Anderson v. Preferred Title & Guaranty Agency, Inc.
2014 Ohio 518
Ohio Ct. App.2014Background
- Anderson, a real-estate facilitator, alleges title/closing agents (Preferred Title, employee Barley, VP Farkas) and underwriter Stewart Title prepared HUD-1 statements that mischaracterized his business debts as second mortgages in three closings.
- Those HUD-1 errors contributed to funds flowing to Anderson, which he accepted and retained; Anderson was later criminally prosecuted and convicted for related fraud, receiving a 15-year sentence and $1M+ restitution.
- Anderson sued for negligence, misrepresentation, fraud, and intentional infliction of emotional distress, seeking damages; he moved for summary judgment and sought $12M.
- Preferred Title and Farkas moved for summary judgment, arguing clerical error, reliance on documents provided by Anderson, and invoking the unclean-hands doctrine; Stewart Title moved for summary judgment denying direct involvement and contesting vicarious or contract liability.
- The trial court denied Anderson’s SJ motion and granted appellees’ motions, holding Anderson’s criminal acts were the proximate cause of his injuries and applying unclean hands; Anderson appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability of Preferred Title/Farkas for HUD-1 errors | Barley (Preferred employee) and Farkas caused the wrongful HUD-1 entries that led to Anderson's prosecution, so they are civilly liable | Errors were clerical; Anderson supplied documents; Anderson's criminal acts broke causation; unclean hands bars relief | Court: Preferred Title and Farkas entitled to SJ — Anderson's acceptance/retention of funds and criminal conduct break proximate causation; claims barred by unclean hands |
| Liability of Stewart Title (vicarious/agency) | Stewart is vicariously liable as principal/underwriter and had privity or implied contract with Anderson | Stewart had no direct role, no communications with Anderson; vicarious liability fails if agent not liable; no contract pleadings or record support | Court: Stewart entitled to SJ — no direct involvement, no agent liability to impute, and no contract claim in record |
| Anderson's motion for summary judgment | No genuine issue of material fact; appellees admitted the HUD-1 errors, so Anderson should prevail as a matter of law | Appellees point to intervening criminal acts, lack of foreseeability, and legal defenses (unclean hands) | Court: Denied Anderson's SJ — his criminal conduct was the proximate cause and legal bar to recovery |
Key Cases Cited
- State ex rel. Grady v. State Emp. Relations Bd., 78 Ohio St.3d 181 (1997) (summary judgment standard)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (moving party's burden under Civ.R. 56)
- Vahila v. Hall, 77 Ohio St.3d 421 (1997) (summary judgment and evidentiary requirements)
- Comer v. Risko, 106 Ohio St.3d 185 (2005) (no vicarious liability if agent not liable)
- Bilicic v. Brake, 64 Ohio App.3d 304 (11th Dist. 1989) (proximate cause and intervening acts)
- Taylor v. Webster, 12 Ohio St.2d 53 (1967) (foreseeability and intervening criminal act doctrine)
- Feichtner v. Ohio Dept. of Transp., 114 Ohio App.3d 346 (10th Dist. 1996) (criminal intervening act severs proximate causation)