Fidelity National Title Insurance Co. v. Pitkin County Title, Inc., 012319 FED10, 18-1128

Docket Nº:18-1128
Opinion Judge:Terrence L. O'Brien Circuit Judge.
Party Name:FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California corporation, Plaintiff - Appellee, v. PITKIN COUNTY TITLE, INC., Defendant-Appellant.
Judge Panel:Before HOLMES, O'BRIEN, and CARSON, Circuit Judges.
Case Date:January 23, 2019
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California corporation, Plaintiff - Appellee,


PITKIN COUNTY TITLE, INC., Defendant-Appellant.

No. 18-1128

United States Court of Appeals, Tenth Circuit

January 23, 2019

(D.C. No. 1:12-CV-03077-RM-KLM) (D. Colo.)

Before HOLMES, O'BRIEN, and CARSON, Circuit Judges.


Terrence L. O'Brien Circuit Judge.

Pitkin County Title, Inc. (Pitkin) appeals from a summary judgment entered in favor of Fidelity National Title Insurance Co. (Fidelity) on Fidelity's breach of contract claim. It also appeals from the denial of its motion to alter or amend the judgment under Fed.R.Civ.P. 59(e). We affirm.1


This case presents a title insurance dispute involving real property located in Aspen, Colorado. The property was purchased by Preston and Betty Henn; title was insured by a policy issued by Pitkin and underwritten by Fidelity. An agency agreement authorized Pitkin to sell and issue Fidelity's title insurance policies consistent with its terms. Fidelity's policies ordinarily excluded coverage for easements or claims of easements, but the policy issued by Pitkin to the Henns deleted that and other exceptions. Consequently, the Henns' policy committed Fidelity to extended coverage for unrecorded easements on the property.

As it happens, the Henns became embroiled in a dispute over a neighbor's use of a footpath across their insured property. The neighbor brought a quiet title action against the Henns in state court, resulting in a prescriptive easement on the property. Although the Henns sought defense and indemnification from Fidelity, Fidelity denied coverage. It later acknowledged that some of the neighbor's claims were covered, but the Henns rejected Fidelity's partial coverage offer and commenced this suit in federal court, asserting claims for breach of contract and bad faith failure to defend.

Several months later, Fidelity filed a third-party complaint against Pitkin. Count one claimed Pitkin was negligent in issuing the policy to the Henns with four exceptions deleted, in particular the exception for unrecorded easements. Count two claimed Pitkin breached its agency agreement with Fidelity by deleting the four exceptions from the Henns' policy without first obtaining written authorization from Fidelity, as required by the agency agreement. The district court consolidated the cases, and the Henns eventually settled with Fidelity, leaving Fidelity's two claims against Pitkin. Fidelity later stipulated to the dismissal of its negligence claim, leaving only its breach of contract claim against Pitkin.

On cross motions for summary judgment, the district judge decided Pitkin breached the agency agreement and, moreover, it was liable to Fidelity for the full amount of the loss because "Pitkin was negligent in its breach of the Agreement," Aplt. App., Vol. VI at 74. In allocating the full loss to Pitkin, the district court applied the relevant provisions of the agency agreement, which required Pitkin to reimburse Fidelity for the entire amount of a loss arising from Pitkin's "negligent, willful or reckless conduct." Id., Vol. III at 90.

In response, Pitkin moved to alter or amend its judgment under Fed.R.Civ.P. 59(e). Without disputing its breach of the agency agreement, it claimed the entire loss ought not have been assigned to it because 1) Fidelity had already stipulated to the dismissal of its negligence claim, 2) Fidelity neither pleaded nor established the elements of negligence, and 3) the issue of negligence was barred by Colorado's economic loss rule, which generally bars tort claims for economic losses arising from contractual duties absent an independent duty of care, see Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1264 (Colo. 2000) (en banc). The district judge rejected the arguments because negligence remained an issue within the context of Fidelity's breach of contract claim, the dismissal of Fidelity's negligence claim notwithstanding. Moreover, Pitkin failed to preserve its economic loss theory in its summary judgment briefs, but even if the theory were to be considered nothing prevented the application of a contractually agreed upon standard of liability-negligence-in allocating the full loss to Pitkin. Aplt. App., Vol. VI at 141-42. The judge thus denied relief under Rule 59(e), and Pitkin appealed.


"We review the district court's grant of summary judgment de novo," SCO Grp., Inc. v. Novell, Inc., 578 F.3d 1201, 1208 (10th Cir. 2009), and its "ruling on a Rule 59(e) motion for abuse of discretion," Hayes Family Tr. v. State Farm Fire & Cas. Co., 845 F.3d 997, 1004 (10th Cir. 2017). To the extent Pitkin challenges the judge's interpretation of the agency agreement, we apply Colorado law under a de novo standard of review. See Spring Creek Expl. & Prod. Co. v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1017-18 (10th Cir. 2018) ("Under Colorado law, 'contract interpretation is a question of law for the court to decide.'") (quoting Copper Mountain, Inc. v. Indus. Sys., Inc., 208 P.3d 692, 696 (Colo. 2009) (en banc)) (brackets omitted)); see also Gorsuch, Ltd., B.C. v. Wells Fargo Nat'l Bank Ass'n, 771 F.3d 1230, 1236 & n.7 (10th Cir. 2014) (applying state law in diversity action).

We begin with the relevant provisions of the agency agreement: Pitkin "shall not, without the prior written approval of [Fidelity's] corporate underwriting department . . . [c]ommit [Fidelity] to insure any Extra Hazardous Risk as defined herein," or "[a]lter any Title Assurance or other form furnished by [Fidelity] . . . ." Aplt. App., Vol. III at 89. "Extra Hazardous Risk" is defined as "all risks which result in a liability not normally assumed by [Fidelity]." Id. at 92. The title insurance forms Fidelity provided to Pitkin included Schedule B, which contained standard Policy Exceptions 1, 2, 3, and 4. Id. at 219 (Flores Aff. ¶ 7). Policies issued without these exceptions "exposed Fidelity to greater risk, including claims for off-record matters like easements and encroachments." Id. (Flores...

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