Mark Boozer, Jerrod Raymond, and Ctmi, LLC v. Ray Fischer and Corporate Tax Management, Inc. N/K/A Ry Fischer & Associates, Inc.

Supreme Court of Texas
══════════
No. 22-0050
══════════

Mark Boozer, Jerrod Raymond, and CTMI, LLC,
Petitioners,

v.

Ray Fischer and Corporate Tax Management, Inc.
n/k/a RY Fischer & Associates, Inc.,
Respondents

═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Second District of Texas
═══════════════════════════════════════

Argued March 22, 2023

JUSTICE YOUNG delivered the opinion of the Court.

As part of a larger settlement agreement, the parties in this case
trusted Wesley Holmes, an attorney representing the owners of CTMI, to
hold about $1 million in escrow. Holmes held those funds in an account
under CTMI’s name—at least, he did so up until he drained the money
from the account and took it for himself. The settlement agreement
provided that Fischer, the party adverse to CTMI and its owners, would
receive those funds if this Court ruled in his favor, as it eventually did.
Only after that ruling did the parties learn of Holmes’s actions. The
bottom-line question is whether CTMI was still required to pay Fischer
or whether CTMI’s payment of the required amounts into the escrow
account discharged its liability. In other words, the outcome of the
parties’ dispute ultimately turns on who bore the risk of loss caused by
the escrow’s failure.
The court of appeals resolved the case by holding that there never
really was an escrow agreement. The court believed that an escrow
holder must be neutral. Holmes—a lawyer on one side of the dispute—
was decidedly not neutral. Placing the funds with him, the court of
appeals accordingly held, could not constitute an escrow. And if Holmes
did not hold the money in escrow, he must have held it in the ordinary
way that lawyers routinely hold client funds. A lawyer’s theft of his
client’s funds, while outrageous and unfortunate, would not satisfy that
client’s contractual obligations to a third party like Fischer. Presumably
based on this logic, the court of appeals ruled for Fischer.
We disagree with the premise of this rationale. Making one side’s
lawyer an escrow holder may seem imprudent, especially in hindsight.
But it is not unlawful. If parties find it sensible and efficient for a non-
neutral party to be an escrow holder, the law does not forbid them from
making that choice. The law only demands clarity. While a non-neutral
individual like one party’s attorney is presumptively not an escrow
holder, the parties’ unmistakable agreement to the contrary will rebut
that presumption. We hold that the parties unambiguously created an
escrow to be held by Holmes until the conclusion of their litigation, at
which point the prevailing party should have received the escrowed funds.
We nonetheless affirm the court of appeals’ judgment. The choice

2
for parties in adversarial litigation to use one party’s attorney as an
escrow holder and to keep the funds in an account opened under that
party’s name will not defeat an escrow if all parties clearly consent, but
that choice remains significant for the risk of loss. When one party agrees
to retain title to property and to allow its attorney (or other fiduciary) to
control the property, that party presumptively retains the risk of loss.
More to the point, the party that lacks title to the escrowed property and
whose lawyer is not the escrow holder cannot be regarded as having
accepted the risk of loss without something more than the existence of
the escrow itself. Express contractual language or necessary implication
from its text is indispensable in this situation. Nothing in these parties’
contractual relationship, however, establishes any such agreement. We
therefore hold that CTMI bore the risk of loss.

I
This is the second time this Court has taken up this case. Our prior
decision described the facts in greater detail, see Fischer v. CTMI, L.L.C.,
479 S.W.3d 231, 233–36 (Tex. 2016), and we provide only a condensed
version relevant to the dispute as it returns to us.
Ray Fischer agreed to sell his tax-consulting business to CTMI, a
business that Mark Boozer and Jerrod Raymond created for the purpose
of receiving the assets of, and then operating, Fischer’s old company. See
id. at 233. Disputes arose; litigation commenced.1 The parties settled in
open court through a Rule 11 agreement. See Tex. R. Civ. P. 11. Their

1Petitioners in this Court are Boozer, Raymond, and CTMI; respondents
are Fischer and his tax-consulting business. We refer to the parties collectively
as “CTMI” and “Fischer,” respectively, unless otherwise indicated.

3
settlement agreement, however, left one claim unresolved: CTMI’s
request for a declaratory judgment regarding Fischer’s entitlement to
revenue for projects begun, but not finished, before he left the company.
See Fischer, 479 S.W.3d at 234–36. This claim was severed from the
remainder of the case, and Fischer ultimately prevailed on it in this
Court. Id. at 244.
The present litigation concerns the aspect of the settlement
agreement that provided for what Fischer would receive if he won in the
prior appeal and the mechanics of how those funds would be handled. At
Fischer’s demand, the parties agreed that the disputed funds would not
stay with CTMI but would “be[] held in escrow.” As revenue from
specified projects came in, 15% of it would, “upon receipt, be paid into an
interest bearing escrow account.” If Fischer won after all appeals were
exhausted, the settlement agreement provided that Fischer “will receive
payment of ” the funds.
But who would hold them in the meantime? One option was to
make Fischer’s attorney the holder of the amounts to be held in escrow.
Fischer’s counsel, however, made clear that he did not want “to be paying
income tax on the interest that accrues on it.” The parties then agreed
that CTMI would place the funds in an account to be controlled by Wesley
Holmes, the attorney for Boozer and Raymond. With the tax question in
mind, they agreed that the account would “be a CTMI account, but” that
they would “have it be controlled by [Holmes].” As Holmes put it, and the
parties agreed, CTMI “will pay the taxes on it, but I’m on the hook.”
After the attorneys hammered out these details in open court, they
emphasized that “it’s agreed by the parties that what is being entered

4
onto the record in this Rule 11 setting, does not contemplate the parties
sitting down and executing any further settlement agreement to be
written or agreed upon. This is to be used as the settlement agreement,
this transcript.” The parties each took the stand and confirmed that they
understood and agreed to these arrangements. The judge then called
the jury back in, gave them the news that the case had settled, and
complimented the lawyers on “some real fine lawyering.”
Little did the judge—or anyone else—know what would come to
pass. At first, all went smoothly. Based on the agreement, Holmes opened
the account in CTMI’s name, but he was the sole signatory and he alone
had authority over the account. The address listed for CTMI was Holmes’s
law office. Over time, as the agreement required, CTMI transferred funds
totaling nearly $1 million—$990,175.66, to be exact. After the court of
appeals ruled for CTMI, this Court granted review and held oral
argument. Only this Court’s decision and mandate were necessary to
determine the final distribution of the money. If we had denied the
petition or affirmed the judgment, Holmes would have been obligated to
return control of the funds to CTMI. If, as in fact happened, we reversed
the judgment, then Holmes’s duty was to pay the funds over to Fischer.
After we ruled for Fischer, he demanded that CTMI pay him the
amounts due. By then, however, Holmes had absconded with the funds,
which came to light only after we announced our decision. In response,
CTMI filed this lawsuit, seeking a declaration that it had fulfilled its
obligations under the settlement agreement. CTMI reasoned that,
because it had paid every dollar of the funds at issue as the escrow
agreement required, it owed nothing further to Fischer. Fischer

5
counterclaimed for breach of contract, arguing that the agreement also
required CTMI to pay him the proceeds.
In three partial summary judgments, the trial court ruled for
CTMI, absolving it of further responsibility. The trial court first held that
CTMI accurately calculated and properly deposited the funds into the
escrow account; second, it concluded that the parties had created an
escrow with Holmes as the sole escrow agent and that Holmes had
converted the funds; and third, the trial court concluded that CTMI had
no further liability to Fischer. Based on these rulings, it rendered a final
judgment in favor of CTMI.2
The court of appeals reversed. 665 S.W.3d 46 (Tex. App.—Fort
Worth 2021). It held that the settlement agreement did not create an
escrow and therefore that CTMI’s failure to pay Fischer the amounts due
was a breach of the settlement agreement. See id. at 55–57. The court
also awarded attorney’s fees to Fischer and remanded for the trial court
to address pre- and post-judgment interest. See id. at 57–59.
CTMI petitioned this Court for review of the court of appeals’
judgment. Like that court’s opinion, the parties’ briefing here focused
primarily on whether the settlement agreement created an escrow.3

2Other parties were involved at the trial court, but on appeal this case
concerns only claims between the CTMI and Fischer parties. Notably, CTMI
and Fischer both asserted claims against Holmes, but they agreed to sever their
claims against him.
3As part of both an “agreed judgment of active suspension” and his plea
agreement after the Dallas County District Attorney initiated prosecution,
Holmes agreed to repay the funds, which he has done. The parties agreed that
Fischer would receive those funds in satisfaction of the settlement agreement
and that those funds would be credited toward any judgment against CTMI.

6
 II
The first question presented by this appeal is whether parties may
form an escrow agreement that selects one party’s attorney to serve as
the escrow holder, even if those parties are actively engaged in litigation
against each other. We conclude that they may.

A
Given how frequent the use of escrow is, and how familiar a
concept it is even to nonlawyers, remarkably few discussions of escrow
appear in this Court’s cases. And despite a myriad of statutory provisions
that refer to escrow or govern aspects of its use in specific contexts,4 the
legislature has not adopted a baseline, generally applicable definition of
the concept.5 For the most part, this dearth of law about escrow’s core

The parties’ dispute still matters for determining attorney’s fees (which, by
their agreement, depend on who prevails in this litigation) as well as pre- and
post-judgment interest. See 665 S.W.3d at 57–59. The amount still in dispute
comes to more than half the amount placed in escrow. See id. at 57–58.
4 Hundreds of statutory references to escrow are spread through various
Texas codes. Many simply refer to escrow as a familiar concept. Others impose
important rules about it in specific contexts. See, e.g., Tex. Ins. Code § 2501.003(4)
(defining “[e]scrow officer” in the title-insurance context); id. §§ 2652.001–.203
(addressing escrow-officer licensing qualifications and describing other escrow
requirements in the title-insurance context); Tex. Prop. Code § 221.002(10)
(defining an “[e]scrow agent” under the Texas Timeshare Act); id. §§ 221.061–
.064 (regulating escrow arrangements in the timeshare context); id. § 82.158
(regulating deposits into escrow made in connection with the purchase of a
condominium unit). Texas agencies’ regulations also sometimes address escrow.
See, e.g., 28 Tex. Admin. Code § 3.1741(g) (detailing requirements for escrow
agreements as well as qualifications for serving as an escrow agent in the context
of life-settlement contracts).
5In our review of Texas statutory and regulatory law, the closest a
provision comes to defining escrow is in a regulatory provision pertaining (and

7
attributes likely reflects that we know what escrow is through frequent
experience. But cases on the margins, like this one, also highlight the
need for a clear, easily administrable definition.
Such a definition is necessary in this case, where the parties have
identified no statute, regulation, or precedent of this Court that directly
governs whether the parties’ arrangement constituted an escrow. We have
found none, either. We therefore articulate and apply a definition of escrow
that draws on available authority to encapsulate our longstanding, though
often implicit, common-law understanding of the concept.6
The concept of escrow originated in the context of land conveyances.
See William A. Ingraham, Jr., Comment, Escrow Agreements, 8 Mia. L.Q.
75, 75–76 (1953). As Blackstone explained, the key distinction between
an immediately effective deed delivered to the party itself and one held
in escrow is that the delivery of the deed held in escrow depends on the
fulfillment of a condition:
A delivery may be either absolute, that is, to the party or
grantee himself; or to a third person, to hold till some
conditions be performed on the part of the grantee: in which
last case it is not delivered as a deed, but as an escrow; that
is, as a scrowl or writing,[7] which is not to take effect as a

limited) to certain franchise-tax reports. It defines escrow as “[a] legal
arrangement whereby an asset is delivered to a third party to be held in trust
or otherwise pending a contingency or the fulfillment of a condition or
conditions in a contract.” 34 Tex. Admin. Code § 3.581(b)(4). This partial
definition applies only in that specific section. See id. § 3.581(b).
6Our general discussion of escrow does not, of course, override any
applicable legislative or regulatory provisions that specifically govern escrow
or impose qualifications for escrow holders in given contexts.
7The word “escrow” derives from the Old French escroe or escroue, which
means a “roll of writings” or “bond.” Escrow, Webster’s New International
Dictionary (1909).

8
 deed till the conditions be performed; and then it is a deed
to all intents and purposes.
2 William Blackstone, Commentaries *307. The applications of an escrow
have since expanded to include other forms of property, such as money or
indeed any type of real or personal property. Charles H. Walker &
William D. Eshee, Jr., The Safeguards and Dilemmas of Escrows, 16 Real
Est. L.J. 45, 49 (1987).
This Court has only infrequently addressed the fundamental
features of an escrow. In an adopted Commission of Appeals opinion
early in the twentieth century, however, we set out the basic nature of
an escrow as a “writing[8] by the grantor, promisor or obligor” deposited
“with a third person not a party thereto” that was “to be kept until the

8 Consistent with escrow’s etymology, see supra note 7, the “writing”
refers not to the escrow agreement but to the escrowed property, which often is a
written legal instrument. See Home Ins. Co. of N.Y. v. Wilson, 275 S.W. 691, 693
(Ky. 1925); Escrow, Black’s Law Dictionary (11th ed. 2019) (defining escrow as
“[a] legal document or property delivered by a promisor to a third party to be held
by the third party for a given amount of time or until the occurrence of a
condition, at which time the third party is to hand over the document or property
to the promisee” (emphases added)). A literal “writing” is, therefore, a subset of
what can be held in escrow; understood in light of the expansion of escrow
beyond the context of deeds, however, it refers to property of any sort. Thus, the
“writing” component does not determine whether escrow agreements can be oral
rather than written. This case, which involves an agreement dictated into the
record, gives us no occasion to resolve whether escrow agreements must always
or sometimes be written. Some Texas courts of appeals and many other states’
high courts have stated that escrow agreements may be either written or oral.
See, e.g., Williams v. Land Title Co. of Dall., No. 05-96-00039-CV, 1997 WL
196345, at *5 (Tex. App.—Dallas Apr. 23, 1997, no writ); Am. State Bank v.
Enabnit, 471 N.W.2d 829, 832 (Iowa 1991). Other Texas courts of appeals,
however, have held that only written escrow agreements are valid. See, e.g.,
JTREO, Inc. v. Hightower & Assocs., Inc., No. 03-19-00255-CV, 2020 WL
3468148, at *2 (Tex. App.—Austin June 18, 2020, pet. denied). We express no
view other than to emphasize that the “writing” component of the definition of
escrow does not answer that question.

9
performance of a condition or the happening of a certain event, then to
be delivered to take effect.” Green v. Priddy, 250 S.W. 656, 660 (Tex.
[Comm’n Op.] 1923) (internal quotation omitted).
We also glean insights from other cases from this Court that
reference escrow. First, to create an escrow, the parties must agree to
do so. See City of Fort Worth v. Pippen, 439 S.W.2d 660, 664 (Tex. 1969);
Pickle v. Whitaker, 224 S.W.2d 741, 745 (Tex. Civ. App.—El Paso 1949,
writ ref’d); Tyler Bldg. & Loan Ass’n v. Biard & Scales, 171 S.W. 1122,
1122–23, 1125 (Tex. 1914).9 This is because of the fundamental
principle that an escrow holder owes fiduciary obligations to both
parties, not just one.10 See Pippen, 439 S.W.2d at 664. Second, the

9 In Tyler Building & Loan, Dallas real-estate agents acted on behalf of
the Tyler Building & Loan Association in selling thousands of acres in East
Texas in exchange for general dry goods from a company in Kansas City. See
171 S.W. at 1122–23. Tyler Building & Loan authorized the agents to proceed
with the closing and delivered the deeds to the agents for safekeeping, which
were to be delivered once Tyler Building & Loan inspected the goods. See id. at
1123. The agents had deceived Tyler Building & Loan about the nature of the
goods, however, and took the fast train to Kansas City to deliver the deeds to the
buyer before an inspector could examine the goods. See id. Other issues in the
case made it unnecessary to determine whether the agents were holding the
deeds in escrow, but the Court briefly noted that they were not. Id. at 1125. In
a separate writing, Chief Justice Brown identified two reasons that there was
no escrow: first, there was no agreement between Tyler Building & Loan and the
Kansas City dry-goods company that the deeds be held in escrow; and second,
the deeds were deposited with Tyler Building & Loan’s agents. See Tyler Bldg.
& Loan Ass’n v. Biard & Scales, 171 S.W. 1200, 1200 (Tex. 1915) (Brown, C.J.,
concurring in overruling of reh’g). The Court’s observation and Chief Justice
Brown’s comments are fully consistent with the principle we expressly articulate
today: that, as a default, property placed with one party’s agent is not held in
escrow unless the parties clearly agree to the contrary.
10The escrow holder, of course, must also agree, precisely because of the
fiduciary obligation that is entailed. We agree with the Washington Supreme

10
escrowed property leaves the depositor’s control through the duration of
the escrow. See Pickle, 224 S.W.2d at 745.
These principles yield the following basic common-law elements
of an escrow:
• a deposit of property (which could be a legal instrument such as
a deed or contract)
• upon an agreement by the parties
• with a third party, who will owe fiduciary obligations to both
parties for purposes of the property held in escrow
• who will hold that property outside of the depositor’s control
and
• who will deliver that property to the other party upon the
performance of a certain condition or the happening of a certain
event, or otherwise will relinquish the property.
Escrow arrangements that satisfy these requirements can come in all
shapes and sizes.11 Compare Harris v. Rowe, 593 S.W.2d 303, 304–05
(Tex. 1979) (two-page escrow agreement), with Martin Operating P’ship
v. QEP Marine Fuel Inv., LLC, 525 S.W.3d 712, 726 (Tex. App.—Houston
[14th Dist.] 2017, no pet.) (thirteen-page, single-spaced escrow agreement).
Our point is not that slapdash or abbreviated escrow agreements—

Court’s statement that “it is essential to the constitution of an escrow, not only
that the grantor and the grantee are at one as to the conditions under which the
deposit is to be made, but that such conditions should be communicated to the
depositary.” Lechner v. Halling, 216 P.2d 179, 185 (Wash. 1950). Any escrow
agreement by the parties cannot be complete, therefore, until the escrow holder
is also involved.
11See, e.g., David Cook, James “Drew” Neill & Jarratt Watkins, State
Bar of Texas, TXCLE Choice, Governance, & Acquisition of Entities ch. 4-II, § 1.1
n.7 (2022) (noting in the context of the purchase of LLC membership interests
that escrow agreements “can range widely in length and scope”).

11
even those that satisfy the requirements listed above—are wise or
desirable. Our concern today is only to identify the minimum common-
law requirements for forming an escrow, not to advocate for any
particular choice that parties may make. Written agreements that
clearly articulate their terms and the escrow holder’s duties remain the
gold standard, especially to avoid doubts about the inevitable
contingencies that surround escrow. The clearer an agreement is about
exactly what should happen under any given set of circumstances, the
better. And as with any other contract, failure to include an essential
term—a term “parties would reasonably regard as vitally important” to
the bargain—renders the contract unenforceable. Fischer, 479 S.W.3d
at 237 (internal quotation omitted).

B
To determine whether these parties created an escrow, we look to
the parties’ intent as expressed by the terms of their agreement. See
Green, 250 S.W. at 660; URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763
(Tex. 2018). As usual when construing agreements, no magic words are
necessary, but the words the parties used in their agreement—especially
the word “escrow” itself—are the clearest indicators of that shared intent.
While not dispositive or sufficient, “the use of the word ‘escrow’ . . .
indicates more clearly than any other their actual intention.” Lechner v.
Halling, 216 P.2d 179, 185 (Wash. 1950). This principle is merely a
manifestation of our general approach to contracts. See, e.g., URI, 543
S.W.3d at 764 (noting that we “presume parties intend what the words of
their contract say” (internal quotation omitted)). We also look to whether
the agreement fits the basic elements of an escrow. As with other

12
contracts, we may look to the objective circumstances of the escrow
agreement’s execution and the property’s deposit as appropriate to help
elucidate (but not to inject ambiguity into) the agreement’s text. See
Green, 250 S.W. at 660; see also URI, 543 S.W.3d at 758 (noting that
appropriate context can include “objectively determinable facts and
circumstances that contextualize the parties’ transaction”); Harris, 593
S.W.2d at 306 (noting, in the context of construing an escrow agreement,
that courts “consider the wording of the instrument, in the light of
surrounding circumstances”).
In this case, the words the parties chose and the structure of their
transaction both demonstrate that they created an escrow. The
agreement repeatedly used the word “escrow” to describe the
arrangement. It stated that the funds would “be paid into an interest
bearing escrow account” and “be[] held in escrow,” with the funds being
placed in the “escrow account” of either Holmes or Fischer’s attorney. The
parties expressly agreed that the transcription of the hearing would itself
constitute the text of the agreement.
In addition, the agreement’s substance satisfies the fundamental
requisites of an escrow. The parties agreed that CTMI would place
control of the funds with a third party—Holmes—who agreed to
safeguard the funds as a fiduciary for both parties in accordance with the
parties’ agreement. The agreement expressly stated that those funds
were to be “controlled by” Holmes alone, not CTMI. And most importantly,
the parties and Holmes agreed that Holmes would hold the money until
the fulfillment of the escrow condition: the judicial resolution, upon the
exhaustion of all appellate avenues, of the parties’ contractual dispute.

13
Fischer would then “receive payment” if the courts resolved the dispute
in his favor. The attorneys for all parties and the parties themselves
agreed to this arrangement; Holmes accepted his duty, too. CTMI then
deposited the funds into the account, completing the steps necessary to
create an escrow.
All the indicia of an escrow were present and the parties
denominated it as such, so we cannot credit Fischer’s post hoc
characterization of their use of that term as merely casual or colloquial.
To the contrary, it cannot have been an offhand way of describing a mere
trust account with IOLTA funds—the reason for Holmes to serve as the
escrow agent was because the account would generate taxable interest
and tedious filings, which Fischer’s counsel did not want to pay or
manage. Fischer continued to describe the arrangement as an “escrow”
long after the open-court agreement—including in formal briefs filed in
this Court. Those briefs described the arrangement as an escrow; we
accepted that description and used it in our opinion. See Fischer, 479
S.W.3d at 236. Only when it became inconvenient was the escrow label
disclaimed. Our point is not that Fischer is “bound” by that usage in the
briefs—our prior decision did not turn on whether it was an escrow.
Rather, the repeated use of “escrow,” combined with the substantive
characteristics of an escrow, illustrate that it was an escrow as a matter
of law.

C
Fischer also argues, however, that the law does not authorize
parties to choose an escrow holder who is not a neutral third party. In
support of this proposition, Fischer cites several lower-court opinions

14
stating that the escrow holder must be a “neutral third party” or
“stranger” and cannot be the agent of one of the parties.12 If Fischer is
right, the arrangement in this case would not be a legally permissible
escrow regardless of the parties’ intent because Holmes was neither
neutral nor a stranger to the transaction. He was Boozer and Raymond’s
attorney and was engaged in active litigation against Fischer.
Fischer is correct up to a point, but it is an important point: when
one party’s attorney holds funds, the law will presume that the parties
have not created an escrow. As discussed above, one fundamental feature
of an escrow is that the escrow holder owes fiduciary duties to both
parties, not just one. Ordinarily, however, an attorney owes fiduciary
duties to—and serves as an agent for—his own client, not an adverse
party. Presumptively, therefore, when a party gives his attorney funds
to hold, the attorney holds those funds as his client’s agent. See Pickle,
224 S.W.2d at 745.
The cases Fischer cites reflect this understanding of an attorney’s
usual role. None of them addresses the question of whether a party’s
attorney may serve as the escrow holder when, up front, the parties
clearly agree to that role. The cited cases do one of two things. Several
look backward in time to retrospectively determine whether an
arrangement that lacked a clearly expressed intent was in fact an
escrow—and, of course, no escrow could be created under such

12See, e.g., Williams, 1997 WL 196345, at *5; Bell v. Safeco Title Ins. Co.,
830 S.W.2d 157, 160–61 (Tex. App.—Dallas 1992, writ denied); Campbell v.
Barber, 272 S.W.2d 750, 753 (Tex. Civ. App.—Fort Worth 1954, writ ref’d n.r.e.);
Bradley v. Howell, 126 S.W.2d 547, 564 (Tex. Civ. App.—Fort Worth 1939, writ
dism’d judgm’t cor.); Smith v. Daniel, 288 S.W. 528, 531 (Tex. Civ. App.—
Beaumont 1926, writ dism’d w.o.j.).

15
circumstances.13 Others simply use the “neutral third party” wording or
similar language when accurately explaining the typical characteristics
of an escrow—and we reaffirm today that having a “neutral” or a
“stranger” is the norm.14 These cases are not binding on us and we
express no view on them other than to confirm this basic point, which we
think emerges from them and many others: as a default, a lawyer or other
agent for one side will be deemed not to have been an escrow holder
without clear evidence that the parties (and the attorney) agreed up front
that the attorney would not merely hold funds but do so as the parties’
escrow holder.
As with other default rules, parties are free to contract around
this one, even if doing so creates odd or inadvisable results. See Rosetta
Res. Operating, LP v. Martin, 645 S.W.3d 212, 220 (Tex. 2022); Endeavor
Energy Res., L.P. v. Energen Res. Corp., 615 S.W.3d 144, 153 (Tex. 2020).
This contractual freedom is especially applicable when the parties involved
are sophisticated, well-counseled, and not subject to domination by the
other side. See Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 58 (Tex. 2008).
Our conclusion is consistent with longstanding precedent from
other states’ high courts, which recognize that one party’s attorney or
agent may serve as the escrow holder as long as doing so presents no
conflict with the client’s interests.15 It is likewise consistent with the

13See Williams, 1997 WL 196345, at *5, *8–9; Bradley, 126 S.W.2d at
564–65; Smith, 288 S.W. at 531.
14 See Campbell, 272 S.W.2d at 753; Bell, 830 S.W.2d at 160–61.
15See, e.g., Progressive Iron Works Realty Corp. v. E. Milling Co., 150
A.2d 760, 762 (Me. 1959); see also Johnson v. Exclusive Props. Unltd., 720 A.2d
568, 573 (Me. 1998) (noting that “the agent of an obligor or obligee may become

16
Restatement, which clearly contemplates that lawyers representing one
side in a dispute may serve as an escrow holder for both sides: “the
arrangement under which the lawyer receives property of a third person
of adverse interest—for example, an escrow arrangement—can imply that
the client and third person have agreed that the lawyer is to protect the
third person’s interests.” Restatement (Third) of the Law Governing
Lawyers § 44 cmt. h (emphases added). Neither the Restatement nor
other states’ courts are binding on us, of course, but they confirm that our
understanding is based on shared and noncontroversial common-law
premises.
Finally, and important to both the bar and the public, our
recognition of the parties’ contractual authority to choose one side’s
lawyer as an escrow holder is also consistent with our Rules of
Professional Conduct. The rules state that an attorney may serve as an
“escrow” holder in connection with a representation and must uphold the
standards of a fiduciary. See Tex. Disciplinary R. Prof’l Conduct 1.14(a)
& cmt. 1. Comment 4 further suggests that, when a lawyer serves as an
escrow holder, it normally is as part of a representation. It notes that
“even” when a lawyer happens to be an escrow holder aside from a
representation, the normal fiduciary responsibilities of lawyers still fully
apply: “For example, a lawyer who serves as an escrow agent is governed

an escrow agent if acting in an individual capacity and where it would not be
antagonistic to the principal’s interest”); Henry v. Hutchins, 178 N.W. 807, 809
(Minn. 1920) (noting that one party’s agent may be the escrow holder and that
such an agent becomes the agent of both parties); Kelly v. Chinich, 108 A. 372,
374 (N.J. 1919) (noting that a principal’s attorney is not prevented from acting
as escrow holder if that role is “not antagonistic to his principal’s interests” and
that, by becoming an escrow holder, the attorney “becomes the agent of both
parties for the purposes of the escrow” (internal quotations omitted)).

17
by the applicable law relating to fiduciaries even though the lawyer does
not render legal services in the transaction.” Id. R. 1.14 cmt. 4 (emphasis
added).
Attorneys understand that when they agree to serve as an escrow
holder, they take on fiduciary duties to both parties for the limited
purpose of the escrow agreement. This Court has noted that fiduciaries
who handle the funds of others owe duties of loyalty, of full disclosure,
and “to exercise a high degree of care to conserve the money and pay it
only to those persons entitled to receive it.” Pippen, 439 S.W.2d at 665.
Our courts of appeals have properly understood an escrow agent to owe
these duties to all parties to an escrow agreement. See, e.g., Williams v.
Land Title Co. of Dall., No. 05-96-00039-CV, 1997 WL 196345, at *5
(Tex. App.—Dallas Apr. 23, 1997, no writ); Trahan v. Lone Star Title Co.
of El Paso, Inc., 247 S.W.3d 269, 287 (Tex. App.—El Paso 2007, pet.
denied).16 An attorney should be well-equipped to comply with the high
fiduciary duties of an escrow holder. Those duties do not generate a
conflict in a context like this one, where an agreed-upon objective
standard governs the distribution of funds and where the attorney
acknowledges himself to be “on the hook,” rather than merely acting for
his client.17

16 We otherwise express no opinion on whether these cases were rightly
decided.
17 If the attorney’s fiduciary duties as an escrow holder do happen to come
into conflict with his ethical duties as one party’s attorney, the attorney can and
must take the appropriate steps required by legal ethics rules. See, e.g.,
Progressive Iron Works, 150 A.2d at 762 (noting that the attorney serving as
escrow holder “very properly and promptly withdrew” from representing the
defendant once a conflict of interest developed).

18
 D
Finally, Fischer argues that the arrangement was not an escrow
because CTMI was the owner of the escrow account and was responsible
for the taxes due on the interest generated by the account. In contrast,
CTMI points out that Holmes was the account’s sole signatory and that
his law-office address, not CTMI’s address, was listed on the account.
We agree with CTMI. As we described above, what matters for the
creation of an escrow is not formal ownership but control. See, e.g., Pickle,
224 S.W.2d at 745 (“In an escrow the paper passes out of the control of
the maker.”). Escrow agreements generally do not require or even
contemplate the transfer of legal title from one of the parties until the
occurrence of a triggering event, upon which the escrow holder must
distribute the property according to the agreement’s terms. See Cowden
v. Broderick & Calvert, 114 S.W.2d 1166, 1169 (Tex. 1938) (“[L]egal title
did not pass to the lessee until the conditions of the escrow agreement
were satisfied . . . .”); Bell v. Rudd, 191 S.W.2d 841, 843 (Tex. 1946) (“As
[the escrow] agent[, the bank] was to deliver the instruments according
to the terms of the escrow agreement and not otherwise.”).
After all, parties usually need an escrow because one of them has
property that is subject to dispute or that they wish to transfer under
specified conditions. Exclusive control over the property by a third-
party escrow holder (and no one else, regardless of formal title) is often
essential for a transaction to proceed smoothly. Ownership will
eventually change—but only if the stated contingency occurs.
The fact that the account was under CTMI’s name is certainly not
irrelevant to the creation of the escrow, however (or, as we discuss below,

19
to the risk-of-loss analysis). To the contrary, if all we knew was that the
funds were held in a CTMI account, we would agree that there was no
escrow. But we would reach that conclusion because account owners
ordinarily can control their own accounts. The control element remains
central, so once the parties agreed to an arrangement in which Holmes
would exclusively control the funds in the account—that is, an
arrangement dividing control and ownership—the impediment to such an
account being held in escrow evaporated.
Once CTMI placed the funds into the escrow account, it could not
direct Holmes regarding what to do with them.18 Holmes alone controlled
the funds, which is why he was able to abscond with them. Had this Court
either denied the petition for review or affirmed the judgment in the
parties’ first appeal, Holmes’s conduct would have been to CTMI’s (and
his own clients’) detriment. Holmes’s conduct likewise harmed CTMI and
his own clients even though the Court ruled for Fischer: by draining the
account, Holmes depleted the funds that CTMI had intended to be set
aside for compliance with the settlement agreement. That conduct
caused CTMI serious legal problems, as CTMI sought to hold Holmes
accountable and to defend against Fischer’s demand for payment.
The court of appeals reasoned that understanding the parties’
agreement to constitute an escrow agreement would render three terms
of the agreement “meaningless”: (1) the parties’ choice to place the funds
in a CTMI-owned account; (2) the parties’ choice to have CTMI pay taxes

18 See, e.g., Restatement (Third) of Agency § 8.09 cmt. d (“Prior to the
occurrence or nonoccurrence of the specified event, an escrow holder is not an
agent as defined in § 1.01 because the holder does not assent to acting subject
to the control of the parties to the escrow contract.”).

20
on the account; and (3) the parties’ agreement that Fischer “will receive”
payment of the funds. See 665 S.W.3d at 56–57. As discussed above, the
first two reasons do not prevent the agreement from creating an escrow.
And the fact that Fischer did not receive payment cannot make the “will
receive payment” term meaningless—it simply means that the escrow
failed, as could happen in any context.
Accordingly, that the account was held in CTMI’s name did not
defeat the parties’ effort to create an escrow.

* * *
The parties in this case referred to their arrangement as an escrow.
They instituted a condition upon which Fischer would be entitled to the
funds held by Holmes: a final judicial determination that the contractual
provision at issue was enforceable. They agreed that Holmes would
control the funds. They were sophisticated parties already engaged in
litigation with each other. Their attorneys hammered out the details and
CTMI deposited the funds in the designated account. We hold, therefore,
that they created an escrow.

III
CTMI has sufficiently rebutted the presumption against the
creation of an escrow when one party’s attorney holds funds and title
remains formally vested in that party. The successful creation of an
escrow, in turn, generates various consequences. For example, because
Holmes was an escrow holder, he owed fiduciary duties to CTMI and
Fischer, not just his own clients. His status as an escrow holder subjected
him to personal liability from all sides; the account’s status as an escrow
made it an escrow for all general purposes. None of this, however, is

21
material to the resolution of this appeal. Rather, the question is whether
the successful creation of an escrow in this unusual context affects CTMI’s
obligation to Fischer with respect to the disputed amounts. We thus
address whether, by entering into or fully complying with the escrow
agreement, CTMI shifted the risk of loss to Fischer.
The parties have not pointed us to—nor are we aware of—any
statutory risk-of-loss rules that apply here, even though the legislature
has adopted risk-of-loss rules in other contexts. Nor has this Court
adopted a common-law risk-of-loss rule relating to the failure of escrow
that would apply when the escrow agreement itself is silent on this issue.
Fischer argues that we should do so now by adopting the
“entitlement rule” for determining how and when risk of loss shifts in
the escrow context. We decline to reach that question here, however, for
several reasons. The court of appeals did not address it; the parties only
lightly raise it in their briefing; the experience of many of our sister
states reflects the host of complicated questions that we would have to
answer before doing so (or refusing to do so); and, most importantly, we
can resolve this dispute without proceeding to consideration of the
entitlement rule, which we therefore may reserve for future cases.
Today’s dispute, in other words, does not require us to develop any
general principles that broadly apply to escrow as opposed to other kinds
of arrangements. Instead, whether such general rules exist, and whatever
they are, we conclude that the principle discussed in Part II also applies
here: when parties involved in active litigation agree for one party’s
attorney (or, as applicable here, an attorney on one side of the litigation)
to serve as escrow holder, and when that party agrees to retain title to

22
the property in escrow, that party must bear the risk of loss unless the
parties clearly indicate a contrary contractual intent. The parties did not
displace that presumption here. CTMI rather than Fischer therefore
bears the risk of loss occasioned by Holmes’s misconduct.
We begin by explaining why we decline to establish a general risk-
of-loss rule that would apply to all escrow arrangements. We then turn
to how we resolve the parties’ dispute on narrower grounds.

A
Texas has not adopted or rejected the “entitlement rule,”19 which
is a general escrow risk-of-loss rule that Fischer suggests. Jurisdictions
that have adopted it in the escrow context describe it this way: “If
property in the custody of an escrow holder is either embezzled or lost by
it, then as between the seller and the buyer, the loss falls on the one who
owns the said property at the time of the embezzlement or loss.” Schmidt
v. Fitzsimmons, 226 P.2d 304, 306 (Or. 1951). Whether to join those
jurisdictions should await a case in which that question is fully presented
and aired.
For one thing, criticism of that doctrine,20 including in the

19 Fischer’s briefing cites only one case, Norman v. Wilson, 41 S.W.2d
331 (Tex. Civ. App.—Austin 1931, writ ref’d), as authority for the proposition
that this Court has adopted the “entitlement rule.” Whatever the merits of the
entitlement rule (we reiterate that we take no position on it), Norman does not
establish its applicability. That case stands only for the familiar proposition
that, for real-estate transactions in which a conveyance is placed in escrow,
title does not pass until the conveyance is delivered. See id. at 331. Norman
does not address who bears the risk of loss in the escrow context, whether
because escrow fails or for any other reason.
20 See Robert L. Flores, A Comparison of the Rules and Rationales for

23
Restatement,21 warrants consideration not only from this Court but from
the lower courts, parties to escrow-related litigation, and amici. Likewise,
how far to take the entitlement rule is an important and nonbinary
question, even in jurisdictions that have applied it. They often have done
so in contexts highly distinct from this one, most commonly involving
real-estate transactions or some other purchase of property. See, e.g.,

Allocating Risks Arising in Realty Sales Using Executory Sale Contracts and
Escrows, 59 Mo. L. Rev. 307, 357 (1994) (“It is . . . implausible to apply a notion
of unilateral ownership for money deposited in escrow. The usual result of the
entitlement rule as applied to deed and money escrows is to impose loss on the
buyer who has deposited money, on the theory that the depositor has retained
ownership until the escrow closes. However, the defining characteristic of an
escrow arrangement is that the depositor must ‘part with “dominion and control”
over the deposited funds.’ In fact, the depositing buyer retains only a limited
right to demand return of the money if the sale fails.” (footnote omitted) (quoting
Mark C. Young, Escrow Agreements, Bridges Across Troubled Closings, 58 Wis.
Bar Bull. 29, 29 (1985))); id. at 363 (“[The entitlement rule’s] reliance on the
untenable theories of sole ownership and unilateral agency leads to significant
difficulties in application, substantially reducing their functioning as bright
lines. [It] require[s] precise determinations as to the points at which losses
occur, and the points at which ownership or agency are said to shift from one
party to another.”); Ingraham, supra, at 79 (“[I]t would seem that since both
parties choose the escrow holder, it might be more equitable to divide the loss.”);
Roger K. Garrison, Comment, Agency and Escrow, 26 Wash. L. Rev. 46, 47 (1951)
(“The argument is strong that after the performance of all the conditions the
seller owns the money, but it is not so clear that the buyer owns it prior to the
performance of the conditions, for he has lost some of the usual incidents of
ownership, e.g., right to possession and control. He has only the right to obtain
the performance of the seller and the possibility that the seller may default and
permit the buyer to demand return of the money.”).
21 Restatement (Second) of Agency § 14D Reporter’s Notes (1958) (“There
is not joint ownership, it is true, but one has lost control and, until the specified
event happens, the other has not gained control. Unless a court believes itself
foreclosed by a previous decision of its own, it is suggested that it should direct
a division of the loss in accordance with basic equitable principles.”). We note
this proposed approach not to endorse it (or any of the others) but simply to
illustrate how commentators have attempted to approach the difficult issue of
escrow loss in a manner consistent with the fundamental nature of an escrow.

24
Foster v. Elswick, 4 S.W.2d 946, 946–47 (Ark. 1928); Schmidt, 226 P.2d
at 305–07; Paul v. Kennedy, 102 A.2d 158, 158–59 (Pa. 1954); Stuart v.
Clarke, 619 A.2d 1199, 1199–1200 (D.C. 1993). And even in the real-
estate context, how the rule is applied can vary depending on the type of
escrow. See Bixby Ranch Co. v. United States, 35 Fed. Cl. 674, 679–80
(1996) (distinguishing between deed-and-money escrows and “set-aside”
escrows).
Even when the rule applies in a given context, it has its exceptions.
Some courts, for example, depart from the rule when one party is more
at fault than the other (such as when one party unreasonably delays
fulfilling the escrow condition), see Foster, 4 S.W.2d at 947, or when “the
depositor would not be entitled to the return of the subject matter under
any circumstances, irrespective of performance of the terms of the
agreement,” Cradock v. Cooper, 123 So. 2d 256, 258 (Fla. Dist. Ct. App.
1960).
In particular, some courts have departed from the rule when it was
more equitable to place the risk of loss on the seller as opposed to the
buyer, based at least in part on the principle that “where one of two
innocent persons must suffer from the wrongful act of a third, the loss
should be borne by him who put the wrongdoer in a position of trust and
confidence[.]” Paul, 102 A.2d at 160 (internal quotation omitted) (placing
the loss on the seller because the escrow holder was acting primarily as
the seller’s agent and the seller had not performed his obligations before
the embezzlement); see also, e.g., Jones v. Lally, 511 So. 2d 1014, 1016
(Fla. Dist. Ct. App. 1987) (placing the loss on the sellers because they
agreed to receive an ordinary check from the escrow holder instead of the

25
cash or equivalent to which they were entitled and failed to properly
endorse the check, making them “best able to avert the loss and . . . the
least innocent”). Some commentators have suggested that when neither
party is more to blame, the logic of an escrow requires that they share the
risk of loss—after all, an escrow holder is a joint fiduciary rather than a
fiduciary for only one party.22
We cannot adopt the entitlement rule, or refuse to adopt it, without
taking these pivot points into account. In an escrow, are both parties
equally defrauded by the escrow holder, such that they should share the
loss? Should the structure of this escrow transaction be informative, as
described above, such that the rule that might apply in a deed-and-money
escrow would not necessarily apply in other types of escrow? Are there
other helpful analogies from related areas of the law that may be
important in understanding how to allocate escrow loss in various
contexts? In short, when the parties’ agreement is otherwise silent on
this issue, how does the existence of an escrow affect the question of who
bears the risk of loss?
We note these issues not to express any view on how courts should
resolve them, nor to suggest that they are the correct (much less

22 See Flores, supra note 20, at 337 (“Commentators have argued that loss-
sharing should be a remedy available in cases of escrow loss when the parties are
equally at fault, and even when they are equally without fault.”); Garrison, supra
note 20, at 53 (noting that, if parties to the escrow are viewed as co-owners of the
escrowed property, “the practical effect of an escrow holder absconding before the
conditions of the escrow had been completely performed would be to split the
loss between the parties to the transaction”); Restatement (Second) of Agency
§ 14D Reporter’s Notes (“A much more equitable result would be a division of
the loss where this is due to the fault of the escrow holder since he holds the
property as the fiduciary of both the others.”); see also supra notes 20–21.

26
exclusive) questions to ask, but only to illustrate why we decline to adopt
a general principle applicable to all escrows today. As the experience of
other states demonstrates, risk of loss is not geared toward a one-size-
fits-all solution. That principle is also reflected in the legislative fine-
tuning of risk-of-loss rules in other contexts.23

* * *
Allocating the risk of loss in the escrow context appears to be a
question of first impression in Texas. Given how widespread the use of
escrow is—and how many different types of escrow agreements exist—
it is to be expected that many in the academy, bar, and industry will
have helpful views if and when Texas courts must address this question
outside the narrow context presented today.

B
We finally turn to the resolution of this case. The court of appeals’
judgment was premised in part on its mistaken conclusion that no escrow
had been created. CTMI therefore requests that we remand to the court

23 See Tex. Prop. Code § 5.007(b), (c) (governing real-estate transactions
and stating that, unless the other party was at fault or the property is taken
by eminent domain, the seller bears the risk of loss if neither legal title nor
possession of the property has yet been transferred, but the buyer bears the
risk of loss once either legal title or possession transfers); Tex. Bus. & Com.
Code § 2.509(a)–(c) (governing the sale of goods and establishing specific rules
that depend on whether goods are to be shipped by carrier (and, within this
category, whether goods are to be delivered to a particular destination),
whether goods are held by a bailee without being moved, and whether the
seller is a merchant); id. § 2A.219 (governing leases of goods). The Uniform
Commercial Code’s comments for the provision regarding the sale of goods
state that “[t]he underlying theory of these sections on risk of loss is the
adoption of the contractual approach rather than an arbitrary shifting of the
risk with the ‘property’ in the goods.” Id. § 2.509 cmt. 1.

27
of appeals to address the risk-of-loss issue in the first instance.
CTMI is correct that we could exercise our discretion, as we often
do, to remand for further proceedings in light of our holding on escrow.24
We would do so if we believed that addressing the entitlement rule was
necessary, for example. “As a court of last resort, it is not our ordinary
practice to be the first forum to resolve novel questions, particularly ones
of widespread import. . . . Rather, this Court’s preferred process is to
decline to address and defer such questions until after complete vetting
of the parties’ potential arguments in the lower courts.” In re Troy S. Poe
Tr., 646 S.W.3d 771, 780 (Tex. 2022) (internal quotation omitted). The
terms of the parties’ settlement and this case’s specific circumstances,
however, allow us to narrowly resolve this dispute while leaving
consideration of the “entitlement rule” for another day. A remand is
therefore unnecessary.
We begin with how the parties’ relationship should have unfolded.
As we concluded in Part II, the parties’ agreement established an escrow
in which Holmes agreed to serve as the escrow holder. 25 The parties
agreed that CTMI was to pay Fischer the disputed funds if he won on
appeal, and they set up a specific mechanism for how the payment process
would work. This required CTMI to deposit the funds into the account

24See, e.g., Tex. R. App. P. 60.2(d); Wal-Mart Stores, Inc. v. Xerox State
& Loc. Sols., Inc., 663 S.W.3d 569, 582 (Tex. 2023); City of Fort Worth v. Rylie,
602 S.W.3d 459, 469 (Tex. 2020); Wasson Ints., Ltd. v. City of Jacksonville, 489
S.W.3d 427, 439 (Tex. 2016); Venture Cotton Coop. v. Freeman, 435 S.W.3d 222,
233–34 (Tex. 2014).
25Not only did Holmes negotiate the agreement and volunteer for that
duty, but he proceeded to implement the agreement by creating the escrow
account and holding the funds.

28
controlled by Holmes, which it indisputably did. Holmes was then to
distribute those funds once the escrow condition was fulfilled.
Of course, things did not work out that way. As escrow holder,
Holmes became liable for those funds. See Norman v. Wilson, 41 S.W.2d
331, 332 (Tex. Civ. App.—Austin 1931, writ ref’d). The question here,
however, is not whether Holmes was, as he himself put it, “on the hook.”
He was. The question is whether CTMI was also liable for those funds
when they went missing, even though CTMI had completed the steps for
fulfilling its part of the payment process.26
To answer that question, we turn to the parties’ agreement in this
specific set of circumstances. Risk of loss is generally a matter better
allocated by contract than left for courts to determine from common-law
principles. Cf. LAN/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234,
240 (Tex. 2014) (“Risks of economic loss tend to be especially well suited
to allocation by contract.” (quoting Restatement (Third) of Torts: Liability
for Economic Harm § 1 cmt. c (Tentative Draft No. 1))). This is
particularly true when, as in this case, the parties are sophisticated and
well-counseled, having had “a full chance to consider how to manage the
risks involved,” such as by “making a contract that assigns the risk of loss
to someone else.” Id. at 240–41 (quoting Restatement (Third) of Torts:
Liability for Economic Harm § 1 cmt. c (Tentative Draft No. 1)). One
would especially expect clarity when—as here—sophisticated parties
already in adversarial litigation with each other create a settlement
agreement for the purpose of facilitating the resolution of that litigation.

26Cf. Tex. Bus. & Com. Code § 2.509 (titled “Risk of Loss in the Absence
of Breach”).

29
 The parties illustrated their ability to speak with clarity even in
the odd circumstance of a settlement agreement read into the record in
open court. To create the escrow in the first place, they sufficiently
displaced the presumptions that one side’s attorney will not be an escrow
holder and that a party controls the funds held in its account. Given the
importance of clarity in escrows managed by one side’s attorney over
property held in that party’s (or side’s) name when the parties are in the
midst of adversarial litigation, however, we hold that the creation of an
escrow alone is insufficient to also shift the risk-of-loss principles
underlying the parties’ joint contractual obligations to each other.
This holding governs the risk of loss here. Because an attorney
representing CTMI’s owners was the escrow holder and CTMI continued
to own the funds, the risk of loss presumptively lies with CTMI. The
purpose of default rules like this one is “to effectuate [parties’]
agreements” and “to enforce them consistently and predictably so that
parties may write their agreements knowing how courts will interpret
them.” Richards v. State Farm Lloyds, 597 S.W.3d 492, 500 (Tex. 2020).
Parties may freely depart from applicable default rules by including
contractual terms in their agreements that clearly rebut the
presumption, either expressly or by necessary implication. See, e.g.,
Perthuis v. Baylor Miraca Genetics Lab’ys, LLC, 645 S.W.3d 228, 237
(Tex. 2022).
Nothing in this agreement, however, rebuts the presumption.
None of its express language gives Fischer recourse exclusively to
whatever is held in escrow. Nor does the settlement agreement explicitly
state that Fischer bears the risk of loss. And although CTMI joined in

30
the creation of an escrow, which ceded control to Holmes, it did not, for
example, transfer the funds to Fischer or to an account owned by Holmes.
It agreed to (and perhaps found it in its interest to) keep the funds in its
own name. The agreement’s terms and structure are in no way
inconsistent with the default rule.
To the contrary, the objective indicia that might be relevant to a
risk-of-loss analysis in this case corroborate that CTMI continued to bear
the risk of loss: the funds were controlled by Holmes, not Fischer’s
attorney; CTMI agreed for the funds to be held in an account under its
name, not Fischer’s or even Holmes’s; CTMI acknowledged its ownership
of and responsibility for the account by agreeing to have it held in its
name and to pay the taxes on the interest it generated; and, at the time
the funds went missing, CTMI still had a legal (though contingent) right
to those funds, which would remain CTMI’s unless and until this Court
reversed the prior judgment in CTMI’s favor. It is true that CTMI
properly divested itself of control of the account; otherwise no escrow
could exist. But CTMI’s nominal ownership of the account, backed by the
fact that CTMI had prevailed in the court of appeals when Holmes
absconded with the funds, and CTMI’s special relationship with, access
to, and confidence in Holmes (an attorney for CTMI’s owners) are
circumstances that gave CTMI, as compared to Fischer, a far greater
ability and incentive to monitor the escrow.
We acknowledge CTMI’s emphasis that the agreement’s language
stated that Holmes would be “on the hook.” True enough—that placed
the risk of loss on Holmes. Of course it did: an escrow holder’s liability to
both parties is an essential feature of an escrow, as we have discussed at

31
some length above. Holmes’s statement was a truism; it confirmed his
acceptance of his own role, which was necessary for the escrow’s very
creation. But at least in the context of this case, such a truism, by itself,
does not also clearly take CTMI off the hook. Said differently, Holmes’s
liability under the escrow agreement does not terminate CTMI’s liability
under the settlement agreement.
We express no opinion about whether a different outcome might
follow if the escrow holder had been a true neutral, or if the escrowed
property had not been held in CTMI’s name, or both. But because both
features were present, and because nothing rebutted the resulting
presumption that CTMI also retained the risk of loss, we therefore hold
that CTMI remained liable to Fischer.

IV
For the foregoing reasons, we disagree with the court of appeals’
rationale but agree with its disposition. We affirm its judgment and we
remand the case to the trial court to address pre- and post-judgment
interest.

Evan A. Young
Justice

OPINION DELIVERED: June 30, 2023

32