No Reasonable Expectation That Policy Would Include Deed Easement

From the January, 2002 issue of the Title Insurance Law Newsletter: When the insured's deed included an access easement but the policy schedule did not, the insured had no right to expect that the policy would insure the easement right. Also, the CLTA abutter's rights provision did not provide any coverage for access, because the public road stopped 500 feet short of the insured property. Elmo Decker bought land in the hills of Laguna Beach, California. His deed granted the right to use a private road known as Castle Rock Road, as further set out in a maintenance agreement. First American Title issued Decker's title policy. It apparently was not satisfied with the pedigree of the access right, and did not include that right in Schedule C of the policy. The policy contained this abutter's rights coverage: Any lack of the ordinary right of an abutting owner for access to at least one physically open street or highway if the land, in fact, abuts upon one or more such streets or highways. For many years, Decker got to his property via a dirt fire road used by the county to maintain a nearby water storage facility. The City eventually blocked the road. Decker visited First American and was told by a title officer that the policy did not insure the private right, but that public Castle Rock Road ran up to his property. The title officer was wrong about the public road. Decker sued First American when he was denied access, claiming, among other things, breach of contract and negligent misrepresentation. The trial court gave the insurer summary judgment and Decker took this appeal. Decker claimed that "it was reasonable for him to expect the title insurance policy to cover [the] easement" because it was included in his deed. He asked the court to reform the policy and add the easement to Schedule C. The court refused: First, the policy specifically stated, "The estate or interest in the land described in Schedule C and which is covered by this policy is: A Fee" i.e., a possessory estate in a tangible area of land, as opposed to a servitude, such as an easement or right of way. [citations omitted] Moreover, Schedule C described only the property conveyed to Decker in parcel 1 of the grant deed; there was no reference to parcel 2 or the easement or right of use described therein. Under these circumstances, as a matter of law, it was not reasonable for Decker to expect coverage under the policy for claims pertaining to parcel 2. (Havstad v. Fidelity National Title Ins. Co. (1997) 58 Cal.App.4th 654, 659 661.) Next, Decker argued that the abutter's rights coverage assured him rights in Castle Rock Road. The court found that the coverage only applies if the road abuts, which was not the case. First American produced an experienced examiner, who testified that the road ended short of the Decker property. This shifted the burden to Decker to prove the street abutted. Instead, Decker's appraiser expert also said the road did not reach the property. The court concluded: Finally, there is no suggestion on appeal that the dirt fire road qualifies as an "open street or highway" abutting Decker's property, and indeed, the record demonstrates that the City of Laguna Beach erected a permanent road block restricting vehicular access over this road. Therefore, as a matter of law, there was no coverage under the abutter's rights clause in First American's policy. (See Lincoln Sav. & Loan Assn. v. Title Ins. & Trust Co. (1975) 46 Cal.App.3d 493, 496 497.) The court affirmed summary judgment in First American's favor. Decker v. First American Title Ins. Co., 2001 WL 1508035 (Cal.App. 4 Dist.) (unpublished).