First Am. Title Ins. Co. v. Bowles Rice, LLP

• Court: U.S. District Court — Northern District of West Virginia
• Writing for the Court: Judge Keeley
• Decision Date: 08 August 2018
• Docket Number: CIVIL ACTION NO. 1:16cv219
• Citation: First Am. Title Ins. Co. v. Bowles Rice, LLP, CIVIL ACTION NO. 1:16cv219 (N.D. W.Va. Aug 08, 2018)
• Parties: FIRST AMERICAN TITLE INSURANCE CO., Plaintiff, v. BOWLES RICE, LLP, Defendant.

FIRST AMERICAN TITLE INSURANCE CO., Plaintiff, v. BOWLES RICE, LLP, Defendant.

CIVIL ACTION NO. 1:16cv219

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

August 8, 2018

(Judge Keeley)

MEMORANDUM OPINION AND ORDER DENYING THE PARTIES' MOTIONS FOR SUMMARY JUDGMENT [DKT. NOS. 168; 170]

Pending before the Court are the parties' competing motions for summary judgment (Dkt. Nos. 168; 170). For the following reasons, the Court DENIES the motions.

I. INTRODUCTION

For a detailed summary of the factual and procedural background in this case, the Court incorporates its statement of the facts in the related case of ALPS Property & Casualty Company v. Bowles Rice, LLP, Civil Action No. 1:18CV29, Dkt. No. 48 at 2-13. The plaintiff, First American Title Insurance Company ("First American"), is a title insurance company with an office in Barboursville, West Virginia. The defendant, Bowles Rice, LLP ("Bowles Rice"), is a law firm with offices in, among others, Charleston and Morgantown, West Virginia.

The parties' relationship is contractual. In 1994, First American and Bowles Rice entered into a Limited Agency Agreement in which First American appointed the Bowles Rice office in Charleston to act as its agent throughout West Virginia ("the 1994 Agency Agreement"). Carl Andrews, a partner at the office in Charleston, executed the agreement on Bowles Rice's behalf. When the parties amended the agreement in 2003, Charles Dollison ("Dollison"), another partner in the Charleston office, executed the addendum for Bowles Rice. In 2006, First American and Bowles Rice entered into a separate Agency Agreement in which First American appointed the Bowles Rice office in Morgantown, West Virginia, to act as its agent throughout the state ("the 2006 Agency Agreement"). Charles Wilson ("Wilson"), a partner in the firm's Morgantown office, executed that agreement for Bowles Rice.

The pending case is one of many flowing from the ill-fated construction of a $2 billion coal-fired power plant by Longview Power, LLC ("Longview"), straddling the border of Monongalia County, West Virginia, and Greene County, Pennsylvania. Financing for the Longview project was secured by a deed of trust in favor of Union Bank of California, N.A. ("Union Bank"). When Union Bank's financing closed on February 28, 2007, First American issued an owner's and lender's policy for the West Virginia properties and an owner's and lender's policy for the Pennsylvania properties.

At issue in this case is Union Bank's $775 million lender's policy for the West Virginia properties that Dollison signed onbehalf of First American ("Lender's Title Policy").¹ At Union Bank's request, the Lender's Title Policy included an endorsement that covered risks related to mechanic's liens.

The Longview project took a turn for the worse in 2012 when Longview's contractors filed mechanic's liens totaling in excess of $335 million. Because the contractors might claim that their liens held priority over its deed of trust, Union Bank filed a claim on First American under the Lender's Title Policy in April 2013. Longview subsequently filed for bankruptcy protection in the District of Delaware in August 2013. After extensive litigation, in December 2014, First American agreed to pay $41 million to settle Union Bank's claim as part of Longview's bankruptcy proceeding.

In November 2016, First American filed this case against Bowles Rice, claiming that Bowles Rice caused its losses under the Lender's Title Policy by breaching its duties under the parties' agency agreements. More particularly, First American claims that Bowles Rice knew construction had commenced on the Longview project, thereby presenting a risk of mechanic's liens senior inpriority to Union Bank's deed of trust, but failed to advise First American of this risk pursuant to its obligations under the 1994 and 2006 Agency Agreements.

II. STANDARD OF REVIEW

Summary judgment is appropriate where the "depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials" establish that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a), (c)(1)(A). "When cross-motions for summary judgment are submitted to a district court, . . . the facts relevant to each must be viewed in the light most favorable to the non-movant." Mellen v. Bunting, 327 F.3d 355, 363 (4th Cir. 2003); see also Providence Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir. 2000). The Court must avoid weighing the evidence or determining its truth and limit its inquiry solely to a determination of whether genuine issues of triable fact exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

The moving party bears the initial burden of informing the Court of the basis for the motion and of establishing thenonexistence of genuine issues of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has made the necessary showing, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256 (internal quotation marks and citation omitted). The "mere existence of a scintilla of evidence" favoring the non-moving party will not prevent the entry of summary judgment; the evidence must be such that a rational trier of fact could find for the nonmoving party. Id. at 248-52. Nor can the non-movant "create a genuine issue of material fact through mere speculation or the building of one inference upon another." Runnebaum v. NationsBank of Md., N.A., 123 F.3d 156, 164 (4th Cir. 1997).

III. APPLICABLE LAW

This case involves the interpretation of agency agreements, lien waivers, and various other contracts. "A federal court exercising diversity jurisdiction is obliged to apply the substantive law of the state in which it sits." Volvo Constr. Equip. N. Am. v. CLM Equip. Co., Inc., 386 F.3d 581, 599-600 (4th Cir. 2004) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79 (1938)). In West Virginia, "[a] claim for breach of contract requires proof of the formation of a contract, a breach of theterms of that contract, and resulting damages." Sneberger v. Morrison, 776 S.E.2d 156, 171 (W. Va. 2015) (citing Syl. Pt. 1, State ex rel. Thornhill Group, Inc. v. King, 759 S.E.2d 795 (W. Va. 2014)). In addition, the plaintiff must "show that he has complied with the contract himself, . . . and, if the evidence shows that he has not complied with the terms of the contract, and has not been prevented or relieved therefrom as aforesaid, he will be denied a recovery from the breach of same." Charleston Nat'l Bank v. Sims, 70 S.E.2d 809, 813 (W. Va. 1952) (quoting Jones v. Kessler, 126 S.E. 344 (W. Va. 1925)); see also Exec. Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., 681 F. Supp. 2d 694, 714 (S.D.W.Va. 2009) (citing 23 Williston on Contracts § 63:1 (Richard A. Lord, ed., 4th ed. West 2009)).

When the existence of a written contract is not in dispute, "[i]t is the province of the Court, and not of the jury, to interpret" the contract. Syl. Pt. 1, Toppings v. Rainbow Homes, Inc., 490 S.E.2d 817 (W. Va. 1997). "A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent." Syl. Pt. 4, Zimmerer v. Romano, 679 S.E.2d 601 (W. Va. 2009) (quoting Syl. Pt. 1, Sally-Mike Props. v. Yokum, 332 S.E.2d 597 (W. Va.1985)). "[I]t is the duty of the court to construe [a written instrument] as a whole, taking and considering all the parts together, and giving effect to the intention of the parties wherever that is reasonably clear and free from doubt." Zimmerer, 679 S.E.2d 601, Syl. Pt. 5 (quoting Syl. Pt. 5, Hall v. Hartley, 119 S.E.2d 759 (W. Va. 1961)).

"A contract is ambiguous when it is reasonably susceptible to more than one meaning in light of the surrounding circumstances and after applying the established rules of construction." Williams v. Precision Coil, Inc., 459 S.E.2d 329, 342 n.23 (W. Va. 1995). Only if a contract is ambiguous may the Court resort to "the situation of the parties, the circumstances surrounding them when the contract was entered into[,] and their subsequent conduct." Zimmerer, 679 S.E.2d 601, Syl. Pt. 7 (quoting Syl. Pt. 2, Snider v. Robinett, 88 S.E. 599 (W. Va. 1916)).

IV. DISCUSSION²

A. The 2006 Agency Agreement may apply to this case.

As an initial matter, Bowles Rice contends that the 1994 Agency Agreement is the only contract applicable to this case.According to Bowles Rice, because Dollison's duties as an agent were governed by the 1994 Agency Agreement, and he signed the Lender's Title Policy upon which First American bases its allegations, the 2006 Agency Agreement is inapplicable (Dkt. Nos. 171 at 7; 179 at 10).

Whether Bowles Rice breached the 2006 Agency Agreement is much more fact-bound than Bowles Rice's simple observation that Dollison signed the Lender's Title Policy. Neither party's motion adequately addresses whether the alleged title work performed by Wilson and the Morgantown office falls under the 2006 Agency Agreement. Indeed, both parties recognize that deciding whether the 2006 Agency Agreement applies in this case involves questions of fact that are not necessary to resolve in order to decide the pending motions (Dkt. Nos. 171 at 7; 172 at 15 n.4). Therefore, the Court will focus its analysis on application of the 1994 Agency Agreement, and reserve for trial whether Bowles Rice breached the 2006 Agency Agreement.

B. First American is not entitled to summary judgment on the question whether Bowles Rice breached the 1994 Agency Agreement.

First American contends that Bowles Rice breached the 1994 Agency Agreement when it failed to inform First American that...