Case Title: SUSAN LITTLEFIELD HAINES V. OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2008-03-20T00:00:00Z

Document:
SUSAN LITTLEFIELD HAINES V. OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY2008 WY 31178 P.3d 1086Case Number: 06-147Decided: 03/20/2008
OCTOBER 
TERM, A.D. 2007

 
 
SUSAN 
LITTLEFIELD HAINES,Appellant(Plaintiff),v.OLD 
REPUBLIC NATIONAL TITLE INSURANCE 
COMPANY,Appellee(Defendant).

 
 
Appeal 
from the DistrictCourtofNatronaCounty

The 
Honorable Gary P. Hartman, Judge

 
 

Representing 
Appellant:

Gibson 
Sean Benham, Casper, 
Wyoming

 
 

Representing 
Appellee:

Keith R. 
Nachbar of Keith R. Nachbar, P.C., Casper, Wyoming

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, BURKE, JJ.

 
 

GOLDEN, 
Justice. 

 
 
[¶1]      In this appeal, 
appellant Susan Littlefield Haines (Haines), the insured, asks this Court to 
decide for the first time whether a title insurance policy that insures legal 
access requires the insurer to affirmatively obtain a recorded easement or right 
of access or compensate the insured for the lack of recorded access rights.  The trial court granted summary judgment 
to appellee Old Republic National Title Insurance (OldRepublic), the insurer, holding that 
Haines was not entitled to either remedy because she had access to her property 
and had suffered no loss entitling her to compensation under the policy.  

 
 
[¶2]      Haines contends 
that, as a matter of law, an insurer's failure to remedy a title defect or 
compensate for the insured's having to establish the right of access under these 
circumstances breaches the title insurance policy.  We find that in this instance the 
insurer has adequately established that the alleged unmarketability or other 
title problems do not really exist and, thus, Haines cannot suffer any loss or 
damages, and we affirm the grant of summary judgment.

 
 
ISSUES

 
 
[¶3]      Haines presents 
the following questions for our review:

 
 

1.                  
Whether 
upon being notified that no recorded easement or right of access exists to a 
real property a title insurance company who issued a title policy on such 
property insuring a legal right of access is required to obtain a recorded right 
of access or otherwise compensate the property owner for the lack 
thereof.

 
 

2.                  
Whether 
a title insurance company breaches the terms of the title policy and/or commits 
the tort of bad faith by failing and refusing to obtain a recorded right of 
access following such notification where no adjoining property owner is actively 
blocking the insured's access to the subject property.

 
 

Old 
Republic 
restates the issues to be:

 
 

1.                  
Did the 
District Court below properly grant summary judgment to DefendantOldRepublic?

 
 

2.                  
Was Old 
Republic obligated to affirmatively act to cure Haines' perceived access 
concerns under the terms of an indemnification title policy when Haines' access 
had never been blocked or restricted, Haines had other access to her property, 
and Haines had not suffered any loss or damages?

 
 

3.                  
Did 
Haines comply with the claim procedure in the policy?

 
 
FACTS

 
 
[¶4]      Our standard of 
review for summary judgments requires that we review the recitation of facts 
from the vantage point most favorable to Haines, as the party opposing the 
motions, awarding her all favorable inferences that may be drawn from the 
facts.  Hulse v. First American Title, 2001 WY 
95, ¶ 5, 33 P.3d 122, 127 (Wyo. 2001) (citing S & G Investors, LLC v. 
Blackley, 994 P.2d 941, 943 
(Wyo. 2000)).   

 
 
[¶5]      Before Haines 
purchased property in Natrona County, Wyoming, in May of 1999, the seller's real 
estate agent requested that Rocky Mountain Title Insurance Agency, Inc., 
(agency)  issue a title insurance 
commitment.  The agency investigated 
methods of access to the home on Gothberg Road, finding that access to 
Haines' home had been obtained by that road for almost 100 years. The agency 
also determined that Haines would have access by two other methods which she 
since has used more frequently than by Gothberg Road. The agency, however, 
recognized that there was no record of easement for Gothberg Road.  

            

[¶6]      Adjacent 
landowners, Steven G. and Suzanne D. Boomer, had purchased their property in 
February of 1999 and believed that Gothberg Road which traversed their 
property was their private road.  
The Boomers had installed cattle guards, made other improvements to the 
road, and maintained it.  When 
Haines' invitees began using the road to move heavy equipment for improvements 
to her property, the Boomers contacted law enforcement and threatened trespass 
charges, delaying the improvements. Haines determined that the Boomers' 
predecessor in interest had granted an easement/right of way to the public to 
use Gothberg 
Road.  On 
this basis, Haines sued the Boomers on June 23, 2000, seeking injunctive relief 
and a declaration that the road was dedicated to public use. The Boomers filed 
an answer denying public dedication and counterclaimed that the road was their 
private property they had privately maintained and requested that the road be 
declared their private property.  
After receiving the counterclaim, Haines contacted OldRepublic and notified it that her right of 
access was in litigation.  In 
response, OldRepublic 
replied:

 
 
Please 
advise if Gothberg 
Road is a public road or a private right of way. Does 
NatronaCounty take the position 
that Gothberg 
Road is a public road?  Does NatronaCounty maintain the road or is it 
maintained by private land owners?  
Is there other legal access to your land?  In other words, is there any way to 
legally access your land other than by way of Gothberg Road?  Your policy insures that you have legal 
access. However, the policy does not insure that you have any particular legal 
access.  Therefore, if you have 
legal access by way of some other public road or private easement, there is no 
duty to defend or indemnify you. 

 
 
The 
letter concluded by requesting more information from Haines' attorney in order 
to make a final determination. 

[¶7]      Haines' lawsuit, 
however, proceeded without OldRepublic participating and concluded in 
Haines' favor.  That litigation 
produced a court order declaring the road had been dedicated to public use by 
deed and prohibiting the Boomers' interference with Haines' or her invitees' use 
of Gothberg Road.  Haines, however, 
was convinced that the absence of recorded legal access amounted to simple 
access that could again be challenged making her title unmarketable.  Her title policy stated that she was 
insured against loss or damage caused by a lack of a right of access to and from 
the land and unmarketability of the title.  
The policy does not define "right of access" but does define the term 
"unmarketability of title," stating it to be an "alleged or apparent matter 
affecting the title to the land, not excluded or excepted from coverage, which 
would entitle a purchaser of the estate or interest described in Schedule A to 
be released from the obligation to purchase by virtue of a contractual condition 
requiring the delivery of marketable title." 

 
 
[¶8]      Haines sued 
OldRepublic seeking affirmative action to 
provide her with legal access and compensate her for her legal fees for its 
failure to defend her against the Boomers' private road claims.  OldRepublic denied that Haines had properly 
followed the policy's notice requirements, provided proof of loss or damages, 
and did not have legal access by any of three methods she was presently 
using.  On all of these bases, the 
trial court granted OldRepublic summary judgment.  This appeal 
followed.

 
 
STANDARD 
OF REVIEW

 
 
[¶9]      Summary judgment 
is proper only when there are no genuine issues of material fact and the 
prevailing party is entitled to judgment as a matter of law.  A material fact is any fact that, if 
proved, would have the effect of establishing or refuting an essential element 
of a claim or defense asserted by a party.  
We review a summary judgment in the same light as the district court, 
using the same materials and following the same standards.  We examine the record from the vantage 
point most favorable to the party opposing the motion, and we give that party 
the benefit of all favorable inferences which may fairly be drawn from the 
record.  Summary judgment serves the 
purpose of eliminating formal trials where only questions of law are 
involved.  We review a grant of 
summary judgment by deciding a question of law de novo and afford no deference 
to the district court's ruling on that question.  Hulse, ¶ 25, 33 P.3d  at 
131.

 
 
DISCUSSION

 
 
[¶10]   "A title insurance policy protects 
the insured against loss or damage as a result of defects in or the 
unmarketability of the insured's title to real property."  Stewart Title Guar. Co. v. West, 676 A.2d 953, 960 (Md. App. 1996).  "[T]he duty owed to an insured that 
arises through the issuance of a title insurance policy is contractual and 
subject to the policy's stated terms and conditions." Hulse, ¶ 45, 33 P.3d  at 136.  Haines' policy states that it is an 
indemnity contract. Haines contends that, although Wyoming has not addressed 
the specific issue she presents in this appeal, Hulse recognized that a lack of legal 
access that causes a title defect and unmarketable title presents the issue 
whether the title insurance policy's terms have been breached. She also contends 
that a case in another jurisdiction directly addressed this issue under similar 
facts and found the insurer to have breached similar policy terms.  Stewart Title, 676 A.2d  at 965.   We have carefully reviewed Hulse and Stewart Title and agree with Haines 
that her policy should be governed under the generally accepted rules of 
interpreting title insurance policy terms and conditions set forth in Stewart Title, which we 
summarize:

 
 
            
The predominant view today is that title insurance  at least as to its 
first party aspect  is a contract of indemnity, and not a contract of guaranty 
or warranty. Consequently, a title insurer does not "guarantee" the status of 
the grantor's title.  

 
 
            
As an indemnity agreement, the 
insurer agrees to reimburse the insured for loss or damage sustained as a result 
of title problems, as long as coverage for the damages incurred is not excluded 
from the policy. . . .

 
 
            
When an insured notifies an insurer of a title problem, the insurer 
ordinarily has three choices.  It 
may either (1) pay the insured for the loss up to the amount of the coverage 
limits of the policy; (2) clear the title defect within a reasonable time; or 
(3) show that the alleged unmarketability or other title problems do not really 
exist and thus there is no way in which the insured could sustain any 
loss.

 
 

Stewart 
Title, 676 A.2d  at 960-61 (citations omitted).  This Court has frequently examined 
issues arising under title insurance policy terms in a manner consistent with 
the above.  See Hulse; Bredthauer v. Christian, Spring, 
Seilbach and Assoc., 824 P.2d 560 (Wyo. 1992); Ruby Drilling Co., Inc. v. Title Guar. Co. 
of Wyoming, Inc., 750 P.2d 674 (Wyo. 1988). 

 
 
[¶11]   As Haines states, this Court has 
not previously addressed similar facts.  
In Stewart Title, the insured 
had title insurance terms protecting their right to legal access to a public 
road.  Because of failures by their 
title insurance company and its agents, the insured, among other problems, was 
found to be landlocked, because although ingress and egress were possible, there 
was no legal right of access.  Stewart Title, 676 A.2d  at 965.  
The court found that there are few title problems that are more 
palpable than complete lack of access to a public road, and it held that when 
property completely lacks such access, it is usually held that its title is 
unmarketable, apparently on the ground that the purchaser would be subjected to 
the risk of a lawsuit to establish an easement by necessity in order to gain a 
right of access.  Id. at 965.  
 

 
 
[¶12]   Haines contends that, based on this 
reasoning, the failure to provide a recorded easement or right of access is a 
breach of her policy.  Consequently, 
she reasons, her insurer should either remedy the title defect by obtaining 
record legal access or pay her damages up to the face value of the policy.  However, based upon Stewart Title, and this Court's previous 
decisions about the nature of roads that provide for legal access in Wyoming, as we explain 
below, we do not find that Haines is landlocked. 

 
 
[¶13]   We have previously recognized that 
the statutory definition of a highway includes a road that is dedicated for 
public use in such a manner that any part is open for use by the public for 
purposes of vehicular travel.  McClean v. State, 2003 WY 17, ¶ 11, 62 P.3d 595, 598 (Wyo. 2003).    
We have said:

 
 
A 
dedication is generally defined as the devotion of property to a public use by 
an unequivocal act of the owner, manifesting an intention that it shall be 
accepted and used presently or in the future.  When lots are being subdivided or 
streets are being defined, land may be dedicated for public use either through 
the statutory procedures for dedication or under common law. 

 

Id., 
¶ 11 n.3, 62 P.3d  at 599 n.3 (quoting River Properties Partnership v. 
Willoughby, 944 P.2d 1145, 1148 (Wyo. 1997)) (emphasis in original).  In addition, this Court has 
recognized:

 

 A common law dedication requires an 
intention to dedicate expressed in some form, and an acceptance of the 
dedication by the proper public authorities, or by general public 
user.  It is distinguishable 
from a statutory dedication, which is in the nature of a grant, and from 
prescription which is based on a long period of use.  Generally a common law dedication 
rests upon the doctrine of estoppel.  Statutory dedication generally vests the 
legal title to the grounds set apart for public purposes in the municipal 
corporation, while the common-law method leaves the legal title in the 
original owner.  

 

McClean, 
¶ 
11 n.3, 62 P.3d  at 599 n.3 (quoting Town of Moorcroft v. Lang, 779 P.2d 1180, 1183 (Wyo. 1989)) (emphasis in 
original).

 
 
[¶14]   In Wyoming, a public road is one the public 
generally  not merely a portion of the public  is privileged to use, provided 
the characteristics of the road indicate it is available to the general 
public.  See Pine Bar Ranch, LLC, et. al v. Luther, 
2007 WY 35, ¶¶ 12, 13, 152 P.3d 1062, 1067 (Wyo. 2007) (citing McGuire v. McGuire, 608 P.2d 1283, 1288 
(Wyo. 1980)); Wagstaff v. Sublette County 
Bd. of County Comm'rs, 2002 WY 123, ¶ 17, 53 P.3d 79, 83-84 (Wyo. 2002) 
(holding the unimproved dirt tracks did not constitute public roads because no 
evidence was presented that the public generally has the privilege to traverse 
them)).  We have decided that where 
a public road is open to the public and used by it, there is legally enforceable 
access and, thus, no question about transferability of the right to use the 
road.  Reidy v. Stratton Sheep Company, 2006 WY 
69, ¶ 24, 135 P.3d 598, 607 (Wyo. 2006).  

 
 
[¶15]   Viewed in the light most favorable 
to Haines, no evidence exists that Gothberg Road, which has been used to access 
her property for over 100 years, is not a public road with appropriate 
characteristics making it generally available to the public.  Accordingly, Haines has legally 
enforceable access to the road that is transferable, meaning that her title is 
marketable.  This was the status of 
her title at the time she brought suit against the Boomers, and OldRepublic was within its rights under the 
policy to decide that her title had no defect and she had suffered no loss.  OldRepublic 
did not breach the policy by failing to defend her against the Boomers' 
counterclaim of which she properly and timely notified it without prejudice to 
OldRepublic.  OldRepublic is not now in breach by failing 
to record access rights or compensate her for her losses sustained by the 
Boomers' counterclaim.  Haines was 
within her rights to sue her neighbor to settle her dispute with them without 
participation by her insurer; however, her insurer's failure to provide her with 
a defense, while risky for it, does not entitle her to compensation for her 
legal fees under the specific terms of her policy, which state that it is not 
liable for those attorney fees. 

 
 
[¶16]   We also find that the tort of bad 
faith is not applicable here for the reasons just stated, there had been no 
breach, but also for the reasons stated in Hulse.  
Haines had two other methods of access and has presented no evidence 
that these were not legally enforceable.  
In such a case, the insurer may decline to defend or remedy the perceived 
title defect because there is no loss or damages.  Only defects shown in the public record 
relating to a legal right of access are covered under the policy.  Hulse ¶ 50, 33 P.3d  at 138.  In summary, having determined there 
is no genuine issue as to any material fact on Haines' claims against OldRepublic, we affirm the district court's 
grant of summary judgment in its favor.