United States District Court, D. Colorado
FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California Corporation, Plaintiff,
WOODY CREEK VENTURES, LLC, a Colorado Limited Liability Company; and PITKIN COUNTY TITLE, INC., a Colorado Corporation, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANT'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT
R. BROOKE JACKSON, District Judge.
Before the Court are cross-motions for summary judgment seeking a declaratory judgment as to whether a Right-of-Way over federal land negotiated by Fidelity constitutes a right of access as required by the title insurance policy held by Woody Creek. Woody Creek argues that this Right-of-Way isn't a "right" at all because it is revocable and expires after 30 years.
The Court has jurisdiction pursuant to 28 U.S.C. § 1332 as there is complete diversity between the parties and the amount in controversy exceeds $75, 000. The parties have fully briefed their motions and engaged in helpful oral argument before the Court. As I will explain below, the Court will grant Fidelity's motion and deny Woody Creek's cross-motion.
I. Factual Background
This case is about a title insurance policy on a parcel of land that Woody Creek owns in Pitkin County near Aspen, Colorado. The parcel in question is separated from another parcel previously owned by Woody Creek by a tract of land managed by the BLM. A road called Discovery Way crosses over the BLM land and is the only way to access the remote parcel. Woody Creek bought the parcel under the assumption that it had a legal right to use Discovery Way over the BLM land to access the remote parcel. Concurrent with the purchase, Woody Creek took out an indemnity policy with a local title company underwritten by Fidelity. That policy states that it will cover loss or damage sustained or incurred by reason of "[u]nmarketability of title" or "[l]ack of a right of access to and from the land." [ECF No. 32, Ex. at 1 §§ 3, 4.]
Later when attempting to sell one of the subdivided lots on the remote parcel, Woody Creek realized it might lack access to Discovery Way, and Fidelity, pursuant to the indemnity policy, initiated a quiet title action regarding access to the parcel. After the quiet title action was filed, the BLM and Fidelity (on behalf of Woody Creek) entered into negotiations. The BLM granted Woody Creek a Right-of-Way over its property. [ECF No. 32, Ex. C.] This Right-of-Way grants a "non-exclusive right to operate, maintain, and terminate an access road... in accordance with the terms, conditions and stipulations of [the Right-of-Way] document and applicable regulations." Id. at 1. The Right-of-Way terminates on December 31, 2041, "unless, prior thereto, it is renewed, relinquished, abandoned, terminated, or modified pursuant to the terms and conditions of this instrument or of any applicable Federal law or regulation." Id. The parties appear to agree that this is a revocable instrument, although I cannot find anything in the instrument itself that suggests the BLM has the right to revoke it prior to its 2041 expiration. Woody Creek also claims-and Fidelity does not appear to dispute-that the Right-of-Way does not allow for the extension of utilities and that it has been unable to sell the parcel due to lack of permanent access. [ECF No. 33 at 3.]
Woody Creek seeks summary judgment on its claim for declaratory relief that the Right-of-Way is not a right of access and therefore the policy provides coverage. Fidelity is seeking summary judgment on its claim for declaratory relief that the grant is a right of access and therefore the policy does not provide coverage. Relatedly, Fidelity seeks summary judgment dismissing Woody Creek's claims of bad faith denial of coverage. The Court held oral argument on the cross motions on April 24, 2014.
a. Standard of Review.
The Court may grant summary judgment if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must "designate specific facts showing that there is a genuine issue for trial." Id. at 324. A fact is material "if under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. The Court will examine the factual record and make reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).
b. Rules of Insurance Policy Interpretation.
"The terms of an insurance policy are interpreted in accordance with general rules of contract interpretation, and should be construed to promote the intent of the parties." Union Ins. Co. v. Houtz, 883 P.2d 1057, 1061 (Colo. 1994) (citation omitted). The meaning of an insurance contract should be interpreted as it would be understood by persons of ordinary intelligence. Simon v. Shelter General Ins. Co., 842 P.2d 236, 240 (Colo. 1992). "In construing a policy, words should be given their plain meaning according to common usage, and strained constructions should be avoided." Compton v. State Farm Mut. Auto. Ins. Co., 870 P.2d 545, 547 (Colo.App. 1993). "Where terms in an insurance policy are ambiguous, [courts] construe the terms against the drafter and in favor of providing coverage to the insured." Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814, 820 (Colo. 2004).
c. The Indemnity Policy Covers the Remote Parcel.
No one disputes that the indemnity policy covers the remote parcel. At the hearing, Fidelity freely conceded that the policy requires them to remedy a lack of access or pay money. Indeed, none of the material facts are disputed in this case. The only disputed issue is whether, as a matter of law, the ...