By Alan Jampol, Esq. of Jampol Zimet LLP In 1975, a California appellate court delivered a nasty shock to the title insurance industry in California and elsewhere by reminding title insurers, who were often referred to simply as aEURoetitle companies,aEUR? that their names included the word aEURoeInsuranceaEUR? and that they could, as a result, be liable for tortious bad faith. In Jarchow v. Transamerica Title Insurance Company (1975) 48 Cal.App.3^rd 917, 122 Cal. Rptr. 470, the court affirmed a judgment against Transamerica Title Insurance Company for $200,000 in compensatory damages no punitive damages were awarded by the jury, which did not find Transamerica guilty of fraud or malice). Apart from the fact that title insurers have thereafter been viewed as simply another kind of insurer for bad faith purposes, Jarchow did recognize one difference between a title insurer and other insurers aEUR" in that case, the title insureraEUR(TM)s good faith obligation to provide a defense to the adverse claim included an obligation, where it was necessary, to affirmative file a lawsuit to quiet title in its insured. In Jarchow, the title insurer waited over two years before paying the claim; its contention that its policy permitted it to defer payment while it litigated the title issue was rejected by the court as in effect making the policy illusory (aEURoeaEUR|instead of having purchased insurance against the trauma and financial hardship of litigation, the insured will have found that he has purchased nothing more than a lawsuit.aEUR? Id. At 942-943). The last forty years after Jarchow have not been any kinder to title insurers in the area of bad faith liability. In White v. Western Title Insurance Company (1985) 40 Cal.3^rd 870, 710 P.2^nd 309, the California Supreme Court held that a title insurer (and, indeed, any insurer) could be liable for bad faith conduct in the course of defending a bad faith action. This led for many years to attorneys for insurers demanding aEURoeWhite waiversaEUR? before any discussion of settlement could take place. The concern about bad faith liability on the part of title insurers is not limited to California. In a couple of 2013 trial level decisions, courts demonstrated a liberal attitude toward bad faith allegations against title insurers. In Stewart Title Ins. Co. v. Credit Suisse (D. Idaho 2013) 2013 WL 1385264, the insured was permitted to claim punitive damages where the title insurer allegedly prevented the insured from arranging a settlement with lien claimants in a foreclosure action by unreasonably delaying its denial of coverage. In Johnson & Allphin Properties v. First American Title Insurance Co. (D. Utah 2013) 2013 WL 6230344, a federal court applying Utah law denied a motion to dismiss a bad faith claim against First American Title Insurance Co. where First AmericanaEUR(TM)s coverage opinion took seven months and was delivered the night before a foreclosure sale by another lien claimant. A recent example of appellate courtsaEUR(TM) liberal attitude toward bad faith claims against title insurers for unreasonable delay in resolving claims is the decision of the Hawaii Supreme Court on February 4^th in Anastasi v. Fidelity National Title Insurance Co. (Ha. 2016) __ Ha. __, 2016 WL462380134. In Anastasi, the Court ruled that Fidelity National Title Insurance Co. must face a real estate investoraEUR(TM)s claim of bad faith after Fidelity initially provided a defense to the claim under a reservation of rights and, after more than two years, ultimately paid the claim. The delay in payment was the basis of the bad faith claim. In Anastasi, broker Anastasi loaned Nagy $2.4 million to purchase investment property on the island of Oahu. Through his due diligence, Anastasi discovered the property was owned by a trust for the benefit of Rand of which Stickney was the trustee. The escrow for the loan included a deed to Nagy apparently signed by Stickney as trustee and, based on that deed, a title insurance policy from Fidelity insuring the validity and priority of AnastasiaEUR(TM)s mortgage. Shortly after the close of escrow, Stickney and Rand sued Anastasi and Nagy alleging that StickneyaEUR(TM)s signature on the deed to Nagy was forged. Anastasi tendered the claim to Fidelity, which provided defense of the claim under a reservation of rights. Two years later, when the case did not settle, Anastasi filed a lawsuit against Fidelity for breach of contract and bad faith. The complaint alleged that that Fidelity knew early on that the deed from Stickney was a forgery and should promptly have paid the claim to Anastasi, but unreasonably delayed paying Anastasi under the policy while it pursued fraud litigation against Stickney and Nagy. A few months after Anastasi filed the bad faith suit, Fidelity paid Anastasi $2.4million under the policy, then filed a motion for summary judgment on the bad faith claim. The motion was granted by the trial court, which held that Fidelity fully and timely investigated the claim and acted within its rights in choosing to defend the action. The trial court also rejected AnastasiaEUR(TM)s claim that Fidelity pursued the fraud litigation because it initially believed that the forged deed might have been created with the complicity of Stickney and Rand.