Doss & Associates v. First American Title Insurance
325 Ga. App. 448
| Ga. Ct. App. | 2013Background
- Stillwater (lender) made a $4.75M loan to Cohutta Water; Steve Carroll guaranteed and granted a security deed on seven tracts. BB&T held a prior first lien on one 48.2-acre tract.
- At closing, Doss (closing attorney/title agent) and First American (title insurer) handled documentation; Stillwater’s counsel requested an escrow agreement and first-position lien on all tracts.
- Cohutta defaulted; Carroll filed bankruptcy; BB&T foreclosed on the 48.2-acre tract (highest bid ~$1M). Stillwater foreclosed on the remaining tracts and obtained title to tracts valued at ~$5.6M.
- Stillwater sued Doss and First American: claims included breach of an oral escrow agreement (against Doss), coverage and bad-faith refusal to pay (against First American), and Doss faced First American’s cross-claim for contractual indemnity under an agency/indemnity agreement.
- Trial court rulings: partial summary judgment for First American on indemnity against Doss; denied summary judgment to First American on policy liability and bad-faith claims; granted summary judgment for Doss on the oral escrow claim. Appeals followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence/enforceability of an oral escrow agreement between Stillwater and Doss | Stillwater: parties agreed on final escrow terms by email/drafts and funded loan — conduct manifested assent despite lack of executed signature | Doss: no signed agreement; Doss interpreted emails as abandoning the escrow requirement; no meeting of minds | Reversed: genuine issues of material fact on assent; summary judgment for Doss on escrow claim vacated (issue for factfinder) |
| Insurer liability under title policy for loss from lack of first-position lien | Stillwater: policy ambiguous; insurer liable for monetary loss (including accrued interest) measured by diminution in value of insured estate (difference between value as insured and value subject to encumbrance) | First American: policy limits and reduction clauses eliminate liability (foreclosure proceeds from other tracts exceed unpaid principal) | Affirmed in part: Section 7(a)(ii) held too indefinite to enforce as written; insurer not entitled to summary judgment because liability exists under alternative Section 7 provisions (not zero) |
| Calculation of insurer’s liability and whether insurer’s liability is zero given foreclosure proceeds | First American: foreclosure proceeds ($5.6M) reduce unpaid principal ($4.75M) below zero → no liability | Stillwater: policy language supports coverage; Section 7(a)(iii) permits recovery of difference in value; ambiguity construes against insurer | Court: could not sensibly apply Section 7(a)(ii) formula as written (indefinite); but Section 7(a)(iii) supports that some liability (>0) exists — denial of insurer’s summary judgment affirmed on coverage issue |
| Bad-faith claim under OCGA § 33-4-6 (penalty for refusal to pay) | Stillwater: insurer refused to pay and demand was timely; seeks penalty and fees | First American: demand was premature or deficient; Stillwater didn’t disclose critical facts (it had foreclosed on other tracts and obtained proceeds) and insurer had reasonable grounds to delay/decline | Reversed: summary judgment for First American on bad-faith claim granted — Stillwater’s pre-suit demand was defective (didn’t fix loss or disclose foreclosure proceeds), so bad-faith penalty unavailable |
| Doss’ contractual indemnity to First American under agency agreement | First American: indemnity clause requires Doss to indemnify for “all loss, cost or damage” caused by agent’s failures (including failure to list or except BB&T lien) | Doss: indemnity ruling premature; indemnity should not be triggered absent judgment; indemnity shouldn’t cover insurer’s bad faith exposure | Affirmed: indemnity clause obligates Doss to indemnify First American for insurer’s liability (excluding attorneys’ fees because clause did not expressly state attorney fees) |
| Recoverability of attorney fees under indemnity clause | First American: phrase “all loss, cost or damage” includes attorney fees; seeks summary judgment to recover fees from Doss | Doss/Stillwater: Georgia requires express contractual provision to recover attorney fees; general language insufficient | Affirmed: indemnity clause does not expressly provide for attorney fees; trial court correctly denied summary judgment to First American for attorney fees |
Key Cases Cited
- Turner Broadcasting Sys. v. McDavid, 303 Ga. App. 593 (explains objective theory of mutual assent and use of extrinsic evidence)
- Terry Hunt Constr. v. AON Risk Servs., 272 Ga. App. 547 (assent may be given other than by signatures; course of dealing can create issues of fact)
- Brooks Peanut Co. v. Great S. Peanut, 322 Ga. App. 801 (formal written agreement may be condition precedent depending on parties’ intent)
- Jimenez v. Chicago Title Ins. Co., 310 Ga. App. 9 (measure of title-insurance damages: difference in value of property with and without encumbrance)
- State Farm Mut. Auto. Ins. Co. v. Staton, 286 Ga. 23 (insurance policies construed as layperson would read; ambiguities construed against insurer)
- Lavoi Corp. v. Nat. Fire Ins. Co., 293 Ga. App. 142 (bad-faith demand must be made when immediate payment is due)
- Balboa Life & Cas. v. Home Builders Fin., 304 Ga. App. 478 (foreclosure proceeds are a recognized method to determine insured’s monetary loss)