Title insurers have been hit with a wave of putative class action lawsuits alleging that they improperly failed to provide discounts on premiums for title policies issued in connection with a refinancing. (For more on this, see the Title Insurance page of this blog.) Although some classes have been certified on this issue, the federal courts have been trending strongly against class certification, as now demonstrated by a Maine federal judge’s decertification of a class.
In Loef v. First American Title Ins. Co., No. 2:08-cv-311-GZS, 2012 U.S. Dist. LEXIS 174313 (D. Me. Dec. 10, 2012), the court had previously certified, prior to the U.S. Supreme Court’s decision in Wal-Mart, a class consisting of certain property owners in Maine who had refinanced their properties, purchased title insurance from First American, and paid more than the statutory refinance rate for their policy. In connection with summary judgment briefing in this case, it became clear to the court that there were numerous factual disputes over whether particular class members (including the named plaintiff himself) were entitled to the refinance rate, for a variety of reasons. Id. at *7-8. In reevaluating its class certification ruling under Wal-Mart, and based on the more extensive record it now had, the district court followed the weight of authority in other courts (including two circuit-level rulings in similar cases), and found that neither commonality nor predominance was satisfied. On commonality, the court concluded that:
What is now clear is that each class member presents unique facts as to what was presented in connection with their purchase of title insurance and what steps were taken to ascertain whether they qualified for First American's published refinance rate. As a result, even assuming that the Class has a common injury (i.e., each was overcharged for title insurance by Defendant), merits discovery has not uncovered any common cause for that injury that can be traced to Defendant. Additionally, it is now clear that First American has different defenses as to why individual class members were not charged the refinance rate at the time of closing. See Wal-Mart, 131 S. Ct. at 2561 (noting that defendant retains a right to litigate defenses to individual claims under Rule 23). Thus, there are not common answers to these common questions. In the absence of a common answer, neither liability nor damages can be established on a class wide basis.
Id. at *15. On predominance, the court similarly concluded that:
Even if the Court assumes that the Plaintiff could establish as a matter of law that First American had an absolute duty to charge the refinance rate in some circumstances, it is clear on the developed record that determining whether First American failed to fulfill that absolute duty will require individual review of each class member's transaction. Despite access to merits discovery, Plaintiff has not presented sufficient evidence to create a trialworthy issue that there was a classwide failure on the part of First American title agents to charge the refinance rate.
Id. at *21-22.
This case is a good example of where the Wal-Mart decision, particularly the unanimous portion of the Wal-Mart opinion that stresses a defendant’s right to put on its individualized defenses, is making a difference in the lower courts. From a defense strategy perspective, this case also illustrates the importance, as I’ve noted before, of digging into the details of the individual claims of class members and developing individualized defenses. It is hard work, but the defendant’s position can be presented more persuasively with specific examples of individual class members’ transactions rather than the hypotheticals that are still often used.