Johnson v. U.S. Title Agency

2020 Ohio 4056

RICHARD G. JOHNSON, ESQ. Plaintiff-Appellant, v. U.S. TITLE AGENCY, INC., ET AL., Defendants-Appellees.

No. 108547

COURT OF APPEALS OF OHIO EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

August 13, 2020

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas

Case No. CV-11-760834

Appearances:

Kehoe & Associates, L.L.C., Robert D. Kehoe, and Lauren N. Orrico, for appellant.

Meyers, Roman, Friedberg & Lewis, and Ronald P. Friedberg, for appellee U.S. Title Agency, Inc.

Sikora Law, L.L.C., and Alexander E. Goetsch, for appellee Chicago Title Insurance Company.

MARY J. BOYLE, P.J.:

{¶ 1} Plaintiff-appellant, Richard G. Johnson ("Johnson") appeals from (1) the trial court's order bifurcating his bad-faith claim, (2) the trial court's judgment reflecting the jury verdict against Johnson, (3) the trial court's order granting a directed verdict on Johnson's negligence claim, and (4) the trial court's judgment denying his motion for a new trial. He raises six assignments of error for our review:

1. The trial court erred by failing to follow the mandate of the Eighth District Court of Appeals, in violation of the law of the case doctrine.

2. The trial court erred in granting a directed verdict in favor of U.S. Title on Johnson's negligence claim.

3. The trial court erred in bifurcating the entirety of Johnson's bad faith claim.

4. The trial court erred in denying Johnson's Motion for New Trial in the face of cumulative errors.

5. The trial court erred by striking substantial portions of the video testimony of Ed Horejs.

6. The trial court prejudiced Johnson by showing clear bias in favor of Appellees.

{¶ 2} Finding no merit to his assignments of error, we affirm the trial court's judgments.

I. Factual Background and Procedural History

A. Procedural History Before Trial

{¶ 3} Johnson originally filed his action against defendant-appellee, U.S. Title Agency, Inc. ("U.S. Title"), in July 2011. But in March 2012, Johnson filed an amended complaint, and joined defendant-appellee, Chicago Title Insurance Company ("Chicago Title"). We will refer to defendants collectively as "appellees." Johnson asserted six counts in his complaint: (1) breach of contract against U.S.Title, (2) breach of contract against Chicago Title, (3) specific performance and injunctive relief against both U.S. Title and Chicago Title, (4) negligence against U.S. Title, (5) breach of fiduciary duty against U.S. Title, and (6) breach of the duty of good faith and fair dealing against both title companies.

{¶ 4} All three parties moved for summary judgment. The trial court granted appellees' motions for counts I, II, III, and VI and denied Johnson's motion, finding that Johnson was not a party to or beneficiary of KeyBank's closing instructions. Johnson appealed, but this court dismissed the appeal because Counts IV and V of the amended complaint had not been resolved. Johnson v. U.S. Title Agency, Inc., 8th Dist. Cuyahoga No. 100535 (Nov. 15, 2013). On remand, the trial court then dismissed Counts IV and V, without prejudice, pursuant to Civ.R. 41(A). Johnson appealed again, but this court dismissed the appeal because the Civ.R. 41(A) dismissal was insufficient to create a final appealable order. Johnson v. U.S. Title Agency, Inc., 8th Dist. Cuyahoga No. 101156 (June 13, 2014).

{¶ 5} U.S. Title and Johnson filed "renewed" motions for summary judgment. (Chicago Title did not need to file a renewed motion because Counts IV and V were against only U.S. Title.) In September 2015, the trial court granted summary judgment for appellees on all counts, including IV and V. Johnson filed his third appeal, arguing that the trial court erred in granting summary judgment to appellees. Johnson v. U.S. Title Agency, Inc., 2017-Ohio-2852, 91 N.E.3d 76, ¶ 1 (8th Dist.). This court found that there were genuine issues of material fact on all counts and, in May 2017, the majority reversed and remanded "for futureproceedings consistent with the law and this decision," with Judge Keough dissenting. Id. at ¶ 82.

{¶ 6} In November 2017, appellees moved to bifurcate Johnson's claim for bad faith. Johnson did not oppose this motion, and the trial court granted it. In May 2018, Johnson moved in limine for the trial court to preclude arguments inconsistent with Johnson, 2017-Ohio-2852, 91 N.E.3d 76. The trial court granted the motion after the commencement of trial.

B. Jury Trial

{¶ 7} A nine-day jury trial commenced in July 2018. For his case in chief, Johnson's counsel called (1) Johnson; (2) Mark Wachter, Johnson's real estate attorney; (3) Mike Gerome, a closing agent for U.S. Title, as if on cross-examination; and (4) Ed Horejs, a representative for Chicago Title, via video deposition as if on cross-examination.

{¶ 8} In 2008, Johnson purchased a home in Bentleyville, Ohio. In the late spring or early summer of 2009, he hired a contractor, Jack Fyffe, to renovate his home. That fall, Johnson terminated Fyffe for not paying the subcontractors. Fyffe had completed much of the work on the third floor of the home, but the renovation was not complete.

{¶ 9} In early 2010, Johnson hired Berns Custom Homes ("Berns") as the general contractor to continue the renovation while Johnson lived at the property. Johnson retained real estate attorney, Wachter, to negotiate the construction loan agreement with KeyBank and the contract with Berns. Johnson entered aconstruction loan agreement with KeyBank in the amount of $815,581.00 to satisfy the existing mortgage on his property (approximately $334,000.00) and to finance the remaining renovations ($477,723.00). Johnson testified that he thought the $477,723.00 would proceed through escrow, but pursuant to a construction holdback provision, KeyBank held the $477,723.00 until Johnson made draw requests as construction progressed.

{¶ 10} On Wachter's recommendation, Johnson and KeyBank selected U.S. Title as the closing, escrow, and title agent for the loan closing. U.S. Title was an insurance agent for Chicago Title. Johnson testified that he verbally instructed Wachter to tell U.S. Title to make sure Johnson "got the same protections that KeyBank did" for the closing. Wachter testified that he verbally told Gerome, a closing agent for U.S. Title, that Johnson "should get every bit of coverage that's being provided to the bank in favor of him." Wachter testified that he was "not aware of any" written instructions from Johnson to U.S. Title. Gerome testified that he did not remember whether he talked to Wachter about title insurance.

{¶ 11} KeyBank provided written closing instructions to U.S. Title for the loan closing. The closing instructions provided that "[t]he title insurance commitment and final policy must not contain any exception or exclusion from coverage based on the existence or possibility of mechanic's liens." The document stated that "[a]ll standard exceptions (such as matters of survey, rights or parties in possession, mechanics liens and standard exceptions not evidenced by a specific instrument recorded against the property) must be deleted." The closinginstructions further provided that "[a]ll documents are to be executed exactly as typed." The document also contained a closing agent certification, stating: "These instructions set forth our requirements for closing the above captioned loan. * * * As used herein, 'closing' shall mean the execution by the Borrower(s) and Mortgagor(s) of all required loan documents as specified herein." Wachter testified that Johnson was both the borrower and mortgagor, and Wachter agreed that "KeyBank actually made it clear that in order to close the transaction, U.S. Title only needed Mr. Johnson to execute the closing documents[.]"

{¶ 12} Johnson reviewed the closing instructions and "agreed" with them. Johnson did not send U.S. Title his own set of written closing instructions but testified that he verbally told a U.S. Title closing agent that KeyBank's closing instructions were his instructions as well.

{¶ 13} The closing took place on May 27, 2010. Documents executed at the closing included the mortgage and the construction loan agreement with a rider. Johnson explained that the rider would go into effect when the renovation was completed. He stated that pursuant to the rider, "the construction mortgage turns into a permanent mortgage, so you do one closing rather than having to do two closings." U.S. Title recorded the mortgage on June 2, 2010.

{¶ 14} The loan agreement outlined requirements for each disbursement of the $477,723.00 to Johnson, which included updated title searches and lien releases. The loan agreement also included a contractor's consent clause, which provided that the contractor "hereby subordinates its lien on the Property, nowexisting or hereafter arising, to the lien of the Security Documents." The consent clause contained a signature block for Justin Berns, Authorized Signatory, with the May 27, 2010 closing date. However, Justin Berns did not sign the consent clause. Wachter testified that he never had a conversation with Gerome or anyone at U.S. Title about having Berns sign the consent clause. Nor did Wachter follow up to confirm that Berns had signed the consent clause. Wachter explained that a lien subordination was not "part of the negotiation with Berns" and that he never contacted Berns to ask if he would be willing to sign a lien subordination.

{¶ 15} U.S. Title offered Johnson closing protection coverage via a closing protection letter as required by R.C. 3953.32. The letter provided that the coverage indemnified Johnson for any loss of settlement funds resulting from certain conditions, including the closing agent's "[f]ailure to * * * comply with any applicable written closing instructions, when agreed to by [U.S. Title]." Horejs, a representative from Chicago Title, explained that settlement funds are "accounted for in the closing of that particular transaction, funds coming in, funds going out. * * * [S]...