Title-Insurance Exclusion 3(a) Bars Defense Coverage When the Insured Knowingly Permits a Title Reversion and Later Sells Into a Known Cloud

Introduction

In Triple Properties Detroit, LLC v. First American Title Insurance Company (6th Cir. Apr. 17, 2026), the Sixth Circuit affirmed summary judgment for a title insurer that denied defense coverage after its insured sold condominium development units despite a known reversion of development rights under the condominium project’s Master Deed and Michigan law.

Parties. Plaintiff-Appellant Triple Properties Detroit, LLC (“Triple”) bought 14 undeveloped condominium units in 2011 and obtained an owner’s title policy from Defendant-Appellee First American Title Insurance Company (“First American”).

Background. The project’s Master Deed tracked Mich. Comp. Laws § 559.167(3) (2002), establishing a 10-year window (running from a 2004 commencement notice) within which the developer (or successors/assigns) had to either complete the project or withdraw undeveloped portions. If not, the undeveloped land remained in the project as general common elements and construction rights ceased—effectively reverting to the condominium association.

Key issue. Whether First American owed Triple a duty to defend in a later buyer’s (PCJ’s) lawsuit where the asserted title defect stemmed from (i) Triple’s failure to prevent reversion and (ii) Triple’s later sale despite knowledge of the defect—given the policy’s Exclusion 3(a) for matters “created, suffered, assumed, or agreed to” by the insured.

Summary of the Opinion

The court held that Exclusion 3(a) unambiguously barred coverage. Triple “suffered” the defect by permitting the reversion to occur when it had power to prevent it (by timely developing, withdrawing, or later supporting an amendment). Triple also “created” the conflicting claim by deliberately selling the units to PCJ in 2019 despite knowledge that the condominium association claimed the units had reverted. Because the claims were specifically excluded, First American had no duty to defend.

The Sixth Circuit also rejected Triple’s newly emphasized appellate theory that the policy was breached at issuance because title allegedly was not fee simple in 2011—finding it not meaningfully pressed below and, in any event, time-barred under Michigan’s six-year contract limitations period (Mich. Comp. Laws § 600.5807(9)).

Analysis

Precedents Cited

  • France v. Lucas, 836 F.3d 612 (6th Cir. 2016): cited for the de novo summary-judgment standard and viewing evidence in the nonmovant’s favor. It frames the appellate posture rather than the substantive insurance rule.
  • McGrath v. Allstate Ins. Co., 802 N.W.2d 619 (Mich. Ct. App. 2010): supplied Michigan interpretive rules: insurance policies are contracts; ambiguities construed against the insurer; clear language enforced. The court used McGrath to justify enforcing Exclusion 3(a) as written once found unambiguous.
  • Tuscany Grove Ass'n v. Peraino, 875 N.W.2d 234 (Mich. Ct. App. 2015): reinforced the directive to enforce unambiguous policy text and give undefined terms their ordinary meaning—supporting the court’s plain-meaning reading of “created” and “suffered.”
  • American Savings & Loan Ass'n v. Lawyers Title Insurance Corp., 793 F.2d 780 (6th Cir. 1986): was the opinion’s substantive cornerstone. It described the “fairly well established” meaning of the phrase “created, suffered, assumed or agreed to”:
    • “created” requires a conscious, deliberate (often affirmative) act intended to bring about the conflicting claim, not mere negligence;
    • “suffered” is synonymous with “permit,” implying the insured had power to prevent the claim;
    • “assume” requires knowledge of the specific defect assumed;
    • “agreed to” requires full knowledge of the extent and amount of the claim.
    The Sixth Circuit applied these definitions directly to Triple’s conduct.
  • Archambo v. Law. Title Ins. Corp., 2002 WL 31013194 (Mich. Ct. App. 2002): cited as consistent Michigan authority aligning “suffered” with allowing/permitting a defect—bolstering the conclusion that Triple “suffered” the reversion by not preventing it.
  • Am. Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 550 N.W.2d 475 (Mich. 1996): stated Michigan’s broad duty-to-defend principle (defend when allegations even arguably fall within coverage). Triple relied on this, but the court treated it as qualified by exclusions.
  • Am. Bumper & Mfg. Co. v. Nat'l Union Fire Ins. Co., 683 N.W.2d 161 (Mich. Ct. Ap. 2004): provided the limiting rule: no duty to defend against claims “specifically excluded.” This case anchored the court’s response to Triple’s duty-to-defend argument.
  • Marlo Beauty Supply, Inc. v. Farmers Ins. Grp., 575 N.W.2d 324 (Mich. Ct. App. 1998): contributed two linked principles: exclusions are strictly construed against insurers, but courts may not manufacture ambiguity; clear and specific exclusions must be enforced. The court used this to foreclose an “arguably covered” defense theory once Exclusion 3(a) was deemed clear.
  • Scherer v. Hellstrom, 716 N.W.2d 307 (Mich. Ct. App. 2006): supported application of Michigan’s six-year contract statute of limitations to bar Triple’s late-asserted theory of a 2011 breach.
  • Rory v. Cont'l Ins. Co., 703 N.W.2d 23 (Mich. 2005), and Kendzierski v. Macomb County, 931 N.W.2d 604 (Mich. 2019): were cited for the strong Michigan rule against judicial rebalancing of “contractual equities” where contract text is unambiguous—undercutting Triple’s equitable appeal.
  • Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945): was invoked as an equitable “clean hands” reference point, supporting skepticism toward Triple’s equity-based arguments given its nondisclosure and deliberate sale amid a known title dispute.

Legal Reasoning

1) The defect and the lawsuit were of Triple’s own making under Exclusion 3(a).

The court treated the PCJ litigation as a downstream consequence of Triple’s loss (and later misrepresentation) of its interest. Exclusion 3(a) removed coverage for defects and adverse claims “created, suffered, assumed, or agreed to” by the insured. Applying American Savings & Loan Ass'n v. Lawyers Title Insurance Corp.:

  • “Suffered” (permitted) reversion: Triple knew about the Master Deed and the 10-year deadline tied to commencement in 2004 (expiring in March 2014), yet chose not to develop, not to withdraw undeveloped portions, and later voted against an amendment that would have reinstated the units. Because Triple had the power to prevent or cure the reversion but did not, it “suffered” the defect.
  • “Created” the conflicting claim: After learning (during the Ferlito negotiations) that the units had “legally reverted” to the association, Triple nonetheless sold to PCJ in 2019, without disclosing the known competing claim. The court characterized this as a conscious, deliberate affirmative act that brought about the conflict and ensuing litigation.

2) The duty to defend does not override a clear exclusion.

Triple leaned on Am. Bumper & Mfg. Co. v. Hartford Fire Ins. Co. to argue that an insurer must defend if allegations arguably fall within coverage. The court answered with Am. Bumper & Mfg. Co. v. Nat'l Union Fire Ins. Co. and Marlo Beauty Supply, Inc. v. Farmers Ins. Grp.: when a claim is specifically excluded by clear language, there is no duty to defend, and courts may not invent ambiguity to trigger a defense obligation.

3) Triple’s “fee simple at issuance” theory failed procedurally and temporally.

Triple argued on appeal that the policy was breached in 2011 because title allegedly was not fee simple when the policy issued. The court treated this as not meaningfully advanced below (the case was litigated as a duty-to-defend dispute tied to the PCJ lawsuit), and further noted the theory would be time-barred under the six-year limitations period for contract claims, citing Scherer v. Hellstrom and Mich. Comp. Laws § 600.5807(9).

4) Equity could not rewrite an unambiguous exclusion.

The court rejected a fairness-based appeal under Rory v. Cont'l Ins. Co. and Kendzierski v. Macomb County: Michigan courts enforce unambiguous contracts as written. It also suggested Triple’s own conduct weakened its equitable stance, citing Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co..

Impact

  • Sharper boundary on title-insurance defense coverage: The decision underscores that a broad duty to defend yields to a clear “created/suffered” exclusion when the insured’s own decisions and nondisclosure generate the adverse claim.
  • Developer-successor risk allocation in condominium projects: Purchasers of undeveloped condominium interests must treat Master Deed deadlines (and statutory reversion mechanisms under Mich. Comp. Laws § 559.167(3)) as core title risks. Title insurance is not a backstop for failing to timely develop/withdraw or for selling after rights lapse.
  • Transactional diligence and disclosure incentives: By characterizing the post-knowledge sale as “creating” the claim, the opinion incentivizes disclosure of known clouds and discourages insureds from converting a known title dispute into litigation and then tendering defense costs to the insurer.
  • Limits on re-framing coverage theories on appeal: The court’s treatment of the late-blooming “breach at issuance” theory—plus the limitations analysis—signals practical constraints on shifting from a defense-tender theory to an underwriting/vesting theory late in the dispute.
  • Persuasive, not precedential: The opinion is “NOT RECOMMENDED FOR PUBLICATION,” so it does not bind future panels, but it is likely to be cited persuasively in analogous Sixth Circuit and Michigan coverage disputes involving Exclusion 3(a)-type language.

Complex Concepts Simplified

  • Title insurance (owner’s policy): Insurance that protects an owner against certain losses from defects in title (ownership) and, depending on the policy, may include a duty to defend against covered claims.
  • Duty to defend: An insurer’s obligation to pay for legal defense when a lawsuit’s allegations potentially fall within coverage. In Michigan, this duty is broad, but it ends where a clear exclusion applies.
  • Exclusion 3(a) (“created, suffered, assumed, or agreed to”): A common exclusion preventing insureds from shifting to the insurer losses arising from the insured’s own intentional acts, permitted conditions, or known/accepted defects.
  • “Suffered” as “permitted”: In this context, it means the insured had the power to stop the defect from arising (e.g., by taking required steps before a deadline) but allowed it to happen.
  • Fee simple: The fullest form of private property ownership under state law, subject to recorded restrictions and other encumbrances. Triple attempted to reframe the case as a fee-simple vesting problem at policy issuance, but the court focused on Exclusion 3(a) and timeliness.
  • Condominium Master Deed / reversion of development rights: The Master Deed can set conditions and deadlines for development. Here, if development wasn’t completed or the land withdrawn within 10 years, the undeveloped portions remained part of the project as general common elements and construction rights ceased—effectively reverting to the association.
  • Statute of limitations (contract): A deadline to sue. Michigan generally provides six years for contract claims; waiting too long can bar even potentially meritorious theories.

Conclusion

Triple Properties Detroit, LLC v. First American Title Insurance Company reinforces a straightforward but consequential coverage rule: where a title defect and ensuing litigation are traceable to the insured’s knowing inaction (permitting a statutory/recorded reversion) and later deliberate conduct (selling into a known cloud), Exclusion 3(a)’s “created, suffered, assumed, or agreed to” language bars both indemnity and defense coverage. The opinion also highlights Michigan’s strong commitment to enforcing unambiguous insurance contract text as written, rejecting equity-based rebalancing and late-stage reframing of breach theories—particularly where limitations periods have run.