IN THE SUPREME COURT OF OHIO

VICTOR D. LEE

Appellant,

vs.

C&R TITLE AGENCY, INC.,

and

TICOR TITLE INSURANCE CO.,

Appellees,

ORII'"INAL

11-1551On Appeal from the HamiltonCounty Court of Appeals, FirstAppellate District

Court of AppealsCase No.: C-100385

MEMORANDUM IN SUPPORT OF JURISDICTIONOF APPELLANT VICTOR D. LEE

Eric C. Holzapfel, Esq.Joel M. Frederic, Esq.The Drew Law Firm Co., LPAOne West Fourth Street, Suite 2400Cincinnati, OH 45202

COUNSEL FOR APPELLANT,VICTOR D. LEE

Maria Mariano Guthrie, Esq.Sikora Law, LLC685 Front StreetColumbus, OH 43206

COUNSEL FOR APPELLEE,TICOR TITLE INSURANCE CO.

^R, E CE ^ v c5Ei^12 2011

CLERK OF GdURTSUPREME CUUR^° OF OHIO

V

Sean P. Donovan, Esq.Finney Stagnaro Saba & Patterson Co., LPA

2623 Erie AvenueCincinnati, OH 45208

COUNSEL FOR APPELLEE,C & R TITLE AGENCY, INC.

3

CLERK OF COURTSUPREME COURT OF OHIO

.

TABLE OF CONTENTS

PaQe

1. EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC ANDGREAT GENERAL INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

H. STATEMENT OF THE CASE AND FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

III. ARGUMENT IN SUPPORT OF PROPOSITION OF LAW . . . . . . . . . . . . . . . . . . . .9

Proposition of Law No. 1: Before the closing, a title insurance company owes aduty to the insured to produce a copy of the title-commitment letter or otherdocument that sets forth the coverage of the policy being sold to the insured aswell as exceptions thereto ..................................................9

IV. CONCLUSION ...................................:....................16

Signature and Certificate of Service

V. APPENDIX ... ........................................................18

Exhibit

A. HSBC Bank, N.A., Trustee v. Victor D. Lee, et al.,Entry Granting Motions to Dismiss Appeal of Appellant, Galina V. LeeFirst Appellate District, Case No. C-100385

B. HSBC Bank, N.A., Trustee v. Victor D. Lee, et al.,Judgment EntryFirst Appellate District, Case No. C-100385

C. HSBC Bank, N.A., Trustee v. Victor D. Lee, et aG,Decision and Entry Affirming Magistrate's DecisionsHamilton County Common Pleas, Case No. A0708861

4

TABLE OF AUTHORITIES

Cases P^a e

Burr v. Stark City Board of Commissioners (1986), 23 Ohio St.3d 69, 491 N.E.2d 1101 ...... 14

Delman v. Cleveland Hts. (1989), 41 Ohio St.3d 1, 534 N.E.2d 835 . . . . . . . . . . . . . . . . . . . . . .12

Kenny v. Henry Fisher Builder, Inc. (1998), 129 Ohio App.3d 27, 716 N.E.2d 1189 ........ 12

Kitson v: Berryman, 10th Dist. No. 02AP-827, 2003-Ohio-2662 . . . . . . . . . . . . . . . . . . . . . . . . .15

Martin v. Ohio State University Fund (2000), 139 Ohio App.3d 89, 742 N.E.2d 1198 ........13

Powell v. Grant Med. Ctr. (2002), 148 Ohio App. 3d 1, 771 N.E.2d 874 . . . . . . . . . . . . . . . . . . 15

Robinson v. Bates (2005), 160 Ohio App.3d 668, 828 N.E.2d 657 . . . . . . . . . . . . . . . . . . . . 11, 12

Schwartz v. Stewart Title Guaranty Company (1991), 134 Ohio App.3d 601,731 N.E.2d 1159 .............................................................. 12

Thomas v. Guranty Title & Trust (1910), 81 Ohio St. 432, 91 N.E. 183 .......... 11, 12, 14, 15

5

EXPLANATION OF WHY THIS CASE IS A CASE OFPUBLIC OR GREAT GENERAL INTEREST

STATEMENT OF THE CASE AND FACTS

The parties are Appellant Victor D. Lee ("Lee") and Appellees C & R Title Agency, Inc.

("C & R") and Ticor Title Insurance Company ("Ticor") and this case arose from a simple

foreclosure action against Lee and his wife Galina V. Lee (collectively the "Lees") initiated on

October 2, 2007, by HSBC Bank, USA, as Trustee for Ownit Mortgage Loan Trust. (T.d. 2).

The Lees Answered, Counterclaimed, and Cross-Claimed against C & R and Ticor asserting a

negligence claim against C & R and negligence and breach-of-contract claims against Ticor.

(T.d. 18). In February 2009, C & R moved for Summary Judgment against the Lees, T.d. 73, and

in March 2009, Ticor likewise moved for Summary Judgment. (T.d. 78). The Lees opposed both

Motions for Summary Judgment. (T.d. 82, 88). The Magistrate entered judgment for both C & R

and Ticor in June 2009 and March 2010 respectively. (T.d. 97).

The Lees timely objected to the Magistrate's Order and Decision, see T.d. 99, and the

Trial Court adopted the Magistrate's decision on May 28, 2010. (T.d. 103). Notice of Appeal

was filed on June 10, 2010, by Victor Lee. See T.d. 104. Galina Lee also filed a Notice of

Appeal to the First Appellate District, but she failed to timely file a Merit Breif or to request an

extension. Accordingly, her appeal was dismissed. See Entry Granting Motions to Dismiss

Appeal of Appellant, Galina V. Lee, 1st Dist. No. C-100385 (November 10, 2010), attached

hereto as Exhibit "A".

The First Appellate District considered Lee's appeal on the accelerated calendar and

issued a judgment entry. See Judgment Entry, 1st Dist. No. C-100385 (July 27, 2011), attached

hereto as Exhibit "B". The First District Court of Appeals affirmed the Trial Court's entry of

summary judgment on the same grounds. (Id.). It is important to note that the Trial Court

6

decided the issue whether a title-insurance company, or the title agency, has a duty to explain the

legal effect of a party-wall agreement on the state of the property's title. See Decision and Entry

Affirming Magistrate's Decisions, Hamilton County Common Pleas No. A0708861 (May 28,

2010), attached hereto as Exhibit "C". But that was not the issue. The duty to render legal

advice to Lee was not asserted by Lee and was not in dispute. The issue was and is as follows:

whether before the closing, a title insurance company owes a duty to the insured to produce a

copy of the title commitment letter or other document that sets forth the coverage of the policy

being sold to the insured as well as exceptions thereto.

On July 1; 2005, Lee agreed to purchase 39 DeWitt Street ("the Property") from Sharon

Kollasch-Schlueter ("Schlueter"), for $78,500. (T.d. 88; Affidavit of Victor D. Lee, ("Lee

Affidavit"), Paragraph 2, Exhibit A). In order to finance a part of the purchase price of the

property, Lee had submitted an application for a loan to Guardian Savings Bank ("Guardian").

(Id., Lee Affidavit, Paragraph 3). At the time it was Lee's understanding that the lender would

be obtaining title insurance which Guardian in fact did from Ticor through C & R. (Id., Lee

Affidavit, Paragraph 4). It was also his understanding that there would be a title examination as

a part of the title insurance process. (Id., Lee Affidavit, Paragraph 5).

After the purchase agreement was executed, Lee learned of a dispute between Schlueter

and her neighbors regarding a certain Party Wall Agreement (the "Agreement") containing a

right of first refirsal that had been executed by a previous owner to the Property and one of the

neighbors, Robert and Terri Treinen. (T.d. 68, Lee Deposition, Exhibit 2). Lee was uncertain as

to what impact, if any, the Agreement might have on his purchase of the Property. (Id, pgs. 105,

171). As the closing approached, he had not heard anything from the lender, so Lee decided to

purchase his own title insurance at the closing.

7

The lender at the time of the closing was Ownit Mortgage Company ("Ownit"), a

successor to Guardian and a predecessor in interest to HSBC. C & R examined the title to the

Property for Ownit, and prepared and issued a title-commitment letter to Ownit on behalf of

Ticor dated July 7, 2005 (approximately one month prior to the closing). (T.d. 83, Deposition of

Jesse Wagner, p. 42; T.d. 88, Lee Affidavit, Paragraph 6, Exhibit B). The commitment letter

clearly shows that Ownit/Ticor/C & R all knew that the Agreement was in the chain of title

because under Schedule B entitled EXCEPTIONS, the conunitment letter specifically excepted

from coverage the "Party Wall Agreement as set forth in Misc. Book 31, page 562."

Nevertheless, none of the above entities ever provided Lee a copy of Ownit's title-commitment

letter, see T.d. 88, Lee Affidavit, Paragraphs 7, 8; Lee Deposition, p. 143, or indicated to him in

any manner that the Agreement was in the chain of title and had been specifically excepted from

coverage.

C & R hosted the closing at its office on August 17, 2005. (T.d. 68, Lee Deposition, p.

128). The closing was attended by Rob Shepard, a Vice President of C & R, the Lees, and the

seller, Schlueter. (Id.). As noted, Lee purchased an Owner's Title Insurance Policy from C & R

at the closing. (T.d. 88, Lee Affidavit, Exhibit C). Yet, C & R did not provide Lee a copy of a

title commitment letter at that time. (Id., Lee Affidavit, Paragraphs 7, 8; T.d. 68, Lee Deposition,

pgs, 147, 150, 155, 158). Further, at no time during the closing did Rob Shepherd provide Lee

with any other document indicating the terms of the policy or inform Lee, according to Ownit's

title-commitment letter prepared over a month earlier, that the Agreement was in the chain of

title and that Ticor had excepted the Agreement from coverage.

Lee testified that he would not have purchased the Property if he had known that the

Agreement (with the Right of First Refusal) was in the chain of title because the Agreement

8

"would have affected my ownership and the ability to sell these properties - I walked away from

this deal once - I would have walked away from it a second time." (T.d. 68, Lee Deposition, p.

149).

On August 19, 2005, Lee sent a check to C & R in the amount of $604.50 covering the

cost of an Owner's Title Insurance Policy for both the Property and Lot 41 (adjoining property).

(Id., Lee Deposition, Exhibit 24). At the closing, Lee had paid C & R $175 as a "closing fee,"

$175 to C & R for a "title examination," $75 to C & R for a "title insurance binder;" $252 for

title insurance for a title insurance policy issued to the lender, Ownit Mortgage Solutions, Inc;

$75 to C & R for an EPA endorsement; $75 for an ARM endorsement; and $150 to C & R for a

"comprehensive endorsement "(Lee Deposition, Exhibits 24, 25). Thus, Lee paid to C & R a

total of $1,279.25 in title-related charges. (Id.).

It was not until some point in time after September 29, 2005 that Lee finally received his

Owner's Title Insurance Policy, over one month after the closing. (T.d., Lee Affidavit, Paragraph

8, Exhibit C). Sure enough, like the title-conunitment letter issued by Ticor, through C & R, to

Ownit on July 7, 2005, Lee's policy referenced the Agreement and excepted it from coverage

under the policy.

ARGUMENT IN SUPPORT OF THE PROPOSITION OF LAW

Proposition of Law No. 1: Before the closing, a title insurance company owes a dutyto the insured to produce a copy of the title-commitment letter or other documentthat sets forth the coverage of the policy being sold to the insured as well asexceptions thereto.

Lee does not assert that there is a duty on behalf of a title-insurance company, or its title

agency, to explain the effect of a party-wall agreement on the state of the property's title or to

give legal advice to an insured. The crux of the matter is a more basic concern, i.e. whether the

Agreement, according to a title examination performed by or on behalf of the insurer, was part of

9

the chain of title and, if so, whether the Agreement was covered or excepted from the insurance

policy. Thus, the legal issue is whether C & R and/or Ticor, as the title-insurance company and

the title agency, had a legal duty to provide Lee, as the insured, with either a title-commitment

letter or some other document that (a) indicated the state of title (which in this case indicated that

the Agreement was in the chain of title) and (b) stated the coverage under the insurance policy

and any exceptions to coverage (such as excepting the Agreement).

This case has given rise to some factual confusion inasmuch as the First Appellate

District stated that it was undisputed that Lee received a copy of the title-commitment letter from

C & R at the closing. See Exhibit B at p. 3. Not so. Lee was never given a copy of the title-

commitment letter at the closing and all references in the lower courts' decisions to the contrary

are unsupported by the record. Moreover, Lee clearly states in both his affidavit and in his

deposition that he did not receive a copy of the title-commitment letter or any similar document.

(T.d. 88, Lee Affidavit, Exhibit C, Paragraphs 7, 8; T.d. 68, Lee Deposition, pgs, 147, 150, 155,

158). At the very least, this dispute created a question of material fact that speaks to the heart of

this case: whether a title-commitment letter or any other document stating the terms and

exceptions to the title-insurance policy was given to Lee on or before the closing. Further,

because this was a factual matter that was, and remains, in dispute, summary judgment was

improper.

A title-commitment letter could easily have been provided to Lee when he purchased title

insurance at the closing because C & R had already sent a title-commitment letter to the lender

on behalf of Ticor on July 7, 2005, over a month before the actual closing. (T.d. 83, Wagner

Deposition, p. 42; T.d. 68, Lee Affidavit, Paragraph 6, Exhibit D). Indeed, the importance of

notifying an insured as to the state of the title before the closing was readily acknowledged by

10 -

Ron Shepherd, Vice President of C & R. (T.d. 84, Rob Shepherd Deposition, pgs. 59-60).

Nonetheless, this did not happen.

In this case, Lee paid for two title insurance policies, a lender's policy and an owner's

policy, yet he still was not informed of (1) the state of the title at the time he was asked by C & R

to close and purchase the property and (2) that the Agreement was excepted from coverage. (T.d.

88, Memo, Lee Affidavit, Paragraphs 7, 8). Even Ticor acknowledges that the contractual

relationship between an insurer and insured creates a duty. (T.d. 78, Ticor Motion, pg. 17); See

also Thomas v. Guranty Title & Trust (1910), 81 Ohio St. 432, 91 N.E. 183. Yet, Ticor and C &

R spumed their duties to Lee by not providing the pertinent documents and information until

after the closing; after Lee had committed to purchase the Property. Accordingly, Lee did not

know until after the closing that the Agreement was excluded from coverage under the insurance

policy. This duty to disclose the state of the title and the exceptions to the title insurance

coverage is not a duty to explain the Agreement's impact on the title or on the insurance

coverage. C & R and Ticor owed a duty, whether based in tort or contract to provide a document

to Lee at or prior to the closing stating the chain of title and the extent and limitations of the title-

insurance coverage. C & R and Ticor were negligent, fraudulent, and in breach of contract by

failing to give Lee a document at the closing that provided the state of the title and the coverage

of the title-insurance policy and exceptions thereto.

1. Negligence

To establish actionable negligence, a plaintiff must show: (1) the existence of a duty; (2)

a breach of that duty; and (3) an injury proximately resulting from the breach of that duty.

Robinson v. Bates (2005), 160 Ohio App.3d 668, 828 N.E.2d 657. The duty may be established

by common law, by legislative enactment, or by the particular facts or circumstances of the case.

11

Id. A duty may be based not only in contract but in tort. Kenny v. Henry Fisher Builder, Inc.

(1998), 129 Ohio App.3d 27, 716 N.E.2d 1189. In this case, the duty is evident as even Ticor

acknowledges that the contractual relationship between an insurer and insured creates a duty.

(T.d. 78, Ticor Motion, pg. 17); Thomas, 81 Ohio St. 432.

This Court has stated that:

"One who, in the course of his business, profession or employment, or in anyother transaction in which he has a pecuniary interest, supplies false informationfor a guidance of others in their business transactions subject to liability forpecuniary loss caused to them by the justifiable reliance upon the information, ifhe fails to exercise reasonable care or competence in obtaining or communicatingthe information. (Emphasis added.)

Delman v. Cleveland Hts. (1989), 41 Ohio St.3d 1, 534 N.E.2d 835.

Most of the case law involving the tortious conduct of title insurers revolves around their

duty to examine the title to the property. See, e.g., Schwartz v. Stewart Title Guaranty Company

(1991), 134 Ohio App.3d 601, 731 N.E.2d 1159. Lee argued in the Trial Court and asserts

herein that Ticor, as the insurer, had a duty to Lee, as the insured, to inform him as to the state of

the title and the exceptions from coverage before the closing was consummated and the failure to

do so constitutes a breach of that duty. Even C & R's Vice President, Ron Shepherd, recognized

the importance of notifying an insured as to the state of the title before the closing. (T.d. 84, Ron

Shepherd Deposition, pgs. 59-60). This duty to provide documentation of the chain of title and

the coverage and exceptions to the title-insurance policy is distinct from providing any advice or

opinion to Lee as to whether to purchase the insurance and whether to even purchase the

property.

Yet, the Magistrate, the Trial Court, and the Court of Appeals based their summary

disposition of the Lees' claims solely on the grounds that the Lees knew of the Agreement before

the closing. Whether one knows of an agreement is entirely different from knowing whether the

12

agreement is in the chain of title and whether it is excepted from coverage by the policy being

sold to Lee. Ticor, not Lee, is the only one that knew the state of the title. Still, the Magistrate

asserted that Lee "should have reasonably concluded that the Agreement for Common Party

Wall would have been excluded from coverage in the policy of title insurance." (T. d. 93,

Magistrate's Decision, pgs. 5-6) (Emphasis added.). A layman would not "reasonably" conclude

that and, respectfully, that is not the issue in any event. Lee had neither a title-commitment letter

nor a copy of the title-insurance policy at the time of the closing. Again, Lee's deposition and

affidavit clearly demonstrate that he was not provided a document with the requisite information

about the title-insurance policy coverage and exceptions thereto. (T.d. 88, Lee Affidavit, Exhibit

C, Paragraphs 7, 8; T.d. 68, Lee Deposition, pgs, 147, 150, 155, 158).

Accordingly, at the closing, Lee had no way of knowing the state of the title, much less

the extent of the insurance coverage because C & R and Ticor negligently failed to disclose the

terms of the insurance policy and the exceptions thereto when Lee, the insured, purchased the

insurance policy. The failure to disclose that the insurance policy excepted the Agreement

directly and proximately harmed Lee when he purchased the defective property. Thus, C & R

and Ticor should be held liable for their negligence as a title-insurance company owes a duty to

the insured to produce a copy of the title commitment-letter or other document that sets forth the

coverage of the policy being sold to the insured as well as exceptions thereto on or before the

closing.

2. Fraud

Fraud is very similar to negligent misrepresentation. Martin v. Ohio State University

Fund (2000), 139 Ohio App.3d 89, 742 N.E.2d 1198. This Court has defined fraud as follows:

"(a) A representation or where there is a duty to disclose, concealment of a fact,(b) which is material to the transaction at hand, (c) made falsely, with knowledge

13

of its falsity, or with such other disregard and recklessness as to whether it is trueor false, that knowledge may be inferred, (d) with the intent of misleading anotherinto relying upon it, (e) justifiable reliance upon the representation orconcealment, and (I) a resulting injury approximately caused by the reliance."

Burr v. Stark City Board of Commissioners (1986), 23 Ohio St.3d 69, 491 N.E.2d 1101.

Ticor acknowledges a duty contractually arises between an insurer and insured. (T.d. 78,

Ticor Motion, pg. 17); Thomas, 81 Ohio St. 432. Yet, they fraudulently sold Lee an insurance

policy by intentionally not disclosing the chain of title for the subject property or the title-

insurance policy terms and exceptions from coverage. This information was withheld even

though C & R had already sent a title-commitment letter to the lender on behalf of Ticor on July

7, 2005; over a month before the actual closing. (T.d. 83, Wagner Deposition, pg. 42; T.d. 68,

Lee Affidavit, Paragraph 6, Exhibit D).

Lee as the purchaser of an Owner's Title Insurance Policy has the same, if not greater,

interest in the state of the title as the lender. In this case, Lee paid for both the lender's title-

insurance policy, as well as his own, and still did not know the state of the title at the time he was

asked by C & R to close and purchase the property. (T.d. 88, Memo, Lee Affidavit, Paragraphs 7,

8). C & R and Ticor possessed the pertinent knowledge about the title and the insurance policy

yet with reckless disregard they withheld this critical infonnation from Lee even as he purchased

title-insurance at the closing. The concealed information was critical because Lee would not

have purchased the property had he known the title insurance excluded the Agreement from

coverage. (T.d. 68, Lee Deposition, p. 149).

Still, C & R and Ticor never mentioned a word to Lee about the Agreement being

excepted from coverage. Nor did C & R or Ticor give Lee a copy of the title-commitment letter

or any other document at the closing that contained the coverage terms and exceptions of the

title-insurance policy. By failing to provide a title-commitment letter or other document setting

14

forth the coverage under the insurance policy and the exceptions thereto, C & R and Ticor

fraudulently induced Lee to purchase title insurance that failed to provide the information that

Lee needed, i.e. whether the Agreement was in the chain of title, and if so, whether it was

covered by the insurance policy or excepted therefrom.

3. Breach of Contract

To prove breach of contract, a party must establish the existence of a contract, that

party's performance of the contract, the other party's breach and the damage or loss as a result of

the breach. Kitson v. Berryman, 10th Dist. No. 02AP-827, 2003-Ohio-2662, ¶ 14 citing Powell

v. Grant Med Ctr. (2002), 148 Ohio App. 3d 1, 771 N.E.2d 874. Lee entered into a contract to

purchase a title-insurance policy from Ticor at the closing. In binding the insurer and the

insured, the contract created a duty on behalf of Ticor to Lee. (T.d. 78, Ticor Motion, pg. 17);

Thomas, 81 Ohio St. 432. Ticor owed a duty to provide Lee a title-commitment letter or similar

document that outlined the state of the title and the extent of the coverage and exceptions thereto

provided by the title-insurance policy. Ticor failed to do so and breached the contract.

The terms and exceptions to the title insurance comprised information that should have

been provided at the closing by C & R and Ticor; these terms were directly pertinent to Lee's

decision to purchase the property as it spoke to the coverage of and exceptions to the title-

insurance policy Lee sought to purchase. Conversely, if at the closing C & R and Ticor neither

knew the state of the title nor the extent of the insurance coverage then C & R and Ticor should

have refused to sell title insurance to Lee because C & R and Ticor could not fully and honestly

disclose the terms that Lee bargained for in purchasing title insurance.

This is not an argument that the parties failed to make an enforceable contract or that

there was not a meeting of the minds. Rather, this matter turns on the fact that Lee paid for a

15

title-insurance policy but Ticor did not give him what he contracted for, i.e. the terms of the

coverage and exceptions thereto, until a month after the closing when it was too late. Lee was

neither verbally informed of coverage or exceptions nor was he given a title-commitment letter

or any similar document that outlined the terms of what he had just bought. It was Ticor's only

obligation under the contract and it failed to perform that obligation.

Further, as a matter of public policy, a material term-here the exception from coverage-

should not be read into the contract when it was not disclosed to the purchaser at the time of the

closing. Lee had no sources but for C & R and Ticor to infonn him of the terms of the title-

insurance policy either verbally or by producing a title-commitment letter. Thus, they should not

be able to assert that the Agreement was excepted from coverage. Their failure to disclose the

terms of the coverage and the exceptions thereto constitute a breach of the contract.

CONCLUSION

Appellant, Victor D. Lee, respectfully requests that the Court reverse the Decision of the

Appellate Court and remand the case for further proceedings as directed by this Court.

Respectfully submitted,

Holzapfel (0012276)M. Frederic (0079401)

he Drew Law Firm Co., LPAOne West Fourth Street, Suite 2400Cincinnati.OH 45202Phone: (513) 621-8210Fax: (513) 621-5444Email: eholzapfel@drewlaw.comCounsel for Appellants,Victor D. Lee

16

CERTIFICATE OF SERVICE

I hereby certify that I served a copy of the foregoing by electronic mail and ordinary U.S.

Umail, postage prepaid, on the of September 2011, upon the following:

Maria Mariano Guthrie, Esq.Sikora Law, LLC685 Front StreetColumbus, OH 43206

COUNSEL FOR APPELLEE,TICOR TITLE INSURANCE CO.

Sean P. Donovan, Esq.Finney Stagnaro Saba & Patterson Co., LPA2623 Erie AvenueCincinnati, OH 45208

COUNSEL FOR APPELLEE,C& R TITLE AGENCY, INC.

196819-1

17

APPENDIX

Exhibit PaRe

A. HSBC Bank, N.A., Trustee v. Victor D. Lee, et aL,Entry Granting Motions to Dismiss Appeal of Appellant, Galina V. LeeFirst Appellate District, Case No. C-100385 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

B. HSBC Bank, N.A., Trustee v. Victor D. Lee, et aL,Judgment EntryFirst Appellate District, Case No. C-100385 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 10

C. HSBC Bank, N.A., Trustee v. Victor D. Lee, et aL,Decision and Entry Affirming Magistrate's DecisionsHamilton County Common Pleas, Case No. A0708861 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

18

IN THE COURT OF APPEAIS

FIRST APPELI.ATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

HSBC BANK, N.A., TRUSTEE,

Plaintiff,vs.

VICTOR D. LEE, et al.,

Defendants/Cross-Claim Plaintiffs/Appellants,

vs.

C&R TITLE AGENCY, INC.

and

TICOR TITLE INSURANCECOMPANY,

Cross-Claim Defendants/Appellees.

APPEAL NO. C-1oo385TRIAL NO. A-o7o8861

ENTRY GRANTING MOTIONSTO DISMISS APPEAL OF APPELLANT,GALINA V. LEE

This cause came on to be considered upon the separate motions of appellees

to dismiss the appeal as to appellant, Galina V. Lee.

The Court finds that the motions are well taken and are granted. This appeal

is hereby dismissed as to appellant, Galina V. Lee. See App.R. 18(C).

It is further ordered that this appeal shall remain open.

To The Clerk:

Enter upon the Journal of the Court on NOV 10 2010 per order of the Court.

By: (Copies sent to all counsel)

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

HSBC BANK, USA, NATIONAL APPEAL NO. C-100385ASSOCIATION AS TRUSTEE, TRIAL NO. A-07o886i

Plaintiff,

vs.

VICTOR D. LEE

and

GALINA V. LEE,

Defendants/Cross-ClaimPlaintiffs-Appellants,

vs.

C&R TITLE AGENCY, INC.,

and

TICOR TITLE INSURANCE CO.,

Cross-Claim Defendants-Appellees,

JUDGMENTENTRY.

vs.

SHARON KOLLASCH SCHLUETER,

Third-Party Defendant.

We consider this appeal on the accelerated calendar, and this judgment entry is

n@t an opinion of the court.1

1 See;S.Ct.R.Rep.Op. 3(A), App.R. 11.1(E), and Loc.R. 11.1.1.

EXHIBIT

6

OHIO FIRST DISTRICT COURT OF APPEALS

This case began when plaintiff HSBC Bank sought to foreclose upon the note

and mortgage defendants-appellees Victor Lee and Galina Lee had executed to

finance their purchase of the property at 39 Dewitt Street from third-party defendant

Sharon Kollasch Schlueter. Lot 39 is one of four adjoining units that share a

common party wall. During the litigation, the Lees filed cross-claims against both

C&R Title Agency and Ticor Title Insurance Company. The Lees alleged that because

they had purchased an owner's title insurance policy from Ticor, Ticor and its agent,

C&R, had a duty at the closing to explain the effect of the party-wall agreement on

the state of the title for the property. They further alleged that Ticor had breached

their owner's title insurance policy (i) by failing to insure against the defect in the

title and/or the unmarketability of the title due to the presence of an agreement for a

common party wall and (2) by failing to pay their costs and attorney fees in

defending against a subsequent lawsuit that had been filed against them as a result of

the party-wall agreement.

The trial court granted summary judgment to C&R and Ticor on the Lees'

cross-claims. The remaining claims in the lawsuit were dismissed. Both Victor and

Galina appealed the trial court's grant of summary judgment on their cross-claims,

but this court has previously dismissed Galina's appeal. As a result, we only address

the assignments of error raised in Victor's appeal.

In his second and third assignments of error, Victor argues that the trial court

erred in granting summary judgment to Ticor and C&R.

We review the trial court's decision on a summary-judgment motion de novo.2

Summary judgment is appropriate when "(1) no genuine issue as to any material fact

= Koos V. Central Ohio Cellular, Inc. (1994), 94 Ohio App.3d 579, 641 N.E.2d 265.

2

OHIO FIRST DISTRICT COURT OF APPEALS

remains to be litigated; (2) the moving party is entitled to judgment as a matter of

law; and (3) it appears from the evidence that reasonable minds can come to but one

conclusion, and viewing such evidence most strongly in favor of the party against

whom the motion for summary judgment is made, the conclusion is adverse to that

party."3

The following facts are undisputed. Kollasch Schlueter gave Victor a copy of

the agreement for the common party wall eight days prior to the closing on 39 and 41

Dewitt Street; Victor was aware that Kollasch Schlueter, in accordance with a right of

first refusal in the agreement for the common party wall, had first offered the

properties to the owners of 37 and 43 Dewitt Street before selling them to him. The

loan originator had hired C&R to perform a title examination of the property for

lending purposes; and Victor, despite his actual awareness of the party-wall

agreement and his prior real estate experience, did not retain independent counsel to

investigate the effect of this agreement on the title to the property prior to the

closing.

Rather, on the day of the closing, Victor told a representative of C&R that he

wanted to purchase an owner's title insurance policy for the property. At the closing,

a representative of C&R gave Victor a packet of documents that included a copy of

the title commitment that had been provided to Victor's lender. Victor testified

during his deposition that he had purchased an owner's title insurance policy for the

property because he had been unsure if the agreement for the common party wall

affected his title to the property, and because he expected by purchasing the title

policy that C&R and Ticor would explain the significance of the party-wall agreement

to him at the closing. Victor further testified that if he had known that the party-wall

3 Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 3r7, 327, 364 N.E.2d 267.

3

OHIO FIRST DISTRICT COURT OF APPEALS

agreement had been excepted from coverage in the title insurance policy, he would

not have purchased the property.

In granting summary judgment to C&R and Ticor on Victor's negligence

claims, the trial court held that Victor's argument that C&R and Ticor had a duty to

explain the effect of the party-wall agreement on the state of the title for the property

was not supported by the law. We agree.

Ohio courts have held that a title insurance company is not an abstractor of

title employed to examine the title.4 Rather, a title insurance company guarantees

the status of the title and insures up to the policy limits against existing defects.5

Here, the record reflects that C&R gave Victor a copy of the title commitment that it

had previously provided to Victor's lender at the closing. That commitment

expressly excepted the party-wall agreement from coverage. Victor, nonetheless,

mailed a check two days after the closing to purchase the policy. Victor subsequently

received the policy, which, in accordance with the commitment, expressly excepted

the party-wall agreement from coverage. Thus, Victor cannot prevail on his assertion

that Ticor had a contractual duty to pay for his defense in the lawsuit pertaining to

the party-wall agreement. Based upon the foregoing, we conclude that C&R and

Ticor were entitled to summary judgment on Victor's cross-claims.

In his first assignment of error, Victor contends that the trial court abused its

discretion in denying his motions to amend his cross-claim against C&R and Ticor to

include claims for fraud and negligent misrepresentation.

But the record reflects that the trial court did not deny Victor the right to

argue his claims for fraud and negligent misrepresentation against C&R and Ticor.

° See Schwartz v. Stewart Title Guaranty Co., 134 Ohio App.3d 6oi, 612-613, 73i N.E.2d 1159.

s Id.

4

OHIO FIRST DISTRICT COURT OF APPEALS

Rather, the trial court in its decision adjudicated those claims on the merits. As a

result, we overrule Victor's first assignment of error.

In his fourth assignment of error, Victor asserts the following: "The presence

of an agreement containing a right of first refusal in the chain of title to the property

constitutes either a defect in the title or renders the property unmarketable." We

decline, however, to address Victor's fourth assignment of error because it does not

seek any relief from this court, as required under Loc.R.16.i(A)(3)(a), but merely

states a proposition of law. Having, therefore, disposed of all Victor's assignments of

error, we affirm the judgment the trial court.

A certified copy of this judgment entry shall constitute the mandate, which shall

be sent to the trial court under App.R. 27. Costs shall be taxed under App.R. 24.

I-IILDEBRANDT, P.J., SUNDERMANN and CuNNINGIIAIVi, JJ.

To the Clerk:

Enter upon the Journal of the Court on July 27, 2011

per order of the CourtPresiding Judge

5

11111111110 COURT OF COMMON PLEASHAMILTON COUNTY, OHIO

HSBC BANK USA, NATIONAL CASE NO. A0708861ASSOCIATION,

Plaintiff,

ENTEREDMAY 2 3 201

ADENNIS S. HELMiCK, Judge

JUDGE DENNIS S. HELMICKj/5 )"/1 c7/u

vs.

ENTEREDVICTOR D LEE et al HON. DENNIS S. HELMICK

MAY 2010 THE CRT ES PURSUANTTONOTICE

VIL

Defendants. ROU LE 58 WHICH SHALL BE TAXEDAS COS I J nencu..

DECISION AND ENTRY AFFIRMING MAGISTRATE'S DECISIONS OFJUNE 18, 2009 AND MARCH 25, 2010

This cause came before the Court uponihe objection of Defendant Victor D. Lee ("Victor")

to the Magistrate's Decision dated March 25, 2010 (the "March Magistrate's Decision") and the

Magistrate's Order dated March 25, 2010 filed on April 8, 2010. 1 The Magistrate's Decision

referenced a prior Magistrate's Decision filed on June 18, 2009 (the "June Magistrate's Decision")

which considered and granted the Motion for Sununary Judgment.filed by Cross-claimant C&R Title

Agency, lrtc. ("C&R Title") against Defendants Victor and Galina Lee. (the "Lees") and the Motion

for Summary Judgment filed by Cross-claimant Ticor Title Insurance Company ("Ticor") against the

Lees.l The June Magistrate's Decision further denied the Lees' Motion for Leave to File a Second

Amended Answer, Counterclaim, and Cross-claim and the Lees' Motion to Stay HSBC's Motion for

Summary Judgment. A hearing on the Objection was held before thi s I Court on May 3, 2010.

Summary judgment is appropriate where: (1) there is no genuine issue of material fact to be

litigated; (2) reasonable minds can come to but one conclusion and thatlconclusion is in favor of the

' On June 18,2009, the Magistrate's Decision was filed, On June 24, 2009, a Request by Defendants, Victor D.Lee and Galina V. Lee for Findings of Fact and Conclusions of Law regarding Magistrate's Decision was filed. Thatsame day, June 24, 2009, a Suggestion of Stay was filed giving notice of the filing of a Voluntary Petition forBankruptcy by Victor Lee in the United States Bankruptcy Court for the Southem District of Ohio on June 23, 2009.

I I

moving party; (3) such that the moving party is entitled to judgment as a matter i f law.2 In deciding

whether to grant a motion for sununary judgment, a court must employ a burd n shifting analysis.

First, the movant must identify evidence which affirmatively demonstrates that the non-movant does

not havc; sufficient evidence to prevail at trial3 If the movant satisfies this initial burden, the burden

then shifts to the non-movant to identify "specif:c facts showing that there is a genuine issue for

trial."4 Therefore, the non-movant must identify disputed facts that n iight affect the outcome of the

suit under the goveming substantive law in order to preclude the entry of suminary judgment.5

The Court has considered the pleadings, the Motions, thelMemoranda, Responses and

Replies, the exhibits, the depositions transcripts, and the arguments of counsh. As against C&R

Title, Victor previously argued that C&R was liable to Victor based upon negligent title examina6on

in failing to "detect an Agreement for Common Party Wall" ("Party Wall Agreement").6 After the

Magistrate's granting of summary judgment in favor of C&R Title, Victor changed his arguments

and argued that no one explained the Party Wall Agreement to him. As against Ticor, Victor argued

(1) negligent performance of a title examination through C&R Title, (2) breach of the Title Insurance

Policy because the Party Wall Agreement constituted a defect in title and rehdered the Property

commonly known as 39 Dewitt Street, Cincinnati, Ohio (the °Property") unmarketable; (3) breach of

the Title Insurance Policy for failing to pay Victor's attorrtey's fees i d defending against the title to

ithe Property.

Upon consideration thereof, the Court finds the objections ofi V ictor are not well-taken, and

this Court hereby AFFIRMS the March Magistrate's Decision, the Ilagistrate's Order, and the June

2 Zivich v. Mentor Soccer Club, Inc. (1998), 82 Ohio St.3d 367, 369-70; Iresher v. B rt (1996), 75 Ohio St.3d

280, 295; Civ. R. 56(C).7

4 Id (emnhasis added),5 Millerv.LoralDefenseSystenis,Akron(1996),109OhioApp.3d379,383(citingAndersonv.LibertyLobby,

Inc. (1986), 477 U.S. 242, 248), appeal not allowed, 76 Ohio St3d 1437.6 See Lees' Answer, Counterclaim and Cross-claim, October 26, 2007, ati 6, 17.

Magistrate's Decision. The Court further notes that Defendant Galin a Lee did not file any objection

to the March Magistrate's Decision and Magistrate's Order. As such, the Court AFFIRMS the

March Magistrate's Decision and the June Magistrate's Decision finds that summary judgment was

appropriately rendered against Defendant Galina Lee.

The Court further finds that Victor was provided a copy of the Party Wall Agreement prior to

the closing on the Property.7 Victor further admits that he had actuil knowledge of the Party Wall

Agreement prior to purchasing the Property. Moreover, the Title Commitment and the Title

Insurance Policy both identified the Party Wall Agreement.$ The Court finds that Victor s argument

that either C&R Title and/or Ticor should have explained the "significance" of the Party Wall

Argument to be unfounded in law and/or fact. Finally, the Court finds that according to the express

exceptions in the Title Insurance Policy, Ticor owed no duty or obligation to Lee to pay for Lee's

defense in the Hamilton County Common Pleas Case No. A05I0964. The existence of the Party

Wall Agreement does not constitute a defect to title and/or render the property unmarketable as

argued by Lee. Therefore, when viewing all of the facts most strongly in Victor's favor, the Court

finds that there exist no genuine issues of material fact for trial. Accordingly, this Court AFFIRMS

the findings of the Magistrate and GRANTS the Motion of C&R Title for Summary Judgment and

the Motion of Ticor for Summary Judgment.

The Court hereby ADOPTS and incorporates the fmdings of fact and conclusions of law set

forth in the March Magistrate's Decision and the June Magistrate's Decision.

7 Deposition of Victor Lee pp. 101-102, 104-111,121-123, 154-155, 157,

(Schedule B - Section II at 9 10).8 /d. See also, Affidavit of Kent Lewis ¶ 4; Exhibit A-2.

70-171,180,192, 252, and 319; Ex. 5

3

IN ACCORDANCE WITH CIVIL RULE 54, THERE IS NO JUST REASON FOR

DELAY AND THIS IS A FINAL APPEALABLE ORDER. ^

The Clerk of Courts is hereby directed, pursuant to Civil Rull 58, to journalize this Decision,

and note such joumalization upon the record and journal of this Court and to serve upon all parties

not in default for failure to appear the notice of the judgment and its date of entry upon the journal.

IT IS SO ORDERED.

JUDGE HELNIICK

Submitted and approved by:

SIKORA LAW LLC

/

Maria Marian G hrie (006A49)685 South Front treetColumbus, Ohio 43206(614) 444-7774 (telephone)(614) 444-7775 (facsimile)mguthrie@sikoralaw.comCounsel for Cross-claim DefendantTicor Title Insuranee Company

KEITH D. WEINER & ASSOCIATES,CO., LPA

/s/ Dean Kanellis (per e-mail auth 5-13-2010)Dean Kanellis (0064069)75 Public Square, 4th FloorCleveland, Ohio 44113(216) 348-6554 (telephone)(216) 771-6540 (facsinule)Counsel for Plaintiff HSBC Bank USA,National Association

DREW & WARD, CO.,L.P.A.

- SUBMITTED - HAS SEENEric C. HolzapfelOne West Fourth Street, Suite 2400

Cincinnati, Oliio 45202(513) 621-8210 (telephone)(513) 621-5444 (facsimile)Counsel for D'efendants Victor D. Leeand Galina V.jLee and Third PartyDefendant Sharon Kollasch-Schlueter akaSharon Kollasch

FINNEY, STAGNARO, SABA &PATTERSONiCO., L.P.A.

i

/s/Sean DonovIan (ner e-mail auth 5-11-2010)

Sean P. Donovan (0069613)2623 Erie AvenueCincinnati, Ohio 45208(513)533-276 (telephone)(513) 533-2715 (facsimile)Counsel for Cross-claim DefendantfThirdparty Plaintiff C&R Title'Agency, Inc

4

t

SUBMITTED-HAS SEENLawrence C. BaronAssistant Prosecuting AttomeyAamilton County Prosecuting Attomey's Office230 East Ninth Street, Suite 4000Cincinnati, Ohio 45202

5