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

920 P.2d 759 (1996)

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Nature of the Case

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Facts

In 1984 the Coopers owned a parcel of property. A representative of the Army Corps of Engineers (Corps) inspected the site and ordered the Coopers to stop construction. The Corps believed the parcel included wetlands which the Coopers needed a permit to fill. On April 23, 1985, the Corps sent the Coopers copies of a proposed permit which allowed them to fill certain areas in the subdivision. The permit became effective on May 2, 1985, the date on which it was signed by the Chief of the Corps' Regulatory Branch. It was valid for three years from the date of issuance. The Coopers never recorded the permit. During the permitting process, the Coopers were negotiating the sale of the subdivision to P. On May 1, 1985, P obtained from Kachemak Bay Title Agency, Inc. and Ticor Title Insurance Company (Ds) a preliminary commitment for title insurance on the property. On May 8, P executed an agreement to purchase the lots. At the end of May, the parties closed the sale. D sent P a title insurance policy. P first learned of the wetlands permit in 1989 or 1990 while negotiating the sale of two lots in the subdivision. It had already expired. P stopped making payments on the purchase money note. The Coopers sued P on the note. P filed a third-party complaint against Ds. P and the Coopers settled and the court held that the permit and the property's wetlands status were not defects in the title. P appealed.