Fifth Third Mortgage Co. v. Chicago Title Ins. Co.
| Decision Date | 17 December 2010 |
| Docket Number | Case No. 1:10–cv–183. |
| Citation | 758 F.Supp.2d 476 |
| Parties | FIFTH THIRD MORTGAGE COMPANY, Plaintiff,v.CHICAGO TITLE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION TEXT STARTS HERE
Harry William Cappel, John Charles Greiner, Kara Ann Czanik, Graydon Head & Ritchey LLP, Cincinnati, OH, for Plaintiff.Derek Edward Diaz, Justin Matthew Croniser, Robert Jerome Fogarty, Sara Ann Stahley, Cleveland, OH, for Defendant.
ORDER THAT PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Doc. 21) BE GRANTED
This civil action is before the Court on Plaintiff's motion for summary judgment (Doc. 21) and the parties' responsive memoranda (Docs. 33, 35).
Plaintiff moves for summary judgment on its complaint 1 and Defendant Chicago Title Insurance Company's (“CTIC”) counterclaim.2 This case is about the parties respective rights and obligations under a title insurance policy. Defendant insured that Plaintiff's mortgage to Anthony Buford would be the first and best lien on real property located at 7694 Plantation Drive in Mason, Ohio. Defendant allegedly missed title defects created by its issuing agent's fraud and, accordingly, Plaintiff's mortgage was not the first and best lien. Subsequently, Defendant refused to defend and indemnify Plaintiff in connection with litigation brought in Warren County, Ohio, despite Defendant's obligations under the title insurance policy. Defendant denied Plaintiff's title claim and counterclaimed that it is excused from performing its contractual obligations because Plaintiff's loan to Mr. Buford did not follow objectively reasonable underwriting standards. Additionally, Defendant argues that since the parties have yet to conduct any discovery, the Court should deny Plaintiff's motion or, in the alternative, grant Defendant leave to conduct the necessary discovery pursuant to Fed.R.Civ.P. 56(f).
1. On April 14, 2006 Defendant and Plaintiff entered into an Issuing Agency Contract. (Doc. 1 at ¶ 29).
2. Plaintiff alleges that on July 11, 2007, it entered into a $406,000 refinance loan with Anthony Buford and that the loan was secured by a mortgage on the Plantation Property.4 (Doc. 21, Ex. 2, A and B).
3. Plaintiff alleges that Jolie Neal, a member of Direct Title, acted as the closing agent for the Buford Loan. (Doc. 1 at ¶¶ 66, 145). Direct Title was required to pay off the prior (known) liens on the Plantation Property in accordance with the instructions to title.
4. Plaintiff alleges that Defendant (through Direct Title) insured its mortgage by providing a short form Residential Loan policy on July 11, 2007 bearing Policy Nos. OH2439–46–20070099–2007, 7234135–74035393. (Doc. 21 Ex. 2C).
5. Plaintiff alleges that Defendant's premium for the Policy was paid out of the loan proceeds of the Buford Loan. (Doc. 21, Ex. 2 at ¶ 4).
6. Plaintiff alleges that under the Policy, Defendant insured Plaintiff against loss or damage by reason of:
2. Any defect in or lien or encumbrance on the title. This Covered Risk includes but is not limited to insurance against loss from
(a) a defect in the title caused by
(i) forgery, fraud, undue influence, duress ...;
(ii) failure of any person or entity to have authorized a transfer or conveyance;
* * *
(iv) a document executed under a falsified, expired, or otherwise invalid Power of Attorney;
* * *
10. The lack of priority of the lien of the Insured Mortgage upon the Title over any other lien or encumbrance. (Policy, Doc. 21, Ex. 5 at §§ 2, 10).
7. Plaintiff alleges that Defendant also agreed to “pay the costs, attorneys' fees, and expenses incurred in defense of any matter insured against by this Policy.” Id.
8. Plaintiff alleges that National City Bank initiated a foreclosure action in December 2008 seeking to foreclose its alleged first mortgage lien on the Plantation Property in the Warren County, Ohio Court of Common Pleas (Case No. 08–cv–72546) (the “Warren County Action”).
9. Plaintiff alleges that it intervened and asserted an Answer, Crossclaim, and Counterclaim requesting an order declaring its lien to be the first and best lien on the Plantation Property.
10. Plaintiff alleges that based on the Warren County Action, Plaintiff became aware of the following liens on the Plantation Property:
a. Mortgage to National City Bank from Anne M. Cohen in the amount of $139,000 dated February 15, 2006 and recorded March 9, 2006 in the Official Record Book 4134, Page 328 of the Warren County, Ohio Records;
b. Mortgage to Wachovia Mortgage Corporation from Jolie O. Neal in the amount of $392,000 dated May 12, 2006 and recorded May 25, 2006 in the Official Record Book 4200, Page 361 with Assignment to U.S. Bank National Association, as Trustee for CSAB Mortgage—Backed Pass–Through Certificates, Series 2006–2 in Official Record Book 4872, Page 508 of the Warren County, Ohio Records;
c. Mortgage to Lehman Brother Bank, FSB from Jolie O. Neal in the amount of $398,000 dated May 16, 2007 and recorded May 24, 2007 in Official Record Book 4463, Page 719 with Assignment to Aurora Loan Services LLC in Official Record Book 4829, Page 548 of the Warren County, Ohio Records.
11. Each of the above was recorded prior to Mr. Buford's Loan. (Doc. 21, Ex. 2 at 17).
12. Plaintiff alleges that on January 12, 2008, it submitted a timely title claim to Defendant demanding that Defendant defend it in the Warren County action and indemnify it from any loss it might eventually suffer based on the defects in the title to the Plantation Property. (Doc. 21, Ex. 2).
13. Plaintiff alleges that on January 11, 2010, Defendant refused to defend and indemnify it. Defendant's only excuse was that Plaintiff did not follow standard underwriting guidelines in approving Mr. Buford's loan. (Doc. 21, Ex. 2E).
14. On March 11, 2010, Defendant filed suit against Ms. Neal, Mr. Buford, Tri–State, Direct Title, Brookstone, and the Cohens alleging claims based on “several negligent and/or improper real estate transactions” involving the Plantation Property.5
15. Defendant acknowledged receiving title claims on the property and sought indemnification against the defendants as well as damages. (Doc. 1 at ¶ 15).
A motion for summary judgment should be granted if the evidence submitted to the Court demonstrates that there is no genuine issue as to any material fact, and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the burden of showing the absence of genuine disputes over facts which, under the substantive law governing the issue, might affect the outcome of the action. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. All facts and inferences must be construed in a light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
A party opposing a motion for summary judgment “may not rest upon the mere allegations or denials of his pleading, but ... must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505 (1986).
Plaintiff's claims are based on a title insurance policy that Direct Title issued. (Doc. 21, Ex. 5). That document binds Defendant only if Direct Title acted as Defendant's agent when it issued the document. Plaintiff alleges that Direct Title acted in that capacity, but Defendant denies that allegation.
Specifically, Defendant argues that even though it delegated the title search to Direct Title and permitted Direct Title to issue policies on its behalf, Defendant is not bound by the Policy because Direct Title exceeded its actual authority. Defendant alleges that “[i]n a nutshell, Direct Title appears to have misrepresented the status of title for the Plantation Drive Property,” which, according to Defendant, violated its issuing agency contract with Direct Title. (Doc. 33 at 7–8). Defendant argues that Direct Title's violation relieves Defendant from its duties under the Policy, because Direct Title was not acting as its agent.
The issuing agency contract between Direct Title and Defendant required Direct Title to “[r]eceive and process applications for title insurance in a timely, prudent, and ethical manner with due regard to recognized title insurance underwriting practices.” ). It also had to “[c]omply with all applicable laws and regulations relating to the conduct of [its] business.” ( Id. at ¶ 4.H). Defendant claims that the contract prohibited Direct Title from participating in transactions in which Direct Title's managing member, Jolie Neal, had an interest. ( Id. at ¶ 7.H).
Defendant claims that Direct Title violated these restrictions when it issued the title insurance policy and misrepresented the status of title for the Plantation Drive Property. Specifically, Defendant claims that Direct Title: (1) failed to process the request for title insurance in a prudent or ethical manner; (2) failed to examine all of the title documents; (3) violated Ohio law which requires a “reasonable examination of title” 6; (4) and violated the bar against engaging in a transaction for its managing member, Ms. Neal. Therefore, Defendant argues that Direct Title lacked authority to issue the title insurance policy and exceeded the scope of its authority by issuing it.
Plaintiff maintains that even if Direct Title lacked actual authority it had apparent authority.7 “Apparent authority encompasses an agent's actions beyond the scope of the authority expressly granted him by the company,...
To continue reading
Request your trial
-
Bank of Am., NA v. Fid. Nat'l Title Ins. Co.
...because BOA's underwriting practices are not material to the terms of the CPLs. See Fifth Third Mtg. Co. v. Chicago Title Ins. Co., 758 F.Supp.2d 476, 487–488 (S.D.Ohio, 2010) (Fifth Third I ); JP Morgan Chase, 795 F.Supp.2d at 632–633.In Fifth Third I, 758 F.Supp.2d at 486, the federal dis......
-
Doe v. Coll. of Wooster, CASE NO. 5:16–cv–979
...contain an implied duty for parties to act in good faith and to deal fairly with each other.’ " Fifth Third Mortg. Co. v. Chicago Title Ins. Co. , 758 F.Supp.2d 476, 485 (S.D. Ohio 2010) (quoting Littlejohn v. Parrish , 163 Ohio App.3d 456, 839 N.E.2d 49, 54 (2005) ). "However, this implied......
-
O'Donnell v. Fin. Am. Life Ins. Co.
...and (5) that such party relied on such representations with a right to rely thereon.(Id. (quoting Fifth Third Mortg. Co. v. Chicago Title Ins. Co ., 758 F.Supp.2d 476, 487 (S.D.Ohio 2010) ).The standard set forth in Fifth Third Mortgage Co . does not support Defendant's position that it is ......
-
Costigan v. John Hancock Ins.
...contract in relation to any matter specially covered by the written terms of the contract itself."); Fifth Third Mortgage Co. v. Chicago Title Ins. Co., 758 F. Supp. 2d 476 (S.D. Ohio 2010)(recognizing that under Ohio law, the duty of good faith and fair dealing does not supplant express co......