                                                                   NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  _____________

                                       No. 13-1024
                                      _____________

                                     BRYAN GRANELLI;
                                 JACQUELINE GRANELLI,
                                  f/k/a JAQUELINE HOEY,
                                              Appellants

                                              v.

                        CHICAGO TITLE INSURANCE COMPANY,
                      a/k/a CHICAGO TITLE OF NEW JERSEY, INC.,
                   FIDELITY NATIONAL TITLE OF NEW JERSEY, INC.
                                      _____________

                     On Appeal from the United States District Court
                              for the District of New Jersey
                         (D.C. Civil Action No. 2-10-cv-02582)
                        District Judge: Honorable Jose L. Linares
                                     _____________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                  November 6, 2013

        Before:    GREENAWAY, JR., VANASKIE, and ROTH, Circuit Judges.

                                   (Filed: June 17, 2014 )
                                      _____________

                                        OPINION
                                      _____________

VANASKIE, Circuit Judge.

       After several attempted sales of their home were thwarted by title defects, Bryan

and Jacqueline Granelli brought this action against the title insurer for their property,
Chicago Title Insurance Company (“Chicago Title”). Following the commencement of

this litigation, Chicago Title resolved all of the title defects in the Granellis’ favor

through a state court quiet title proceeding. Nevertheless, the Granellis allege that

Chicago Title breached the insurance contract by failing to uncover obvious title defects

through a reasonable title search at the time of the home purchase. The Granellis also

argue that Chicago Title’s efforts to cure the title defects once they were discovered were

not prompt and reasonable, as they took a total of three years, due in large part to

Chicago Title’s delay in bringing a quiet title action until twenty months after the

Granellis filed their claim.

       The Granellis sought damages, claiming breach of contract, breach of the duty of

good faith and fair dealing, detrimental reliance, and violation of the New Jersey

Consumer Fraud Act, N.J. Stat. Ann. § 56:8-2 (West 1976). The District Court granted

Chicago Title’s motion for summary judgment and dismissed all of the Granellis’ claims.

We will vacate the District Court’s summary judgment ruling as to the reasonableness of

Chicago Title’s efforts to cure the title defects and affirm the remainder of the District

Court’s ruling.

                                               I.

       In March 1998, Jacqueline Granelli—at the time, Jacqueline Hoey—acquired a

parcel of real property located at 221 Summit Drive, Boonton, New Jersey (“the Boonton

property”), along with her then-boyfriend, John Thompson. In connection with the

purchase of the property, the two obtained a residential title insurance policy from

Chicago Title in the amount of $137,000. The two subsequently separated, with her

                                               2
retaining possession of the property. She later married Bryan Granelli, who moved into

the Boonton property in 2001.1

         The Granellis first listed the Boonton property for sale in 2005. Sometime in

2007, the Granellis became aware of a boundary line dispute with their neighbor, Keith

Brown, when Brown called police officers to the property after the Granellis attempted to

install a French drain on what Brown maintained was his property. In late 2007, before

selling the Boonton property, the Granellis purchased a second home (“the Kearney

property”), which they moved into in early 2008. The Granellis believed that they would

only retain possession of the Boonton property for several months following their

acquisition of the Kearney property.

         In June 2008, the Granellis entered into a contract to sell the Boonton property.

The purchaser began moving her possessions into the home, but subsequently backed out

of the sale after finding she could not clear good title due to several boundary and land

ownership disputes, including the dispute with Brown and another dispute with Boonton

Township.

         In August 2008, the Granellis filed a claim with Chicago Title seeking resolution

of these disputes. The claim was initially assigned to Jason Bergman at Fidelity National

Title Group.2 In the following months, Fidelity underwent restructuring that included the

closing of the New York claims center and the transfer of all claims to Fidelity’s offices


1
 Jacqueline Granelli is a named beneficiary of the title policy; Bryan Granelli is not a
beneficiary listed on the policy.
2
    Chicago Title is a subsidiary of Fidelity National Title Insurance Company.
                                               3
in Omaha, Nebraska. On February 2, 2009, Fidelity employee Shawn Grimsley informed

Bryan Granelli that the claim had been transferred from Bergman to him.

       Fidelity made a final coverage determination in May 2009, nine months after the

Granellis’ claim had been filed. Chicago Title subsequently sent letters to adjoining

property owners in an attempt to reach a resolution of the boundary disputes. The parties

dispute when Attorney Brian Romanowsky was first assigned to the claim. The District

Court accepted Chicago Title’s assertion that Romanowsky began working on the claim

in May 2009, at which time Fidelity determined it would be necessary to bring a quiet

title action to resolve the boundary disputes. The Granellis allege Romanowsky was not

assigned to the matter until November 2009, fifteen months after the Granellis first filed

their claim. Chicago Title brought a quiet title action to resolve the boundary disputes in

April 2010, twenty months after the Granellis filed their claim.

       The quiet title litigation was concluded in August 2011, with all boundary disputes

resolved in the Granellis’ favor. The Granellis allege, however, that the disputes

pertaining to the Boonton property precluded them from selling their home during the

three-year pendency of the title insurance claim.

                                            II.

       The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have

jurisdiction pursuant to 28 U.S.C. § 1291. Our review of the District Court's grant of

summary judgment is plenary. Anderson v. Consol. Rail Corp., 297 F.3d 242, 246 (3d

Cir. 2002). Summary judgment is proper where “the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a matter

                                             4
of law.” Fed. R. Civ. P. 56(a). A dispute is genuine “if the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986).

                                              III.

                                               A.

       The Granellis argued before the District Court that the Defendants had breached

“the terms of the contract to provide ‘good title’ to Jacqueline Granelli at the time of her

purchase of the subject property on March 10, 1998.” (App. 468). The District Court

concluded that plaintiff’s breach of contract argument failed.

       New Jersey law requires that, before issuing a title insurance policy, title insurers

perform a “a reasonable examination of the title” and render “a determination of

insurability of title in accordance with sound underwriting practices for title insurance

companies.” N.J. Stat. Ann. § 17:46B-9 (West 1976). New Jersey courts have

interpreted this statutory provision to mean that “a title company’s liability is limited to

the policy and . . . the company is not liable in tort for negligence in searching records.”

Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 562 A.2d 208, 218 (N.J. 1989).

Although a title insurer is not liable in tort for failing to conduct a reasonable title search,

it may be liable under a breach of contract theory, depending on the terms of the policy in

question. Id. If “the title company agrees to conduct a search and provide the insured




                                               5
with an abstract of title in addition to the title policy, it may expose itself to liability for

negligence as a title searcher in addition to liability under the policy.” 3 Id.

          Because a title insurer can only be liable for a negligent title search under a breach

of contract theory, plaintiffs asserting such a theory bear the burden of presenting

evidence tending to demonstrate that such a contractual relationship existed. See, e.g.

Stewart Title Guar. Co. v. Greenlands Realty, L.L.C., 58 F. Supp. 2d 370, 384 (D.N.J.

1999) (concluding that an insured could not “pursue a claim for breach of contract [to

perform a reasonable title search and provide abstract of title] where it has failed to set

forth any evidence demonstrating the existence of a contract.”). The Granellis have

failed to point to any evidence establishing that Chicago Title undertook an independent

contractual duty to “provide the insured with an abstract of title in addition to the title

policy.” Walker Rogge, Inc., 562 A.2d at 218. Accordingly, the District Court did not

err in dismissing this claim at summary judgment.

                                                B.

          The Granellis also argued before the District Court that Chicago Title had

breached the title insurance contract by not curing the title defects in a prompt and

reasonable manner. The District Court concluded that Defendants’ actions in curing the

defect:



3
  An “abstract of title” is defined by Black’s Law Dictionary as “a concise statement, usu.
prepared for a mortgagee or purchaser of real property, summarizing the history of a
piece of land, including all conveyances, interests, liens, and encumbrances that affect
title to the property.” Black's Law Dictionary 10 (9th ed. 2009).

                                                 6
              were reasonable, throughout the claim investigation. It hired
              all necessary parties, exhausted all non-legal outlets for
              resolution of the issue, and when it became clear the issue
              would have to be resolved in court, it went forward at its own
              expense. Despite Plaintiffs’ desire for an immediate remedy
              the title insurance company is not required to proceed
              immediately into litigation. It is within its right to assess the
              situation and pursue alternative resolutions to the dispute that
              do not involve legal proceedings.

(App. 8-9.)

       The quiet title litigation action, however, was not initiated until almost twenty

months after the Granellis first filed their complaint with Chicago Title in August of

2008. The District Court found that Chicago Title’s claims examiner had determined in

May 2009 that it “would be necessary to bring a quiet title action to resolve the boundary

disputes,” yet Chicago Title did not file a quiet title action on behalf of the Granellis until

April 2010. (App. 5).

       In Stewart Title, the District Court addressed a similar claim of unreasonable delay

in the resolution of a title insurance claim. 58 F. Supp. 2d at 382-84. Although the title

insurance company in that case argued that it “satisfied any obligations it had under the

policy by instituting an action to cure the defect,” the District Court found that there was

a genuine dispute of material fact as to whether it had done so “in a reasonably diligent

manner,” as it had contracted in the policy. Id. at 382. The insured had presented some

evidence establishing that the insurer had been aware of the defect in April 1996 when it

first issued the title policy and knew in February 1997 that the defect meant the insured

property owners did not possess title to a portion of the property. Id. The insurer took no

action until it filed a quiet title suit on August 27, 1997. Id. Although the insurer

                                               7
disputed when it became aware of the title defect, the District Court concluded that the

insured’s allegation that the insurer had waited sixteen months after becoming aware of a

title defect before filing a quiet title action was sufficient evidence to defeat the insurer’s

motion for summary judgment on the issue of reasonable diligence. Stewart Title, 58 F.

Supp. 2d at 382-84.

       Although we are not bound by Stewart Title, we find its reasoning persuasive.4

Unlike in Stewart Title, there is no dispute as to when the insurer first became aware of

the existence of title defects on the insured property. Chicago Title took twenty months

from the date the Granellis filed their claim in August of 2008 to institute a quiet title

action—four months longer than the delay in Stewart Title. This delay creates a strong

inference that Chicago Title failed to act with reasonable diligence in curing the

Granellis’ title defects. Although a factfinder might ultimately find that Chicago Title

acted reasonably in pursuing non-litigation strategies during the twenty months after

receipt of the Granellis’ claim, a reasonable factfinder could also conclude that Chicago

Title was not acting with due diligence.




4
 We note that the terms of the policy at issue here may be different than the terms of the
policy examined in Stewart Title. The precise terms of the Granellis’ title insurance
policy are not before us in this appeal, however, because the District Court found that
Chicago Title was not in breach by concluding that its “actions [in curing title] were
prompt and reasonable” as a matter of law. (App. 9.) We vacate because we believe the
District Court was in error to conclude that there was no genuine dispute of material fact
as to whether Chicago Title resolved the Granellis’ claim in a prompt and reasonable
manner. We leave the determination of whether Chicago Title had a contractual duty to
cure the title defects in a diligent manner for the District Court to consider on remand.

                                               8
       In addition to the inference raised by the length of the delay, the Granellis have

pointed to some evidence from which a jury could find that at least a portion of the delay

was the product of negligence rather than a calculated strategy for prompt claim

resolution by means other than litigation. During his deposition, David LaPlante, who

supervised the handling of the Granellis’ claims for Fidelity, testified to the following:

              Q:      Okay. Do you know why it took approximately 18
              months to get to the point where a lower court action was
              filed to quiet title on this property?
              A:      Based on my review of the file, yes, I can provide an
              answer.
              Q:      Okay. Please do.
              A:      There was a major restructuring done in December of
              2008. The New York claim center was shut down. It appears
              from my review of the file the claims counsel in New York
              had numerous conversations with Mr. Smith, the surveyor,
              and was properly investigating the claim and maintaining
              communication with the insured.
                      In late—in December ’08 the entire New York claims
              center was shut down and there was a company
              reorganization. There were several bankruptcies if you recall
              at that time. Commonwealth went under. And there was a
              very large restructuring.”

(App. 196.)

       LaPlante’s testimony indicates that Fidelity’s internal restructuring during the

period after the Granellis filed their claim affected the length of time Chicago Title took

to bring a quiet title action on the Granellis’ behalf. Although Chicago Title contended

before the District Court that the delay in bringing the quiet title action was due to the

pursuit of non-litigation alternatives to resolving the claim, LaPlante’s testimony

indicates he believed at least a portion of the delay was attributable to Fidelity’s internal

reorganization. The combination of this testimony and the inference raised by the twenty

                                              9
months it took Chicago Title to file the quiet title action after receiving the Granellis’

claim suffices to create a genuine dispute as to whether Chicago Title’s handling of the

Granellis’ claim was reasonably prompt. Therefore, we will vacate the District Court’s

grant of summary judgment to Chicago Title on this claim.

                                              C.

       The Granellis next assert that the District Court erred in finding that Chicago Title

had not breached the duty of good faith and fair dealing in their handling of the claim.

We agree with the District Court that Plaintiffs have not offered any evidence of conduct

by Chicago Title that would constitute bad faith.

       Under New Jersey law, “an insurance company owes a duty of good faith to its

insured in processing a first-party claim.” Pickett v. Lloyd’s, 621 A.2d 445, 450 (N.J.

1993). “The implied covenant is an independent duty and may be breached even where

there is no breach of the contract's express terms.” Black Horse Lane Assoc., L.P. v. Dow

Chemical Corp., 228 F.3d 275, 288 (citations and quotation marks omitted).

       In Pickett, the New Jersey Supreme Court addressed a factual scenario analogous

to the one at issue here. There, an insured truck driver brought an action against his

insurer alleging that the insurer’s failure to promptly pay a valid claim constituted a

breach of the duty of good faith and fair dealing. 621 A.2d at 449-50. The court

recognized that a situation involving “inattention to payment of a valid, uncontested

claim” presented a “more difficult application of the [bad faith] standard” than a case

presenting “a denial or refusal to pay a claim,” but that the test was “essentially the same”

in both instances. Id. at 454. In a delay case, “[b]ad faith is established by showing that

                                              10
no valid reasons existed to delay processing the claim and the insurance company knew

or recklessly disregarded the fact that no valid reasons supported the delay.” Id. at 457.

The New Jersey Supreme Court noted that a claim being delayed while lost in a computer

system would not constitute bad faith under this standard, as “[n]either negligence nor

mistake is sufficient to show bad faith.” Id. at 454 (citing Blue Cross & Blue Shield v.

Granger, 461 So. 2d 1320, 1327-28 (Ala. 1984)).

       The Granellis have not presented any evidence that Chicago Title acted in “bad

faith” under this standard. The Granellis point to the previously-discussed deposition

testimony by LaPlante that indicated Fidelity’s restructuring during this period may have

been responsible for some of the delay in making a coverage determination.5 This type of

delay does not constitute bad faith, but instead presents at best evidence of negligence,

which does not suffice to state a claim for breach of the implied duty of good faith and

fair dealing.

                                              D.

       The Granellis further contend that the District Court erred in holding that they

could not make out a claim under the theory of detrimental reliance based on Chicago

Title’s alleged representation that it would search the title on their behalf at the time of

5
  As a part of their duty of good faith and fair dealing claim, Appellants also allege that
certain of Chicago Title’s claims handlers who worked on the their claim “failed to
investigate” the claim and “failed to take any action.” (Appellant’s Br. 22) The Granellis
provide no record citation or evidence in support of these assertions. Therefore, they do
not suffice to create a genuine dispute as to Defendant’s good faith. See Fireman’s Ins.
Co. of Newark, N.J. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982) (non-movant cannot
“rely merely upon bare assertions, conclusory allegations or suspicions” to defeat
summary judgment).

                                              11
purchase. Detrimental reliance “is an equitable doctrine, founded in the fundamental

duty of fair dealing imposed by law, that prohibits a party from repudiating a previously

taken position when another party has relied on that position to his detriment.” State v.

Kouvatas, 678 A.2d 1178, 1182 (N.J. Super. Ct. App. Div. 1996). To make out a claim

for detrimental reliance, a plaintiff must show that defendant made a representation, had

knowledge that plaintiff was acting on the basis of that representation, and that plaintiff

relied to their detriment on that representation. Id.

       As discussed in Section III.A, supra, the Granellis have not pointed to any

evidence in the record that would establish that the terms of the title insurance policy

included a representation that Chicago Title would search title on their behalf or provide

them with an abstract of title. Therefore, the Granellis have not shown that Chicago Title

made a representation that would form the prerequisite for a claim of detrimental

reliance. The District Court thus did not err in dismissing the detrimental reliance claim

at summary judgment.

                                              E.

       Finally, the Granellis contend that Chicago Title violated the New Jersey

Consumer Fraud Act (“NJCFA”). Under the NJCFA, “unlawful practice” is defined as:

              The act, use or employment by any person of any
              unconscionable commercial practice, deception, fraud, false
              pretense, false promise, misrepresentation, or the knowing
              concealment, suppression, or omission of any material fact
              with intent that others rely upon such concealment,
              suppression, or omission, in connection with the sale or
              advertisement of any merchandise…



                                             12
N.J. Stat. Ann. § 56:8-2 (West 1976). The Granellis argue that Chicago Title violated the

NJCFA by inducing Jacqueline Granelli to purchase the title policy by misrepresenting its

scope of coverage, leading to the Granellis’ “mistaken belief that the title policy would

insure good and marketable title.” (Appellant’s Br. 28).

       “New Jersey courts . . . have consistently held that the payment of insurance

benefits is not subject to the Consumer Fraud Act.” Van Holt v. Liberty Mut. Fire Ins.

Co., 163 F.3d 161, 168 (3d Cir. 1998). The New Jersey Supreme Court, however, has

allowed that “[NJCFA’s] language is ample enough to encompass the sale of insurance

policies as goods and services that are marketed to consumers.” Lemelledo v. Beneficial

Mgmt. Corp. of America, 696 A.2d 546, 551 (N.J. 1997) (emphasis added).

       Again, as discussed in Section III.A, supra, the Granellis have not pointed to any

record evidence that indicates Chicago Title fraudulently misrepresented the terms of the

policy at the time of the sale by manifesting an intention to act as a title searcher or

provide the Granellis with an abstract of title. To the extent the Granellis’ NJCFA claim

is premised upon Chicago Title’s lack of diligence in bringing a quiet title action, such a

claim is also not actionable under the NJCFA, as it does not pertain to the “sale or

advertisement” of the policy. See N.J. Stat. Ann. § 56:8-2 (West 1976). Moreover, as

discussed in Section III.C., supra, the Granellis have only introduced evidence creating a

genuine dispute as to whether Chicago Title was negligent in its efforts to cure the title

defect. The record does not support an inference of fraudulent intent in Chicago Title’s

handling of the claim. Therefore, the District Court did not err in dismissing Appellants’

NJCFA claims at summary judgment.

                                              13
                                            IV.

       For the foregoing reasons, we will vacate the District Court’s grant of summary

judgment to Chicago Title on the Granellis’ claim that Chicago Title failed to resolve

their title defects in a reasonably prompt manner, and affirm the District Court’s rulings

as to the remainder of the Granellis’ claims.




                                            14
