JPMorgan Chase Bank, N.A. v. First American Title Insurance
750 F.3d 573
| 6th Cir. | 2014Background
- First American underwrote title insurance and CPL; Patriot was its Michigan agent issuing commitments and CPL for a WaMu loan to Truong in 2007.
- Truong transaction funded WaMu’s loan of $4,543,593.07 with WaMu’s mortgage on the Bellerive property; Saylor fraudulently diverted funds.
- FDIC became WaMu’s receiver after WaMu failed in Sept. 2008 and entered a Purchase & Assumption Agreement with Chase, with Schedule 3.5 listing assets not purchased.
- CPL language granted WaMu (and successors) indemnity for losses arising from closing agent fraud; FDIC stepped into WaMu’s rights when it took over WaMu’s assets.
- FDIC intervened in Chase v. First American for breach of CPL; after summary judgment on liability, a jury awarded the FDIC $2,263,510.78 for damages; post-trial Rule 60(b) motion and related appeals followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FDIC may bring a CPL breach claim independent of the title policy | First American: CPL cannot be sued separately from the related title policy | FDIC: CPL is an independent indemnity and FDIC has WaMu’s rights | Yes; CPL claim independent; FDIC has standing under WaMu’s rights |
| Whether FDIC had prudential standing to challenge the P&A Agreement interpretation | First American contends FDIC lacked standing to rely on P&A terms | FDIC and Chase agree FDIC retained the CPL claim; federal law governs choice-of-law issue | District court did not err; First American lacks standing to challenge the contract interpretation |
| Whether the PX7 spreadsheet was properly admitted as a business record and its use supported damages | PX7 lacked proper certification and trustworthiness | PX7 satisfies 902(11) and 803(6) as business record; deference to district court | Yes; PX7 properly admitted; supports FDIC’s actual losses |
| Whether pre-complaint interest should have been determined by the jury or court | Discretion to judge; error to submit to jury | Under Michigan law, liquidated damages allow jury to determine pre-complaint interest | Jury could determine pre-complaint interest; damages considered liquidated under Michigan law |
| Whether the Rule 60(b)(2) relief motion was properly denied | Newly discovered evidence warrants relief | Evidence non-controlling; would not change outcome | No abuse of discretion; denial affirmed |
Key Cases Cited
- New Freedom Mortgage Corp. v. Globe Mortgage Corp., 761 N.W.2d 832 (Mich. Ct. App. 2008) (CPLs independent of title policies; coverage distinct risks)
- Bergin Fin., Inc. v. First Am. Title Co., 397 F. App’x 119 (6th Cir. 2010) (CPL breach action separate from title policy; underwriter liability)
- Deutsche Bank National Trust Co. v. FDIC, 717 F.3d 189 (D.C. Cir. 2013) (prudential standing; intervenors lack standing to enforce contract terms)
- Jones v. Jackson Nat’l Life Ins. Co., 819 F. Supp. 1382 (W.D. Mich. 1993) (pre-judgment interest as liquidated damages under state law)
- Jack Henry & Assocs. v. BSC, Inc., 487 F. App’x 246 (6th Cir. 2012) (pre-claim interest treated under state law in diversity)