## Facts

- Dorothea McCullough contracted to purchase approximately 120 acres from Charles Keilbach in Monroe County, Indiana, and later received a warranty deed that included a disputed seven-acre tract.
- In 1993, when McCullough attempted to sell, adjoining owner Sid D. Martin asserted ownership of the seven acres by adverse possession and recorded affidavits stating he owned it.
- Martin also confronted McCullough’s realtor while armed and claimed ownership of the disputed parcel.
- McCullough sued Martin to quiet title and for slander of title, and also sued Keilbach for breach of the deed’s covenants (including failure to defend title).
- After a bench trial, the trial court quieted title in McCullough, found Martin liable for slander of title, and held Keilbach liable for McCullough’s attorney’s fees and expenses based on his refusal to defend.
- Keilbach appealed only the award of McCullough’s attorney’s fees and expenses against him.

## Issues

1. Whether a grantor’s refusal to defend title under a warranty deed constitutes a breach when the grantee successfully defends and retains title.
2. Whether, absent a failure of title, a grantee may recover attorney’s fees and litigation expenses from the grantor as damages for breach of warranty.

## Decision

- The Court of Appeals of Indiana reversed the judgment against Keilbach.
- The court held Keilbach did not breach the warranty of title by refusing to defend because McCullough ultimately prevailed and her title did not fail.
- The court remanded with instructions to vacate the portion of the judgment awarding McCullough attorney’s fees and expenses against Keilbach.

## Legal Principles

- A warranty deed’s covenant to warrant and defend does not create fee-shifting for every third-party challenge to title.
- Attorney’s fees and defense expenses may be recoverable as consequential damages for breach of warranty only when there is an actual failure of title (such as loss of the property to a superior claim).
- When the grantee’s title is upheld in litigation, there is no breach of the warranty of title, even if the grantor refused to participate in the defense.

## Conclusion

Because McCullough successfully quieted title and retained the disputed parcel, the court found no breach of Keilbach’s warranty deed and rejected recovery of her attorney’s fees and expenses from him, limiting such recovery to cases involving an actual failure of title.


Keilbach v. McCullough, 669 N.E.2d 1052 (Ind. Ct. App. 1996)