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Woody Creek Ventures, LLC purchased two parcels of land in Pitkin County, Colorado, with the intention of dividing the land into subplots and selling them. Wood Creek also purchased a title insurance policy from Fidelity. The two parcels of land were separated by a tract of land owned by the Bureau of Land Management but Woody Creek had assumed it had a legal right to access the more remote parcel of land via a roadway that crossed the BLM’s tract of land. This was not the case.
When a prospective buyer of a lot inquired about access, Woody Creek discovered it had no legal right of access via the roadway. Woody Creek then submitted a claim to Fidelity, alleging that the lack of legal access lowered the value of the remote parcel land by $7 million. Fidelity retained counsel on Woody Creek’s behalf and purchased a 30-year revocable right-of-way grant from the BLM. However, Woody Creek was not satisfied and continued to seek payment from Fidelity because it suffered a covered loss due to the lack of permanent and irrevocable access.
Fidelity subsequently filed a claim seeking declaratory judgment that Wood Creek was not entitled to coverage because it had the 30 year right-of-way grant that Fidelity purchased. Woody Creek countered with its its own claim for declaratory judgment, arguing, inter alia, that lack of permanent and irrevocable access to and from the relevant parcel renders its title unmarketable, therefore supporting a claim for covered loss under the title insurance policy. The trial court granted Fidelity’s claim and Woody Creek took the case to the Tenth Circuit Court of Appeals.
Do you think a lack of legal access renders a title unmarketable? The prospective mentioned earlier backed out from the deal because of the access issue. Does this fact change your opinion? Do you think there is a distinction between economic marketability and title marketability? What does the Tenth Circuit think about this distinction and how does it affect the case?

 
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