Consequential Damages and Title Insurance: Lessons from the Fifth Circuit for the Louisiana Title Industry
Case: Renton Properties, LLC v. 213 Upland, LLC 25-CA-36 (La. App. 5 Cir. 12/18/25)
Authors: Molly M. Jones and M. Robert C. Riess, Jr.
A Louisiana real estate transaction gone wrong has produced one of the more instructive title insurance decisions in recent memory. In Renton Properties, LLC v. 213 Upland, LLC, the Louisiana Fifth Circuit Court of Appeal addressed a question with direct implications for commercial developers, title insurers, and attorneys alike: when a title dispute delays a project and causes economic harm, does the owner’s title policy respond to those losses? The court confirmed the general rule that consequential and delay damages are not covered under a standard owner’s title policy. The decision underscores the limited scope of title insurance, which protects title itself and the cost of defending it, not business losses tied to delayed development. It also provides important guidance for developers, title insurers, and attorneys navigating title disputes in commercial projects.
Background: Competing Purchase Agreements and a Disputed Sale
Due to competing purchase agreements, litigation was triggered among the parties over whether Renton Properties, LLC (“Renton”) had enforceable rights over the property. The facts were tight: Renton accepted seller Upland’s counteroffer on August 17, 2017, but failed to deliver the required $20,000 deposit by Monday morning. Upland declared the agreement null and void and, the same day, moved forward with a competing buyer. JodyCorp, LLC (“JodyCorp”), which had submitted a competing offer at a higher price, closed on the property on August 25, 2017 for $500,000. Renton filed suit the same day. As litigation progressed, JodyCorp turned to Commonwealth Land Title Insurance Company (“Commonwealth”), arguing that the multi-year lawsuit with Renton created unmarketable and/or defective title and prevented it from developing the property as planned, causing significant financial losses.
Holding One: Title Insurance Does Not Cover Consequential Delay Damages Under Condition 7
JodyCorp purchased the Upland Avenue property for a townhouse development. When Renton’s competing purchase claim tied up the property for several years, JodyCorp argued that Commonwealth owed coverage not only for its defense costs, but for the profits it lost while development sat idle. The trial court agreed, finding that the policy covered costs, expenses, and damages resulting from allegations of defective title.
The Fifth Circuit reversed. Reviewing Policy Condition 7, the provision governing options to pay or settle claims, the court found that the phrase “costs, attorneys’ fees, and expenses” is limited to litigation defense costs authorized by the insurer. It does not encompass broader consequential damages such as lost profits or delay losses. The court declined to read the word “damages” into policy language that did not include it. At its core, the ruling reinforces a narrow, “four corners” of the contract only view of title insurance coverage. For Louisiana title professionals, this is a strong reaffirmation that courts will enforce policy language as written and will not expand coverage concepts beyond clearly expressed terms.
Holding Two: Insurer Delay in Resolving a Claim May Still Give Rise to Liability
Equally important is the court’s discussion of the “reasonably diligent manner” standard when insurers defend and resolve title claims. While the court rejected JodyCorp’s damages claim under Condition 7, it left a separate avenue open. Condition 9(a) provides that if the insurer establishes the insured’s title in a “reasonably diligent manner,” it fully performs its obligations and owes no further loss or damage to the insured. Commonwealth argued this clause extinguished JodyCorp’s delay damage claim because Commonwealth had promptly appointed defense counsel and ultimately preserved JodyCorp’s ownership through settlement. Critically, the court did not dismiss JodyCorp’s cross-claim and affirmed the trial court’s denial of Commonwealth’s summary judgment on the issue.
The court refused to create a bright-line timeline for what constitutes reasonable claim handling and instead treated it as a fact-specific inquiry. This means documentation of claim handling (timeline of defense appointment, litigation strategy, settlement posture, and responsiveness) will remain critical. Failure to do so could give rise to a claim under the applicable policy for the same damages sought by JodyCorp in this case.
Holding Three: LLC Principals Are Not Automatically Insureds Under an Owner’s Policy
The ruling also provides helpful clarity on insured status under owner’s policies. Charles Cannon III, the principal member of JodyCorp, was named personally in Renton’s lawsuit and sought a defense from the Commonwealth under JodyCorp’s policy, pointing to Renton’s alter ego allegations and the broader duty-to-defend doctrine. The court affirmed the dismissal of his claim, holding that an individual must independently hold title, through purchase or operation of law, to qualify as an “Insured” under the policy. The court confirmed that individuals associated with an insured entity (such as members, managers, or principals) are not automatically “insureds” unless they independently acquire title or fall within specific successor provisions. In Louisiana, where LLC structures tend to dominate real estate ownership, attorneys should consider discussing this gap.
Key Takeaways:
Renton Properties v. 213 Upland draws a clear boundary around what a standard owner’s title policy will and will not cover. It protects title and the reasonable costs of defending it. It does not insure business outcomes, project timelines, or the personal exposure of LLC principals. For attorneys, developers, and title professionals operating in Louisiana’s commercial real estate market, that boundary is worth understanding well before a dispute arises.
