2020 Ohio 4056
Ohio Ct. App.2020Background
- Johnson obtained an $815,581 construction loan from KeyBank; KeyBank's written closing instructions required deleting standard exceptions (including mechanic’s lien exceptions) from the title commitment/policy and required that "all documents are to be executed exactly as typed." U.S. Title acted as closing/escrow agent and Chicago Title was the underwriter.
- An owner’s title policy dated June 2, 2010 (issued to Johnson) included standard exclusions: (1) matters created or assumed by the insured and (2) matters attaching or created subsequent to the policy date; it also contained the standard mechanic’s-lien exception. KeyBank’s lender’s policy did not contain the mechanic’s-lien exception.
- Contractor Berns began work June 14, 2010, was later terminated by Johnson, and recorded a mechanic’s lien on October 29, 2010. Berns obtained an arbitration judgment against Johnson; the lien remained until it expired in 2016.
- Johnson sued U.S. Title and Chicago Title for breach of contract, negligence, breach of fiduciary duty, and bad faith; after multiple summary-judgment motions and appeals (including a 2017 remand by this court finding genuine issues of material fact), a bifurcated jury trial was held in July 2018.
- At trial the jury found (inter alia) no lien or encumbrance existed as of June 2, 2010, and that U.S. Title followed written closing instructions; the trial court granted a directed verdict for U.S. Title on negligence and later dismissed bad-faith as a matter of law; the court denied Johnson’s motion for a new trial. The court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prior appellate opinion created law of the case binding the trial court | Johnson: the 2017 remand established legal mandates (coverage for mechanic’s-lien losses, need for Berns’s consent signature, fiduciary/agent duties, third‑party beneficiary status) that the trial court had to follow | Appellees: the 2017 opinion merely found genuine issues of fact under summary‑judgment standards, not new legal rulings | Court: most of Johnson’s contentions were factual issues on remand, not binding law; only standing as third‑party beneficiary was decided but any inconsistent evidence was harmless given jury findings; assignment overruled |
| Whether directed verdict on negligence was improper | Johnson: U.S. Title negligently failed to procure a policy without the mechanic’s‑lien exception and failed to obtain Berns’s signature on the consent clause, causing his damages | U.S. Title: even if the mechanic’s‑lien exception had been removed, owner’s policy excludes post‑policy liens and insured‑created matters; closing‑protection coverage only covers loss of settlement funds and required following written instructions (which were followed) | Court: directed verdict proper—Johnson failed to show breach proximately caused recoverable damages because Berns’s lien was recorded after the policy date and exclusions applied; closing protection did not cover his claimed losses |
| Whether bifurcation of bad‑faith claim (liability and punitive phase) was improper | Johnson: trial court improperly bifurcated the entirety of bad‑faith rather than only punitive‑damages evidence | Appellees: bifurcation proper under R.C. 2315.21(B) and Civ.R. 42(B); motion was unopposed | Court: bifurcation lawful and within discretion; trial court complied with statute and rule; assignment overruled |
| Whether trial management (time limits, exclusion of evidence and portions of Horejs video, jury interrogatories) or judicial conduct required a new trial for bias or error | Johnson: time limits, exclusion of arbitration and insurer‑communications evidence, struck portions of Horejs deposition, and judge’s interruptions/remarks prejudiced him and demonstrated bias | Appellees: trial court has broad discretion to control proceedings; excluded evidence was irrelevant or cumulative; interrogatories were determinative and based on trial evidence; judge’s interruptions were routine case management | Court: no abuse of discretion; exclusions were not prejudicial or were harmless; interrogatories were proper; remarks/interruptions did not show disqualifying bias — assignments overruled |
Key Cases Cited
- Nolan v. Nolan, 11 Ohio St.3d 1 (establishes scope and purpose of the law‑of‑the‑case doctrine)
- Hawley v. Ritley, 35 Ohio St.3d 157 (trial courts must follow appellate mandates on remand when same facts and issues recur)
- Hubbard ex rel. Creed v. Sauline, 74 Ohio St.3d 402 (legal findings on reversal of summary judgment can create law of the case)
- Strother v. Hutchinson, 67 Ohio St.2d 282 (standard that court must not weigh evidence or judge credibility when ruling on directed verdict)
- Ruta v. Breckenridge‑Remy Co., 69 Ohio St.2d 66 (directed‑verdict standard—substantial competent evidence requirement)
- Liteky v. United States, 510 U.S. 540 (judicial remarks during trial ordinarily do not establish bias unless they reveal deep‑seated favoritism or antagonism)