Riordan v. Lawyers Title Insurance Corp.
393 F.Supp.2d 1100 (2005)
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Rule of Law:
A title insurance policy insuring against a 'lack of a right of access' guarantees only the existence of a legally recognized right of ingress and egress, not the quality, practicality, or specific type (e.g., vehicular) of that access.
Facts:
- Plaintiffs purchased 160 acres of real property located within the Cibola National Forest, accessible only via the Piedra Lisa Trail.
- The Piedra Lisa Trail, maintained by the U.S. Forest Service, was a hiking and horse trail unsuitable for vehicular traffic.
- Before the purchase, the prior owner and a U.S. Forest Service employee represented to Plaintiffs that the property had vehicular access via other routes.
- Defendant, Lawyers Title Insurance Corporation, issued Plaintiffs an owner's title insurance policy insuring against losses arising from, among other things, a 'lack of a right of access to and from the land.'
- Plaintiffs sued the United States government in a separate action to have a vehicular right of way to their property declared.
- While the action against the government was pending, Plaintiffs sold the property.
- Following the sale, Plaintiffs made demands for payment under their title insurance policy for the alleged loss in property value due to the lack of vehicular access.
- Defendant denied Plaintiffs' claims for coverage under the policy.
Procedural Posture:
- Plaintiffs initiated a lawsuit against the United States of America in U.S. District Court to declare a vehicular right of way to their property (the 'Primary Action').
- The Primary Action was dismissed by stipulation of the parties as moot after Plaintiffs sold the property.
- Plaintiffs then filed a complaint against Defendant Lawyers Title Insurance Corporation in New Mexico state court.
- Defendant removed the case to the U.S. District Court for the District of New Mexico based on diversity jurisdiction.
- Plaintiffs filed a Second Amended Complaint, alleging breach of contract, insurance bad faith, and other claims.
- Defendant moved for summary judgment on all of Plaintiffs' claims.
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Issue:
Does a title insurance policy that insures against a 'lack of a right of access to and from the land' cover a claim for loss when the insured property has guaranteed legal pedestrian and equestrian access but lacks practical vehicular access?
Opinions:
Majority - Brack, District Judge
No. A title insurance policy insuring against a 'lack of a right of access' is not triggered when access is merely impractical or of a certain type, so long as a legal right to access exists. The policy language is clear and unambiguous, insuring against the complete absence of a legal right of access, not guaranteeing the quality or method of that access. The doctrine of reasonable expectations is inapplicable where contract terms are unambiguous. Here, Plaintiffs admittedly possessed a legally guaranteed right of access via the Piedra Lisa Trail, as mandated by federal law, even if it was limited to pedestrian and equestrian use. The court aligns with the majority of jurisdictions holding that difficulties with the physical nature of access do not constitute a lack of legal right of access. Furthermore, defects in the physical condition of property relate to its economic marketability, not the marketability of its title, which is what the policy insures.
Analysis:
This decision clarifies the scope of standard 'right of access' coverage in title insurance policies under New Mexico law, aligning it with the prevailing view in other jurisdictions. It establishes that such coverage protects against legal impediments to access, not physical ones. The ruling reinforces the fundamental distinction between title insurance, which covers defects in legal rights of ownership, and other forms of insurance that might cover physical property conditions. This precedent limits the liability of title insurers for claims based on the quality or usability of access routes, thereby requiring landowners in remote or undeveloped areas to conduct more thorough due diligence regarding the practical nature of access before purchase.
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