The Washington State Supreme Court recently held in Edmonson v. Popchoi, 172 W2nd. 272 (2011) that a grantor of a statutory warranty deed cannot summarily settle an adverse title claim but must provide a good faith defense even though there may not be a viable defense for the claim.
In 2006, Kiss sold a parcel of land to Popchoi by statutory warranty deed. By statute, the deed contained the covenant that Kiss would defend Popchoi’s title. Popchoi discovered through a survey that a fence encroached by 165 square feet into the southern part of his new property. The neighbor to the south, Edmondson, sent a letter claiming that property by adverse possession. Popchoi tendered the defense of the claim to Kiss. Kiss conditionally accepted the tender subject however to his right to settle the claim. Kiss said that it would be less expensive to pay damages to Popchoi for the breach of the title covenant than to defend the lawsuit. Kiss’ tender was rejected and Popchoi engaged his own attorney to defend the lawsuit filed by Edmonson.
The trial court awarded summary judgment to Edmonson on his adverse possession claim and also awarded damages to Popchoi on the value of the lost property and for the reimbursement of his attorneys’ fees. Only the attorneys’ fee award was appealed. The Supreme Court concluded that Kiss did not have the right to condition acceptance of the tender of defense on his ability to settle the claim without investigation of its merits and to simply pay damages for breach in the amount of the value of the diminished title.
The Court’s holding raises a number of issues which are not addressed by the Court. Normally, a fence between two property owners which has been in existence for over 10 years is very strong evidence of adverse possession. Indeed, in this case, Edmonson’s claim was decided on summary judgment. Why should a grantor be force to expend attorneys’ fees if the defense of a claim would be frivolous? Why not simply pay the resulting damages? The Court was probably influenced by the fact that there was no investigation by Kiss of the title claim and by Kiss’ candid admission that it would be cheaper to pay the damages.
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