NOTICE: NOT FOR PUBLICATION. 

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE 

LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

IN THE 

ARIZONA COURT OF APPEALS DIVISION ONE

TOUCH STONE AZ-CENTRAL PROPERTIES, L.L.C., an Arizona limited 

liability company, Plaintiff/Appellant/Cross-Appellee, 

v.

TITLE MANAGEMENT AGENCY OF ARIZONA, L.L.C., an Arizona 

limited liability company; WESTERN SURETY COMPANY, a South 

Dakota corporation, Defendants/Appellees/Cross-Appellants. 

Nos. 1 CA-CV 12-0614, 1 CA-CV 12-0724, 1 CA-CV 12-0782 

 (Consolidated) 

Appeal from the Superior Court in Maricopa County 

No. CV2009-037433 

The Honorable John Rea, Judge 

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED 

COUNSEL 

Curtis Ensign, P.L.L.C., Phoenix 

By Curtis Ensign 

Counsel for Plaintiff/Appellant/Cross-Appellee 

Davis Miles McGuire Gardner, PLLC, Tempe 

By Gregory L. Miles, Julie A. LaFave, Joshua Carden 

Counsel for Defendants/Appellees/Cross-Appellants
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

2 

MEMORANDUM DECISION 

Judge Peter B. Swann delivered the decision of the Court, in which 

Presiding Judge Andrew W. Gould and Judge Jon W. Thompson joined. 

S W A N N, Judge: 

¶1 This appeal involves claims asserted against an escrow agent 

by a plaintiff who purchased property without knowing it was 

encumbered by a deed of trust. The superior court entered summary 

judgment in the escrow agent’s favor on the plaintiff’s claims for breach of 

contract, breach of fiduciary duty, breach of the covenant of good faith 

and fair dealing, and negligence, and the court denied the plaintiff’s 

motion to amend its complaint to allege additional claims. We hold that 

summary judgment on the complaint was proper, but the court erred by 

determining that the plaintiff’s proposed negligent misrepresentation 

claim was futile. We therefore affirm in part, reverse in part, and remand 

for further proceedings. 

FACTS AND PROCEDURAL HISTORY 

¶2 In July 2009, Touch Stone AZ-Central Properties, LLC 

(“Touch Stone”) sought to purchase real property from DYRCZ 

Commercial Venture, LLC (“DYRCZ”). The parties executed an escrow 

employment agreement and escrow instructions (collectively, “the escrow 

contracts”) by which they agreed that Title Management Agency of 

Arizona, LLC (“Title Management”) would act as escrow agent for the 

sale. The escrow instructions set forth the terms of the sale and there was 

no other contract between the buyer and seller. 

¶3 Under the escrow contracts, Title Management was directed 

to disburse Touch Stone’s purchase money to DYRCZ when the terms of 

escrow were complied with and the title insurer, Commonwealth Land 

Title Insurance Company (“Commonwealth”), became willing to issue a 

title insurance policy through Title Management as its agent. 

¶4 Commonwealth, through an employee of Title 

Management’s title department, issued an initial commitment for title 

insurance conditioned on the release of certain liens on the property, 

including a deed of trust held by Northern Trust Bank, N.A. (“Northern 

Trust”). Later, after a trustee’s sale was completed concerning other 
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

3 

properties encumbered by Northern Trust’s deed of trust, the titledepartment employee came to believe that the property Touch Stone 

sought to purchase was not encumbered by the deed of trust after all and 

that no release of lien was necessary. Title Management closed the escrow 

and Commonwealth issued a title insurance policy that did not list 

Northern Trust’s deed of trust as an exception. 

¶5 In fact, the property that Touch Stone purchased was indeed 

encumbered by Northern Trust’s deed of trust, and was sold to Northern 

Trust at a trustee’s sale a few months after Touch Stone acquired it. This 

action followed, with Touch Stone asserting claims against 

Commonwealth and against Title Management and its surety, Western 

Surety Company (collectively, “Title Management”). Touch Stone 

eventually settled its claims against Commonwealth. As against Title 

Management, Touch Stone alleged in its first amended complaint that in 

closing the escrow with Northern Trust’s deed of trust outstanding, Title 

Management breached its contractual duties, breached its fiduciary duties, 

breached the covenant of good faith and fair dealing, and was negligent. 

¶6 Touch Stone and Title Management filed competing motions 

for summary judgment on the contract and negligence claims. The 

superior court denied Touch Stone’s motion and granted Title 

Management’s motion. Touch Stone then sought leave to file a second 

amended complaint that alleged additional forms of breach of fiduciary 

duty and breach of the covenant of good faith and fair dealing, and added 

new counts for negligence and negligent misrepresentation. The court 

denied the motion to amend, finding that the proposed amendments did 

“not add any allegation or claim that would survive the arguments and 

authorities presented in [Title Management’s] Motion for Summary 

Judgment.” Some months after the court denied Touch Stone’s motion to 

amend, Title Management filed a second motion for summary judgment, 

directed at the existing fiduciary duty and good faith and fair dealing 

claims. The court granted Title Management’s motion and dismissed the 

action. 

¶7 Touch Stone appeals the entry of summary judgment and 

the denial of its motion to file the second amended complaint. Title 

Management appeals the denial of its application for attorney’s fees. 
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

4 

DISCUSSION 

I. TOUCH STONE’S APPEAL 

A. Title Management Was Entitled to Summary Judgment on 

the First Amended Complaint. 

¶8 In the first amended complaint, Touch Stone asserted claims 

against Title Management for breach of contract, breach of fiduciary duty, 

breach of the covenant of good faith and fair dealing, and negligence. The 

contract, fiduciary duty, and good faith and fair dealing claims were 

predicated on an alleged breach of requirements expressly or impliedly 

created by the escrow contracts. The negligence claim, by contrast, was 

based on the title-department employee’s mistaken conclusion regarding 

the continuing applicability of Northern Trust’s deed of trust, which in 

turn led to satisfaction of a condition precedent to Title Management’s 

performance under the escrow contracts. We hold that under the 

undisputed material facts, Title Management was entitled to judgment as 

a matter of law on all of the claims set forth in the first amended 

complaint. See Ariz. R. Civ. P. 56(a). 

¶9 Touch Stone contends that Title Management knew the 

transaction was meant to be lien-free because the escrow instructions set 

forth a purchase-price calculation that showed “N/A” and “$ 0.00” next to 

headings styled “encumbrance of record.” Moreover, the escrow officer 

and the employee who acted as Commonwealth’s agent both testified that 

they believed the transfer would be “free and clear.” But the fact that Title 

Management knew that the parties intended a lien-free transfer did not 

transform Title Management from an escrow agent into a title 

investigator, guarantor, or insurer. Nothing in the escrow contracts 

provided or even suggested that Title Management assumed 

responsibility for ensuring that no title defects existed. Under the clear 

and unambiguous terms of the escrow contracts, Title Management’s only 

relevant responsibility was to wait to close the escrow until 

Commonwealth indicated its willingness to issue a policy for title 

insurance. Consistent with its duties as a fiduciary, Title Management 

performed precisely the duties required of it in the escrow contracts. See, 

e.g., Tucson Title Ins. Co. v. D’Ascoli, 94 Ariz. 230, 234, 383 P.2d 119, 121 

(1963). 

¶10 Contrary to Touch Stone’s contentions, the escrow contracts 

did not impliedly require that Title Management clear the title to the 

property. To be sure, Title Management assumed some obligations 
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

5 

beyond the express terms of the escrow contracts. Title Management’s 

fiduciary duties, as well as the implied covenant of good faith and fair 

dealing, required it to act with scrupulous honesty, fairness, skill, and 

diligence. Burkons v. Ticor Title Ins. Co. of Cal., 168 Ariz. 345, 355, 813 P.2d 

710, 720 (1991); D’Ascoli, 94 Ariz. at 234, 383 P.2d at 121-22. For example, 

Title Management was required to disclose known facts that reasonably 

indicated fraud. Burkons, 168 Ariz. at 353, 813 P.2d at 718. And similarly, 

Title Management was required to disclose any substantial title defects of 

which it had knowledge. Cf. Aranki v. RKP Invs., Inc., 194 Ariz. 206, 208-

09, ¶ 9, 979 P.2d 534, 536-37 (App. 1999) (holding that real estate agents’ 

duty of fair dealing required disclosure of known latent defects in home). 

But Title Management was not required to search for fraud or title defects. 

Burkons, 168 Ariz. at 353, 813 P.2d at 718; Aranki, 194 Ariz. at 208-09, ¶ 9, 

979 P.2d at 536-37. It is undisputed that when Title Management closed 

the escrow, it believed the property was unencumbered. We hold that

Title Management acted in conformance with its fiduciary duties and the 

covenant of good faith and fair dealing. 

¶11 Touch Stone argues that Title Management’s belief that the 

property was unencumbered cannot provide a defense to liability because 

its belief arose from a “wrong” that Title Management itself committed. 

The “wrong” to which Touch Stone refers is the conduct described by its 

negligence claim: the title-department employee’s mistaken reassessment 

of Northern Trust’s deed of trust. As a matter of law, the mistake did not 

constitute negligence. Negligence requires the existence of a duty of care. 

Gipson v. Kasey, 214 Ariz. 141, 143, ¶ 9, 150 P.3d 228, 230 (2007). As escrow 

agent, Title Management had no duty to represent the condition of title. 

Further, Title Management assumed no such duty by providing a title 

insurance commitment and policy on Commonwealth’s behalf. A policy 

attached to a commitment’s list of discovered title defects “is not a 

promise that no other exceptions or encumbrances exist[, but is 

instead] . . . a contract under which the insurer agrees to indemnify the 

insured for losses caused by claims arising from encumbrances not 

identified in the insurer’s commitment.” Centennial Dev. Grp., LLC v. 

Lawyer’s Title Ins. Corp., 233 Ariz. 147, 149, ¶ 6, 310 P.3d 23, 25 (App. 2013). 

A title insurance commitment “is not a representation as to the condition 

of title to real property,” A.R.S. § 20-1562(5), and gives rise to “no rights, 

duties, or responsibilities” related to ensuring clear title. Centennial Dev. 

Grp., LLC, 233 Ariz. at 149, ¶ 10, 310 P.3d at 25. 

¶12 None of the claims set forth in Touch Stone’s first amended 

complaint alleged a violation of any duty imposed by contract or by law. 
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

6 

The superior court correctly entered summary judgment for Title 

Management on the first amended complaint. 

B. Touch Stone’s Proposed Second Amended Complaint Was 

Not Entirely Futile. 

¶13 Touch Stone contends that it should have been allowed to 

file its second amended complaint. “Leave to amend shall be freely given 

when justice requires.” Ariz. R. Civ. P. 15(a)(1)(B). Leave to amend 

should be granted when the underlying facts relied upon may be a proper 

subject of relief, and should also generally be granted when the 

amendment merely seeks to add a new legal theory. MacCollum v. 

Perkinson, 185 Ariz. 179, 185, 913 P.2d 1097, 1103 (App. 1996). The court 

may deny amendment, however, if the amendment would be futile. 

Bishop v. State Dep’t of Corr., 172 Ariz. 472, 474-75, 837 P.2d 1207, 1209-10 

(App. 1992). We agree for the most part with the superior court’s 

determination that Touch Stone’s proposed amendments would have 

been futile, but we conclude that its proposed negligent misrepresentation 

claim should have been allowed. 

¶14 As an initial matter, Touch Stone points out that the court’s 

futility finding relied on arguments previously asserted in the summary 

judgment proceedings on the contract and negligence claims, which were 

not claims that Touch Stone sought to amend. Contrary to Touch Stone’s 

suggestion, the court’s reliance on the previous arguments was 

appropriate. All of the claims that Touch Stone asserted shared 

substantial factual and legal similarities. The arguments directed toward 

the previously disposed-of contract and negligence claims were also 

relevant to the court’s consideration of the amendments that Touch Stone 

sought to make to its fiduciary duty and good faith and fair dealing 

claims, and to the new claims that Touch Stone sought to add. 

¶15 With respect to the fiduciary duty and good faith and fair 

dealing claims, Touch Stone sought to allege the following as additional 

examples of breach: “preparing escrow instructions that did not clearly 

indicate or failed to indicate that the parties’ agreement was that the 

Property was to be transferred free and clear of liens,” and “preparing a 

deed that indicated that the Property was to be conveyed subject to all 

encumbrances of record.” Touch Stone also sought to add a new 

negligence claim based on these factual allegations. The court did not err 

by finding that these amendments would be futile. The escrow 

instructions already fairly suggested that the parties intended a lien-free 

transfer, and Title Management had actual knowledge of the parties’ 
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

7 

intention. But Title Management’s knowledge of the transaction’s 

intended result did not create an express or implied obligation to 

investigate and eradicate title defects. Likewise, Title Management was 

obligated neither by contract nor by law to prepare a deed that warranted 

title against encumbrances. 

¶16 Touch Stone also sought to amend the fiduciary duty claim, 

and to add a new claim for negligent misrepresentation, based on alleged 

representations by Title Management. In the proposed negligent 

misrepresentation claim, Touch Stone alleged, in relevant part, that: 

In the course of dealing between [Title Management] and 

Plaintiff, [Title Management], through its duly authorized 

representatives, represented as follows: 

a. that after the foreclosure by Northern Trust, the 

Property was what remained and Northern Trust did 

not have a lien on the Property; and 

 b. that the Property was free and clear of liens. 

Touch Stone also alleged that it relied on these alleged misrepresentations 

to its detriment.

¶17 Title Management contends that the proposed negligent 

misrepresentation claim “clearly targets the title commitment 

representations” and could not be read to refer to any other 

representations made by Title Management. Were that the case, the 

proposed amendment would be futile under Centennial Dev. Grp., LLC, 233 

Ariz. at 149, ¶ 10, 310 P.3d at 25. But we conclude that the claim is not that 

narrow. Nothing in the claim, or in the balance of the proposed second 

amended complaint, limits the alleged misrepresentations to 

representations set forth in a title commitment. Further, we reject Title 

Management’s contention that title-commitment representations were the 

only representations that Touch Stone could have intended to describe. 

As an initial matter, Touch Stone disputed that it ever received an 

amended title commitment misrepresenting the applicability of Northern 

Trust’s deed of trust. Touch Stone also expressly stated in its reply to the 

motion to amend that the proposed negligent misrepresentation claim was 

based on statements made during meetings, and the record includes an 

example of an e-mail communication from Title Management to Touch 

Stone discussing the status of Northern Trust’s deed of trust.
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

8 

¶18 Arizona has adopted the definition of negligent 

misrepresentation set forth in the Restatement (Second) of Torts § 552 

(1977). Mur-Ray Mgmt. Corp. v. Founders Title Co., 169 Ariz. 417, 422, 819 

P.2d 1003, 1008 (App. 1991). Section 552(1) provides that 

[o]ne who, in the course of his business, profession or 

employment, or in any other transaction in which he has a 

pecuniary interest, supplies false information for the 

guidance of others in their business transactions, is subject to 

liability for pecuniary loss caused to them by their justifiable 

reliance upon the information, if he fails to exercise 

reasonable care or competence in obtaining or 

communicating the information. 

Title Management contends that this standard could not be satisfied 

because it was not duty-bound to guide Touch Stone in its business 

transactions. But if Title Management voluntarily represented the 

condition of title, it assumed a duty to use reasonable care to ensure that 

the representation was accurate. See Mur-Ray, 169 Ariz. at 422, 819 P.2d at 

1009 (“[A]lthough Minnesota Title may have had no duty to respond to 

[plaintiff]’s questions [regarding the effect of an assignment], when 

Minnesota Title chose to speak in its capacity as an escrow agent, it 

assumed a duty to use reasonable care when it did speak.”); Ariz. Title Ins. 

& Trust Co. v. O’Malley Lumber Co., 14 Ariz. App. 486, 492, 484 P.2d 639, 

645 (1971) (“Arizona Title had no duty to speak or respond to the [thirdparty] contractors’ inquiries [regarding the amount of available 

construction funds] at all. But if it chose to speak, we think that under all 

of the circumstances its business relationship with the contractors carried 

with it a duty to exercise reasonable care in making representations about 

presently ascertainable facts.”). The superior court’s denial of Touch 

Stone’s motion to amend based on futility was error with respect to the 

negligent misrepresentation claim. The negligent misrepresentation claim 

was facially adequate.1 

II. TITLE MANAGEMENT’S APPEAL 

¶19 We now turn to Title Management’s appeal from the denial 

of its application for attorney’s fees. The superior court denied the 

application as untimely filed. Ariz. R. Civ. P. 54(g)(2) requires that a 

 

1 We express no opinion as to the merits of the claim, or as to the 

nature of any remedy available for the claim. 
TOUCH STONE v. TITLE/WESTERN 

Decision of the Court 

9 

motion for attorney’s fees be filed “within 20 days from the clerk’s mailing 

of a decision on the merits of the case, unless extended by the trial court.” 

Here, Title Management did not move or apply for attorney’s fees until 

more than 20 days after the court filed its minute entry granting summary 

judgment on Touch Stone’s last remaining claims. Title Management 

contends that the minute entry did not trigger the 20-day period 

prescribed by Rule 54(g)(2) because it was not a signed order, and was 

later followed by a signed judgment. This argument confuses a “decision 

on the merits” for purposes of Rule 54(g)(2) with an appealable order. 

Rule 54(g)(2) does not require a signed order, and Ariz. R. Civ. P. 58(g) in 

fact contemplates that claims for attorney’s fees will be decided before a 

final judgment is entered. See also Ariz. R. Civ. P. 54(b), State Bar 

Committee Notes to 1999 Amendments. The superior court correctly 

determined that Title Management’s fee application was untimely, and 

the court had no obligation to grant Title Management an extension of 

time. 

CONCLUSION 

¶20 For the reasons set forth above, we affirm the judgment to 

the extent that it dismissed Touch Stone’s contract, fiduciary duty, good 

faith and fair dealing, and negligence claims. We reverse the judgment to 

the extent that it disallowed Touch Stone’s proposed negligent 

misrepresentation claim, and we remand for further proceedings 

consistent with this decision. We affirm the denial of Title Management’s 

application for attorney’s fees in the superior court. In exercise of our 

discretion, we deny both parties’ requests for attorney’s fees awards on 

appeal.