The Arizona Supreme Court issued a split ruling in *Centerpoint Mechanic Lien Claims, LLC v. Commonwealth Land Title Insurance Company*, affirming parts of the lower court's decision while vacating others and remanding the case with instructions to the trial court. The unanimous decision, authored by Justice Clint Bolick and filed June 10, 2025, addresses complex title insurance coverage issues arising from the collapse of construction financer Mortgages Ltd.
The case represents the latest development in extensive litigation stemming from Mortgages Ltd.'s financial collapse, which left numerous unfinished construction projects in its wake. When the construction financing company failed, mechanics' liens were placed on multiple projects that Mortgages Ltd. had been funding, creating priority conflicts with deeds of trust held by investors who had loaned money to keep the construction projects operational.
Centerpoint Mechanic Lien Claims, LLC, represented by Richard M. Lorenzen of RMLaw/PC in Phoenix, served as both plaintiff and appellant in various stages of the proceedings. Commonwealth Land Title Insurance Company faced representation from a team of attorneys including Robert R. Berk, Eileen Dennis GilBride, and Charles M. Callahan from Jones, Skelton & Hochuli P.L.C. in Phoenix, along with David M. Satnick from Loeb & Loeb LLP in New York.
The case drew significant industry attention, with the American Land Title Association filing an amicus curiae brief through attorneys Matthew G. Kleiner of Gordon Rees Scully Mansukhani, LLP in Phoenix. The association's involvement signals broader implications for the title insurance industry regarding coverage disputes and mechanic lien priority issues.
According to the court's opinion, the central legal issue revolves around the scope of title insurance coverage under policies issued to lenders involved in the Mortgages Ltd. projects. The court addressed whether title insurance coverage extends beyond specific circumstances outlined in the policy terms, particularly regarding losses attributable to loan repayment failures.
Justice Bolick's opinion establishes that under the terms of the title insurance policy issued to the lenders, coverage is limited to losses attributable to a failure to repay loans. The court held that in cases where loans were actually repaid, different coverage analysis may apply, though the full implications of this distinction require further examination of the specific policy language and circumstances.
The litigation history traces back over a decade, with the original case filed in Maricopa County Superior Court under case number CV2011-008600 before The Honorable Christopher Whitten. The case proceeded through the Arizona Court of Appeals, Division One, which issued an opinion reported at 255 Ariz. 261 (App. 2023), before reaching the state's highest court.
The Arizona Supreme Court's decision to affirm parts of the lower court ruling while vacating others reflects the complex nature of the legal issues involved. The remand with instructions indicates that specific aspects of the case require further proceedings at the trial court level, guided by the Supreme Court's clarifications on applicable legal standards.
The case highlights ongoing challenges in the construction industry regarding the intersection of construction financing, mechanic liens, and title insurance. When construction projects fail due to financing issues, the resulting legal disputes often involve multiple parties with competing interests, including contractors seeking payment through mechanic liens, lenders protecting their security interests, and title insurers facing coverage claims.
For the title insurance industry, the case provides important guidance on policy interpretation and coverage limitations. The court's emphasis on specific policy language regarding loan repayment failures versus other types of losses offers clarity for similar disputes involving construction project failures and competing lien priorities.
The American Land Title Association's participation as amicus curiae underscores the precedential value of the decision for title insurance companies nationwide. The association's involvement suggests that the legal principles established in this case may influence how similar coverage disputes are resolved in other jurisdictions.
The mixed nature of the Arizona Supreme Court's ruling reflects the factually intensive nature of the dispute, as acknowledged by Justice Bolick in the opinion. While the court established general legal principles governing title insurance coverage in construction financing contexts, the specific application of these principles to the particular facts required the partial remand.
Moving forward, the case returns to the trial court for proceedings consistent with the Supreme Court's instructions. The lower court must apply the clarified legal standards to resolve remaining issues in the dispute between Centerpoint and Commonwealth Land Title Insurance Company.
The decision adds another chapter to the extensive litigation arising from Mortgages Ltd.'s collapse, demonstrating how construction industry failures can generate complex legal disputes that persist for years across multiple court levels. The case serves as a reminder of the intricate relationships between construction financing, lien priorities, and insurance coverage in real estate development projects.