Bank of Am., NA v. Fid. Nat'l Title Ins. Co.

Decision Date21 June 2016
Docket Number312426,313797,316538.,Docket Nos. 311798
Citation316 Mich.App. 480,892 N.W.2d 467
Parties BANK OF AMERICA, NA v. FIDELITY NATIONAL TITLE INSURANCE COMPANY.
CourtCourt of Appeal of Michigan — District of US

RJ Landau Partners PLLC, Ann Arbor (by Richard J. Landau and Christopher A. Merritt ), for Bank of America.

Curley & Berkal, P.C., Southfield (by John E. Curley ), and Hahn, Loeser & Parks LLP (by Robert J. Fogarty ), for Fidelity National Title Insurance Company.

Before: METER, P.J., and SHAPIRO and O'BRIEN, JJ.

O'BRIEN, J.

In Docket No. 311798, plaintiff, Bank of America, NA (BOA), appeals as of right a final order granting BOA's motion to dismiss its remaining claims following an earlier order granting summary disposition in favor of defendant Fidelity National Title Insurance Company (FNTIC) with respect to BOA's breach of contract claims against FNTIC. In Docket No. 312426, BOA appeals as of right an order granting FNTIC's motion for costs and awarding FNTIC costs in the amount of $19,580.04. In Docket No. 313797, BOA appeals as of right an order granting FNTIC's motion for attorney fees in the amount of $164,539. In Docket No. 316538,1 plaintiff, BOA, appeals as of right a final order dismissing BOA's claims against defendant Chicago Title Insurance Company (CTIC), formerly known as Ticor Title Insurance of Florida, and dismissing CTIC's counterclaims against BOA following an earlier order granting summary disposition in favor of defendant FNTIC, formerly known as Lawyers Title Insurance Corporation (LTIC), with respect to BOA's breach of contract claims against FNTIC. The appeals were consolidated to advance the efficient administration of the appellate process. Bank of America, NA v. Fidelity Nat'l Title Ins. Co., unpublished order of the Court of Appeals, entered August 6, 2015 (Docket Nos. 311798, 312426, 313797, 316538).

In Docket No. 311798, we reverse the order granting summary disposition to FNTIC regarding BOA's breach of contract claims, reverse the order denying BOA's motion for summary disposition concerning FNTIC's counterclaims and affirmative defenses, and remand for further proceedings consistent with this opinion. In Docket Nos. 312426 and 313797, we vacate the order striking the case evaluation award and the orders awarding costs and attorney fees to FNTIC. In Docket No. 316538, we reverse the order granting summary disposition to FNTIC regarding BOA's breach of contract claims, affirm the order denying BOA's motion for summary disposition concerning its breach of contract claims, affirm the order granting summary disposition to BOA regarding FNTIC's counterclaims and affirmative defenses, and remand for further proceedings consistent with this opinion.

These cases arise from allegations of mortgage fraud perpetrated by various individuals and entities against BOA, the mortgage lender that commenced both of the lower court actions that led to the present appeals. Pertinent to these appeals, BOA filed breach of contract claims against FNTIC, the title insurer that had issued closing protection letters (CPLs) that promised to indemnify BOA for any actual losses arising from fraud or dishonesty in handling BOA's funds or documents on the part of the closing agent, who was also the title agent of FNTIC, in each action. In each underlying action, the trial court granted summary disposition to FNTIC on BOA's breach of contract claims, and BOA challenges those respective determinations on appeal in Docket Nos. 311798 and 316538. In Docket Nos. 312426 and 313797, BOA challenges the trial court's order striking the case evaluation award and the trial court's award of costs and attorney fees to FNTIC in the same underlying action that led to the appeal in Docket No. 311798.

I. STANDARDS OF REVIEW

"This Court reviews de novo a trial court's decision on a motion for summary disposition." Hackel v. Macomb Co. Comm., 298 Mich.App. 311, 315, 826 N.W.2d 753 (2012).

A motion under MCR 2.116(C)(8) tests the legal sufficiency of the complaint on the basis of the pleadings alone to determine if the opposing party has stated a claim for which relief can be granted. A reviewing court must accept all well-pleaded allegations as true and construe them in the light most favorable to the nonmoving party. The motion should be granted only if no factual development could possibly justify a recovery.
A motion brought under MCR 2.116(C)(9) seeks a determination whether the opposing party has failed to state a valid defense to the claim asserted against it. A motion under MCR 2.116(C)(9) is analogous to one brought pursuant to MCR 2.116(C)(8) in that both motions are tested by the pleadings alone, with the court accepting all well-pleaded allegations as true. When a party's defenses are so untenable as a matter of law that no factual development could possibly deny the plaintiff's right to recovery, the motion is properly granted. [Id. at 315–316, 826 N.W.2d 753 (citations and quotation marks omitted).]

"In reviewing a motion under MCR 2.116(C)(10), this Court considers the pleadings, admissions, affidavits, and other relevant documentary evidence of record in the light most favorable to the nonmoving party to determine whether any genuine issue of material fact exists to warrant a trial." Walsh v. Taylor, 263 Mich.App. 618, 621, 689 N.W.2d 506 (2004). "Summary disposition is appropriate if there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law." Latham v. Barton Malow Co., 480 Mich. 105, 111, 746 N.W.2d 868 (2008). "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." West v. Gen. Motors Corp., 469 Mich. 177, 183, 665 N.W.2d 468 (2003).

The interpretation of a contract presents a question of law that is reviewed de novo. Kloian v. Domino's Pizza, LLC, 273 Mich.App. 449, 452, 733 N.W.2d 766 (2006).

In interpreting a contract, this Court's obligation is to determine the intent of the parties. This Court must examine the language of the contract and accord the words their ordinary and plain meanings, if such meanings are apparent. If the contractual language is unambiguous, courts must interpret and enforce the contract as written. Thus, an unambiguous contractual provision is reflective of the parties' intent as a matter of law. [In re Smith Trust, 274 Mich.App. 283, 285, 731 N.W.2d 810 (2007) (citations and quotation marks omitted).]
II. FNTIC'S LIABILITY UNDER THE CLOSING PROTECTION LETTERS

To prevail on a breach of contract claim, a party "must establish by a preponderance of the evidence that (1) there was a contract, (2) the other party breached the contract, and (3) the breach resulted in damages to the party claiming breach." Bank of America, NA v. First American Title Ins. Co. 499 Mich. 74, 100, 878 N.W.2d 816 (2016) (FATCO ).

A CPL is a contract between the title company and the lender whereby the title insurance company agrees to indemnify the lender for any losses caused by the failure of the title agent to follow the lender's closing instructions. A CPL is necessary because, while a title agent is the agent of the title insurance company for purposes of selling the title insurance policy (and binding the company to the insurance contract), that agency relationship does not extend to the title agent's conduct at the closing. As a result, a lender who also wants the title insurer to be responsible for the agent's acts in connection with escrow closing activities and services must separately contract with the title insurer for such additional protection by entering into an insured closing letter or closing protectionletter. [Id. at 104, 878 N.W.2d 816 (citations, brackets, and quotation marks omitted).]

See also New Freedom Mtg. Corp. v. Globe Mtg. Corp., 281 Mich.App. 63, 80, 761 N.W.2d 832 (2008) ("A closing protection letter is typically issued by a title insurance underwriter [t]o verify the agent's authority to issue the underwriter's policies and to make the financial resources of the national title insurance underwriter available to indemnify lenders and purchasers for the local agent's errors or dishonesty with escrow or closing funds.’ ") (citation omitted; alteration in original) overruled in part on other grounds by FATCO, 499 Mich. 74, 878 N.W.2d 816 (2016).

The CPLs issued for the closings at issue in Docket No. 311798 provided, in relevant part, that FNTIC would reimburse BOA "for actual loss incurred by [BOA] in connection with such closings ... when such loss arises out of: ... (2) Fraud or dishonesty of [the closing agent, Fidelity Title Company (FTC) ] in handling [BOA's] funds or documents in connection with such closings." This contractual language plainly makes FNTIC liable if BOA suffered actual losses arising out of FTC's fraud or dishonesty in handing BOA's funds or documents in connection with the closings.

The common meaning of "dishonesty" is the opposite of "honesty;" it is "a disposition to lie, cheat, or steal" or a "dishonest act; fraud." ... [T]he plain meaning of "fraud" includes both actual fraud—an intentional perversion of the truth—and constructive fraud—an act of deception or a misrepresentation without an evil intent. Fraud may also be committed by suppressing facts—silent fraud—where circumstances establish a legal duty to make full disclosure. Such a duty of full disclosure may arise when a party has expressed to another some particularized concern or made a direct inquiry. [FATCO, 499 Mich. at 106–107, 878 N.W.2d 816 (citations and quotation marks omitted).]

A lender is not required to present evidence of concealed disbursements, shortages, or unpaid prior lien holders in order to recover for a closing agent's fraud or dishonesty if no such restrictions are contained in the CPL. Id. at 107, 878 N.W.2d 816.

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