Fidelity National Title Insurance v. Woody Creek Ventures, LLC
2016 U.S. App. LEXIS 13563
| 10th Cir. | 2016Background
- Woody Creek bought two adjoining parcels and a title insurance policy from Fidelity; one parcel was accessed across BLM land via Discovery Way.
- After subdividing the remote parcel, Woody Creek learned there was no recorded permanent legal right to use Discovery Way, derailing a pending lot sale and prompting a $7 million claim to Fidelity.
- Fidelity sued/declared that it had cured the access defect after purchasing from BLM a 30-year revocable right-of-way grant allowing access via Discovery Way.
- Woody Creek maintained the revocable, time‑limited grant did not provide permanent access and therefore (a) a covered “lack of right of access” loss persisted and (b) the title was rendered unmarketable.
- The district court granted Fidelity summary judgment, holding the 30‑year right-of-way satisfied the policy’s “right of access” coverage and that lack of permanent access did not make title unmarketable; Woody Creek’s bad‑faith claim failed because coverage was not denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a 30‑year revocable right‑of‑way satisfy the policy’s “right of access” coverage? | “Right of access” means a permanent, legally enforceable right; a revocable grant does not qualify. | Policy insures a right of access as written; it need not be permanent or unrestricted — a revocable right‑of‑way suffices. | The revocable 30‑year right‑of‑way constitutes a “right of access”; Fidelity cured the access defect. |
| Does lack of permanent, irrevocable access render title “unmarketable” under the policy? | Temporary/revocable access diminished value and therefore made title unmarketable. | “Unmarketability of title” covers defects in title/ownership rights, not economic or physical-use limitations; lack of permanent access affects value, not title. | Lack of permanent access is an economic/use issue, not a title defect; it does not render title unmarketable. |
| Can Woody Creek invoke the doctrine of reasonable expectations to expand coverage? | Insured reasonably expected permanent access coverage; reasonable expectations should control. | Doctrine applies only where policy language is ambiguous; here language is plain. | Reasonable‑expectations doctrine does not override unambiguous policy language; no coverage expansion. |
| Was Woody Creek’s bad‑faith denial claim viable after Fidelity obtained the right‑of‑way? | Fidelity acted in bad faith by refusing to recognize ongoing coverage for permanent access loss. | Fidelity never denied coverage; it cured the defect and thus performed its obligations. | Bad‑faith claim fails as a matter of law because Fidelity did not deny coverage and cured the defect. |
Key Cases Cited
- Qwest Corp. v. AT&T Corp., 479 F.3d 1206 (10th Cir. 2007) (standard for de novo review of summary judgment in federal court)
- Radil v. Nat’l Union Fire Ins. Co. of Pittsburgh, 233 P.3d 688 (Colo. 2010) (insurance contracts construed by plain language; ambiguities resolved for insured)
- Edwards v. St. Paul Title Ins. Co., 563 P.2d 979 (Colo. App. 1977) (economic burdens affecting value do not necessarily make title unmarketable)
- Campbell v. Summit Plaza Associates, 192 P.3d 465 (Colo. App. 2008) (lack of access is not necessarily an encumbrance or title defect that defeats possession)
- Knight v. Devonshire Co., 736 P.2d 1223 (Colo. App. 1986) (marketable title means reasonably free from doubt that would subject purchaser to litigation)