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Bear Fritz Land Co. v. Kachemak Bay Title Agency, Inc.

920 P.2d 759 (1996)

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Bear Fritz Land Co. v. Kachemak Bay Title Agency, Inc.

Alaska Supreme Court

920 P.2d 759 (1996)

Facts

The Coopers owned a parcel in a subdivision. The Army Corps of Engineers (Corps) notified the Coopers that the parcel included wetlands that required a permit to fill and build upon. The Coopers applied for and received a Corps permit, but never recorded it. In 1985, the Coopers sold the subdivision parcel to Bear Fritz Land Company (Bear Fritz) (plaintiff). Bear Fritz obtained title insurance for the sale from Kachemak Bay Title Agency, Inc. and Ticor Title Insurance Company (Ticor) (defendants). Under the title insurance policy, Ticor insured Bear Fritz against the risk of loss due to any “defect” or “encumbrance” on the title. The policy also stated that the terms “defect” and “encumbrance” did not include any laws, governmental acts, or regulations, including any laws that regulated the use of the property. Bear Fritz learned of the wetlands-permit requirement in 1989 or 1990 while negotiating the sale of two subdivision lots. By that time, the Corps permit had already expired. Bear Fritz stopped making payments to the Coopers for the parcel. The Coopers sued Bear Fritz. Bear Fritz filed a third-party complaint against Ticor, claiming that Ticor had breached its contract with Bear Fritz by failing to disclose the Corp permit in its policy. For the claims against Ticor, the trial court concluded that the expired permit and the existence of protected wetlands on the parcel were not defects in title and found for Ticor. Bear Fritz appealed.

Rule of Law

Issue

Holding and Reasoning (Compton, J.)

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