     Case: 10-31043     Document: 00511596220         Page: 1     Date Filed: 09/08/2011




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                            FILED
                                                                        September 8, 2011

                                       No. 10-31043                        Lyle W. Cayce
                                                                                Clerk

MGD PARTNERS, LIMITED LIABILITY CORPORATION; COVES OF THE
HIGHLAND COMMUNITY DEVELOPMENT DISTRICT,

                                                  Plaintiffs-Appellants,
v.

FIRST AMERICAN TITLE INSURANCE COMPANY,

                                                  Defendant-Appellee.



                   Appeal from the United States District Court
                       for the Eastern District of Louisiana
                             USDC No. 2:10-CV-1437


Before KING, DAVIS and GARZA, Circuit Judges.
PER CURIAM:*
        This is an appeal from a summary judgment concluding that the plaintiff
landowner’s claim was not covered under the defendant title insurance
company’s policy.
        The landowner (MGD Partners or MGD) purchased a policy of title
insurance from the defendant, First American Title Company. The policy




        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
   Case: 10-31043    Document: 00511596220       Page: 2   Date Filed: 09/08/2011



                                   No. 10-31043

generally insured against defects in title to property MGD owned in Tangipahoa
Parish, Louisiana that might affect the marketability of the title.
      After plaintiffs purchased the property, they learned that it had been
under lease to the United States government during World War II for use as a
bombing range. Although the lease had expired years before plaintiff purchased
the property, plaintiffs discovered that remnants of bombs were still on the
property. More to the point, because of the potential hazards from the bombs,
officials in Tangipahoa Parish, Louisiana refused to issue permits to plaintiffs
to develop a residential subdivision on the property.
      The plaintiff argues that a servitude was created on the property under
a Louisiana statute codifying the judicially created St. Julien doctrine. La. R.S.
19:14. Under this statute, a servitude is created when: (1) a public body,
believing it has authority to do so, takes possession of property; and (2) contructs
a facility; (3) under circumstances where the owner of the property consents or
acquiesces in the government takeover. Id. Plaintiffs argue that the property
is not marketable because the prior use of the property and because the residue
of explosive material left on the property creates a servitude under the St. Julien
doctrine in favor of the United States government, and that this was a risk
insured against in defendant’s policy.
      We agree with the district court that the marketability problem plaintiff
faces is not due to a defect in title; rather, it was because of the condition of the
property. We need not determine whether a St. Julien servitude exists or might
exist in reference to the subject property, because this risk is not covered by the
defendant’s title policy. Unmarketable title under the policy is defined as
      an alleged or apparent matter affecting title to the land, not
      excluded or excepted from coverage, which would entitle a purchaser
      of the estate or interest described in Schedule A to be released from
      the obligations to purchase by virtue of a contractual condition
      requiring delivery of marketable title.


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     Case: 10-31043   Document: 00511596220     Page: 3   Date Filed: 09/08/2011



                                   No. 10-31043


Any servitude created by the St. Julien doctrine (which is the alleged cause of
lack of marketability / merchantability) is not reflected in the public records.
Accordingly it would be excluded from coverage under the following policy
exclusions:
1.      (a)   Any law, ordinance, or governmental regulation . . .relating to (i)
              the occupancy, use or enjoyment of the land; (ii) the character,
              dimensions or location of any improvement now or hereafter
              erected on the land; . . . or (iv) environmental protection, or the
              effect of any violation of these laws, ordinances or governmental
              regulations, except to the extent that notice of the
              enforcement thereof or a notice of a defect, lien or
              encumbrance resulting from a violation of or alleged
              violation affecting the land has been recorded in the
              public records at Date of Policy.

        (b)    Any governmental police power not excluded by (a) above,
              except to the extent that a notice of the exercise thereof or
              a notice of a defect, lien or encumbrance resulting from a
              violation or alleged violation affecting the land has been
              recorded in the public records at Date of Policy.

2.      Rights of eminent domain unless notice of the exercise thereof
        has been recorded in the public records at Date of Policy, but
        not excluding from coverage any taking which has occurred prior to
        Date of Policy which would be binding on the rights of a purchaser for
        value without knowledge.

(Bold added). MGD does not argue that the government’s alleged servitude
on the property is reflected in the public records and there is no factual
dispute about the contents of the public records.
        The district court correctly granted summary judgment and we affirm
that judgment.
AFFIRMED.




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