United States District Court, D. Colorado
FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California corporation, Plaintiff,
PITKIN COUNTY TITLE, INC., Defendant.
KRISTEN L. MIX, Magistrate Judge.
This matter is before the Court on Plaintiff's Motion For Reconsideration of Order and Recommendation Granting Defendant/Third-Party Plaintiff Fidelity National Title Insurance Company's Motion to Stay Proceedings [#114] (the "Motion"). Defendant filed a Response [#123] to the Motion and Plaintiff Fidelity National Title Insurance Company ("Fidelity") filed a Reply [#124] in further support of the Motion. Pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.LCivR 72.1(c), the Motion has been referred to the undersigned for disposition [#115]. The Court has reviewed the Motion, the Response, the Reply, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#114] is DENIED.
A. Procedural Background
This case was initially brought by insureds, Preston and Betty Henn (the "Henns") against Fidelity. See generally Compl. [#1]. The Henns brought claims against Fidelity for its alleged breach of their title policy. See generally id. On May 12, 2013, Fidelity, which at that time was the only Defendant, filed a third-party complaint against Defendant, alleging that Defendant, among other things, acted negligently when it deleted certain insurance policy exceptions from the title policy that was issued to the Henns. See generally Defendant/Third-Party Plaintiff Fidelity National Title Insurance Company's Corrected Third-Party Complaint and Jury Demand Against Third-Party Defendant Pitkin County Title, Inc. [#34] (the "Third-Party Complaint"). On November 15, 2013, Fidelity filed its Motion to Stay Proceedings [#68] (the "Motion to Stay"), which stated that it was opposed by the Henns and that Defendant "does not oppose the Motion." Motion to Stay [#68] at 2. On February 21, 2014, the Court received an email from Fidelity's counsel informing the Court that Fidelity and the Henns settled the claims between them. Minute Order [#93] at 1. On March 19, 2014, the Court set a deadline for Fidelity and the Henns to file dismissal papers regarding those claims. Id. On April 17, 2014, Defendant filed its Motion to Join in Fidelity National Title Insurance Company's Motion to Stay Proceedings [Doc. No. 68] [#108] (the "Joinder Motion") stating that it filed "this Motion to Join to make clear that [Defendant] joins with Fidelity in requesting the relief set forth in the Motion to Stay [Doc. No. 68], supports the motion, and agrees that the Court should grant the relief sought therein." Joinder Motion [#108] at 2. The next day, The Henns and Fidelity filed their Joint Motion to Dismiss Complaint [#110] (the "Motion to Dismiss"), which, if granted, would dispose of all claims between them. That same day, the Court entered its Order and Recommendation of United States Magistrate Judge [#112] (the "Challenged Order"). The instant Motion asks the Court to reconsider the Challenged Order. In the Challenged Order, the Court explained:
On April 18, 2014, Plaintiffs and Defendant/Third-Party Plaintiff filed their Joint Motion to Dismiss Complaint [#110], which states that all claims Plaintiffs assert against Defendant/Third-Party Plaintiff have been resolved. Accordingly, Plaintiffs' opposition to the Motion is no longer relevant to resolution of the Motion. Third-Party Defendant does not oppose the Motion and recently filed a joinder motion. See generally Defendant/Third-Party Plaintiff Fidelity National Title Insurance Company's Status Report Re: Motion to Stay Proceedings [#76]; Joinder Motion [#108]. Accordingly, the Court treats the Motion as unopposed.
In the Motion, Defendant/Third-Party Plaintiff requests a stay of all proceedings in this case while a related state-court case, Westpac Aspen Investments LLC v. Preston B. Henn, et al., (the "State Court Action") proceeds. Motion [#68] at 4. Defendant/Third-Party Plaintiff explains that the State Court Action involves a dispute about an easement and that the instant action involves claims relating to a title insurance policy relating to the real property at issue in the State Court Action. Id. at 2. As a result, Defendant/Third-Party Plaintiff argues that "[i]f this case proceeds to trial prior to the resolution of the [State Court Action], there is a significant risk that there will be inconsistent verdicts regarding the existence of an easement, Plaintiffs' entitlement to damages, or the amount of Plaintiffs' damages, if any." Id. at 4
Challenged Order [#112] at 1-2. The Court then applied the factors outlined in String Cheese Incident, LLC v. Stylus Shows, Inc., No. 02-cv-01934-LTB-PA, 2006 WL 894955, at *2 (citing FDIC v. Renda, No. 85-2216-O, 1987 WL 348635, at *2 (D. Kan. Aug. 6, 1987) (unreported decision)), and concluded that the String Cheese Incident factors weighed in favor of a stay, but recommended that the case be administratively closed pursuant to D.C.COLO.LCivR 41.2 for administrative reasons. Challenged Order [#112] at 3-4. On April 21, 2014, the Court granted the Motion to Dismiss. Order [#113] at 2. Later, because the Henns were no longer parties to this action, the Court ordered that the caption be modified to its present state, which reflects the relationship of the remaining parties in the Third-Party Complaint. Order [#120] at 1.
B. The Motion
In the Motion, Fidelity asks the Court to reconsider the Challenged Order and asks the Court to deny as moot the Motion to Stay [#68]. Motion [#114] at 3. It argues that the Motion to Stay was "based on the uncertainty and prejudice that could result to Fidelity from inconsistent verdicts if this case were tried prior to resolution of" the State Court Action. Id. at 4. Fidelity argues that its claims against Defendant "were undetermined, based on the uncertainty of the outcome of the" State Court Action. Id. Fidelity maintains that it intended "to move to withdraw" the Motion to Stay "following the granting of the" Motion to Dismiss. Id. at 5. Fidelity further argues that the Motion to Stay is moot because the breach of contract claim it asserts against Defendant in the Third-Party Complaint "is based solely on conduct by [Defendant] predating the" State Court Action. Id. Fidelity explains its claims as follows:
[Defendant's] liability in this case stems from its 2004 breach of the Issuing Agency Agreement between it and Fidelity. Specifically, the Issuing Agency Agreement prohibited [Defendant] from altering any title form from Fidelity without prior written authorization from Fidelity's corporate underwriting department. On July 29, 2004, [Defendant] issued a title policy to [the Henns] in which it deleted from Schedule B the preprinted policy exclusions from coverage relating to unrecorded easements and for any unrecorded title issue which a correct survey and inspection of the property would reveal. [Defendant] did not request authorization from Fidelity prior to deleting these policy exclusions and Fidelity would not have agreed to underwrite the policy as issued by [Defendant]. Fidelity's claims against [Defendant], which are the only remaining claims in this case, do not depend on the outcome of the [State Court Action].
Id. Fidelity maintains that its "damages consist of the settlement amount [it] was required to pay to [the Henns] and of the fees and costs [it] incurred in defending against [the Henns'] claims." Id. at 6. Therefore, it argues that "a stay is unwarranted under the factors enumerated in String Cheese Incident ...." Id. In addition, Fidelity avers that it will be prejudiced by any delay of this case. Id.
In its Response, Defendant argues that because there has been no admission that the Henns' underlying insurance claim was covered by the title policy, whether Fidelity's claims against Defendant have any basis in fact is dependent on the State Court Action. Response [#123] at 3-7. Specifically, Defendant avers that "[t]he question of whether there was an easement must be decided in the [State Court Action] according to the title policy...." Id. at 7 (emphasis omitted). Defendant further argues that one of the claims asserted in the State Court Action is that the Henns had actual knowledge of the easement on their property and the title policy allegedly "does not provide coverage for unrecorded claims or easements known to the insured claimant and not disclosed in writing' to [Defendant] or Fidelity" Id. at 8 (quoting Response, Ex. A [#123-1] ¶ 3(b)). Defendant maintains that if "the Henns had actual knowledge of the neighbors use, there would be no coverage, no obligation of Fidelity to indemnify, and no opportunity to pass through policy damages to [Defendant]." Id. Defendant argues that this is just one of the factual issues that must be resolved by the state court before this instant litigation should proceed. Id. at 9. With regard to the String Cheese Incident factors, Defendant argues that it "would be greatly burdened and highly prejudiced in its ability to defend the remaining claim without a stay." Id. It maintains that "if the stay were lifted, [it] would be forced to litigate facts and issues that will be (and should be) litigated by the Henns and their neighbors...." Id. at 9. Without a stay, Defendant argues that there is a risk of inconsistent judgments. Id. at 9-10. With regard to Fidelity's allegation that it will be prejudiced by a stay, Defendant maintains that "the title policy indicates that damages are not due and owing under the policy until thirty (30) days after both liability and the extent of loss or damage' have been definitely fixed' in accordance with the policy, which is when there is a final determination adverse to the insured's title." Id. at 10 (quoting Response, Ex. A §§ 12(b), 9(b)).
In its Reply, Fidelity argues that Defendant's characterization of this case is incorrect. Reply [#124] at 2. Fidelity maintains that this "is not an indemnity case requiring a final resolution of an underlying action." Id. Fidelity avers that its claims are based on the Issuing Agency Agreement. Id. at 2, 4. According to Fidelity, the "Issuing Agency Agreement's plain language states that [Defendant] is liable for any Loss' resulting to Fidelity from [Defendant's] failure... to comply with the terms and conditions of'" the Issuing Agency Agreement. Id. at 4. Fidelity further argues that "[t]here is no language in the Issuing Agency Agreement making [Defendant's] liability for breach of the agreement contingent on title policy defenses." Id. at 5. Fidelity maintains that there is no risk of inconsistent verdicts because its claims against Defendant are not ...