standard that must apply is the “clearly erroneous” standard.
¶ 58 Our supreme court has limited the clearly erroneous standard to the review of
administrative decisions on mixed questions of fact and law. Samour, Inc. v. Board of Election
Commissioners, 224 Ill. 2d 530, 542 (2007). “In all other civil cases, we review legal issues
de novo and factual issues under a manifest weight of the evidence standard.” Samour, 224 Ill.
2d at 542. The Illinois Supreme Court has accepted the application of the clearly erroneous
standard of review to the review of decisions other than that of an administrative agency in
limited situations, such as a trial court’s ruling on allegations of discrimination in jury
preemptory challenges. See McDonnell v. McPartlin, 192 Ill. 2d 505, 527 (2000). However,
plaintiff fails to properly address this issue and further fails to provide a legal basis as to why
this court should expand this narrow standard of review to apply to the review of the trial
court’s decision in the bench trial of this matter. Plaintiff cites only to Illinois case law
involving review of administrative decisions to which the clearly erroneous standard applies.
¶ 59 The standard of review that this court applies to a trial court’s decision following a bench
trial is to determine if the judgment is based on facts that are against the manifest weight of the
evidence. Gambino v. Boulevard Mortgage Corp., 398 Ill. App. 3d 21, 51 (2009). “A decision
is against the manifest weight of the evidence only when an opposite conclusion is apparent or
when the findings appear to be unreasonable, arbitrary, or not based on the evidence.”
Eychaner v. Gross, 202 Ill. 2d 228, 252 (2002). The manifest weight of the evidence standard
affords great deference to the trial court because the trial court is in a superior position to
determine and weigh the credibility of the witnesses, observe witnesses’ demeanor, and
resolve conflicts in their testimony. People v. Jones, 215 Ill. 2d 261, 268 (2005).
¶ 60 The parties agree that this case also involves the interpretation of the terms of a title
insurance policy contract, which presents an issue of law that is reviewed de novo. Crum &
Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391 (1993). “Under the
de novo standard of review, the reviewing court does not need to defer to the trial court’s
judgment or reasoning.” Platinum Partners Value Arbitrage Fund, Ltd. Partnership v.
Chicago Board Options Exchange, 2012 IL App (1st) 112903, ¶ 12. “De novo review is
completely independent of the trial court’s decision.” Platinum Partners Value Arbitrage
Fund, Ltd. Partnership, 2012 IL App (1st) 112903, ¶ 12. De novo consideration means we
perform the same analysis that a trial judge would perform. Khan v. BDO Seidman, LLP, 408
Ill. App. 3d 564, 578 (2011).

¶ 61 II. Delay in Removing Encumbrances on the Title of the Property
¶ 62 Plaintiff claims that defendant failed to cure title defects against the Washington property
in a “reasonably diligent manner.” The trial court found that plaintiff failed to offer evidence
that the defects in the title were not cured in a “reasonable diligent manner.”
¶ 63 “[T]he rules applicable to contract interpretation govern the interpretation of an insurance
policy.” Founders Insurance Co. v. Munoz, 237 Ill. 2d 424, 433 (2010). However, an insurance
contract will be liberally construed in favor of the insured. First Chicago Insurance Co. v.
Molda, 2015 IL App (1st) 140548, ¶ 33. When analyzing an insurance policy, the primary
objective is to give effect to the intent of the parties. Valley Forge Insurance Co. v. Swiderski

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 Electronics, Inc., 223 Ill. 2d 352, 362 (2006). An insurance policy is construed as a whole in
order to give effect to every provision, as it must be assumed that every provision was intended
to serve a purpose. Valley Forge Insurance Co., 223 Ill. 2d at 362. “[W]here policy provisions
are unambiguous, the court must give the words of the provisions their plain and ordinary
meaning.” Indiana Insurance Co. v. Liaskos, 297 Ill. App. 3d 569, 573 (1998).
¶ 64 Under the title insurance policy, defendant agreed to insure plaintiff against “any defect in
or lien or encumbrance on the title” of the Washington property. Defendant does not dispute
the fact that the Deutsche Bank mortgage and the housing court action were defects in title, and
plaintiff does not dispute the fact that defendant resolved these defects. Instead, plaintiff argues
that defendant breached section 9(a) of the title insurance policy, which required defendant to
remove the encumbrances on the title “in a reasonably diligent manner,” claiming that
defendant took three years to remove the title defects. Plaintiff’s argument requires us to
consider both (1) the point in time that triggered defendant’s obligations under the policy to
initiate the removal of the title defects and (2) defendant’s actions once its obligations to
remove the title defects arose. We consider each issue in turn.
¶ 65 First, the trial court found that plaintiff failed to provide sufficient evidence to establish the
date upon which plaintiff provided sufficient notice to defendant in order to trigger the claim
process under the policy. On appeal, plaintiff claims that defendant’s obligations were
triggered when she provided oral notice of the claim to defendant through a personal encounter
with a representative from defendant’s office where plaintiff was issued a claim number.
Plaintiff testified this encounter occurred in December 2006, shortly after plaintiff first
discovered the Deutsche Bank lien through a representative of Amalgamated Bank. Plaintiff
did not provide any evidence that she had any further contact with defendants after this initial
encounter.
¶ 66 In response, defendant argues that plaintiff did not provide proper written notice to
defendant until December 27, 2007, as required under the policy to trigger the claims process.
Additionally, defendant argues that plaintiff’s appearance before an unknown party regarding
the title defect claim was not proper notice under the policy. 8 Sharp, defendant’s claim
counsel, testified she received a written letter, dated December 27, 2007, from plaintiff’s
attorney. Sharp confirmed receipt of this written notice by responding in a letter, dated January
15, 2008, which indicated that defendant would initiate an investigation to begin curing the
title defects.9
¶ 67 Under the terms of the title insurance policy, plaintiff was required to submit written notice
in order to trigger the claim process. Section 3 of the policy required the insured to “notify the
Company promptly in writing” in the event a claim arose. If the policy language is clear and
unambiguous, the court will apply the provisions of the agreement using their plain and
ordinary meaning. Indiana Insurance Co., 297 Ill. App. 3d at 573. In the case at bar, plaintiff
failed to provide written notice to defendant until December 27, 2007. Plaintiff does not argue

8
During the bench trial, it was alluded to during opening arguments and in an objection during
plaintiff’s testimony that plaintiff appeared to the affiliated offices of “Stewart Title,” rather than
“Stewart Title Guaranty Company.” However, no witness testified to the name of the company where
plaintiff appeared.
9
Plaintiff’s letter, dated December 27, 2007, and defendant’s letter, dated January 15, 2008, were
stipulated to and entered into evidence at the bench trial.

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 that she provided written notice prior to this date. Defendant entered into a settlement to
remove the disputed Deutsche Bank mortgage from the title by July 2009, within 18 months of
December 27, 2007. In fact, defendant removed all title defects against the Washington
property, including plaintiff’s own mortgage lien on the property, by December 2009, within a
two-year period. Therefore, we cannot find that it was against the manifest weight of the
evidence for the trial court to conclude that plaintiff had failed to establish that defendant’s
obligations were triggered prior to December 2007, as she claimed.
¶ 68 The issue is whether the 18-month period in which defendant cured the title defects were
performed within a “reasonable diligent manner” as required under the policy. The trial court
found that plaintiff failed to prove that defendant did not cure the title defects in a reasonably
diligent manner by a preponderance of the evidence. We cannot find that this conclusion was
against the manifest weight of the evidence. The question of whether an 18-month period
constitutes a “reasonable” period of time cannot be decided as a matter of law, as this is an
issue of fact to be resolved by the trial court. See Brown v. State Farm Fire & Casualty Corp.,
33 Ill. App. 3d 889, 894 (1975) (finding that a reasonable period of time for an insurer to
resolve a claim depends on the circumstances of each case and is a question of fact unless the
period of time constitutes a period so brief or so long as to be clearly reasonable or
unreasonable).
¶ 69 In the case at bar, plaintiff admits that whether this period of time is reasonable for
defendant to cure the defects is a question of fact for the trial court’s determination. However,
plaintiff argues that other courts in other cases have determined much shorter periods of time to
be unreasonable. To support her argument, plaintiff cites only to case law applying section 155
of the Insurance Code, which allows for the recovery of punitive damages in the event an
insurance company is liable for the unreasonable delay in settling a claim where the court
deems the delay “vexatious and unreasonable.” 215 ILCS 5/155 (West 2012). We do not find
this persuasive as it is not applicable to the case at bar.
¶ 70 First, on June 6, 2014, the trial court dismissed plaintiff’s count II, which stated her claim
under section 155 of the Insurance Code. On October 14, 2015, plaintiff filed an amended
complaint wherein count II was not pled and merely stated “Count II was dismissed and is not
pled in this Amended Complaint.” Appellate review is forfeited if a party fails to refer to,
adopt, or otherwise incorporate prior pleadings in amended complaints. Barnett v. Zion Park
District, 171 Ill. 2d 378, 384 (1996). Plaintiff failed to adopt or incorporate count II in her
amended complaint. In fact, plaintiff’s amended complaint clearly stated that the claim was not
pled. Plaintiff proceeded solely on her breach of contract claim. As a result, plaintiff forfeited
this claim, which is unreviewable on appeal.
¶ 71 We further note that plaintiff fails to establish that the Insurance Code is applicable to
defendant in the case at bar. The Insurance Code expressly precludes its application to
“companies now or hereafter organized or transacting business under the Title Insurance Act
[(215 ILCS 155/1 et seq. (West 2012))].” 215 ILCS 5/451 (West 2012). Defendant claims that
it is organized and transacts business under the Title Insurance Act, and plaintiff does not
dispute this fact. Thus, by its express terms, the Insurance Code does not apply. Additionally,
the Title Insurance Act does not contain a similar provision, holding title insurance companies
liable for an unreasonable delay in settling a claim. See 215 ILCS 155/1 et seq. (West 2012).
¶ 72 Instead, Illinois courts have held that “[t]he scope of a title insurer’s liability is properly
defined by contract.” First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218 Ill. 2d 326,

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 341 (2006). In the case at bar, the insurance policy at issue does not define or provide any
additional clarity as to the appropriate length of time for the cure in the title defect to be
removed to be in a “reasonably diligent manner.” As a result, we cannot say as a matter of law
that the 18-month period constituted a breach of the policy, regardless of whether courts in
other cases have found shorter periods to be unreasonable. Accordingly, whether defendant
acted in a “reasonably diligent manner” depends on the particular facts concerning defendant’s
conduct.
¶ 73 Plaintiff argues that once defendant’s obligations to cure the title defects arose, defendant’s
conduct amounted to a breach of the policy because defendant pursued time-intensive
litigation designed to settle the liens for less money, rather than immediately tendering the full
face value of the lien. We do not find this argument persuasive.
¶ 74 The title insurance policy grants defendant discretion in the manner in which claims are to
be resolved. Section 4(b) of the policy expressly allows defendant the ability “to institute or
prosecute any action or proceeding *** to establish the title to the estate or interest, as insured,
or to prevent or reduce loss or damage to the insured.” Additionally, section 6(b) allows
defendant the option “to pay or otherwise settle with other parties for or in the name of an
insured claimant any claim insured against under this policy.” See Sabatino v. First American
Title Insurance Co., 308 Ill. App. 3d 819, 824 (1999) (recognizing that the title insurance
company had the right to elect alternative methods to resolve its claims as provided for in the
terms of the policy). Under the terms of the policy, defendant was not required to remove the
Deutsche Bank mortgage solely by immediately tendering the full face value of the lien.
¶ 75 Plaintiff presented no evidence that defendant acted in an unreasonable manner that would
constitute a breach of the title insurance policy. Plaintiff merely argued that the process that
defendant used prejudiced plaintiff. Defendant’s claim representative, Sharp, testified that
defendant initiated an equitable subrogation claim after Sharp determined that the Deutsche
Bank mortgage was covered under plaintiff’s title insurance policy. Sharp testified that this
equitable subrogation claim formed the basis of the agreement with Deutsche Bank for the
removal of the second mortgage from plaintiff’s title for the amount of $15,000. Defendant
also retained an attorney to represent plaintiff in the housing court action wherein defendant
paid $17,000 in attorney fees. Sharp additionally testified that payment was also made in the
amount of $44,000 to Amalgamated Bank to pay off plaintiff’s own mortgage on the property.
Thus, defendant’s conduct was permissible under the policy. Plaintiff never advised defendant
that time was a factor in settling the liens because the liens were affecting her ability to obtain
a rehabilitation loan.
¶ 76 Thus, the trial court’s finding that plaintiff failed to prove that defendant’s conduct
amounted to a breach of the title insurance policy, which required the removal of title defects in
“reasonably diligent manner,” is not against the manifest weight of the evidence. We therefore
affirm the trial court’s judgment.

¶ 77 III. Failure to Prove Damages Proximately Caused by Delay
¶ 78 We next address plaintiff’s argument that the trial court erred in finding plaintiff failed to
establish cognizable damages proximately caused by defendant’s conduct.
¶ 79 “The purpose of title insurance is to protect a transferee of real estate from the possibilities
of loss through defects that may cloud title.” First National Bank of Northbrook, N.A. v.
Stewart Title Guaranty Co., 279 Ill. App. 3d 188, 192 (1996). However, title insurance does

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 not provide coverage of the loss of value to the land itself. Rackouski v. Dobson, 261 Ill. App.
3d 315, 318 (1994). “If the value of the property appreciates or depreciates, the title policy is
not affected.” McLaughlin v. Attorneys’ Title Guaranty Fund, Inc., 61 Ill. App. 3d 911, 916
(1978). Instead, a title insurance policy insures the title against defects, which may damage the
insured’s interest in the property. McLaughlin, 61 Ill. App. 3d at 916.
¶ 80 In the case at bar, plaintiff argues she produced sufficient evidence of her damages at trial,
including the costs of demolition, as well as various other expenses lost in her investment in
the Washington property, including fees incurred by installing new windows and hiring an
architect. However, these are not recoverable damages under the title insurance policy. Title
insurance only protects against damages caused by undisclosed defects in plaintiff’s title to the
Washington property. See First National Bank of Northbrook, N.A., 279 Ill. App. 3d at 192.
Plaintiff does not dispute that defendant cured the undisclosed defects that existed at the time
of plaintiff’s purchase of the property. Since plaintiff failed to produce evidence at the trial of
damages properly related to a timely failure to cure defects in title to the Washington property,
we cannot say the trial court’s finding as to damages is against the manifest weight of the
evidence.
¶ 81 Additionally, the title insurance policy evinces an intent by the parties to preclude
defendant from liability from the loss in value to plaintiff’s property. Section 9 of the insurance
policy limits the defendant’s liability to only the removal of the title defect, and states: “If the
Company establishes the title, or removes the alleged defect, lien or encumbrance *** in a
reasonably diligent manner by any method, including litigation *** it shall have fully
performed its obligations to that matter.” The policy further indicates that once defendant cures
the title defects, the defendant “shall not be liable for any loss or damage caused thereby.” See
First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218 Ill. 2d 326, 341 (2006) (“[t]he
scope of a title insurer’s liability is properly defined by contract”). Thus, under the policy
agreement, defendant cannot be held liable for damages or defects to the property itself, not
caused by the title defects.
¶ 82 Plaintiff also failed to produce evidence to establish that defendant’s conduct was a
proximate cause to her damages. Plaintiff testified that she was aware that the Washington
property required substantial repairs. Plaintiff knew prior tenants had severely damaged the
property. Even if defendant had disclosed the title defects to plaintiff prior to her purchase of
the Washington property, plaintiff still would have been obligated to pay the cost for repairs to
prevent the demolition of the Washington property. Due to the severely dilapidated condition
of the Washington property, the amount required to repair the Washington property may have
been cost-prohibitive. Plaintiff presented no evidence to establish she possessed the financial
means to satisfy the building code violations upon purchase of the property, or even what the
work would require in time or expense.
¶ 83 Plaintiff testified that she attempted and was unable to secure a loan from multiple
financing institutions in order to finance the rehabilitation of the Washington property.
However, plaintiff failed to produce completed loan applications or other documents to show
that she attempted and was denied financing due to the title defects. Plaintiff merely produced
one letter from Amalgamated Bank, which requested plaintiff to submit a number of listed

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 documents in order for the bank to reevaluate her request for a rehabilitation loan.10 However,
there is no evidence that plaintiff complied with this request, nor is there evidence to suggest
that plaintiff was ever denied the loan based on the title defects. Even if plaintiff was unable to
secure a rehabilitation loan due to the title defects, Sharp testified that defendant would have
insured over the Deutsche Bank lien to allow plaintiff the opportunity to secure the
rehabilitation loan while the litigation was pending. Plaintiff only needed to provide defendant
with a request to do so. Sharp testified that plaintiff failed to do so.
¶ 84 After the title defects were cured, plaintiff testified that she made no effort to satisfy the
code violations from 2009 through 2012. Plaintiff testified that she did not even attempt to
obtain financing to rehabilitate the Washington property. Plaintiff had a sufficient period of
time to secure the premises and obtain new financing, yet plaintiff failed to take any action
whatsoever.
¶ 85 Furthermore, the evidence at the bench trial revealed that plaintiff’s own conduct may have
contributed to the demolition of the Washington property. The housing court action was
resolved on December 1, 2009, when the court issued an injunction against the City of Chicago
on the condition that plaintiff would keep the Washington property secure and vacant.
However, the City of Chicago filed an emergency motion claiming plaintiff violated this order
on November 29, 2011, when an inspection revealed that plaintiff failed to secure the premises
and that the property was open, which resulted in fire damage and holes in the flooring caused
by unknown persons living on the premises. The demolition order was then entered on July 2,
2012, against the Washington property as a public safety hazard.
¶ 86 Therefore, the decision of the trial court finding that plaintiff failed to produce evidence of
cognizable damages that were proximately caused by defendant’s conduct is not against the
manifest weight of the evidence.

¶ 87 IV. Implied Covenant of Good Faith and Fair Dealing
¶ 88 Finally, plaintiff argues that we must address the issue as to whether defendant’s delay in
removing the encumbrances on the title also violated defendant’s duty of good faith and faith
dealing. The trial court did not rule on this issue, as plaintiff argues this claim for the first time
on appeal. A party “cannot properly raise a new theory for recovery for the first time on
appeal.” Federal Insurance Co. v. Turner Construction Co., 277 Ill. App. 3d 262, 268 (1995).
Plaintiff failed to plead this theory in her complaint and failed to argue this issue before the
trial court. Thus, plaintiff forfeited this claim and this issue cannot be considered on appeal.

¶ 89 CONCLUSION
¶ 90 The judgment entered in favor of defendant title insurance company is affirmed, where
plaintiff failed to produce evidence establishing that defendant’s conduct in curing title defects
constituted a breach of the title insurance policy, which required removal of defects in a
“reasonably diligent manner.”

¶ 91 Affirmed.

10
We note that this letter was not disclosed to defendant until the date of the trial. The letter was
admitted into evidence over defendant’s objection.

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