The opinion of the court was delivered by: Conti, District Judge
Pending before the court is a motion for partial summary judgment (Doc. No. 218) filed pursuant to Federal Rule of Civil Procedure 56(c) by Anthony L. Slapikas and Alice B. Slapikas ("Slapikas") and Ivy J. Fodor ("Fodor") (collectively "plaintiffs"). Plaintiffs in their complaint sought relief under state law on several claims and in this motion request partial summary judgment on two issues for all members of a class who were overcharged for residential title insurance policies purchased in the state of Pennsylvania from the defendant First American Title Insurance Company ("defendant" or "First American"). The two issues are: (1) how certain phrases in the rate manual filed by the Title Insurance Rating Bureau of Pennsylvania ("TIRBOP") with the Pennsylvania Insurance Commissioner during the class period should be interpreted; and (2) whether summary judgment should be granted on liability with respect to their breach of implied contract claim. For the reasons set forth below, the court will grant plaintiffs' motion.
Defendant underwrites title insurance transactions (Plaintiffs' Concise Statement of Material Facts ("Pls.' Statement") ¶ 51) and appoints agents throughout Pennsylvania (Defendant's Response to Plaintiffs' Concise Statement of Material Facts ("Def.'s. Resp.") ¶ 28). Defendant instructed its agents with respect to calculating title insurance premiums and filling out HUD-1 settlement statements, which are statutorily mandated disclosure documents intended to standardize the reporting of settlement charges for most mortgage loans. (Combined Concise Statement of Material Facts ("Combined Statement") ¶¶ 30, 37.) Defendant entered into an agency agreement in Pennsylvania with Mezzo Land LLC ("Mezzo Land") (Def.'s Resp. ¶ 28), third-party defendant, which required Mezzo Land to receive and process applications for title insurance in accordance with defendant's rules and regulations. (Pls.' Statement ¶ 29.)
When one of defendant's agents handles a title insurance transaction, the agent frequently receives the applications for title work, processes the orders for title policies, performs all services necessary to issue the title policies, examines the title evidence, obtains information from customers' prior lenders to pay off any prior loan, issues title insurance commitments, prepares HUD-1s and other necessary closing documents, conducts the closing of the transaction, and receives the premium for the title insurance as shown on the HUD-1s. (Combined Statement ¶ 33.) In each transaction, the agent performs a title examination, which includes a search of land records that would reflect deeds to a bona fide purchaser for value (a "BFP") and outstanding institutional mortgages that existed prior to the date of acquisition of the property by the current owner. (Def.'s Resp. ¶ 34.)
Defendant was a member of the Title Insurance Rating Bureau of Pennsylvania ("TIRBOP") throughout the class period-December 19, 1999 through August 1, 2005. (Combined Statement ¶ 1.) TIRBOP filed a rate manual (the "Rate Manual") with the Pennsylvania Insurance Commissioner for all its members, including defendant. (Id. ¶ 3.) Section 2.1 of the Rate Manual, as amended through April 1, 2003, required that all charges for title insurance coverage be made in accordance with the Rate Manual. (Id. ¶ 6.) Throughout the class period the Rate Manual specified a "Basic Rate" in section 5.50 and two discount rates, the "Reissue Rate" in section 5.3 and the "Refinance Rate" in section 5.6. (Id. ¶¶ 7-8.) During the class period, sections 5.3 and 5.6 of the Rate Manual provided:
A purchaser of a title insurance policy shall be entitled to purchase this coverage at 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 when evidence of the earlier policy is produced notwithstanding the amount of coverage provided by the prior policy. . . .
5.6 REFINANCE OR SUBSTITUTION LOANS When a refinance or substitution loan is made within 3 years from the date of closing of a 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 the fee simple ownership, the charge shall be 80% of the reissue rate. (Id. ¶¶ 10, 12 (emphasis added).) During the class period, the Rate Manual did not define the phrase "when evidence of the earlier policy is produced," which was utilized in section 5.3. (Id. ¶ 13.)
Plaintiffs assert that evidence of the earlier policy is produced when the agent during a title search would find a deed to a BFP or an unsatisfied institutional mortgage recorded within the applicable look-back period. Defendant argues that evidence of the earlier policy is only produced when a customer comes forward with a copy of the previous policy or a settlement sheet showing payment of a title insurance premium. In support of their argument, plaintiffs note that during the class period some of defendant's agents deemed a recorded deed to a BFP or an unsatisfied institutional mortgage within the three or ten-year periods specified in sections 5.3 and 5.6 of the Rate Manual to be sufficient evidence of insurance entitling a consumer to the applicable discount rate. (Pls.' Statement ¶ 51.) Defendant does not deny that some agents accepted recorded deeds to a BFP and unsatisfied institutional mortgages as sufficient evidence of an earlier policy, but denies that a recorded deed to a BFP or an institutional mortgage was sufficient evidence of prior insurance under the pre-2005 refinance and reissue rates. (Def.'s Resp. ¶ 51.) Defendant did not notify those agents that they were misapplying the Rate Manual. (Combined Statement ¶ 54.) Several of defendant's former and current employees testified that they did not always presume a prior title insurance policy existed based on a prior recorded deed to a BFP or an unsatisfied institutional mortgage. (Def.'s Stat. of Additional Material Facts ("Additional Facts") ¶ 15).
On May 5, 2005, before filing a revised Rate Manual, TIRBOP discussed amendments to the Rate Manual at the annual meeting. (Id. ¶ 23.) Defendant's representatives attended TIRBOP meetings during which the 2005 amendments were drafted and discussed. (App. to Pls.' Concise Stat. of Material Facts ("Pls.' App.") 214, 216, 221, 223.) The official minutes of the meetings noted that the proposed amendments sought to "clarify the application of reduced rates set forth in Section 5.3 . . . and 5.6 of the Rate Manual." (Id. ¶ 23.) On May 10, 2005, TIRBOP filed an amended Rate Manual with the Deputy Insurance Commissioner with a proposed effective date of August 1, 2005. (Id. ¶ 14.) The cover letter that accompanied the filing stated:
The purposes for the proposed revisions to the Rate Manual are to clarify, among other things, the nature of the evidence of previous insurance that would entitle the purchaser of title insurance to a reduced rate. (Id. ¶ 15.) In response to a letter from the Pennsylvania Department of Insurance, TIRBOP eliminated some of the proposals, but retained "revisions to the Rate Manual to clarify the application of discounts associated with reissue and refinance transactions." (Id. ¶¶ 16-17.) The Department of Insurance approved the reissue and refinance rate provisions to the Rate Manual with an effective date of August 1, 2005. (Id. ¶ 18.)
New section 2.8 and the amended versions of sections 5.3 and 5.6 provided:
2.8 Sections 5.3, 5.4 and 5.6 of the Manual provide that reduced rates are applicable when evidence of previous insurance is provided within a specified time period. As evidence of previous insurance, an Insurer will rely upon:
a. the recording (within the period of time specified within the applicable Section of the Manual) of either:
i. a deed to a bona fide purchaser for value, or
ii. an unsatisfied mortgage to an institutional lender; or in the alternative,
b. any of the following documents provided by or on behalf of the purchaser of the title insurance policy:
iii. a copy of the prior policy;
iv. a copy of the marked-up commitment;
v. a settlement sheet showing payment of a title insurance premium; or
vi. other written evidence acceptable to the Insurer that title insurance coverage was purchased for the property.
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 part of real property insured 10 years immediately prior to the date the insured transaction closes. Evidence of previous insurance in accordance with the provisions of Section 2.8 of this Manual must be considered in order to apply the reissue rate. Insurer shall comply with the written notice provisions of Section 2.9. . . .
5.6 REFINANCE AND SUBSTITUTION LOANS When a refinance or substitution loan is made within 3 years from the date of closing or a 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 the fee simple ownership, the Charge shall be 80% of the reissue rate. Evidence of previous insurance in ...