United States District Court, W.D. Pennsylvania
ANTHONY L. SLAPIKAS, ALICE B. SLAPIKAS, and IVY FODOR, for themselves and all others similarly situated, Plaintiff,
FIRST AMERICAN TITLE INSURANCE COMPANY, Defendant,
MEZZO LAND SERVICES, LLC, Third-Party Defendant.
JOY FLOWERS CONTI, Chief District Judge.
Anthony L. Slapikas and Alice B. Slapikas (the "Slapikases") and Ivy J. Fodor ("Fodor") (collectively "plaintiffs") brought this suit on behalf of themselves and a class of similarly situated consumers alleging that agents of First American Title Insurance Company ("First American") overcharged them for title insurance obtained in connection with refinancing their mortgages. (ECF No. 1.) Pending before the court is First American's motion for decertification (ECF No. 366), First American's motion for summary judgment (ECF No. 367), and plaintiffs' renewed motion for partial summary judgment (ECF No. 370). The court will GRANT both of First American's motions because plaintiffs are unable to establish an essential element of their claim, i.e. justifiable reliance, and no other representative plaintiff could do so on this record. Plaintiffs' motion is thereby rendered moot.
I. Factual Background
A. Title Insurance Rates
First American is a national title insurance underwriter that issues title insurance policies in Pennsylvania through a network of agents. (ECF No. 433 Part A: ¶ 1.) First American and third-party defendant Mezzo Land Services, LLC ("Mezzo") entered into an agency agreement on November 16, 2001 under which Mezzo employees completed various tasks prior to and during real estate closings on behalf of First American. (Id. ¶¶ 4, 7.) Mezzo's employees prepared the HUD-1 Settlement Statement ("HUD-1"), which listed the title insurance premium to be charged. (Id. ¶ 4) First American was issued monthly remittance reports reflecting the premium fees due to the insurer for each transaction. (ECF No. 433 Part C: ¶ 3.) There is some dispute regarding the details of the agency relationship between Mezzo and First American. (See, e.g., ECF No. 433 Part A: ¶¶ 1, 3, 6, 7.) These disputes are construed in the plaintiffs' favor for purposes of deciding the instant action and Mezzo will be treated as an agent acting on behalf of First American. (Id.)
Pennsylvania law requires every title insurance company to file a manual specifying the rules, plans, schedules of fees, and modifications for the rates it plans to charge. 40 Pa. Cons. Stat. § 910-37(a). Approved rates are recorded in the Manual of the Title Insurance Rating Bureau of Pennsylvania ("Rate Manual") which provides that all charges for title insurance policies must correspond to the rates filed with and approved by the Pennsylvania Department of Insurance. 40 Pa. Cons. Stat. § 910-37(h). (ECF No. 188-3.) The Rate Manual used by First American contained three separate rate tiers that a customer could be charged: (1) the basic rate, (2) the reissue rate, which is 90% of the basic rate, and (3) the refinance rate, which is 80% of the reissue rate. (ECF No. 311 at 2-3.) Under section 5.3 and 5.6 of the Rate Manual a customer may qualify for the lower reissue or refinance rate if she purchased title insurance for an identical property within the applicable "look-back" period. (ECF No. 215 ¶¶ 22-23, 38-39.) Plaintiffs contend that they qualified for discounted title insurance rates but were charged the basic rate instead. (ECF No. 188 ¶¶ 27, 41.)
The charge for title insurance is memorialized on line 1108 of the HUD-1 for each transaction. (ECF No. 433 Part A: ¶ 10.) The settlement agent is required to itemize clearly "all charges imposed upon a borrower" on the HUD-1. 12 U.S.C. § 2603(a). Under 24 C.F.R. § 3500.8(b)(1), "[t]he settlement agent shall state the actual charges paid by the borrower and seller on the HUD-1... and separately itemize each third party charge paid...." Following each transaction Mezzo placed the proceeds from the closing into a fiduciary trust account. (ECF No. 433 Part B: ¶ 11.) Mezzo used this account to pay First American its premium due from each transaction. (Id.)
B. Plaintiffs' Transactions
1. Slapikases' Transaction
On June 24, 2003, the Slapikases refinanced a parcel of property (the "Slapikases Property") through the proceeds of a loan provided by the National City Mortgage Corporation ("National City") in the amount of $168, 000.00. (ECF No. 433 Part A: ¶ 12.) Mrs. Slapikas testified that the "low mortgage rate" was "what made us want to" refinance. (Id. ¶ 27.) Mr. Slapikas testified that he focused on "two numbers" stating, "[o]ne, I want the rate. Two, what is the total rolled up closing costs. Giving very little thought to the individual pieces of it." (Id. ¶ 25.) He further explained that, "there wasn't much on my end in terms of attention paid to the specifics." (Id.) Mr. Slapikas testified, "[w]e expected the close [sic] was going to be done with the correct numbers, with the professionalism that you would expect from a transaction...." (Id. ¶ 26.)
Mezzo prepared and executed the documentation for the Slapikases' refinancing. (Id. ¶ 13) The Slapikases played no role in selecting Mezzo. (Id. ¶ 14.) Mrs. Slapikas testified that she recalled that a woman, whom she later identified as "Lisa, " had signed the HUD-1 for Mezzo as the "settlement agent." (Id. ¶ 15.) The Slapikases did not have any other contact with Lisa, or anyone else representing Mezzo, before or after the closing. (Id. ¶ 24.) The record does not reflect that the Slapikases knew Lisa's last name. The Slapikases do not recall any discussion with anyone concerning title insurance before, during or after the closing. (Id. ¶¶ 19, 20, 22.)
The title insurance policy was purchased by the Slapikases for a premium of $1, 198.75, which was consistent with the basic rate under the Rate Manual. (Id. ¶¶ 16, 18.) The difference between the basic rate and the refinance rate (i.e., the rate the Slapikases assert they should have been charged) was $335.65. (ECF No. 166 at 8.) The record is devoid of any evidence that the Slapikases read line 1108 of the HUD-1. There is no evidence in the record to indicate that the Slapikases would have refused to refinance their mortgage if they knew about the purported title insurance overcharge.
2. Fodor Transaction
Fodor is the record owner of a parcel of property (the "Fodor Property"). (ECF No. 433 ¶ 28.) On February 5, 2004, Fodor refinanced the Fodor Property through the proceeds of a loan from America's Wholesale Lender ("AWL") in the amount of $110, 000.00. (Id. ¶ 29.) Fodor testified that the interest rate was the "most important consideration" in her decision to refinance. (Id. ¶ 40.) Third-party defendant Mezzo prepared and executed the documentation for the Fodor refinancing. (Id. ¶ 29.) Fodor was not consulted regarding the decision to choose Mezzo. (Id. ¶ 33.) Fodor stated she "was not sure" if David Gould, her mortgage broker and then-boyfriend, or someone else in his company choose Mezzo. (Id. ¶¶ 30, 32.) Fodor does not recall having any conversations with Mr. Gould about title insurance. (Id. ¶ 36.)
Fodor did not read the HUD-1 or the other closing documents before signing them. (Id. ¶ 45.) When she described her closing she stated, "they were just handing me papers and showing me where to sign, and I was just signing away...." (ECF No. 433 Part B: ¶¶ 8, 9.) Fodor did not discuss title insurance with anyone during the meeting and did not question the title insurance cost. (ECF No. 433. Part A: ¶ 46.)
The title insurance policy was purchased by Fodor for a premium of $908.75, which is consistent with the basic rate under the Rate Manual. (Id. ¶¶ 34.) The difference between the basic rate and the reissue rate (i.e., the rate Fodor asserts she should have been charged) was $90.87. (ECF No. 311 at 6.) There is no evidence in the record to indicate that Fodor would have refused to refinance her mortgage if she knew about the purported title insurance overcharge.
C. Procedural Background
On December 19, 2005, the Slapikases filed a class action complaint in the Court of Common Pleas of Allegheny County, Pennsylvania. (ECF No. 1-1) On January 19, 2006 this case was removed to federal court pursuant to 28 U.S.C. § 1441. (ECF No. 1.) First American filed a motion to dismiss which the court granted in part and denied in part at a hearing held on May 8, 2006. (ECF No. 29.) On June 6, 2006, the Slapikases filed an amended complaint. (ECF No. 32.)
In the amended complaint the Slapikases asserted four common law claims sounding in contract, unjust enrichment, and fraud and a claim asserting a violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"). (ECF No. 32 at 12-19.) The Slapikases specifically alleged that First American violated the UTPCPL by overcharging them for title insurance in connection with the refinancing of their mortgage. (Id. at 17-18.) The catchall provision of the UTPCPL, under which the Slapikases pled their UTPCPL claim, provides: "a private right of action in persons upon whom unfair methods of competition and unfair or deceptive acts or practices are employed and who, as a result, sustain an ascertainable loss." 73 Pa. Cons. Stat. § 201-9.2.
On June 27, 2006, First American moved to dismiss the common law fraud and UTPCPL claims and filed a third-party complaint against Mezzo. (ECF Nos. 34 and 37.) First American alleged that Mezzo and its agents dealt directly with plaintiffs for the purpose of selling title insurance policies, and that Mezzo is accountable for the premiums charged. (ECF No. 37 ¶¶ 13-19.) Mezzo filed a motion to dismiss the third-party complaint, as well as a motion to dismiss the first amended complaint, arguing that the Slapikases failed to exhaust administrative remedies provided to them under 40 Pa. Cons. Stat. § 910-1 of the Pennsylvania Title Insurance Company Act. (ECF Nos. 51 and 55.) First American joined Mezzo and filed a motion for judgment on the pleadings asserting the same ground. (ECF No. 67.)
At a hearing held on December 21, 2006, the court denied First American's motion to dismiss and motion for judgment on the pleadings, as well as Mezzo's motions to dismiss the first amended complaint and the third-party complaint. (12/31/2006 minute entry; ECF No. 94.) On March 2, 2007, upon joint motion by First American and Mezzo, this court certified the order of December 21, 2006 for interlocutory appeal concerning the exhaustion of administrative remedies issue and stayed these proceedings pursuant to 28 U.S.C. § 1292(b). (ECF No. 115.) On May 30, 2007, the Court of Appeals for the Third Circuit denied the petition for permission to appeal. (ECF No. 122.)
The Slapikases promptly filed a renewed motion for class certification. (ECF No. 123.) The court granted the motion for class certification in a memorandum opinion and order dated March 24, 2008. (ECF No. 167, published at Slapikas v. First Am. Title Ins. Co. , 250 F.R.D. 232 (W.D. Pa. 2008)). The order defined the class as:
All persons in the Commonwealth of Pennsylvania who, at any time after December 19, 1999 through July 31, 2005: (a) paid premiums for the purchase of residential title insurance at the Basic or Reissue Rate from defendant First American; (b) who had either an unsatisfied mortgage from an institutional lender or a deed to a bona fide purchaser in the chain of title within ten years of the ...