Fidelity National Financial Inc. has snatched up all the Colorado title insurance operations of troubled Mercury Companies Inc. from under the nose of a competitor, boosting its market share in the state by 30 percent.
In recent months, Denver-based Mercury has closed down its title and escrow companies in California, Arizona, Texas, Oregon and Nevada, and announced that it was negotiating the sale of its Colorado title companies to its exclusive underwriter, First American Corp. (see story).
Instead, competitor Fidelity stepped in and acquired Mercury’s Colorado operations, including Security Title, First American Heritage Title, Title America and United Title, and the Impact title operating system all the companies use. Mercury has said the companies controlled a 30 percent share of the Colorado title insurance market.
"With the acquisition of these Colorado operations, we have become the market-share leader in the state of Colorado," Fidelity National Financial President Raymond R. Quirk said in a press release. "The Impact title operating system is also a great component of the acquisition, as these companies have effectively utilized that system for a number of years."
First American and Mercury are involved in litigation over First American’s stake in Mercury and millions in loans dating back to 2001. Mercury sued First American Corp. in May, seeking a judgment from a federal district court that would force First American to continue underwriting title insurance policies on behalf of Mercury’s California subsidiaries. Mercury also claimed it had an agreement that called for its affiliates to be First American’s exclusive agents in Colorado (see story).
In a July 17 counterclaim, First American said Mercury breached the agreements by failing to repay more than $17 million in loans dating back to 2001, and refusing to convert nonvoting preferred stock once valued at $80 million into Class A common stock with voting rights.
Pending a resolution of the dispute, First American sought a judgment to prevent Mercury’s board of directors from taking any "action, vote or consent" and barring the company from "distributing any dividend, money, property, stock or other interest" without First American’s consent.
In releasing preliminary second quarter earnings Aug. 1, First American valued its investment in Mercury at $37.3 million, but said write-downs of the investment could dent the $42 million in profits claimed for the quarter (see story).
Mercury, which closed California-based subsidiary Alliance Title in December, shuttered its remaining title and escrow subsidiaries in California, Texas and Arizona, including Financial Title and Lenders Choice Title, on July 29 (see story).
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