First American Title Insurance v. Spanish Inn, Inc.

This is one of many appeals arising from litigation over the renovation of a hotel property in Palm Springs. In this appeal, the project’s developers challenge the trial court’s grant of summary adjudication in favor of the title insurer, which sought contractual indemnity from the developers for legal expenses incurred in defending the project’s construction lender against mechanic’s lien foreclosure actions. The developers contend the trial court erred because triable issues of fact exist regarding whether the mechanic’s lien claims were covered by the title policy and regarding the amount of the title insurer’s damages. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Defendants Spanish Inn, Inc. (Spanish Inn), Hormoz Ramy, and Nejat Kohan owned or otherwise held an interest in the Spanish Inn Hotel property in Palm Springs. In order to renovate and rehabilitate the property, Spanish Inn borrowed $6 million from Nara Bank under a written construction loan agreement. To secure the loan, Nara Bank recorded a construction deed of trust against the property. To protect its construction deed of trust, Nara Bank required that Spanish Inn procure a lender’s title insurance…