Wednesday, October 24, 2007

real property - title insurance

Rood v. Commonwealth Land Title Insurance Company - Superior Court - October 18, 2007

Title insurance policy held not to cover claim for defective on-site sewage system. The purpose of title insurance is to protect from loss arising from defects in the title which the buyer acquires. Such a contract is construed strictly in favor of the buyer. The court rejected coverage for the defective sewer system, in spite of the argument that the title was rendered unmarketable by this defect, whose disclosure might cause a reduction in price. The court looked to decisions from other states in reaching its decision, in which it found a "dearth of authorities dealing with this precise question." Ultimately, the court rejected the argument that sought to equate an abandoned septic tank with a "defect, lien or encumbrance affecting title to the property." It held that plaintiff's argument confused economic lack of marketability with title marketability. Summary judgment was properly granted to the defendant.

corporations - piercing the corporate veil

Fletcher-Harlee Corp. v. Szymanski and David Concrete Corp. - Superior Court - October 15, 2007

It was appropriate to pierce defendant's corporate veil where defendant was the sole shareholder, director, and officer of several inter-related corporations. Citing Lumax Industries v. Aultman, 669 A2d 893 (Pa. 1995), the court reviewed the factors it considers in such cases, including whther

- the corporation is undercapitalized
- corporate formalities were followed
- relevant records were kept
- there was intermingling of personal and corporate funds

The court noted that there is no clear and well-settled rule about this doctrine in Pennsylvania. It relied heavily on Lumax and The Village at Camelback v. Carr, 538 A.2d 528 (Pa. Super. 1988), in which it held, inter alia, that a plaintiff does not have to show fraud in order for the doctrine to apply.