Lawyers Title Co. v. J.G. Cooper
Development, Inc.
Dallas Court of Appeals, No. 05-11-01537-CV (February 10, 2014)
Justices Lang-Miers, Fillmore, and Brown (Opinion)
Dallas Court of Appeals, No. 05-11-01537-CV (February 10, 2014)
Justices Lang-Miers, Fillmore, and Brown (Opinion)
J.G. Cooper deposited $1.8 million into an escrow account for use in a specified real estate acquisition. But the funds were used for a different purpose without Cooper’s permission, apparently as part of a fraudulent scheme. Three individuals were indicted on federal wire-fraud charges in connection with the transaction. Cooper sued those individuals and others involved in the transaction, including Lawyers Title (in whose name the escrow account was held), for conversion, bailment, and money had and received, among other causes of action. Cooper and Lawyers Title filed cross-motions for partial summary judgment on these three claims, and the trial court granted Cooper’s motion and denied Lawyers Title’s motion, and severed the remaining claims and parties. The Court of Appeals, however, reversed, finding that a material fact issue precluded summary judgment for either side.
The primary disputed issue on appeal was whether Lawyers Title controlled the escrow account from which funds were misappropriated. Cooper relied on bank records that showed the escrow account was in Lawyers Title’s name and under its taxpayer ID number, with a number of Lawyers Title employees authorized as signers on the account. Moreover, the escrow agreement was executed by an individual purporting to sign for Lawyers Title, and a Lawyers Title employee “made the entry for the [unauthorized] wire transfer.” Lawyers Title denied that it controlled the escrow account, contending instead that Phillip Hawk, an attorney it used as an independent contractor, controlled the account, and that Hawk did not act as the company’s agent in connection with the unauthorized transfer. Lawyers Title pointed to its agreement with Hawk, which designated him as an agent of Lawyers Title only for the purpose of closing real estate transactions, and required him to maintain the escrow account at issue. An officer of Lawyers Title testified in his deposition that Hawk maintained exclusive access to the account, that Lawyers Title merely approved the account for Hawk’s use, that Hawk was authorized only to issue title insurance for Lawyers Title and not to receive money or make disbursements on behalf of the company, and that the notation of the Lawyers Title employee in connection with the transfer was an accounting “cleanup” made after the fact as a favor to Hawk.
The Court concluded this evidence raised a genuine issue of material fact about whether Lawyers Title exercised control over the escrow account, and this fact issue precluded summary judgment for either party on all the claims at issue. It therefore reversed summary judgment for Cooper and affirmed the denial of Lawyers Title’s motion for summary judgment.
