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First Am. Title Ins. Co. v. DJ Mortg., LLC

Court of Appeals of Georgia

July 14, 2014


Title insurance. Fulton Superior Court. Before Judge Lee.

Coles Barton, Thomas M. Barton, Aaron P. M. Tady, for appellant.

Clark Caskey, John C. Clark, for appellee.

PHIPPS, Chief Judge. Ellington, P. J., concurs. McMillian, J., concurs in judgment only.


Page 812

Phipps, Chief Judge.

After DJ Mortgage, LLC (" DJ Mortgage" ) asserted claims under numerous title insurance policies issued by First American Title Insurance Company (" First American" ), First American filed a complaint seeking a declaration that DJ Mortgage's claims were excluded from coverage under the policies. DJ Mortgage, which counterclaimed for breach of contract, bad faith, and attorney fees, filed a motion for partial summary judgment on the issue of First American's liability under the policies. First American filed a cross-motion for summary judgment. The trial court entered an order granting DJ Mortgage's motion for partial summary judgment and denying First American's motion

Page 813

for summary judgment. First American appeals from this order. For the reasons set forth below, we affirm in part and reverse in part.

It is well established that " summary judgment is appropriate when the moving party can show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law." [1] A defendant may meet this burden when " the documents, affidavits, depositions and other evidence in the record reveal that there is no evidence sufficient to create a jury issue on at least one essential element of the plaintiff's case." [2] If the moving party meets this burden, " the nonmoving party cannot rest on its pleadings, but must point to specific evidence giving rise to a triable issue." [3]

The evidence shows that in 2007, Twelve Oaks JV, LLC (" Twelve Oaks" ) contracted to sell 14 units (the " Units" ) in a Riverdale, Georgia condominium complex to Darius Ashlock (" Ashlock" ). DJ Mortgage agreed to extend purchase money loans to Ashlock to buy the Units. The sales were closed in March and April 2007 (the " 2007 Closings" ), and DJ Mortgage was represented at those closings by attorney Jackson Jones, and his law firm, Morris, Hardwick & Schneider. DJ [328 Ga.App. 250] Mortgage did not have a corporate representative physically present at the 2007 Closings.

Jones deposed that he had received instructions from David Dick, who " ran DJ [Mortgage]," to withhold $10,000 from the proceeds of each loan.[4] In light of the withholdings, Twelve Oaks's representative requested that Jones draft security deeds to memorialize the withheld amounts and then demanded that Twelve Oaks " be placed in the first position on those $10,000 mortgages." According to Jones, he telephoned Dick, who, although initially unwilling, ultimately agreed to allow Twelve Oaks " to be placed in the first lien position." First American admits, however, that it remains a disputed issue of fact whether Jones advised Dick that DJ Mortgage's loans would not be filed in the first-priority position.

Jones further testified that " the biggest reason" Dick consented to Twelve Oaks's demand was that " we would get at closing an agreement by [Twelve Oaks] that it would not be paid off unless DJ Mortgage was paid off." Jones assessed that such an agreement would " essentially ... place DJ [Mortgage] in the first position." According to Jones, he prepared a short document, which was then signed by a representative of Twelve Oaks, to the effect that " Twelve Oaks would not be paid off on any of their mortgages until DJ [Mortgage] is paid off." However, neither an original nor a copy of the alleged side agreement was produced by Jones or a party to the transaction, nor is it shown to be referenced in any other document. Twelve Oaks denies that such an agreement was ever made, signed or otherwise. Rather, Twelve Oaks's closing representative deposed that his understanding was that Twelve Oaks " had a first of $10,000" such that it would be " paid $10,000 before anybody on all those units."

It is undisputed, however, that as part of the 2007 Closings, DJ Mortgage held back $10,000 per unit, or $140,000 in total, from the loan proceeds. Ashlock also executed 14 security deeds to Twelve Oaks (the " Twelve Oaks Security Deeds" ), each secured by a Unit, and each in the amount of $10,000. By special stipulation in each of the purchase contracts, Ashlock and Twelve Oaks agreed: " Seller to be in 1st position with lender for an amount of $10,000." Jones then recorded the Twelve Oaks Security Deeds first, ...

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