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Amato v. United General Title Insurance Co.

March 17, 2009


The opinion of the court was delivered by: Berle M. Schiller, J.


Schiller, J.

Plaintiff Deborah M. Amato brings this putative class action against Defendant United General Title Insurance Company ("United General"), alleging that she and others similarly situated were charged a basic rate for title insurance when they should have received lower "reissue" or "refinance" rates. Currently before the Court is Defendant's motion to dismiss for failure to exhaust administrative remedies and for failure to state a claim. For the following reasons, the motion is granted.


This action is one of a series of cases brought in Pennsylvania and other states against title insurance companies that allegedly overcharged consumers for title insurance. Plaintiff's Amended Complaint alleges that United General collected excess premiums from her and putative class members by charging them the "basic rate" for title insurance rather then the discounted "reissue rate" or "refinance rate" to which they were entitled.

As a title insurance company, United General guarantees the correctness of title searches and insures property owners against loss or damage incurred as a result of defects in their titles. (Am. Compl. ¶ 9; see also 40 PA. CONS. STAT. ANN. § 910-1(1) (2009).) Pennsylvania law regulates title insurance companies' rates and requires approval of those rates by the Commonwealth's Insurance Commissioner ("Commissioner"). 40 PA. CONS. STAT. ANN. § 910-37. For the purpose of establishing its rates, United General is a member of the Title Insurance Rating Bureau of Pennsylvania ("TIRBOP"). (Am. Compl. ¶15.) TIRBOP's rates, as set forth in it's manual ("TIRBOP Manual"), have been filed with and approved by the Pennsylvania Insurance Department. (Id. ¶¶ 17-19.) United General and its agents are required by law to charge the rates set forth in the TIRBOP manual. 40 PA. CONS. STAT. ANN. § 910-37(h) ("[N]o title insurance company or agent of a title insurance company shall charge any fee for any policy or contract of title insurance except in accordance with filings or rates which are in effect for said title insurance company or such agent of a title insurance company.").

The TIRBOP Manual, which Plaintiff has attached to her Amended Complaint, establishes a basic rate for title insurance, a reissue rate and a refinance rate. The reissue rate is discounted from the basic rate by ten percent. (Am. Compl. ¶ 22.) Pursuant to Section 5.3 of the Manual, "[a] purchaser of a title insurance policy shall be entitled to the reissue rate if the real property to be insured is identical to, or is part of, real property insured 10 years immediately prior to the date the insured transaction closes." (Am. Compl. Ex. A [TIRBOP Manual] § 5.3.)

The TIRBOP Manual also establishes a "refinance rate," which is available "[w]hen a loan policy is to be issued within four years of the date of the previously insured mortgage or fee interest, and the premises to be insured are identical to, or part of, the real property previously insured, and there has been no change in fee simple ownership." (Id. § 5.6.) The refinance rate is 70% of the reissue rate when the title insurance company issues the new policy up to two years from the previously insured mortgage, and 80% of the reissue rate when it issues the new loan policy between two and four years from the initial mortgage date. (Id.) For either the reissue rate or the refinance rate to apply, evidence of previous insurance, which can be established by, among other things, an unsatisfied mortgage to an institutional lender, must be considered. (Id. §§ 2.8, 5.3, 5.6.)

Plaintiff obtained title insurance when she purchased her home in Southampton, Pennsylvania in September 2003. (Am. Compl. ¶¶ 28-29.) On two additional occasions, once in October, 2004 and again in November 2005, Plaintiff purchased title insurance in connection with home refinancings. (Id. ¶ 30.) Plaintiff refinanced her mortgage a third time on July 26, 2006. (Id. ¶ 31.) Patriot Real Estate Settlement Services ("Patriot"), an agent of United General, provided the closing and settlement services. (Id.) The loan amount for Plaintiff's 2006 refinance was $306,000.00 and Patriot, on United General's behalf, issued a lender's title insurance policy in that amount. (Id. ¶ 34.) Plaintiff was charged the basic rate for this policy, $1,888.75, instead of the refinance rate, $1,189.93, to which she was entitled. (Id. ¶¶ 35-36.)

Based on these facts, Plaintiff brings claims against United General on behalf of herself and putative class members for money had and received, unjust enrichment and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("CPL"). Plaintiff alleges that United General and its agents, including Patriot, owed her a fiduciary duty in connection with her refinancing transaction because they have superior knowledge regarding the laws governing title insurance and applicable rates. (Id. ¶¶ 32, 37, 66.) She also alleges that United General's failure to charge her the proper rate violated Section 910-37(h) of the Pennsylvania Title Insurance Companies Act ("TICA") and therefore constituted a per se violation of the CPL. (Id. ¶ 68.) The Amended Complaint seeks to recover the damages suffered by the class members, punitive damages, statutory damages and treble damages pursuant to the CPL, as well as costs and attorney's fees. However, Plaintiff did not seek a refund from United General nor did she appeal to the Commissioner prior to filing this action.


United General's motion to dismiss for failure to exhaust administrative remedies challenges this Court's subject matter jurisdiction and is therefore governed by Federal Rule of Civil Procedure 12(b)(1). Challenges to subject matter jurisdiction, pursuant to Rule 12(b)(1), may be facial or factual. Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). "In a facial attack, a defendant argues that the plaintiff did not properly plead jurisdiction . . . [whereas] a 'factual' attack asserts that jurisdiction is lacking on the basis of facts outside of the pleadings." Smolow v. Hafer, 353 F. Supp. 2d 561, 566 (E.D. Pa. 2005). Since the parties only reference the Amended Complaint and the exhibits attached thereto, the Court will treat United General's challenge as a facial one. When a defendant brings a facial attack, the court considers only the allegations in the complaint, which are taken as true, exhibits attached to the complaint and anything else properly considered on a 12(b)(6) motion for failure to state a claim. Vicky M. v. Ne. Educ. Intermediate Unit 19,486 F. Supp. 2d 438, 450 (M.D. Pa 2007); see also Mortensen, 549 F.2d at 891. Plaintiff bears the burden of establishing jurisdiction over her claims. Kehr Packaging Inc. v. Fidelcor, Inc., 926 F.2d 1406 (3d Cir. 1991); Bell Atlantic-Pa., Inc. v. Pa. Pub. Util. Comm'n, 107 F. Supp. 2d 653, 659 (E.D. Pa. 2000).


United General moves to dismiss Plaintiff's Amended Complaint for failure to exhaust administrative remedies and failure to state a claim. United General predominately argues that Section 910-44(b) of TICA provides a mandatory statutory remedy that Plaintiff was required to exhaust prior to filing a lawsuit. Plaintiff responds that TICA's remedy is discretionary and ...

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