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SUPREME COURT, STATE OF COLORADO Court Address: 2 East Fourteenth Avenue Fourth Floor Colorado State ... - page 17 / 22

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insurance where the fact that you have insurance means your insurance company can get out of

paying a claim under the policy.

The Court of Appeals said that the presence or absence of title insurance was irrelevant,

but a closer reading of the decision shows that the decision turns on the presence of title

insurance. If the Respondents had not gotten title insurance, or if they had done a bad job of

searching the records, they would have been deemed negligent, and they would not have any

equitable claim. The result, whether the Court intended this outcome or not, is that it protected

the title company, the only participant in this drama (other than Grubbs) with culpability of any

kind. Now it is as if Chase Manhattan and the Londres have a first and second lien (or

concurrent first liens) which they may arbitrarily deem to be in default, and they can and will file

a foreclosure action to wipe out the judgment lien (unless Hicks can come up with $1.5 million

to redeem.) Since it is a large judgment lien, this is a much less expensive solution for the title

company than paying it, which is what it would have to do with a judgment lien that has priority

over the interests of the insureds, as this one did before equity intervened. Can it be said that this

is a result without potential prejudice to Hicks?

The Londres and Chase Manhattan have nothing to lose. The title company is on the

hook to them under its policies of title insurance. The title company made a mistake and didn't

find the judgment lien. Why should it be rescued from the consequences of its negligence at the

expense of the judgment creditor? Who should bear the risk? Should the risk of loss be with the

junior lienholder or with the title insurer that was paid to mitigate that same risk and which,

through its own negligent practice, caused the situation to arise?

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