An insurance company claims it incurred more than $50,000 in defense costs after a title company wrongly issued a lease on a Hamel property.
Chicago Title Insurance Company filed a lawsuit Aug. 27 in Madison County Circuit Court against Madison County Title Company.
In its complaint, Chicago Title claims it incurred $53,315.93 in costs after a man was sued by the village of Hamel for filing a lease on property that allegedly did not have a valid deed.
The issue began when Hal Gitcho purchased land from Naran and Manisha Bhakta at 9180 State Route 140 in Hamel. In turn, Madison County Title Company prepared a deed of trust, which was executed on Sept. 22, 2004, according to the complaint.
However, the village of Hamel rejected the deed of trust, saying it violated requirements that each plot of land have access to a public road, the suit states. Hamel informed Madison County Title Company of the rejected deed, but Madison County Title Company failed to tell Gitcho of the issue, the complaint says.
It was not until Gitcho inquired about the absence of a tax bill for the property that he learned of the rejected deed, Chicago Title claims.
To correct the problem, Madison County Title Company proposed that Gitcho enter into a 99-year lease agreement with the Bhaktas, according to the complaint. After both parties consented, the lease was filed on Jan. 20, 2006, in Madison County's recorder's office, the suit states.
In turn, Madison County purchased title insurance from Chicago Title, the complaint says.
However, when the village of Hamel discovered the lease, it filed a lawsuit against Gitcho, Chicago Title claims.
Eventually, the lawsuit was settled, and Gitcho was forced to pay $5,000 to the village of Hamel, according to the complaint.
Under its obligations as Gitcho's title insurance company, Chicago Title was forced to defend him in the lawsuit and to pay the $5,000 Gitcho owed to Hamel, the suit states. The insurance company now seeks a reimbursement of its money from Madison County Title Company.
"Madison County Title caused the loss and is primarily liable to Hal Gitcho for the same," the suit states.
In addition to the money it says Madison County Title owes it, Chicago Title seeks costs, attorney's fees and other relief the court deems just.
Scott B. Mueller and David P. Renovitch of Galloway, Johnson, Tompkins, Burr and Smith in St. Louis will be representing it.
Madison County Circuit Court case number: 12-L-1359.