Jpmorgan Chase Bank, N.A. v. First Am. Title Ins. Co.

Decision Date13 August 2014
Docket NumberNos. 12–2094,13–1172.,s. 12–2094
PartiesJPMORGAN CHASE BANK, N.A., Plaintiff Federal Deposit Insurance Corporation, Intervenor Plaintiff–Appellee, v. FIRST AMERICAN TITLE INSURANCE COMPANY, Defendant–Appellant.
CourtU.S. Court of Appeals — Sixth Circuit

OPINION TEXT STARTS HERE

ARGUED:Matthew A. Kairis, Jones Day, Columbus, OH, for Appellant. Jerome A. Madden, Federal Deposit Insurance Corporation, Arlington, VA, for Appellee. ON BRIEF:Matthew A. Kairis, Chad A. Readler, Jones Day, Columbus, OH, for Appellant. Jerome A. Madden, Federal Deposit Insurance Corporation, Arlington, VA, for Appellee.

Before: COLE, GILMAN, and DONALD, Circuit Judges.

OPINION

BERNICE B. DONALD, Circuit Judge.

First American Title Insurance Company (First American) appeals the $2,263,510.78 final judgment entered in favor of the Federal Deposit Insurance Corporation (FDIC) after a jury trial on the issue of damages in this diversity breach of contract action. First American contends the district court erred by granting summary judgment to the FDIC on the issue of liability for breach of a closing protection letter, by upholding the jury's verdict over First American's various objections, and by denying First American's motion for relief from judgment under Federal Rule of Civil Procedure 60(b)(2). We disagree and now AFFIRM the judgment of the district court.

I.

First American underwrites title insurance policies for property owners and mortgage lenders. Patriot Title Agency, LLC (“Patriot”) formerly was an agent authorized to issue title commitments and policies underwritten by First American in Michigan. In September of 2007, Patriot closed a real estate transaction in which Washington Mutual Bank (“WaMu”) loaned $4,543,593.07 to Ha Truong (“the Truong transaction”) for the purchase of property in Grosse Ile, Michigan (“the Bellerive property”). WaMu secured the loan with a first-priority mortgage on the property. Patriot issued a commitment to provide title insurance, underwritten by First American, to WaMu in connection with the transaction, as well as a closing protection letter (“CPL”).

In the CPL, First American agreed to indemnify WaMu for actual losses arising from Patriot's fraud or dishonesty in connection with the closing. Specifically, the CPL provided:

When title insurance of First American Title Insurance Company is specified for your protection or the protection of a purchase from you in connection with closings of real estate transactions on land located in the state of Michigan in which you are to be the seller or purchaser of an interest in the land or a lender secured by a mortgage (including any other security instrument) of an interest in land, the Company ... hereby agrees to reimburse you for actual loss incurred by you in connection with such closing when conducted by the Issuing Agent (an Agent authorized to issue title insurance for the Company), referenced herein and when such loss arises out of:

...

2. Fraud or dishonesty of the Issuing Agent handling your funds or documents in connection with such closing.

In March of 2008, First American discovered that the Truong transaction was a sham. Randy Saylor, Patriot's owner, had orchestrated a fraud in order to retain the proceeds of the WaMu loan and purchase the Bellerive property for himself. In June 2008, First American obtained title to the Bellerive property and negotiated with WaMu to sell it in order to cover losses WaMu suffered due to Saylor's fraud. On September 25, 2008, however, federal regulators closed WaMu, and the FDIC became its Receiver.

That same day, the FDIC entered into a Purchase and Assumption Agreement (“P & A Agreement”) with JPMorgan Chase Bank (Chase) whereby the FDIC sold nearly all of WaMu's assets to Chase. Section 3.1 of the P & A Agreement provides that, subject to Section 3.5, “the Assuming Bank [Chase] hereby purchases from the Receiver [FDIC], and the Receiver hereby sells, assigns, transfers, conveys, and delivers to the Assuming Bank [Chase], all right, title, and interest of the Receiver in and to all of the assets ... of the Failed Bank [WaMu].” Section 3.5, in turn, incorporates the attached Schedule 3.5 to identify the assets that Chase did not purchase. Section (2) of Schedule 3.5 provides in pertinent part that Chase did not purchase the following:

(2) any interest, right, action, claim, or judgment against ... (iv) any other Person whose action or inaction may be related to any loss (exclusive of any loss resulting from such Person's failure to pay on a Loan made by the Failed Bank) incurred by the Failed Bank; provided, that for the purposes hereof, the acts, omissions or other events giving rise to any such claim shall have occurred on or before Bank Closing, regardless of when any such claim is discovered ....

Under the P & A Agreement, Chase purchased the title insurance commitment Patriot issued to WaMu in connection with the Truong transaction and had the right to bring a claim against First American, the underwriter, on that commitment. Attempting to resolve this outstanding claim, First American tendered a quitclaim deed for the Bellerive property to Chase on December 4, 2009. Chase, however, refused to accept that deed.

First American then filed suit against Chase in the Wayne County Circuit Court on December 16, 2009, seeking a declaration that First American had fulfilled its obligations under the title insurance commitment by tendering a deed to the Bellerive property. Chase, in turn, filed suit against First American in the United States District Court for the Eastern District of Michigan the next day, requesting a declaration that the deed was void and seeking money damages. On December 18, 2009, Chase removed the state court suit to the Eastern District of Michigan, and the district court consolidated the actions.

In early 2010, the FDIC notified First American that it intended to intervene in the lawsuit to state a claim for breach of the CPL. The district court granted the motion to intervene over First American's objection. The FDIC filed its complaint in intervention on June 14, 2010, alleging one count of breach of contract against First American based on the CPL.

Subsequently, on September 24, 2010, First American and Chase agreed to appoint a Receiver to sell the Bellerive property. After the Receiver accepted a third-party offer to purchase that property, on April 11, 2011, First American and Chase stipulated to an order of dismissal with prejudice of both Chase's claims against First American and First American's claims against Chase. Thereafter, only the FDIC and First American remained parties to the suit.

Just before Chase's dismissal from the suit, but after discovery closed on February 1, 2011, Chase and the FDIC entered into a stipulation concerning ownership of the CPL. That stipulation stated:

1. On September 25, 2008, Chase and the FDIC/Receiver entered into a Purchase and Assumption Agreement.... Pursuant to the Purchase and Assumption Agreement, Chase acquired certain assets of the Washington Mutual Bank (“WaMu”); and

2. Chase did not acquire the CPL claim that the FDIC/Receiver is purs[u]ing in this action pursuant to the Purchaser and Assumption Agreement, and Chase claims no interest in that CPL claim.

Two weeks after Chase's dismissal from the action, on April 28, 2011, the district court held a hearing on the FDIC's and First American's cross-motions for summary judgment. First American argued in its two motions that the FDIC did not have standing to assert a claim under the CPL and, even if the FDIC did have standing, it did not incur any “actual loss” due to the Truong transaction and therefore could not recover under the CPL. The FDIC argued in its motion that First American had admitted facts establishing liability and that the FDIC suffered an “actual loss” of at least $1.7 million.

On June 10, 2011, the district court denied First American's motions for summary judgment and granted the FDIC's motion as to liability but denied it as to damages. The parties then proceeded to trial on the issue of damages, and a jury awarded the FDIC $2,263,510.78 on December 1, 2011. After trial, First American filed a renewed motion for judgment as a matter of law, an alternative motion for a new trial, and a motion to alter or amend the judgment. The district court denied those motions on June 20, 2012, and First American filed a timely Notice of Appeal from the final judgment on August 15, 2012.

While its initial appeal was pending in this Court, on November 20, 2012, First American filed a Federal Rule of Civil Procedure 60(b)(2) (Rule 60(b)(2)) motion for relief from judgment based on newly discovered evidence. The district court denied this motion on January 31, 2013, and First American filed another timely Notice of Appeal. This consolidated appeal followed.

II.

First American argues that the district court committed multiple reversible errors. Its primary argument is that the lower court improperly granted summary judgment to the FDIC on the issue of liability for breach of the CPL. First American also contends that the district court erred when it upheld the jury's verdict over First American's objections that the verdict was based on an inadmissible hearsay document, imposed double liability, and incorrectly included a jury-determined amount of pre-complaint interest. Finally, First American asserts that the district court improperly denied its Rule 60(b)(2) motion for relief from judgment. We address each argument in turn.

A.

We begin with the argument that the district court erred when it granted summary judgment to the FDIC on the issue of liability. We review de novo a district court's grant of summary judgment. Flagg v. City of Detroit, 715 F.3d 165, 178 (6th Cir.2013). Summary judgment is proper “if the movant shows that there is no genuine dispute as to...

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