A Louisiana appeals court has confirmed: title insurance is insurance, not just a warranty – a decision that clarifies how title insurance is regulated in the state.
The case, decided by the Louisiana Fourth Circuit Court of Appeal on September 29, 2025, centered on a failed property development in New Orleans East. In 2008, Henry L. Klein, the Succession of Frederick P. Heisler, and Levy Gardens Partners 2007 LP purchased property with the intention of building a multi-family housing complex. To protect their investment, they obtained three title insurance policies through Lewis Title Insurance Company, with the policies issued by Commonwealth Land Title Insurance Company.
The project never got off the ground. The plaintiffs alleged that zoning issues, which prevented the planned development, were not disclosed at closing. This led to a series of lawsuits, with the plaintiffs seeking to recover damages for their inability to develop the property. Their legal strategy hinged on the argument that the title insurance policies should be interpreted not as insurance contracts, but as contracts of warranty. If successful, this interpretation would have allowed them to claim lost profits under the policies.
The litigation was extensive, involving multiple rounds in both state and federal courts. The plaintiffs initially filed suit against Lewis Title and Commonwealth in 2010, seeking damages for the loss of development rights. After a series of dismissals and remands – including a $605,000 damages award against Commonwealth in federal court – the plaintiffs continued to pursue claims, including negligent abstracting, negligent misrepresentation, fraud, and requests for declaratory judgment.
A key issue throughout was whether the title insurance policies were truly insurance contracts under Louisiana law or simply contracts of warranty. The trial court denied the plaintiffs’ petition for declaratory judgment, and the appellate court affirmed this decision. The Fourth Circuit pointed to the Louisiana Insurance Code and the Louisiana Title Insurance Act, both of which explicitly define and regulate title insurance as insurance. The court also referenced federal case law, including United States v. Home Title Ins. Co. and Katz v. Fidelity National Title Ins. Co., which support the classification of title insurance as part of the business of insurance.
The plaintiffs argued that the policies included zoning provisions that should have covered their losses if the property was not zoned for the planned construction. However, the court found that the title insurance policies were issued in accordance with Louisiana law and did not entitle the plaintiffs to recover lost profits as if the policies were contracts of warranty. The court also addressed and dismissed claims of unjust enrichment, finding that alternative remedies were available and that the requirements for unjust enrichment were not met.
With the September 29, 2025, decision, the case is now closed. The ruling clarifies how title insurance is treated under Louisiana law – regulated as insurance, not as a contract of warranty – and offers guidance for mortgage and title professionals navigating similar issues in the future. While the decision is binding within the Fourth Circuit and persuasive elsewhere in the state, it stands as an important reference point for the industry.
