                                                                                 Digitally signed by
                                                                                 Reporter of Decisions
                               Illinois Official Reports                         Reason: I attest to the
                                                                                 accuracy and integrity
                                                                                 of this document
                                       Appellate Court                           Date: 2017.10.04
                                                                                 16:17:52 -05'00'




                  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.

                                                     -2-
       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.

                                                    -3-
       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

                                                     -4-
       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


                                                   -5-
       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.

                                                   -6-
       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.

                                                      -7-
       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

                                                    -8-
       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

                                                    -9-
       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.




                                                    - 10 -
¶ 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

                                                   - 11 -
       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.

                                                     - 12 -
       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,

                                                    - 13 -
       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

                                                    - 14 -
       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




                                                    - 15 -
       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.

                                                     - 16 -
