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BECKER v. CHICAGO TITLE INSURANCE COMPANY

February 4, 2004.

JULIE A. BECKER, et al.
v.
CHICAGO TITLE INSURANCE COMPANY, et al



The opinion of the court was delivered by: MICHAEL BAYLSON, District Judge

MEMORANDUM

Plaintiffs allege overcharging of notary fees in connection with real estate transactions. Presently before this Court are three motions by Defendants. Defendants First American Title Company and Olde City Abstract, Inc. have filed a Motion to Sever. Defendants First American Title Company, Olde City Abstract, Inc., Fidelity National Title Insurance Company, Fidelity National Title Insurance of New York, and Chicago Title Insurance Company have brought a Motion to Strike and all Defendants have brought a Motion to Dismiss. For the reasons that follow, the Motion to Sever will be granted, the Motions to Strike and Dismiss will each be granted in part and denied in part, and Plaintiffs will be given leave to file an amended complaint.

I. Factual and Procedural Background

  Plaintiffs in this case are individuals who, between June 15, 2001 and December 16, 2002, participated in real estate closings at which they paid fees for notary services. Plaintiffs allege that Defendants overcharged them for notary fees incurred at these real estate closings, in violation of the fee schedule of permissible notary charges set forth in the Pennsylvania Notary Page 2 Public Law, 57 P.S. § 147, et seq. ("Notary Public Law").*fn1 It is alleged that Defendants not only overlooked, but also encouraged, title clerks to overcharge consumers for notary fees at real estate closings. Defendants are corporations who were either the title underwriters for the policies issued in these transactions, or the title agents in these transactions, acting as agents for one of the title underwriters. No plaintiff is alleged to have engaged in a transaction involving more than one title agent or more than one title underwriter, so that each plaintiff is discretely connected with one pair of Defendants in this case, as indicated below: Page 3

 
Plaintiff Defendant Defendant Notary Settlement Title insurer Title agent charge Date
Julie Decker Conestoga Title Insurance ABCO-Abstracting $20.00 Sept. 4, Co. Company 2002
Michael and Stewart Title Insurance Aracor Search & Abstract $25.00 Oct. 25, Sharon Blimm Services, Inc. 2001
Joan and Paul Commonwealth Land Title Savings Abstract Co. $25.00 Nov. 28, Donahue Insurance Co. 2001
Jacquelyne Commonwealth Land Title Savings Abstract Co. $25.00 Feb. 27, Shines Insurance Co. 2002
Walter McCall Lawyers Title Insurance Abstract Professionals, $20.00 June 15, Co. Ltd. 2001
Kevin and Fidelity National Title Realty Land Transfer, LLC $25.00 August 28, Kirsten Small Insurance Co. 2002
Margaret E. Chicago Title Insurance Statewide Abstract Group, $6.00 May 28, Hildebrandt Co. Inc. 2002
Christine First American Title Olde City Abstract, Inc. $30.00 Dec. 16, Burke Insurance Co. 2002
Darryl Smith Fidelity National Title Weichert Closing Services, $25.00 May 8, Insurance of New York Inc. 2002
Plaintiffs' Amended Complaint raises the following claims:
Count One: Violation of the Real Estate Settlement Procedures Act ("RESPA") 12U.S.C. § 2603. et seq.
Count Two: Breach of Settlement Agreement (against only Chicago Title Insurance, Lawyers Title Insurance and Commonwealth Land Title Insurance Company)
Count Three: Negligent Supervision
Count Four: Civil Conspiracy
Count Five: Violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1 et seq. ("UTPCPL")
Count Six: Unjust Enrichment
  Plaintiffs filed their original Complaint on April 14, 2003. Defendants filed a Motion to Dismiss on July 23, 2003. Plaintiffs filed their Amended Complaint on September 4, 2003. All Page 4 Defendants filed a Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on September 30, 2003 and Defendants First American Title Insurance Company and Olde City Abstract, Inc. filed a Motion to Sever and a Motion to Strike on September 30, 2003. Defendants Fidelity National Title Insurance of New York, Fidelity National Title Insurance Company, and Chicago Title Insurance Company joined the Motion to Strike on October 14, 2003. Briefing was completed by the parties on October 30, 2003. The Court held oral argument on all pending motions on January 22, 2004.

  This Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331, as Plaintiffs raise a claim under RESPA, 12 U.S.C. § 2603 et seq., which states "Any action pursuant to the provisions of section 6, 8, or 9 [12 U.S.C. § 2605, 2607, or 2608] may be brought in the United States district court or in any other court of competent jurisdiction, for the district in which the property involved is located, or where the violation is alleged to have occurred." 12 U.S.C. § 2614 (2003). Venue is proper as the transactions in question occurred in the Eastern District of Pennsylvania.

 II. Parties

  Both the Motion to Sever and the subject matter jurisdiction issue in the Motion to Dismiss implicate which parties will be allowed to continue in this Court. Thus, for efficiency's sake, the Court will first dispose of those issues.

 A. Motion to Sever

  Defendants First American Title Insurance Company ("First American") and Olde City Abstract, Inc. ("Olde City") filed a Motion to Sever the allegations of Plaintiff Christine Burke Page 5 against them. Plaintiff Burke does not oppose the Motion.

  Federal Rule of Civil Procedure 20 permits joinder of multiple plaintiffs whose claims (1) "aris[e] out of the same transaction, occurrence, or series of transactions or occurrences" and (2) will present some "question of law or fact [in] common." Fed.R.Civ.P. 20(a). When parties fail to satisfy the requirements of Rule 20(a), they are considered to be misjoined and severable pursuant to Federal Rule of Civil Procedure 21. See Norwood Co. v. RLI Insurance Co. et al., 2002 WL 523946 at *2 (E.D. Pa. April 4, 2002), citing C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1683 at 475 (3d ed. 2001) (finding parties improperly joined because they did not meet the requirements of Fed.R.Civ.P. 20(a)).

  Defendants argue that each set of Plaintiff and Defendant title agent and Defendant title underwriter in this case involves a discrete set of claims arising out of a transaction independent from the others in this case. Thus, the first requirement of Rule 20 is not met. In addition, the fact that each set of Plaintiff and Defendants involves separate plaintiffs and companies, with different closing procedures, means that separate questions of fact will exist for each set of Plaintiff and Defendants, and thus the second requirement of Rule 20 is not met.

  In addition, at oral argument, the Court raised the issue of why, if Plaintiff Burke and the corresponding Defendants are severed, each set of Plaintiff and Defendants should not also be severed. The parties agreed that severing each set of Plaintiff and Defendants would be the appropriate course of action. In addition, at the Court's suggestion, the parties agreed, because there are common issues of law, that discovery and pretrial motions would be coordinated among the parties and that all claims and defenses would be contained in a single case. Accordingly, as Page 6 discussed at oral argument, the Court requests that Plaintiffs, assuming they do file an amended complaint, file a single complaint for all Plaintiffs, but assert on behalf of each Plaintiff the factual allegations and claims against the two defendants applicable to that Plaintiff, and incorporate by reference the allegations and claims that are common to all parties. As the Motion to Sever is unopposed and as the claims of each Plaintiff are subject to severance pursuant to Federal Rule of Civil Procedure 21, the Motion to Sever will be granted.

 B. Subject Matter Jurisdiction — Statute of Limitations

  Defendants argue that Count One should be dismissed with prejudice pursuant to Rule 12(b)(1) and/or Rule 12(b)(6) to the extent it purports to allege claims under RESPA on behalf of Plaintiffs Michael and Sharon Blimm, Joan and Paul Donahue, Jacqueline Shines, and Walter McCall, since their alleged claims arose from closings that took place earlier than one year before the complaint was filed, as RESPA imposes a one year statute of limitations. Additionally, Defendants argue that the allegations concerning Plaintiff Darrell Smith appeared only in the Amended Complaint filed September 4, 2003, which is also more than one year after the alleged transaction involving Plaintiff Smith and thus is barred by 12 U.S.C. § 2614.

  Plaintiffs concede that the claims brought by Plaintiffs Michael and Sharon Blimm under RESPA are untimely under 12 U.S.C. § 2614. Thus, these claims will be dismissed. Plaintiffs argue, however, that Plaintiffs Joan and Paul Donahue, Jacqueline Shines, and Walter McCall have all stated timely claims under RESPA due to the doctrine of equitable tolling. Plaintiffs also argue that Darryl Smith's claim was filed in the original complaint, within one year of his settlement, that the allegations in the amended complaint relate back to that original complaint, Page 7 and therefore, his claim is timely under 12 U.S.C. § 2614.

  a. Plaintiffs Donahue, Shines and McCall: Equitable Tolling

  The parties agree that 12 U.S.C. § 2614 applies to this issue, and that this Court lacks subject matter jurisdiction over any claim brought more than one year after the transaction occurred which allegedly gave rise to the cause of action. The parties disagree as to whether the doctrine of equitable tolling applies to § 2614 and whether, if the doctrine does apply, Plaintiffs have pled facts that properly invoke equitable tolling.

  The Third Circuit has held that, absent explicit statutory language to the contrary, namely an explicit link between expiration of a statute of limitations and the expiration of jurisdiction, equitable tolling will be read into a statute. Ramadan v. The Chase Manhattan Corp., 156 F.3d 499, 504 (3d Cir. 1998). In addition, two courts in this district have held that Ramadan requires equitable tolling principles to apply to RESPA because the one year statute of limitations is not explicitly jurisdictional. Solar v. Millenium Fin. Inc., 2002 U.S. Dist. LEXIS 8923, at *2 (E.D. Pa. May 17, 2002); Smith v. Equicredit Corp., 2002 U.S. Dist. LEXIS 19395, (E.D. Pa. October 4, 2002). Accordingly, this Court will apply the test for equitable tolling to this case.

  Equitable tolling stops "the statute of limitations from running when the date on which the claim accrued has already passed." Lake v. Arnold, 232 F.3d 360, 370 (3d Cir. 2000). This doctrine allows a court to "extend a statute of limitations on a case-by-case basis to prevent inequity." Colletti v. N.J. Transit Corp., 50 Fed. Appx. 513, 2002 U.S. App. LEXIS 15463 (3d. Cir. 2002). Equitable tolling is appropriate in three situations: (1) when the defendant has actively misled the plaintiff respecting the facts which comprise the plaintiffs cause of action; Page 8 (2) when the plaintiff in some extraordinary way has been prevented from asserting his rights; and (3) when the plaintiff has timely asserted his rights in the wrong forum. U.S. v. Midgley, 142 F.3d 174, 179 (3d Cir. 1998) (quoting Kocian v. Getty Refining & Mktg. Co., 707 F.2d 748, 753 (3d. Cir. 1983)). In addition, a plaintiff must have "exercised reasonable diligence in investigating and bringing the claims." Miller v. New Jersey Dep't of Corrections, 145 F.3d 616, 618-19 (3d Cir. 1998).

  Plaintiffs Donahue, Shines, and McCall contend they all dealt with either Defendant Commonwealth or Defendant Lawyers' Title, and their respective agents. These Plaintiffs argue that these defendants were also parties to the Callahan order, see n. 1, supra, and thus had an affirmative duty to prevent consumers from being overcharged. Plaintiffs argue that Defendants misrepresented the correct notary charges and, thus, misled the Plaintiffs in such a way as to fulfill the requirements of equitable tolling. Even if all of Plaintiffs' allegations are true, as this Court must assume in deciding a motion to dismiss, Plaintiffs have not alleged any fraudulent actions by Defendants that would have concealed from Plaintiffs their claims in this case. In fact, according to Plaintiffs, the amounts charged for notary services were listed on the forms presented to Plaintiffs at closing, and the statutorily appropriate notary fees are clearly set forth in the Notary Public Law. Although Defendants may have charged Plaintiffs an improper notary fee, they did not prevent Plaintiffs from discovering through reasonable diligence the actual fee they had been charged or the statutorily appropriate fee. In addition, Plaintiffs have not presented any allegations that would otherwise show that Plaintiffs were prevented from asserting their rights within one year of their settlements with Defendants. Accordingly, equitable tolling is not appropriate here, Plaintiffs Donahue, Shines and McCall have not filed their claims within the Page 9 statute of limitations of RESPA, and their claims will be dismissed.

  b. Plaintiff Smith: Relation Back

  Defendants further argue that Plaintiff Smith's claims are time-barred because he did not make any factual allegations in the original Complaint, where his name only appeared in the caption of the case, but nowhere else. Defendants argue that, because Plaintiff Smith only raised his claims in the Amended Complaint, which was filed more than a year after his real estate closing, his claims are barred.

  Rule 15(c)(2) states: "An amendment of a pleading relates back to the date of the original pleading when . . . the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading." "Amendments that merely correct technical deficiencies or expand or modify the facts alleged in the earlier pleading meet the Rule 15(c) test and will relate back. Thus, amendments that do nothing more than restate the original claim with greater particularity or amplify the details of the transaction alleged in the preceding pleading fall within Rule 15(c))." 6A Wright, Miller & Kane, Federal Practice and Procedure § 1497 (2d ed. 1990). See Egervary v. Young, 159 F. Supp.2d 132, 156 (E.D. Pa. 2001) (holding that the relation back doctrine applies where amended complaint restates original allegations with more specificity).

  In the original Complaint, the only mention of Plaintiff Smith is the listing of his name in the caption and the only mention of Defendants Fidelity New York and Weichert Closing Services ("Weichert") is in the caption and listing of parties. (Complaint ¶ 13-14). There is no description of the transaction that occurred between Smith and the two Defendants and there are Page 10 no allegations as to whether these Defendants were involved in a transaction with Smith, what amount these two Defendants charged Smith, or whether this amount represented an overcharge. In the Amended Complaint, Plaintiffs present factual allegations concerning the date of Smith's real estate transaction, the property involved, that Fidelity New York and Weichert were the insurance company and closing agent respectively, the amount charged for notary fees, and the allegation that this amount was a significant overcharge based on the number of notarizations required. (Amended Complaint ¶ 63-64). However, as noted above, the original pleading in this case did not allege any conduct, transaction, or occurrence involving Plaintiff Smith or these two Defendants. Thus, the Amended Complaint does more than correct technical deficiencies or amplify the facts contained in the allegations; rather, it presents facts and allegations involving Plaintiff Smith for the first time. Plaintiff Smith does not meet the standards of Fed.R.Civ.P. 15(c)(2) and his Amended Complaint does not relate back to the Original Complaint. Accordingly, Plaintiff Smith has failed to raise his claims under Count One within the one year limitations period of RESPA and his claims will be dismissed.

  As the sole basis for subject matter jurisdiction in this Court is the claim for violation of RESPA in Count One, the dismissal of Count One for Plaintiffs Blimm, Donahue, Shines, McCall, and Smith means that these parties may no longer remain as parties in this Court. Accordingly, all claims by these Plaintiffs will be dismissed without prejudice. Thus, the parties remaining before this Court are Plaintiffs Becker, Small, Hildebrandt, and Burke and the corresponding Defendants. Accordingly, the Motion to Strike and the Motion to Dismiss will only be addressed as they relate to these Plaintiffs. Page 11

 III. Motion to Strike

  Defendants First American and Olde City filed a Motion to Strike several items from the Amended Complaint, which was subsequently joined by Fidelity National Title Insurance of New York ("Fidelity New York"), Fidelity National Title Insurance Company ("Fidelity National"), and Chicago Title Insurance Company ("Chicago Title"). For the reasons that follow, the Court will deny the Motion to Strike in part and grant it in part.

 A. Legal Standard

  Federal Rule of Civil Procedure 12(f) provides that the court "may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R. Civ. P. 12(f). Motions to strike are generally disfavored. See, e.g., DiPietro v. Jefferson Bank, 1993 WL 101356, at *1 (E.D. Pa. March 30, 1993). This Court has observed that the "standard for striking under Rule 12(f) is strict" and that "only allegations that are so unrelated to plaintiffs' claims as to be unworthy of any consideration" should be stricken. Id. (quoting In re Catanella and E.F. Hutton and Co., Inc., 583 F. Supp. 1388, 1400 (E.D. Pa. 1984)).

 B. Discussion

  Defendants move to strike from the Amended Complaint Plaintiffs' requests for punitive damages, treble damages, and attorneys' fees as well as Plaintiffs' references to a fiduciary relationship. These motions will be addressed as they relate to each claim in the Complaint. As a preliminary matter, there is no motion to strike the claims for punitive or treble damages or attorneys' fees as pertains to Count One, the claim under RESPA. In addition, as discussed below, Count Two, the breach of settlement claim, will be ...


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