Commander Leasing Co. v. Transamerica Title Ins. Co.

• Decision Date: 06 April 1973
• Docket Number: No. 72-1171.,72-1171.
• Citation: 477 F.2d 77
• Parties: COMMANDER LEASING CO., a partnership, et al., Plaintiffs-Appellants, v. TRANSAMERICA TITLE INSURANCE COMPANY, a California corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

477 F.2d 77 (1973)

COMMANDER LEASING CO., a partnership, et al., Plaintiffs-Appellants, v. TRANSAMERICA TITLE INSURANCE COMPANY, a California corporation, et al., Defendants-Appellees.

No. 72-1171.

United States Court of Appeals, Tenth Circuit.

Argued September 21, 1972.

Decided April 6, 1973.

Dale Tooley, Denver, Colo. (Hugh J. McClearn, Van Cise, Freeman, Tooley & McClearn, Denver, Colo., on the brief), for plaintiffs-appellants.

Patrick M. Westfeldt, Denver, Colo. (Haradon Beatty, Denver, Colo., and Holland & Hart, Aspen, Colo., on the brief), for defendants U.S. Life Title Ins. Co. of Dallas and Lawyers Title Ins. Corp.

Aldo G. Notarianni, Denver, Colo. (Stephen Susman, Denver, Colo., Fulbright, Crooker & Jaworski, Houston, Tex., on the brief), for defendant Stewart Title Ins. Co.

Edward B. Towey, Denver, Colo. (James J. Zak, Denver, Colo., on the brief), for defendants Title Ins. Co. of Minnesota and Land Title Guarantee Co.

William H. Orrick, San Francisco, Cal. (Orrick, Herrington, Rowley & Sutcliffe, San Francisco, Cal., Richard M. Davis, Robert H. Harry, Donald E. Phillipson, and Davis, Graham & Stubbs, Denver, Colo., on the brief), for defendant Transamerica Title Ins. Co. Charles H. Haines, Jr., Grant, Shafroth, Toll & McHendrie, Denver, Colo., and John T. Loughlin, John C. Christie, Jr., Bell, Boyd, Lloyd, Haddad & Burns, Chicago, Ill., for defendant Chicago Title Ins. Co.

Christian J. Allison, Denver, Colo., for defendant Pioneer Nat. Title Ins. Co.

Edward I. Haligman, Atler, Haligman & Atler, Denver, Colo., for defendant Denver Abstract Co., d/b/a Titles, Inc.

Hugh A. Burns, Dawson, Nagel, Sherman & Howard, Denver, Colo., for defendants American Title Ins. Co., First American Title Ins. Co., St. Paul Title Ins. Corp., and Standard Title Ins. Co.

Francis S. Mancini and Charles J. Hafertepen, Denver, Colo., for defendant Commercial Standard Ins. Co.

Before LEWIS, Chief Judge, and JONES^* and McWILLIAMS, Circuit Judges.

McWILLIAMS, Circuit Judge.

The issues here to be resolved are whether the "business of title insurance" is the "business of insurance" within the meaning of that phrase as used in the McCarran-Ferguson Act and whether the State of Colorado "regulates" the business of title insurance to the end that by reason of the McCarran-Ferguson Act the Sherman and Clayton Acts are not applicable to certain title insurance companies doing business in Colorado. The McCarran-Ferguson Act will hereinafter be referred to as the McCarran Act.

The trial court in granting the defendant's pre-trial motions to dismiss held that the business of title insurance was the "business of insurance" and that the State of Colorado did regulate the title insurance business to the end that under the McCarran Act a private antitrust action would not lie against certain title insurance companies doing business in Colorado. We agree with this holding.

The plaintiffs in this proceeding are Commander Leasing Co., a partnership, and Richard B. Eichenberger and Hilda J. Eichenberger, individually and on behalf of others similarly situated. Commander alleged that it had purchased title insurance from one of the defendants, namely, Transamerica, for six years. The Eichenbergers alleged that they had purchased title insurance both from Transamerica and one of the other defendants, namely, Lawyers Title Insurance Corporation.

Two of the fourteen defendants, namely, Denver Abstract Co., doing business as Titles, Inc., and Land Title Guarantee Company, are Colorado corporations which serve as local agents for foreign title insurance companies and are otherwise engaged in what plaintiffs characterize as the "business of providing title proof and assurance."

The remaining twelve defendants are title insurance companies formed under the laws of states other than Colorado but qualified to do business in Colorado and which, according to the plaintiffs, are engaged in the "business of providing title proof and assurance and abstracting." We note that throughout their complaint the plaintiffs steer away from using the word "insurance" in describing the defendants' activities and, no doubt for euphemistic reasons, seem to prefer to use the word "assurance." This distinction is in our view of no great import.

Jurisdiction is based on 15 U.S.C. §§ 15 and 26, the plaintiffs seeking treble damages and injunctive relief. The action is sought to be maintained as a class action under Fed.R.Civ.P. 23(a), and in this regard it is alleged that "since July 9, 1965, thousands of persons have purchased title proof and assurance and abstracting from defendants in connection with real estate transactions within the State of Colorado * * *."

By way of general allegations, the plaintiffs aver that prior to 1950 abstracts of title, certified to the date of each transaction by an abstract company, were utilized in connection with proof of title in real estate transactions in Colorado, but that since that time the use of abstracts of title has sharply declined and the "use of so-called title insurance as title proof and assurance" has sharply increased. In this same general connection it is alleged that the abstract companies have now to a large extent been purchased or acquired by the title insurance companies, with certain of the defendants having thus acquired numerous abstract companies. It is then generally alleged that the defendants now have "a monopoly of title information and have conspired to fix uniform and excessive prices for abstracting and for so-called title insurance, to limit competition and to retire abstracts of title in favor of so-called title insurance." The plaintiffs go on to allege that the "title proof and assurance" sold by defendants is not "insurance" and is not regulated by state law.

The complaint then sets up five claims for relief. We shall refer to each. Before doing so, we note that underlying the entire complaint is plaintiffs' belief that in their purchase of title insurance from the defendants they have been charged a noncompetitive, monopolistic price. So, regardless of the fact that the complaint sets up five separate claims, and regardless of the further fact that the complaint asks for injunctive relief as well as treble damages, plaintiffs' constant target is the allegedly noncompetitive and excessive charge made by the several defendants for their title insurance.

Plaintiffs' first claim is directed against all defendants and in essence is a claim for price fixing based on § 1 of the Sherman Act, 15 U.S.C. § 1. A bit more specifically, plaintiffs allege in this claim that the defendants have conspired to fix, and have in fact fixed, arbitrary and noncompetitive charges for the issuance of their title insurance policies.

Plaintiffs' second claim is also directed against all defendants and is based on § 2 of the Sherman Act, 15 U.S.C. § 2, charging that the defendants through their acquisitions of abstract companies and otherwise have conspired to obtain a monopoly in "title proof and assurance and abstracting within the State of Colorado" for the purpose of eventually terminating the use of abstracts of title in favor of title insurance. It is further alleged that as a direct result of defendants' monopolistic activities plaintiffs and their class have been overcharged for title insurance.

Plaintiffs' third claim is likewise directed against all defendants and is based on the Robinson-Patman Act, 15 U.S.C. § 13, for alleged price discrimination. In this regard, it is alleged that the defendants have sold their title insurance to plaintiffs at a so-called "regular rate," which was substantially greater than the so-called "subdivider rate" charged others.

Plaintiffs' fourth claim seeks relief from all defendants and is based on Colorado statutory law prohibiting illegal restraint of trade and unlawful conspiracy. CRS 55-4-1, 2 and 8. Again, plaintiffs allege that they have been overcharged as a result of defendants' actions.

Plaintiffs' fifth and final claim is against one defendant only, namely, Transamerica Title Insurance Company, and is based on Transamerica's allegedly unlawful acquisition in Colorado of abtract companies and title insurance companies in violation of § 7 of the Clayton Act and § 2 of the Sherman Act, as well as in violation of CRS 55-4-1 et seq. Again, plaintiffs' complaint is that as a result of Transamerica's activities they, the plaintiffs, have been overcharged in their purchase of title insurance.

The defendants by either motions to dismiss or by answer raised the issue as to whether by virtue of the McCarran Act, 15 U.S.C. §§ 1011-1015,¹ the federal antitrust laws are applicable to the business of title insurance in Colorado.

As indicated, the trial court, after full argument and briefing of the matter, granted the several motions to dismiss. In so doing, the trial court reasoned as follows: (1) Title insurance is "insurance" within the meaning of that word as used in the McCarran Act; (2) the State of Colorado has "not only" regulated the title insurance business, but has done so in "great detail"; (3) therefore, insofar as the plaintiffs' claims are based on federal antitrust acts, which included plaintiffs' first, second, third and fifth claims, such are "subject to the exclusion or are barred by the McCarran Act"; and (4) plaintiffs' fourth claim based on an alleged violation of the Colorado antitrust and restraint of trade laws should be dismissed for lack of pendent jurisdiction.

The trial court in entering its judgment dismissing the action did so without prejudice to the right of the plaintiffs, or any of them, to file an amended complaint based on alleged violations of federal and state antitrust laws in connection with "abstracting service furnished separate and apart from the issuance of a title insurance policy * * *." (Emphasis added.) In this regard, the trial court viewed the complaint insofar as it related to abstracting services as one...