## Facts

- Horry County adopted an “Official Map Ordinance” under S.C. Code Ann. § 6-7-1220 establishing an official map that reserved future locations for public streets, highways, and utility rights-of-way.
- The ordinance prohibited buildings or improvements within a mapped reservation area unless an exemption or exception was granted and provided enforcement mechanisms, including penalties.
- Jericho State Capital Corporation of Florida and Lynx Jericho Partners, LLC acquired and/or financed real property in Horry County that lay within a corridor reserved on the official map for a planned roadway/right-of-way.
- Chicago Title Insurance Company issued title insurance policies to Jericho and Lynx Jericho insuring against loss from, among other things, defects in title, liens or encumbrances on title, and unmarketability of title.
- After the transactions, the insureds learned the County relied on the ordinance and official map to restrict development within the reserved corridor on their land.
- The insureds submitted a claim asserting the mapped reservation was a covered defect or encumbrance and rendered title unmarketable.
- Chicago Title denied coverage, asserting the reservation did not affect title as a covered defect/encumbrance and that any asserted loss was excluded as a governmental regulation/zoning or similar police-power matter.
- The insureds sued for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith refusal to pay benefits.
- A special referee granted summary judgment to Chicago Title on all claims.

## Issues

1. Whether an official-map right-of-way reservation that restricts development constitutes a defect in or encumbrance on title, or renders title unmarketable, under standard title insurance insuring clauses.
2. Whether policy exclusions for zoning, governmental regulation, or police-power actions bar coverage for losses tied to the official-map reservation.
3. Whether Chicago Title’s denial of coverage constituted bad faith as a matter of law.

## Decision

- Affirmed in part, reversed in part, and remanded.
- Reversed summary judgment for Chicago Title on the breach-of-contract claims; held the official-map reservation, on these facts, constituted a defect/encumbrance and rendered title unmarketable within the policies’ coverage.
- Held none of the policies’ coverage exclusions applied to bar coverage for the official-map reservation described.
- Affirmed summary judgment for Chicago Title on the bad-faith claim because the denial was based on a reasonable, debatable coverage position even though the court ultimately found coverage.

## Legal Principles

- A governmental “official map” reservation that designates a specific corridor for a future public right-of-way and imposes present, enforceable restrictions on improvements can constitute an encumbrance on title and can render title unmarketable for purposes of title insurance coverage.
- Standard title-policy exclusions for zoning, governmental regulation, and police-power enactments do not necessarily apply where the governmental action goes beyond general land-use regulation and imposes a specific, property-burdening reservation for future public acquisition coupled with immediate development restrictions.
- Bad faith refusal to pay requires lack of a reasonable basis for denial and the insurer’s knowledge or reckless disregard of that lack; a legitimate, debatable coverage dispute can defeat bad-faith liability as a matter of law.

## Conclusion

The court held that the official-map right-of-way reservation operated as a present, title-burdening encumbrance that made the insureds’ title unmarketable and was not excluded by standard governmental-regulation provisions, requiring reversal and remand of the contract claims, while sustaining summary judgment for the insurer on bad faith because the denial rested on a reasonable coverage dispute.


Jericho State Cap. Corp. of Fla. v. Chi. Title Ins. Co., 848 S.E.2d 572 (S.C. Ct. App. 2020)