White v. Western Title Insurance Co.

40 Cal.3d 870, 221 Cal.Reptr. 509, 710 P.2d 309 (1985)

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Nature of the Case

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Facts

The land at issue was initially owned by the Longhursts, who in 1975 had granted an easement on the property for a right-of-way to construct and maintain a water pipeline, drill wells, and take up to 150 gallons of water per day from the property. The deed for the easement was recorded the day after it was granted. In 1978, the Longhursts sold the property to the Whites (P), who were unaware of the easement. In connection with the transaction, P ordered title reports from Western Title Insurance Co. (D). These reports purported to list all encumbrances of record but did not mention the water easements. D then issued P a title policy which did not mention the easement. The policy expressly excluded losses arising from 'water rights, claims, or title to water.' After P bought the property, the owner of the easement notified P of their intention to implement the easement. P objected, and the owner of the easement filed suit to quiet title. P notified D, which agreed to provide a defense. However, P chose to be represented by their own attorney. The owner of the easement eventually dismissed the suit, having chosen not to enforce the easement. P made a demand on D for an amount representing the loss in value of the land due to the potential loss of groundwater. D admitted responsibility for the loss but refused to pay P's claim, since it was expressly excluded in the policy. P filed suit. D appeals a jury verdict in P's favor.