By Alicia McNally, LAW WEEK COLORADO
DENVER — District Judge William Hood awarded an Arapahoe County woman $4.8 million in a rare case involving a breach of a title insurance contract.
The bench trial lasted eight days, and the judge submitted his order on May 4.
Breach of a title insurance contract is rare because of its “retroactive” nature, said Katie Reilly and Larry Katz, both members of Denver law firm Jacobs Chase Frick Kleinkopf & Kelley. Title insurance is purchased with real estate to ensure that the property buyer, in short, “gets what he or she pays for” by investigating property history and deeds.
“Normally when you purchase something like health insurance, you insure problems that could happen in the future. When you buy title insurance, they investigate things that happen in the past,” Katz said. “Usually the insurance companies get it right, and there aren’t that many claims.”
Mary Scott purchased nearly 20 acres of property at 2501 South Monroe Lane, Cherry Hills Village, in September 2004. They intended to build their dream home on the land and also to separate it into six additional lots. Because the property was only accessible by South Monroe Lane, a “very winding dirt road” that ran over an easement belonging to Kent Denver School. Cherry Hills would only allow the Scotts to subdivide their property if the easement was more than 20 feet wide.
While in the process of purchasing the property, the Scotts wanted to make sure they could subdivide. There were deeds dating back to the 1940s with conflicting measurements of the road, one that measured 16 feet wide and one that measured 30. Chicago Title Insurance, who insured the Scotts, said they would cover them for both measurements.
“In Cherry Hills Village, there aren’t many open parcels of land,” Reilly said. “[The Scotts’ property] is much less valuable if it can’t be subdivided.”
The Scotts purchased the land and the title insurance with the understanding that they would be able to subdivide their property. But while heavily into the subdivision process, they found they were unable to do so. When they filed a claim, CTI “fought every step of the way,” said Reilly.
The bench trial lasted seven days. According to Hood’s order, CTI failed to pay a valid claim and failed to take action to solve the title problem in a reasonable period of time.
While Hood found CTI breached its contract, no punitive damages were awarded because the language of the deeds were too ambiguous to find proof of damages beyond reasonable doubt of willful misconduct.
