[Cite as Johnson v. U.S. Title Agency, Inc., 2017-Ohio-2852.]



                  Court of Appeals of Ohio
                                EIGHTH APPELLATE DISTRICT
                                   COUNTY OF CUYAHOGA


                               JOURNAL ENTRY AND OPINION
                                       No. 103665




                          RICHARD G. JOHNSON, ESQ.
                                                            PLAINTIFF-APPELLANT

                                                      vs.

                      U.S. TITLE AGENCY, INC., ET AL.
                                                            DEFENDANTS-APPELLEES




                                    JUDGMENT:
                              REVERSED AND REMANDED


                                      Civil Appeal from the
                             Cuyahoga County Court of Common Pleas
                                    Case No. CV-11-760834

        BEFORE: Laster Mays, J., Keough, A.J., and Boyle, J.

        RELEASED AND JOURNALIZED: May 18, 2017
ATTORNEYS FOR APPELLANT

Robert D. Kehoe
Lauren N. Orrico
Tatyana Pishnyak
Kehoe & Associates L.L.C.
900 Baker Building
1940 East Sixth Street
Cleveland, Ohio 44114


ATTORNEYS FOR APPELLEES

For U.S. Title Agency, Inc.

Debra J. Horn
Meyers, Roman, Friedberg & Lewis
28601 Chagrin Boulevard, Suite 500
Beachwood, Ohio 44122

For Chicago Title Insurance Company

Alexander E. Goetsch
Sikora Law L.L.C.
8532 Mentor Avenue
Mentor, Ohio 44060
ANITA LASTER MAYS, J.:

       {¶1} Plaintiff-appellant Richard G. Johnson, Esq. (“Johnson”) appeals the trial

court’s grant of summary judgment on behalf of defendants-appellees, U.S. Title Agency,

Inc. (“US Title”) and Chicago Title Insurance Company (“Chicago Title”) on several

grounds, arising from the closing of a home renovation construction loan.          After a

thorough review of the record, the matter is reversed and remanded.

I.     BACKGROUND AND FACTS

       {¶2} In 2008, Johnson hired Berns Custom Homes (“Berns”) as the general

contractor (“Contractor”) to renovate his recently purchased home in Bentleyville, Ohio

(“Property”).       Johnson obtained a $815,581 construction loan (the “Loan”) from

KeyBank National Association (“KeyBank”) to satisfy the existing mortgage and finance

the renovations.

       {¶3}       Johnson, an attorney specializing in legal malpractice issues, retained

counsel Mark Wachter (“Wachter”) to assist him with negotiating the Loan. A key factor

in the negotiations was to ensure that the project proceeded to completion and that

contractual and insurance protections were sufficient to accomplish this goal.

       {¶4}       At Wachter’s recommendation, the parties agreed that US Title would serve

as the closing agent, escrow agent, and title agent for Chicago Title who would issue the

title policies.     KeyBank provided written closing instructions to US Title for the

transaction,       entitled “Construction-to-Permanent Closing Instructions” (“Closing
Instructions”).      Wachter allegedly issued verbal closing instructions to US Title

(“Johnson Closing Instructions”), asking for the same protections against mechanics liens

that KeyBank received, and for compliance with KeyBank’s Closing Instructions.

       {¶5} Closing took place at the offices of US Title, who was charged with, among

other responsibilities, adhering to the Closing Instructions or absorbing liability for their

failure to do so.     Documents executed at the closing included the construction loan

agreement and rider dated May 27, 2010 (collectively          “Loan Agreement”), and the

mortgage agreement that included a construction rider (“Mortgage”).          The Mortgage,

executed by Johnson and KeyBank, and recorded by US Title, included a construction rider,

and a provision that no lien whatsoever could take priority over the Mortgage.

       {¶6}   Following the printed provisions, the Loan Agreement contains a signature

block signed by Johnson and the date May 27, 2010. The next page contains a contractor’s

consent clause (the “Consent Clause”) with a signature block for Berns and the date of May

27, 2010 inserted, followed by a signature page executed by a KeyBank director, on behalf

of KeyBank.

       {¶7}       The Consent Clause provides that the Contractor “hereby subordinates its

lien on the Property, now existing or hereafter arising, to the lien of the Security

Documents.” The sum of $477,723.00 is also set forth, representing the amount of the

construction contract between Johnson and Berns. The signature portion below the

subordinate clause contained typewritten language:

       May 27, 2010
       CONTRACTOR
       Berns Custom Homes, Inc.
       By: ________________________
            Name: Justin Berns
                       Authorized Signatory

       {¶8}   US Title concedes in its appellate brief that, “when signed,” the Consent

Clause, “provides for the Contractor to contractually subordinate his rights to any liens the

Contractor may file on the property, now or in the future, in favor of the Mortgage such

that the Mortgage would still remain in first position.” Though the May 27, 2010 date is

inserted below the clause, and the name of the authorized signatory for Berns is typed

underneath the signature line, US Title states that it did not have Berns sign because Berns

was not a party to the Loan, and it was not required by the Closing Instructions.

       {¶9}   On June 14, 2010, US Title provided Johnson with a copy of the HUD-1

settlement statement setting forth the charges and allocations for the transaction. The

HUD-1 reflects Johnson’s payment for Closing Protection Coverage (“CP Coverage”).

On July 15, 2010, US Title provided Johnson’s counsel with a copy of the owner’s policy

of title insurance (“Owner’s Policy”) issued by Chicago Title for the Loan and Mortgage.

Also on that date, US Title states it provided KeyBank with a copy of the lender’s policy

of title insurance (“Lender’s Policy”) issued by Chicago Title.

       {¶10} As required by Ohio law,1 Johnson was offered CP Coverage via a closing

protection letter form (“CP Letter”) from US Title that Johnson signed indicating

acceptance. According to the language of the CP Letter, the CP Coverage indemnified



       1   R.C. 3953.32.
Johnson for any loss resulting from listed conditions, including the closing agent’s

“[f]ailure to comply with any applicable written closing instructions, when agreed to by

the Licensed Agent [US Title].”    No exclusions are listed in the CP Letter. The parties

agree that Johnson paid for and was entitled to the CP Coverage, but did not receive a

copy of the CP Coverage.

       {¶11}    During September 2010 to October 2010, a dispute arose between Berns

and Johnson. Johnson terminated Berns. Berns and four subcontractors filed mechanic’s

liens for $297,191. The matter proceeded to mandatory mediation and, later, to

arbitration.2

       {¶12} US Title notified KeyBank of the liens on December 29, 2010. KeyBank

dishonored Johnson’s draw request as a result. Subsequently, Johnson discovered that:

(1) the Lender’s Policy had not been issued to KeyBank until after KeyBank was provided

with notice of the liens, an assertion disputed by US Title, (2) the CP Coverage policy that

Johnson purchased had not been provided to Johnson, (3) the Consent Clause containing

the Contractor’s consent to subrogation to the Mortgage of all liens had not been executed

by the Contractor; (4) neither the Owner’s Policy nor the Lender’s Policy contained a

future advance endorsement or exclusion protecting against priority of mechanics liens,


        2The arbitrator found that Johnson breached the agreement by failing to
pay for certain work, and prevented Berns and the subcontractor from further
performing. Berns filed suit in the common pleas court to reduce the $166,550
arbitrator’s award to judgment. Berns Custom Homes, Inc. v. Johnson, Cuyahoga
C.P. No. CV-12-791858. We affirmed the trial court’s determination granting
Berns’s request in Berns Custom Homes, Inc. v. Johnson, 8th Dist. Cuyahoga Nos.
100837 and 101014, 2014-Ohio-3918.
and (5) the use of an open end form of mortgage instead of the Mortgage used in this

transaction would have assured priority for future advances.

       {¶13}     On several dates between December 31, 2010 and January 17, 2011,

Johnson and his counsel corresponded with US Title and Chicago Title requesting removal

of the liens pursuant to the CP Coverage and the title insurance under the Owner’s Policy,

and asserting Johnson’s third-party beneficiary status under KeyBank’s Lender’s Policy.

Johnson also requested that the Owner’s Policy be corrected to remove the lien exceptions,

and that appellees satisfy the mechanics liens claim. Johnson asserted that appellees’

failure to comply with the Closing Instructions caused the current issues. Appellees did

not respond to the claim requests. The liens remained and KeyBank refused to release

further draws.

       {¶14} Johnson filed suit against US Title and Chicago Title. The complaint asserts

six counts:

       I. US Title — breach of contract against US Title including the failure to
       insure for mortgage priority, violating the Closing Instructions, failing to
       have the contractor sign the Construction Loan, refusal to honor the title
       policies.

       II. Chicago Title — breach of contract against Chicago Title including the
       failure of Chicago Title’s agent, US Title, to properly handle the closing; and
       denial of claims under the owner’s policy, closing protection coverage, and
       as a third-party beneficiary of KeyBank’s Lender’s Policy.

       III. Chicago Title and US Title — specific performance and injunctive
       relief requiring that appellees extinguish the liens, provide for subordination
       of the liens or issue title insurance insuring over any after-filed liens.

       IV.      US Title — alleging US Title was negligent in performing
       professional services by failing to issue the proper title insurance policies,
      filing closing documents without properly examining them for compliance
      with the requirement that the Mortgage must maintain priority over
      subsequent liens.

      V. US Title — breach of fiduciary duty to Johnson, including the failure to
       correctly conduct the closing to effect the intention of the parties that the
      Mortgage maintain priority at all time, and to record and/or issue the proper
      documents.

      VI. Chicago Title and US Title — breach of duty of good faith and fair
      dealing by failing to remedy the problems caused by the breaches set forth in
      Counts I through V.

      {¶15} Private mediation between the parties was unsuccessful. The court ordered

plaintiff’s expert deadline of May 15, 2013, defense’s expert deadline of June 15, 2013,

and dispositive motion deadline of July 1, 2013.

      {¶16} Chicago Title filed for summary judgment on June 27, 2013, supported by

evidence including testimony from Johnson, Edward R. Horejs, Jr. (“Horejs”) of Chicago

Title, Michael Gerome (“Gerome”) of US Title, title expert Michael Waiwood

(“Waiwood”), and various exhibits. US Title filed for summary judgment on June 28,

2013. The motion was supported by Waiwood’s affidavit. Appellees also filed motions

to prevent Johnson from offering expert witness testimony at trial due to his failure to

designate an expert by the deadline.

      {¶17} Johnson filed for summary judgment on July 1, 2013, with evidence that

included a supporting affidavit by Johnson. Johnson was granted leave until August 14,

2013, to respond to appellees’ motions for summary judgment. On August 14, 2013,

Johnson filed the replies to summary judgment, and a motion for leave to submit the expert

report of Dr. Robert Belinger (“Belinger”), opposed by appellees.     A series of motions
ensued between the parties regarding the expert report; however, there are no dispositive

journal entries in the record resolving any of these motions.          On August 29, 2013,

Johnson filed the notice of original affidavit of Belinger.

       {¶18} On September 18, 2013, the trial court granted appellees’ motions for

summary judgment, and denied Johnson’s motion, finding:

       (1) Johnson’s claims are excluded by the express terms of the Owner’s
       Policy and CP Coverage as the liens were created by Johnson after closing
       and after he chose to fire the Contractor;

       (2) Johnson’s claims were excluded by the CP Coverage terms, as Johnson
       created the lien problem and he failed to provide written closing instructions
       to US Title seeking a variance of the customary exclusions and limitations
       regarding mechanics liens;

       (3) Johnson lacked standing to assert a breach of contract regarding the
       KeyBank’s Lender’s Policy and Closing Instructions, as he failed to
       demonstrate that he was a party to those documents; and

       (4) the claims for bad faith, specific performance and injunctive relief failed
       as a result of the court’s finding on the stated issues.

       {¶19}     Johnson appealed; however, this court dismissed the appeal because

Counts IV and V of the amended complaint had not been resolved.3 On February 21,

2014, the trial court dismissed the two counts pursuant to Civ.R. 41(A), without prejudice.

       {¶20} A second appeal was filed on March 24, 2014. 4              This court granted

Johnson’s motion to dismiss the appeal on June 13, 2014, because the Civ.R. 41(A)

dismissal was not sufficient to constitute a final appealable order:


        3   8th Dist. Cuyahoga No. 100535 (Nov. 15, 2013).
        4   8th Dist. Cuyahoga No. 101156 (June 13, 2014).
      A court order granting a motion for summary judgment without actually
      entering judgment for any party is not an final order. Bapst v. Goodwin, 4th
      Dist. Pike No. 08CA780, 2009-Ohio-6244, ¶ 9. It is not made final or
      appealable by the dismissal of some other claims without prejudice.

      {¶21} The trial court returned the case to the active docket and issued dispositive

motion deadlines for the remaining counts.       US Title and Johnson filed “renewed”

motions for summary judgment. Johnson’s filing included an affidavit from Wachter.

The affidavit was not submitted with Johnson’s prior motion for summary judgment.

      {¶22}   On September 24, 2015, the trial court granted summary judgment for

appellees on Counts IV and V of the amended complaint without opinion. This appeal

followed.

II.   ASSIGNMENTS OF ERROR

      {¶23}    Johnson advances four assignments of error proposing various grounds

upon which the trial court improperly granted summary judgment in this case:

      I.    The trial court erred in granting summary judgment in favor of
      defendants as to plaintiff’s claims for breach of contract where defendants
      failed to properly execute the Closing Instructions, failed to honor the terms
      of their policies, and failed to issue the correct policy.

      II. The trial court erred in granting summary judgment in favor of US Title
      as to plaintiff’s claim for breach of fiduciary duty where US Title served as
      an escrow agent for plaintiff and KeyBank, and breached its duty to follow
      the Closing Instructions.

      III. The trial court erred in granting summary judgment in favor of US
      Title as to plaintiff’s claim for negligence where US Title failed to secure the
      correct form of coverage for plaintiff and failed to follow Closing
      Instructions.
       IV.   The trial court erred in granting summary judgment in favor of
       defendants as to plaintiff’s claim for bad faith where defendants failed to
       acknowledge receipt and pay plaintiff’s claim.

III.   STANDARD OF REVIEW

       {¶24}    Our standard of review for summary judgment appeals is de novo:

       We review the trial court’s decision on summary judgment de novo. Grafton
       v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). In so
       doing, we use the same standard as the trial court. Lorain Natl. Bank v.
       Saratoga Apts., 61 Ohio App.3d 127, 129, 572 N.E.2d 198 (9th Dist.1989).
       The party moving for summary judgment bears the initial burden of
       apprising the trial court of the basis of its motion and identifying those
       portions of the record which demonstrate the absence of a genuine issue of
       fact on an essential element of the nonmoving party’s claim. Dresher v.
       Burt, 75 Ohio St.3d 280, 293, 662 N.E.2d 264 (1996). Once the moving
       party meets its burden, the burden shifts to the nonmoving party to set forth
       specific facts demonstrating a genuine issue of material fact exists. Id. To
       satisfy this burden, the nonmoving party must submit evidentiary materials
       showing a genuine dispute over material facts. PNC Bank, N.A. v.
       Bhandari, 6th Dist. Lucas No. L-12-1335, 2013-Ohio-2477, ¶ 9.

Lillie & Holderman v. Dimora, 8th Dist. Cuyahoga No. 100989, 2015-Ohio-301, ¶ 9.

       {¶25} The following elements must be established to grant summary judgment:

       The motion for summary judgment may only be granted when the following
       are established: (1) that there is no genuine issue as to any material fact; (2)
       that the moving party is entitled to judgment as a matter of law; and (3) that
       reasonable minds can come to but one conclusion, and that conclusion is
       adverse to the party against whom the motion for summary judgment is
       made, who is entitled to have the evidence construed most strongly in its
       favor. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 67, 375
       N.E.2d 46 (1978); Civ.R. 56(C).

Id.

       {¶26}    We, as the reviewing court, evaluate the record in a light most favorable to

the nonmoving party. Saunders v. McFaul, 71 Ohio App.3d 46, 50, 593 N.E.2d 24 (8th
Dist.1990). Any “doubts must be resolved in favor of the nonmoving party.” Murphy v.

Reynoldsburg, 65 Ohio St.3d 356, 358-359, 604 N.E.2d 138 (1992).

IV.    LAW AND ANALYSIS

       {¶27}        Johnson argues that the trial court decision misconstrues the facts and is

contrary to Ohio law. We agree.

       A.      Preliminary Evidentiary Issues

       {¶28}        An appellate court reviews “the same evidentiary materials that were

properly before the trial court at the time it ruled on the summary judgment motion.” Am.

Energy Servs., Inc. v. Lekan, 75 Ohio App.3d 205, 208, 598 N.E.2d 1315 (5th Dist.1992).

Appellees argue the Belinger and Wachter affidavits should be excluded from

consideration because they were not properly before the court.

               1.      Belinger Affidavit and Report

       {¶29}    Appellees posit that the affidavit and report of Belinger (collectively

“Belinger Report”) may not be considered because the affidavit was not accompanied by

the report upon initial filing, the report was submitted after the expert disclosure deadline

of May 15, 2013, and that, due to the trial court’s failure to rule on the subsequent motion

for leave to file the report, the motion was presumptively denied when final judgment was

granted. Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, 770 N.E.2d 58, ¶ 13 (“a

motion not expressly decided by a trial court when the case is concluded is ordinarily

presumed to have been overruled.”) (emphasis added); Tanio v. Ultimate Wash, 8th Dist.

Cuyahoga No. 98826, 2013-Ohio-939, ¶ 21, fn. 3.
        {¶30}    “A rebuttable presumption is a presumption which is not conclusive and

which may be contradicted by evidence.” Forbes v. Midwest Air Charter, Inc., 86 Ohio

St.3d 83, 85, 1999-Ohio-85, 711 N.E.2d 997. Thus, we examine the record.

        {¶31}    On June 28, 2013, US Title filed a liminal pretrial motion requesting that

Johnson be barred from presenting expert testimony at trial that, at the time, was set for

September 23, 2013, for failure to meet the May 15, 2013 expert identification deadline.

The trial court did not rule on that motion. Even if the motion had been expressly denied,

liminal pretrial motions may be reconsidered by the trial court at trial. Williams v. State,

8th Dist. Cuyahoga No. 98741, 2013-Ohio-1040, ¶ 13.

        {¶32}   On August 14, 2013, Johnson timely submitted his replies to appellees’

briefs in opposition to Johnson’s motion for summary judgment, that included the Belinger

Report, concurrently filing a motion for leave to submit the report.5 The focus of the

Belinger Report is to opine whether the closing by US Title complied with the KeyBank

Closing Instructions and the closing instructions that Johnson verbally provided. A series

of motions ensued requesting the report be stricken and motion for leave denied. No

rulings were made on any of the motions.

        {¶33}   Reviewing the record, the trial court’s decision does not reflect reliance on

the expert reports and affidavits,6 but focuses on the plain language of the policies for the


        5   Johnson filed a notice of filing of Belinger’s original affidavit on August 29,
2013.
        6 The only expert reference is to Waiwood’s assertion that the phrase
“created, suffered, assumed, or agreed to” in the mechanic’s lien exclusion means
exactly what it says, an interpretation that is clear on its face.
axiom that the coverage of conduct under an insurance policy is provided as defined in the

policy. Allstate Ins. Co. v. Campbell, 128 Ohio St.3d 186, 2010-Ohio-6312, 942 N.E.2d

1090, ¶ 8; see also Chicago Title Ins. Co. v. Huntington Natl. Bank, 87 Ohio St.3d 270,

273, 1999-Ohio-62, 719 N.E.2d 955 (a title insurance policy is a matter of contract,

interpreted by looking to the plain and ordinary meaning from the contents).

       {¶34}    We conclude that the trial court’s:      (1) stated reliance on the plain

language of the documents as described in the trial court’s decision; (2) failure to rule on

all motions relating to the Belinger Report, both for or against; and (3) failure to rule on

appellees’ earlier motion seeking to bar Johnson from presenting any expert testimony

during the case does not support the enforcement of a presumption of final denial.

“Fairness and justice are best served when a court disposes of a case on the merits.   Only

a flagrant, substantial disregard for the court rules can justify a dismissal on procedural

grounds.”   De Hart v. Aetna Life Ins. Co., 69 Ohio St.2d 189, 192-193, 431 N.E.2d 644

(1982).7

               2.    Wachter Affidavit

       {¶35} Appellees also argue that the affidavit of attorney Wachter, submitted with

the summary judgment on Counts IV and V is barred because it was not submitted with the


       7  Our holding in Wolk v. Paina, 8th Dist. Cuyahoga No. 93095,
2010-Ohio-1755, affirming a motion to strike unauthenticated documents
supporting opposition to summary judgment is distinguishable from the failure to
immediately attach Belinger’s affidavit to the report. In that case, the subsequent
submission of a curative affidavit was deficient because the documents requiring
authentication were referenced in, but not attached to, the remedial affidavit. Id.
at ¶ 29-30. That is not the case here where the curative affidavit included the
report.
first motion for summary judgment.          Upon dismissal by this court, finding that the

addition of Civ.R. 54(B) language did not make the judgment final, the trial court

reinstated the case to the active docket and set a dispositive motion deadline of May 11,

2015 on Counts IV and V.

          {¶36} The remanded counts relate to negligence and breach of duty regarding the

Closing Instructions and improper title policies, a component of all counts in the case.

Implicit in a Civ.R. 54(B) remand is the conclusion that the order was not final and

appealable because the underlying claims are inexplicably intertwined. Pesta v. Parma,

8th Dist. Cuyahoga No. 92363, 2009-Ohio-3060, ¶ 13, quoting Internatl. Managed Care

Strategies, Inc. v. Franciscan Health Partnership, Inc., 1st Dist. Hamilton No. C-010634,

2002-Ohio-4801, ¶ 9 (claims arising from the same transaction or conduct are

“inextricably intertwined and not appealable despite Civ.R. 54(B) certification.”)

          {¶37}   Johnson has maintained from the inception of the case, and averred in his

affidavit opposing summary judgment that, in addition to the KeyBank                    Closing

Instructions, Wachter verbally provided closing instructions to US Title on Johnson’s

behalf.     Wachter’s affidavit reiterates the verbal provision of those Closing Instructions, a

fact acknowledged in the trial court’s entry stating that Johnson provided no “written”

instructions.     The claims in this case are inextricably intertwined and the affidavit was

submitted in response to a trial court entry directing briefing of the issues.       Therefore,

consideration of the Wachter affidavit cannot be separated from the total analysis and is

part of our de novo review of the record, a finding that does not prejudice appellees.
         B.      First Assignment of Error — Breach of Contract

                 1.    Closing Instructions

                       a.     Johnson’s Closing Instructions

         {¶38} Johnson asserts the parties used US Title as the agent at Wachter’s

suggestion, and that Wachter verbally advised US Title that Johnson required the same

title policy coverage that KeyBank requested in the Closing Instructions, removing

standard exceptions or other exclusions based on mechanic’s liens, and containing a future

advance endorsement.        Wachter also advised that US Title was to comply with the

KeyBank Closing Instructions.

         {¶39} The affidavits of Johnson and Wachter support the provision of verbal

closing instructions. Appellees argued, and the trial court determined, that Johnson did

not provide “written instructions.”      The issue of whether Johnson provided closing

instructions, and whether the instructions were required by law, policy, custom or practice

to be in writing, is a genuine issue of material fact, underlying Johnson’s claims in this

case.8

                       b.     KeyBank Closing Instructions

         {¶40}    It is undisputed that US Title served as Chicago Title’s agent for escrow,

title, and closing. Johnson also argues that his status as the borrower named in the Loan

Agreement and Closing Instructions makes him a party with standing to enforce


         8Notwithstanding the foregoing, the provision of verbal closing instructions
does not apply to closing protection coverage under R.C. 3953.32 which requires a
violation of “written closing instructions.”
compliance by appellees.      Johnson asserts that the relationship is contractual, either

express, implied in law or fact, or via third-party beneficiary, and that the requisite

contractual factors of offer, acceptance, capacity, consideration, mutual assent, and legality

of object and consideration, are present. Union Sav. Bank v. Lawyers Title Ins. Corp.,

191 Ohio App.3d 540, 2010-Ohio-6396, 946 N.E.2d 835 (10th Dist.).

       {¶41}    US Title and Chicago Title argue that the trial court correctly determined

that Johnson lacks standing to sue for breach, because he failed to introduce evidence that

he was a party to KeyBank’s Closing Instructions. Johnson directs our attention to this

court’s holding to support his position.   Pippin v. Kern-Ward Bldg. Co., 8 Ohio App.3d

196, 456 N.E.2d 1235 (8th Dist.1982).

       {¶42}    The Pippins contracted with Kern-Ward to construct a home. Id., at *197.

 Continental Federal Savings and Loan Co. (“Continental”) agreed to finance and serve as

escrow agent.    The Pippins signed a release and acceptance form but attached a list of

items that needed to be addressed by the contractor, accompanied by the notation “call

me,” written on a withdrawal slip with their telephone number.             The papers were

submitted to Continental.

       {¶43}    Upon receipt of the release, Continental closed the transaction and paid the

contractor. Pippins sued Continental for breach of contract, arguing that Continental was

required to call them before disbursing funds.       Id.   The trial court granted summary

judgment in favor of Continental and Pippins appealed.
       {¶44}   In analyzing the appeal, this court addressed the nature of an escrow

agreement:

       An escrow is a matter of agreement between parties, usually evidenced by a
       writing placed with a third-party depositary providing certain terms and
       conditions the parties intend to be fulfilled prior to the termination of the
       escrow. The depositary under an escrow agreement is an agent of both
       parties, as well as a paid trustee with respect to the purchase money funds
       placed in his hands. Squire v. Branciforti, 131 Ohio St. 344, 2 N.E.2d 878
       (1936).

(Emphasis added.) Id. at 198; Calhoun v. McCullough, 8th Dist. Cuyahoga No. 60271,

1991 Ohio App. LEXIS 1844, at *7-8 (Apr. 25, 1991).

       {¶45}   We also described the scope of an escrow agent’s responsibilities:

       The depositary may not perform any acts with reference to the handling of
       the deposit, or its disposal, which are not authorized by the contract of
       deposit. Thus, a depositary holding a deed conveying land and a sum of
       money to pay therefor, the transaction to be consummated at a definite, fixed
       time which is made the essence of the contract, may not, in the absence of
       express authority from the vendee, surrender to the vendor any part of the
       money held, to enable him to remove encumbrances and perfect his title.
       Likewise, if an escrow agent neglects to carry out the instructions of a party
       to the escrow agreement, liability will result for the damages induced
       thereby. 20 Ohio Jurisprudence 2d 215, Escrows, Section 8.

       The duty of the escrow agent is therefore clear — to carry out the terms of
       the agreement as intended by the parties.

(Emphasis added.) Id.; Squire v. Branciforti, 131 Ohio St. 344, 354, 2 N.E.2d 878 (1936)

(a depository may not perform any acts that are not authorized by the contract).        “[T]he

very name ‘escrow’ gives it the earmarks of a trust.” Pippin at 198, quoting Squire at

355.   “Thus, the escrow agent is a fiduciary agent for both parties to a purchase
agreement.”    Saad v. Rodriguez, 30 Ohio App.3d 156, 158, 506 N.E.2d 1230 (8th

Dist.1986).

       {¶46}     The Pippin escrow agreement provided that Continental would not

withhold settlement of the escrow without a court order, if the terms of the escrow

agreement have been complied with. We agreed with the trial court that the blank

withdrawal slip with the notation “call me” could not be admitted into evidence to vary the

clear and unambiguous terms of the agreement:

       Whether the plaintiffs requested that the bank withhold the funds is
       irrelevant. An escrow agent’s duties are fixed and limited by the escrow
       agreement. The escrow agreement between the plaintiffs and defendant
       builder stated that the ‘bank * * * assumes no responsibility as to * * *
       physical conditions of premises * * * alterations or additions to the
       premises.’

       “Continental could not alter the terms of the agreement on the request of one
       of the parties. Continental’s duties could only be changed by mutual
       consent of both parties. Because there was no agreement, the bank had no
       obligation to withhold funds. When the bank received all the materials
       necessary to allow it to close the transaction, it properly did so.”

Id. at 199.

       {¶47}    Pippin involves an express agreement.       Case law also supports the

premise that an escrow agreement need not be express or formal, and may be deemed to

exist where there are only closing instructions:

       Ohio courts have held that escrow agreements do not have to be in writing.
       In Waffen [v. Summers, 6th Dist. Ottawa No. OT-08-034, 2009-Ohio-2940,]
       at ¶30, the court specifically discussed implied escrow agreements:

       No precise form of words is necessary to constitute an escrow. The term
       “escrow” need not be used. * * * Thus, whether an escrow exists in any
       case depends not so much upon the terms the parties may use as upon the
       intent with which the deed or paper is deposited in the hands of a third-party.


Union Sav. Bank, 191 Ohio App.3d 540, 2010-Ohio-6396, 946 N.E.2d 835, ¶ 22.9 See

also Forum Restaurants, Inc. v. Zimmerman, 8th Dist. Cuyahoga No. 44077, 1982 Ohio

App. LEXIS 13506 (May 20, 1982) (finding a genuine issue of material fact as to the

existence of an oral or written escrow agreement).

       {¶48}   A review of Ohio case law on an analogous fact situation of the standing of

a borrower to sue an agent for breach of closing instructions issued by a lender, provided a

narrow, and distinguishable result.      In Hughes v. Knapp, 10th Dist. Franklin No.

08VA07-9735, 2009 Ohio Misc. LEXIS 12278 (Sept. 21, 2009), the Franklin County

Court of Common Pleas addressed a breach of contract claim by Hughes against title agent

Knapp.

       {¶49}   Hughes obtained title to the property without a title search.     The lender,

Royal Bank of Pennsylvania (“Royal Bank”), contacted Knapp to conduct a search for

purposes of a lender’s policy. Id. at *2. Royal Bank’s closing instructions to Knapp

directed that the mortgage be afforded a first lien priority; however, a prior mortgage

existed at the time of the mortgage recording.       The prior mortgage holder filed for

foreclosure.   Hughes sued Knapp for negligence, breach of contract, and indemnification.




        Squire’s statement that an escrow agreement is “usually in writing,” has
         9

resulted in a split among the appellate courts regarding whether “usually”
translates into “shall.”
       {¶50}    The court held that Hughes was an incidental beneficiary who may have

gained a benefit, but there was no intention by any party to confer a benefit on Hughes.

The finding was based on the fact that: (1) Hughes had no contact with Knapp (Id. at

*2-3); (2) Royal Bank contacted Knapp for the purpose of providing lender’s title

insurance and filing the mortgage securing its interest. Id. at *6.        In contrast, the

relationship between Johnson and appellees is not incidental.

       {¶51}   We also look to other jurisdictions. Phleger v. Countrywide Home Loans,

Inc., N.D.Cal. No. C 07-01686 SBA, 2009 US Dist. LEXIS 10105 (Jan. 28, 2009),

provides direction. Phleger sued several Countrywide entities for violating the Federal

Truth in Lending Act, 15 U.S.C. 1601, et seq., cancellation and rescission of a $3,300,000

 mortgage and $550,000 home equity line of credit. Countrywide countersued for

foreclosure. Phleger also sued Stewart Title of California, Inc. (“Stewart”), the escrow and

settlement agent for the transaction, for negligence, breach of fiduciary duty, and

indemnity. Several third-party defendants were also named who were involved with

defrauding Phleger and siphoning money from the transactions. Id. at *2-4.

       {¶52}   The closing of the transaction took place by mail.     The documents were

executed in Las Vegas by someone purporting to be Phleger; however, Phleger was in

California at the time of the alleged signatures and denied signing any of the documents.

Stewart closed and disbursed funds based on the forged documents.

       {¶53}   Pertinent here, Phleger claimed indemnification by Stewart for breach of

Countrywide’s escrow and closing instructions that, if followed, would have prevented the
improvident closing and settlement. Id. at *20.     Stewart argued that “a borrower may

not claim a breach of duty arising from a lender’s closing instructions to an escrow agent,

as they only create a duty running from the escrow agent to the lender.”        (Emphasis

added.)    Id. at *28.     Phleger responded that she is a third-party beneficiary of

Countrywide’s instructions. Id.

       {¶54}   The appellate court looked to the California Supreme Court’s holding in

Summit Fin. Holdings, Ltd. v. Continental Lawyers Title Co., 27 Cal.4th 705, 117

Cal.Rptr.2d 541, 41 P.3d 548 (2002), that sets forth six factors to consider in determining

when an escrow agent may be held liable to a borrower as a third-party beneficiary for

breach of a lender’s closing instructions:

      [1] the extent to which the transaction was intended to affect the plaintiff, [2]
      the forseeability of harm to him [or her], [3] the degree of certainty that the
      plaintiff suffered injury, [4] the closeness of the connection between the
      defendant’s conduct and the injury suffered, [5] the moral blame attached
      to the defendant’s conduct, and [6] the policy of preventing future harm.
      Id. (quoting Biakanja v. Irving, 49 Cal.2d 647, 650, 320 P.2d 16 (1958)).
Phleger at * 28-29. The Phleger court found the existence of genuine issues of material
fact:

       A factfinder could find that Phleger is Countrywide’s borrower, and could
       find that Stewart had clear evidence of fraud before it, and by closing,
       breached its duty to follow [several of] the closing instructions. If a
       factfinder so found, then all six Summit factors would favor finding Phleger
       to be their third-party beneficiary, and Stewart would be liable to her for
       breaching its duty to follow them.

(Emphasis added.) Id. at *37.

       {¶55} The court also denied Stewart’s request for summary adjudication of

Phleger’s negligence and breach of fiduciary duty claims to the extent based on Stewart’s
breach of its duty to the parties, to following the escrow instructions and the duty to follow

certain of the closing instructions. Id. at *40. We find that Phleger is applicable to the

instant case, where there was clear evidence of no signature in the contractor’s section,

accompanied by an explicit directive in the Closing Instructions to fully execute the

documents as typed, the duty to follow certain of the closing instructions.

       {¶56}     A similar conclusion regarding a borrower’s third-party beneficiary status

was reached in Stanton v. Bank of Am., N.A., D.Haw. No. 09-00404 DAE-LEK, 2010 US

Dist. LEXIS 143123 (Oct. 19, 2010). Stanton refinanced her property. Bank of America,

N.A. as successor to Countrywide Bank, N.A. (“Countrywide”) served as lender. Fidelity

Title & Escrow of Hawaii, Inc. (“Fidelity”) served as the escrow agent.          Stanton signed

the documents at Fidelity’s office but admitted she did not review them. Id. at *4.

       {¶57}     Stanton filed suit. Stanton claims included a breach of Fidelity’s fiduciary

duty by failing to comply with the “Lender’s Closing Instruction.” Id. at *17. Fidelity

argued that the escrow instructions, and not the “Lender’s unilateral Closing Instructions,”

controlled the agent’s duty to Stanton. Id. at *18.

       {¶58}     The court observed that a third-party beneficiary may sue to enforce

contract provisions for which they are intended to benefit.               Id., citing Trans-Bay

Engineers & Builders, Inc. v. Hills, 551 F.2d 370, 378, 179 US App. D.C. 184 (D.C.

Cir.1976).     The court found Stanton to be a third-party beneficiary:

       Review of the Lender’s Closing Instructions, specifically the instruction at
       issue regarding the provision of Loan documents to Plaintiff at signing * * *
       reveals that Plaintiff, as a non-signatory third-party, was explicitly named in
       the contract as the “Borrower” and that the signatories to the instructions
       intended to confer a benefit on Plaintiff as the Borrower. See Sher [v.
       Cella, 114 Haw. 263, 160 P.3d [1250,] at 1256-57 [(Haw.App.2007)] (citing
       E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin
       Intermediates, S.A.S., 269 F.3d 187, 196-97 (3rd Cir. 2001) (“[A]
       third[-]party beneficiary will only be bound by the terms of the underlying
       contract where the claims asserted by that beneficiary arise from its
       third[-]party beneficiary status.”); McCarthy v. Azure, 22 F.3d 351, 362
       (1st Cir.1994).

       Further, the Lender’s Closing Instructions satisfy the three-part test
       described in E.I. DuPont de Nemours, and cited by the court in Sher, in that
       the lender, Countrywide, and Fidelity Escrow intended that Plaintiff benefit
       from the agreement (in the form of facilitating Plaintiff’s refinancing), the
       benefit was intended in satisfaction of a pre-existing obligation to that party
       * * * and the intent to confer the benefit was a material part of the parties’
       purpose in entering into the agreement (there would be no escrow without
       the Loan between Countrywide and Plaintiff). Id.; see also Guardian Constr.
       Co. v. Tetra Tech Richardson, Inc., 583 A.2d 1378, 1386 (Del. Sup. 1990)
       (“In order for third-party beneficiary rights to be created, not only is it
       necessary that performance of the contract confer a benefit upon a third
       person that was intended, but the conferring of the beneficial effect on such
       third-party, whether it be creditor or donee, should be a material part of the
       contract’s purpose.”). Thus, Plaintiff can be considered third-party
       beneficiary to that agreement.

Id. at *19-20.

       {¶59}     For a third-party to be an intended beneficiary under a contract in Ohio,

the evidence must demonstrate that the contract was intended to directly benefit that party.

 “Generally, the parties’ intention to benefit a third-party will be found in the language of

the agreement.” Huff v. FirstEnergy Corp., 130 Ohio St.3d 196, 2011-Ohio-5083, 957

N.E.2d 3, ¶ 12. In this case, the parties’ intention is indicated in the Closing Instructions

that, among other factors, named Johnson as the customer, provided a material benefit in

the provision of a loan, directed that the Loan Documents be fully executed exactly as
typed, and the borrower must initial any changes.         Stanton, D.Haw. No. 09-00404

DAE-LEK, 2010 US Dist. LEXIS 143123 at *19-20.

       {¶60} US Title admittedly played a tripartite role in this transaction, providing

services to KeyBank and Johnson.     It is incongruous to conclude that where a    borrower

agrees with the lender’s closing instructions, such as fully executing the Loan Agreement,

the borrower must issue a duplicate of that instruction to have standing to pursue the

agent’s failure to follow the instructions that results in damage to the borrower. This is

particularly true where all parties were aware that intervening liens would not be tolerated,

and the Loan Agreement contains a clause addressing the issue.

       {¶61}      US Title admits that:

       When signed, [the Clause] provides for the Contractor to contractually
       subordinate his rights to any liens the Contractor may file on the property,
       now or in the future, in favor of the Mortgage such that the Mortgage would
       still remain in first position.

(Emphasis sic.) US Title brief, p. 6. See also, the deposition testimony of Chicago

Title’s Horejs, attached to Chicago Title’s motion for summary judgment. “The only

thing that would have prevented the mechanic’s lien[s] from not [sic] trumping the

mortgage would be the contractor’s subordination.”

       {¶62}   The contractor’s clause in this case was contained in the Loan Agreement

signed by Johnson and KeyBank. Johnson’s signature page, effective as of the May 27,

2010 date typed on the first page of the Loan Agreement, contains his signature as well as

his typewritten name under the signature line.
      {¶63}    The next page contains the contractor’s clause and signature section,

followed by the signature page of KeyBank. The contractor’s clause provides that any

mechanics liens issued by the Contractor and, as a result, its subcontractors, will remain

subordinate to the Mortgage:

      CONTRACTOR’S CONSENT: The undersigned hereby certifies to
      LENDER, that it is the Contractor for the OWNER named herein above for
      the construction of the Improvements, that the total contract price for said
      construction covered by our Agreement is $477,732.00 and in consideration
      of the making of the Loan by LENDER to OWNER, the undersigned
      consents to the assignment by the OWNER to LENDER of the Construction
      Contract and all permits, Plans and Specifications concerning the
      Improvements. The undersigned hereby subordinates its lien on the Property,
      now existing or hereafter arising, to the lien of the Security Documents. Any
      funds received by the undersigned will be used by the undersigned will be
      used only to pay for costs that are authorized hereunder. The undersigned
      agrees that, in the event of default by OWNER under this Agreement, it will
      at LENDER’S request continue performance of the Construction Contract in
      accordance with its terms, provided it is reimbursed in accordance with the
      Construction Contract for all work, labor and materials provided by the
      undersigned. The undersigned will immediately notify LENDER, in writing,
      in the event that OWNER defaults in making any payments owed the
      undersigned under the Construction Contract or in the event of any other
      default occurring thereunder. By executing this consent, Contractor will not
      be deemed in privity with LENDER.

      Dated 27th day of May, 2010

                                         CONTRACTOR
                                         Berns Custom Homes, Inc.
                                         By: ________________________
                                                Name: Justin Berns
                                                        Authorized Signatory

      {¶64}    The Closing Instructions state that, “[a]ll documents are to be executed

exactly as typed. All forms must be properly dated, witnessed and acknowledged.”      Any

changes to the document must be initialed by the customer.       The Loan Agreement is
included in the list of items to be “properly executed.”    The insertion into the clause of

the contract price, closing date, and the contractor’s identifying information indicates a

clear expectation that the contractor would sign.

       {¶65}    In addition to the clause executions, Johnson asserts other breaches of the

instructions. Those breaches include closing the transaction with the wrong form of

mortgage, and failure to include certain endorsements or exclusions to the title policies.

       {¶66}    Viewed in a light most favorable to Johnson, we find that the trial court

erred in finding that Johnson lacks standing to assert a breach of contract action based on

the KeyBank Closing Instructions.     The fact that the closing agent certification contained

on KeyBank’s form contains a provision that the settlement agent will be liable for

KeyBank’s losses does not negate liability to Johnson.

               2.    Closing Protection Coverage Policy (“CP Coverage”)

       {¶67}    CP Coverage’s are policies of insurance. R.C. 3953.32(C); Horvath v.

Lawyers Title Ins. Corp., 11th Dist. Portage No. 2012-P-0068, 2013-Ohio-1295, ¶ 33. The

interpretation of insurance policies are governed by contract principles.        Andrews v.

Nationwide Mut. Ins. Co., 8th Dist. Cuyahoga No. 97891, 2012-Ohio-4935, ¶ 14. Except

where language in the policy indicates otherwise, phrases and words are to be construed

based on their plain and ordinary meaning. Id. at ¶ 15.          Ambiguities are construed

liberally in favor of the insured. Id. at   ¶ 16.

       {¶68}    Johnson was not provided with a copy of the CP Coverage; however,

appellees advise that there is only one form of policy in Ohio. Thus, the terms of the CP
Coverage issued to KeyBank are identical to those that cover Johnson.         A CP Coverage

is a contract that extends the title agency relationship to the acts of the agent during escrow

closing activities and services.   Bank of Am., NA v. First Am. Title Ins. Co., 499 Mich. 74,

104, 878 N.W.2d 816 (2016).        “‘[A] breach of contract action [on a CP Coverage] may

be maintained independent of the title insurance policy.’” JPMorgan Chase Bank, N.A.

v. First Am. Title Ins. Co., 750 F.3d 573, 578-579 (6th Cir.2014), quoting New Freedom

Mtge. Corp. v. Globe Mtge. Corp., 281 Mich.App. 63, 761 N.W.2d 832 (2008), overruled

in part on other grounds, Bank of Am., supra.

       {¶69}    R.C. 3953.32, “Closing or settlement protection” provides in pertinent part:



       (B) The closing or settlement protection offered pursuant to this section
       shall indemnify any lender, borrower, seller, and applicant that has requested
       the protection, both individually and collectively, against the loss of
       settlement funds 10 resulting from any of the following acts of the title
       insurance company’s named title insurance agent or anyone acting on the
       agent’s behalf:

              (1) Theft, misappropriation, fraud, or any other failure to properly
       disburse settlement, closing, or escrow funds;

              (2)    Failure to comply with any applicable written closing
       instructions, when agreed to by the title insurance agent.

       (C) The issuance of closing or settlement protection by a title insurance
       company pursuant to division (A) of this section is part of the business of
       title insurance for purposes of Chapter 3953. of the Revised Code.



         The term “settlement funds,” is also known as closing funds or escrow
        10

funds. Thus, those funds generally consist of funds to be disbursed upon the
occurrence of the stated contingencies.
      (D) Except as provided in division (A) of this section, a title insurance
      company shall not offer or issue any coverage purporting to indemnify
      against a person’s improper acts or omissions in connection with escrow,
      settlement, or closing services.

      (E) The superintendent of insurance may adopt rules in accordance with
      Chapter 119. of the Revised Code as the superintendent considers necessary
      to carry out the purposes of this section, including, but not limited to, rules
      that detail the specific language that must be included in the written
      document offering closing or settlement protection as provided for in
      division (A) of this section.

(Emphasis added.)

      {¶70} Johnson also received the requisite notice of availability of CP Coverage

from US Title.    The notice explains:

      A title insurance policy does not cover losses due to the mishandling of
      funds or documents. However, Closing Protection Coverage, as outlined
      below, does provide such protection. * * * The Closing Protection
      Coverage indemnifies you against the loss of settlement funds resulting from
      any of the following acts of the Licensed Agent, subject to certain
      conditions and exclusions specified in the Closing Protection Coverage
      Form:

      (1)     Theft, misappropriation, fraud, or any other failure to properly
              disburse settlement, closing or escrow funds; and

      (2)     Failure to comply with any applicable written closing instructions,
              when agreed to by the Licensed Agent.

(Emphasis added.)

      {¶71}      The CP Coverage provides, in part:

      When title insurance is specified in connection with closing of the
      above-described real estate transaction (the Closing) in which Closing you
      are the Covered Party hereunder with an interest in land or a lender secured
      by a mortgage (including any other security instrument) of an interest in
      land, Chicago Title Insurance Company (the Company ), subject to the
      Conditions and Exclusions set forth below, hereby agrees to reimburse you
      for actual loss incurred by you in connection with the Closing, when such
      Closing is conducted by the above named Licensed Agent (an agent licensed
      and authorized to issue title insurance in the State of Ohio for the Company)
      and where such loss arises out of:

      1. Theft, misappropriation, fraud or any other failure of the Licensed
      Agent, or anyone acting on the Licensed Agent’s behalf, to properly handle
      and disburse your funds or documents in connection with such Closing; or

      2. Failure of the Licensed Agent, or anyone acting on the Licensed Agent’s
      behalf, to comply with any applicable written closing instructions, when
      agreed to by the Licensed Agent, to the extent that they relate to: (a) the
      status of the title to said interest in land or the marketability thereof as
      insured or the validity, enforceability and priority of the lien of said
      mortgage on said interest in land, including the obtaining of documents and
      the disbursements of funds necessary to establish such status of title or lien;
      or (b) the obtaining of any other document, specifically required by you, but
      only to the extent the failure to obtain such other document affects the status
      of the title to said interest in land or the validity, enforceability and priority
      of the lien of said mortgage on said interest in land, but not to the extent that
      said instructions require a determination of the validity, enforceability or
      effectiveness of such other document.

      Conditions and Exclusions:

             A. The Company will not be liable to you for loss arising out of: * *
      *

             2. Mechanics’ and materialmens’ liens in connection with your
      purchase or lease or construction loan transactions, except to the extent that
      protection against such liens is afforded by a title insurance binder,
      commitment or policy.

(Emphasis added.)

      {¶72} In the affidavit in support of appellees’ motions for summary judgment,

Waiwood, an expert in the real estate title insurance industry, averred that the CP

Coverage provides no coverage to Johnson due to the cited lien exclusion language.

According to Waiwood, the CP Coverage only covers liens to the extent that protections
are contained in a title insurance binder, commitment or policy. The title insurance

policies in this case specifically exclude lien coverage.11

       {¶73}    We agree that the plain language of the CP Coverage excludes coverage for

the liens created by Johnson. However, Johnson’s entitlement to have liens excluded

pursuant to the Closing Instructions, the only written closing instructions provided to US

Title, is a question of fact to be determined upon remand.

       {¶74}     The CP Coverage also covers an agent’s failure to comply with closing

instructions that results in a loss of priority of the mortgage.   Here, the parties agree that

the signing of the Loan Agreement by the Contractor would have protected the priority of

the Mortgage.    There is a genuine issue of material fact as to whether appellees are liable

under the CP Coverage and what damages, if any, Johnson may establish as a result.

“Under the plain language of the CP [Coverage], the only relevant inquiry in this case is

whether * * * [the] issuing agent failed to comply with * * * relevant written closing

instructions.” FDIC v. First Am. Title Ins. Co., E.D.Mich. No. 14-CV-13624, 2015 US

Dist. LEXIS 10669, *12 (Jan. 30, 2015).




        11Our reversal on the issue of US Title’s compliance with the Closing
Instructions, as well as Johnson’s Closing Instructions, brings the question of the
failure to provide title policies containing requested endorsements and exclusions
into play, impacting the CP Coverage exclusion language.
               3.    Owner’s Title Policy

       {¶75}        There is no dispute that the liens are excluded under the plain language

of the Owner’s Policy as issued. The resolution of this issue turns on establishing that

Johnson provided verbal closing instructions to US Title directing that US Title issue an

Owner’s Policy with exclusion for mechanics liens, as the KeyBank Closing Instructions

did not specify the exclusion for the Owner’s Policy, only for the lender.

       {¶76}    In light of our determination that Johnson is a third-party beneficiary of the

Closing Instructions, that there is a genuine issue of material fact as to the provision of

verbal closing instructions by Johnson, and that the language of the CP Coverage

addresses a loss of settlement funds due to an agent’s failure to comply with “applicable

written closing instructions,” we reverse the trial court’s finding and remand to the trial

court for further consideration.

       C.      Second through Fourth Assignments of Error — Fiduciary Duty,
               Negligence, Ordinary Care, and Bad Faith

       {¶77}    We combine the remaining errors for review.         As we have previously

acknowledged:

       A fiduciary has been defined as a person having a duty, created by his or her
       undertaking, to act primarily for the benefit of another in matters connected
       with such undertaking. Stock v. Pressnell, 38 Ohio St.3d 207, 527 N.E.2d
       1235 (1988). A claim of breach of fiduciary duty is basically a claim for
       negligence that involves a higher standard of care. Id. In order to
       recover, one must show the existence of a duty on the part of the alleged
       wrongdoer not to subject such person to the injury complained of, a failure
       to observe such duty, and an injury proximately resulting therefrom. Id.
All Star Land Title Agency, Inc. v. Surewin Inv., Inc., 8th Dist. Cuyahoga No. 87569,

2006-Ohio-5729, ¶ 36.

       {¶78}     Further:

       An escrow agent, despite fiduciary status, will not be liable when he or she
       acts in accordance with the escrow agreement or instructions. Janca v. First
       Federal Sav. and Loan Assn. of Cleveland (1985), 21 Ohio App.3d 211, 21
       Ohio B. 225, 486 N.E.2d 1216 (1985), paragraph two of the syllabus.

Waffen v. Summers, 6th Dist. Ottawa No. OT-08-034, 2009-Ohio-2940, ¶ 34.

       {¶79}    Moving to the negligence claim, a case that arises from contract generally

excludes an action in tort; however,

       Whether plaintiffs’ claims are viewed as sounding in contract or tort, the
       “essential elements” of their case included, (1) breach of duty and (2) that
       the alleged damages were the “natural and necessary consequence of” or
       “proximately caused by” defendants’ actions. “It is fundamental that in order
       to establish actionable negligence, one must show the existence of a duty, a
       breach of the duty and an injury proximately resulting therefrom.” Federal
       Steel & Wire Corp. v. Ruhlin Constr. Co., 45 Ohio St.3d 171, 173, 543
       N.E.2d 769 (1989). “Generally, a breach of contract action is pleaded by
       stating (1) the terms of the contract, (2) the performance by the plaintiff of
       his obligations, (3) the breach by the defendant, (4) damages, and
       (5) consideration.” American Sales, Inc. v. Boffo, 71 Ohio App.3d 168,
       175, 593 N.E.2d 316 (1991). Damages must arise as a result of the breach
       and must “naturally and necessarily flow” from the breach of contract. The
       Toledo Group v. Benton Industries, 87 Ohio App.3d 798, 806, 623 N.E.2d
       205 (1993); Homes by Calkins, Inc. v. Fisher, 92 Ohio App.3d 262, 267,
       634 N.E.2d 1039 (1993); Ziss Bros. Constr. Co., Inc. v. TransOhio Sav.
       Bank, 8th Dist. Cuyahoga No. 58787, 1991 Ohio App. LEXIS 3134 (June
       20, 1991).

Nichols v. Chicago Title Ins. Co., 107 Ohio App.3d 684, 690-691, 669 N.E.2d 323 (8th

Dist.1995).    In Nichols, the plaintiffs were not successful on the negligence claim
because they failed to establish a duty of care, and their admission that their damages were

not Chicago Title’s responsibility was “fatal to their claims.” Id.

       {¶80}    It is also true on the question of negligence in the insurance field that:

       [A]n action for negligence may be based upon an insurance agent’s failure to
       procure insurance.” Gerace-Flick v. Westfield Natl. Ins. Co., 7th Dist.
       Columbiana No. 01 CO 45, 2002-Ohio-5222, citing Minor v. Allstate Ins.
       Co., 111 Ohio App.3d 16, 21, 675 N.E.2d 550 (2d Dist.1996). Whether an
       agent has negligently failed to procure insurance is ordinarily a question of
       fact. Id.

Tornado Techs., Inc. v. Quality Control Inspection, Inc., 2012-Ohio-3451, 977 N.E.2d

122, ¶ 18 (8th Dist.).

       {¶81}    The issues of bad faith, negligence, and ordinary care will be addressed

upon remand, based on our findings herein. Therefore, we reverse the grant of summary

judgment on these issues.

V.     CONCLUSION

       {¶82}     We find that, viewed in a light most favorable to Johnson, there are

genuine issues of material fact in this case, and we reverse and remand for future

proceedings consistent with the law and this decision.

       {¶83}    Judgment is reversed and remanded with instructions.

       It is ordered that appellant recover from appellees costs herein taxed.

       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate issue out of this court directing the common

pleas court to carry this judgment into execution.
      A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the

Rules of Appellate Procedure.



________________________________________
ANITA LASTER MAYS, JUDGE

MARY J. BOYLE, J., CONCURS;
KATHLEEN ANN KEOUGH, A.J., DISSENTS WITH SEPARATE OPINION


KATHLEEN ANN KEOUGH, A.J., DISSENTING:

      {¶84} Respectfully, I dissent.

      {¶85} First, Johnson has not raised any assignment of error on appeal regarding the

trial court’s dismissal of Count III of his amended complaint, which seeks specific

performance and injunctive relief against U.S. Title and Chicago Title. Therefore, I

would hold that Johnson has waived this claim.

      {¶86} With respect to Chicago Title, I would hold that summary judgment was

properly granted because Johnson failed to give Chicago Title notice of his claim. The

Owner’s Policy mandates a specific notice procedure that requires that “any notice of

claim * * * must be given to the Company at the address shown in Section 18 of the

Conditions.” Section 18 provides that “any notice of claim * * * must be given to the

Company at Chicago Title Insurance Company, Attn: Claims Depart, P.O. Box 45023,

Jacksonville, Florida 32232-5023.”

      {¶87} In Kincaid v. Erie Ins. Co., 128 Ohio St.3d 322, 2010-Ohio-6036, 944

N.E.2d 207, the Ohio Supreme Court held that an insured does not have standing to
maintain an action against his insurance company for coverage of an alleged loss when he

did not file a claim for the loss or give any notice to the insurer of the loss before filing the

complaint. Despite Johnson’s assertions otherwise, his emails to U.S. Title were not

notice to Chicago Title, as required by the Owner’s Policy. There is no genuine issue of

material fact that the first notice Chicago Title had of the claims was when Johnson filed

the amended complaint adding Chicago Title as a defendant. Indeed, Johnson admits that

he gave no notice to Chicago Title prior to filing his amended complaint. Based on

Kincaid and the notice provisions of the Policy, Johnson lacks standing to bring suit; his

claims against Chicago Title fail; and summary judgment in favor of Chicago Title was

properly granted.

       {¶88} With respect to U.S. Title, Johnson asserts claims for breach of contract,

negligence, breach of fiduciary duty, and bad faith (Counts I, IV, V, and VI respectively of

the amended complaint). I would hold that the trial court properly granted summary

judgment to U.S. Title on all of these claims.

       {¶89} Johnson contends that the closing instructions were either an express or

implied-in-fact contract between U.S. Title, himself, and KeyBank. Johnson claims that

U.S. Title breached this alleged contract by failing to (1) obtain his contractor’s signature

on the construction loan agreement; (2) advise KeyBank that its choice of a closed-end

mortgage was wrong; and (3) secure title insurance with exclusions for any liens filed

against his property after the closing date of the agreement.
       {¶90} But the evidence is clear that Johnson never submitted any written closing

instructions to U.S. Title.     Indeed, it is undisputed that the only written closing

instructions were issued by KeyBank to U.S. Title. The evidence is also clear that the

closing instructions issued by KeyBank did not contemplate losses incurred by Johnson.

In fact, the instructions specifically stated that U.S. Title “will be made liable for losses

incurred by the Lender as a result of the agent closing a loan with knowledge that errors

were contained in any documents or instructions.” (Emphasis added.) The instructions

did not require coverage for the alleged losses Johnson now claims, and therefore, the trial

court did not err in granting summary judgment on this claim.

       {¶91} The majority concludes that although Johnson is not a party to the contract

created by the closing instructions, he has standing to pursue his breach of contract claim

as a third-party beneficiary of the closing instructions. The problem with this analysis is

two-fold. First, Johnson never raised his third-party beneficiary claim in the trial court

and thus has waived it for purposes of appeal.

       {¶92} Moreover, even assuming Johnson is a third-party beneficiary of the closing

instructions, his breach of contract claim still fails. Contrary to Johnson’s assertions

otherwise, there is simply no evidence in the record that KeyBank ever asked either U.S.

Title or Chicago Title to insure over unreleased mechanic’s liens to allow KeyBank to

make further construction disbursements. Indeed, the plain language of the construction

loan agreement makes clear KeyBank’s intention to seek title endorsements before making

disbursements. The agreement specifically provides that KeyBank could request title
endorsements and refuse to disburse further construction funds to Johnson if unreleased

mechanic’s liens on the property were discovered.

       {¶93} Further, the record reflects that KeyBank informed Johnson that the

transaction was closed correctly, and that KeyBank was not obligated to disburse more

construction funds to Johnson in light of the mechanic’s liens. Thus, despite Johnson’s

assertion that the mechanic’s lien exclusion should not have been included in the title

policy, it is apparent that KeyBank got exactly what it wanted at closing. Logically then,

as a third-party beneficiary of the closing instructions, Johnson did too. Consequently,

there was no breach of the closing instructions.

       {¶94} Johnson also cannot demonstrate a breach of contract under the Owner’s

Policy.   Under the exclusions from coverage, Johnson is not covered for liens that

attached or were created after the date of the policy. Even Johnson’s expert agreed that

there is no coverage under the Owner’s Policy for liens filed after the date of the policy.

The policy is dated June 2, 2010; the mechanic’s liens were recorded well after the date of

the policy.

       {¶95} Likewise, Johnson cannot prove breach of the closing protection coverage.

As the trial court correctly recognized, Johnson’s closing protection coverage excludes

coverage for “matters created, suffered, assumed or agreed to by you and/or your agents or

employees.” The mechanic’s liens arose when Johnson refused to pay his contractor.

Thus, it is apparent that Johnson’s claims arose out of a situation he created, and therefore,

the “created, suffered, assumed or agreed to” exclusion applies.
       {¶96} Johnson’s negligence claim against U.S. Title also fails.            It is well

established that there is no cause of action for negligence where the alleged duty arises out

of a contract. Corporex Dev. & Constr. Mgmt. v. Shook, Inc., 106 Ohio St.3d 412,

2005-Ohio-5409, 835 N.E.2d 701. “Where the duty allegedly breached by the defendant

is one that arises out of a contract, independent of any duty imposed by law, the cause of

action is one of contract.” Nichols v. Chicago Title Ins. Co., 107 Ohio App.3d 684, 697,

669 N.E.2d 323 (8th Dist.1995).

       {¶97} U.S. Title’s duties to Johnson are defined by contract, not tort. The majority

apparently agrees, finding that Johnson is a third-party beneficiary of the closing

instructions. Nevertheless, the majority improperly holds that Johnson’s negligence claim

can proceed upon remand.

       {¶98} I would find that Johnson’s breach of fiduciary duty claim against U.S. Title

also fails. Johnson is not a party to the Lender’s Policy and cannot create a duty owed to

him by U.S. Title based on contractual terms between U.S. Title and KeyBank.

Furthermore, even assuming that U.S. Title, as escrow agent, was an agent of both

KeyBank and Johnson, Johnson’s breach of fiduciary claim still fails. It is undisputed

that Johnson never provided any written instructions to U.S. Title. Although Johnson

asserts that his attorney called U.S. Title and stated that Johnson wanted his coverage to be

“no less comprehensive than that of KeyBank,” in light of KeyBank’s representation that

the transaction closed appropriately, there is no issue of fact that U.S. Title followed
KeyBank’s closing instructions.       Thus, Johnson cannot demonstrate that U.S. Title

breached its fiduciary duty to him in carrying out KeyBank’s written closing instructions.

       {¶99} Finally, I would find that Johnson’s bad faith claim against U.S. Title fails.

Ohio law is clear that a purported breach of a covenant of good faith and fair dealing is not

an independent tort claim upon which liability can attach. Good faith is part of a contract

claim and does not stand alone.            Pappas v. Ippolito, 177 Ohio App.3d 625,

2008-Ohio-3976, 895 N.E.2d 610 (8th Dist.). Nor is U.S. Title an insurer such that an

implied covenant of good faith and fair dealing should be attributed to its relationship with

Johnson.    See id. at ¶ 57.     Accordingly, the trial court properly granted summary

judgment on Johnson’s bad faith claim.           By finding Johnson to be a third-party

beneficiary of the closing instructions, the majority implicitly finds that his claim arises in

contract. Accordingly, it errs in holding that his bad faith claim against the defendants

can proceed upon remand.

       {¶100} Because there are no genuine issues of material fact regarding any of

Johnson’s claims, I would affirm the trial court’s ruling granting summary judgment to

U.S. Title and Chicago Title.
