This is a most interesting, perturbing, but regrettably a common tactic employed by Stewart Title-deny everything.

Clearly the lender had a title claim; the improvement (house) was not on the property. Sure the title was marketable, but only as an unimproved lot. Rather than paying the claim, Stewart chose to go through a rather expensive litigation process to avoid payment. Their agent was liable, as the policy was issued on behalf of Stewart Title.

It would have been far more appropriate, and expeditious to have simply paid the claim, and then turned to their agent for remuneration. This was an agent liable claim. The agent would have either filed an E&O claim in order to pay Stewart, or paid Stewart directly.

It is tactics like this that bring into question the integrity and value of a title insurance policy. It harms us all. The bank had to endure three expensive and unnecessary  legal proceedings to receive payment on their valid policy.

As a result of the portrayed litigation scenario, the lender most likely will be unwilling to accept Stewart Title Insurance Policies going forward. There is "nothing to be gained from the second kick of a mule". This agent has lost a source of business.

Stewart could have easily avoided excessive litigation costs; created good rather than ill-will;   totally avoided attorney fees which likely exceeded the cost of the claim; and at the end of the day simply recouped the amount of claim paid from their agent.. Everyone would have won by doing the right thing.

 Who is in charge of decisions like this?