Newport Beach : Title Insurance Firm Is Out of Back Bay Suit

Environmentalists failed to move quickly enough in challenging an insurance firm’s guarantee of ownership of lands now part of the Upper Newport Bay Ecological Reserve, a judge ruled Monday.

Judge Judith M. Ryan exonerated the firm, First American Title Insurance Co., from any liability in the Orange County lawsuit.

The Sierra Club alleged that the state paid $3.4 million for land it already owned in the back bay in 1976 to create the reserve. The money was paid to the Irvine Co., and First American issued a policy of title insurance on the land, composed of three islands.

The lawsuit asks for a return of the purchase price from the Irvine Co. and seeks to force the insurance firm to pay off on the guarantee.

After one week of trial, Ryan ruled that First American and lawyers for the state agreed that the policy was good only for five years from 1976, when it went into effect.

Based largely on the testimony and correspondence of state lawyers who helped draw up the policy, Ryan decided that any legal challenge to the land deal should have been completed by 1981, before the guarantee expired.

The trial is to continue with the Irvine Co. as the only remaining defendant.

The company claims that confusion over the character of the islands dating back 100 years made the sale a proper way to end disputes over ownership and create the reserve.