Benavides v. Chicago Title Ins. Co.

• Decision Date: 23 March 2011
• Docket Number: No. 10–10136Summary Calendar.,10–10136Summary Calendar.
• Citation: 636 F.3d 699
• Parties: Emma BENAVIDES, individually and on behalf of all others similarly situated, Plaintiff–Appellant,v.CHICAGO TITLE INSURANCE CO., Defendant–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

636 F.3d 699

79 Fed.R.Serv.3d 189

Emma BENAVIDES, individually and on behalf of all others similarly situated, Plaintiff–Appellant,

v.CHICAGO TITLE INSURANCE CO., Defendant–Appellee.

No. 10–10136Summary Calendar.

United States Court of Appeals, Fifth Circuit.

March 23, 2011.

Eric Graham Calhoun, Travis, Calhoun & Conlon, P.C., Dallas, TX, for Benavides.Robert Jerome Fogarty, Derek E. Diaz, Hahn, Loeser & Parks, L.L.P., Cleveland, OH, Lance Vernon Clack, Keith R. Verges, Figari & Davenport, L.L.P., Dallas, TX, for Chicago Title Ins. Co. Appeal from the United States District Court for the Northern District of Texas.Before WIENER, PRADO, and OWEN, Circuit Judges.PRADO, Circuit Judge:

Emma Benavides appeals the district court's denial of her motion for class certification. Benavides sued Chicago Title Insurance Co. (“Chicago Title”) on behalf of a purported class for refusing to give her a title insurance premium discount mandated by Texas law. The district court denied class certification on the ground that Benavides had not shown that common questions would predominate as required for a class seeking certification under Federal Rule of Civil Procedure 23(b)(3). Benavides appeals, arguing that Mims v. Stewart Title Guaranty Co., 590 F.3d 298 (5th Cir.2009), controls. Because Mims does not control and because the district court properly addressed Mims, we affirm the district court.

I. FACTUAL AND PROCEDURAL BACKGROUND

Benavides filed a Complaint in district court on August 22, 2007, against Chicago Title, alleging that she and others similarly situated were denied a mandatory title insurance discount when she purchased a title insurance policy from Chicago Title. Specifically, Texas Insurance Code Rate Rule 8 (“R–8”) entitles a mortgage borrower to a discount on a title insurance policy issued on a loan to fully take-up, renew, extend, or satisfy an old mortgage when the new loan is issued within seven years of the initial mortgage and the initial mortgage was also covered by a title insurance policy. The Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas § 3 Rate Rule 8 (available at www. tdi.state.tx.us/title/titlem3b.html # R–8). Benavides alleges she was entitled to a discount of $370.40 after she refinanced her mortgage within two years after taking out the initial mortgage loan. Benavides alleged violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607(b), and state-law causes of action for unjust enrichment, money had and received, and breach of implied contract. The RESPA and unjust enrichment causes of action were previously dismissed by the district court on summary judgment.

As the district court noted in its order denying class certification, there is often no definitive way for a title insurer to determine, based on the documents available to it, whether or not a prior mortgage was covered by title insurance such that the new title insurance policy would qualify for the reissue discount. Chicago Title, like other title insurance companies, had a policy of giving the discount when the borrower's file contained certain circumstantial evidence that the prior mortgage was insured. Benavides alleges that, regardless of Chicago Title's ad hoc policies, it routinely fails to give the discount when required. Chicago Title admits that, regardless of the circumstantial evidence in the borrower's file, the discount is mandatory for all borrowers who qualify.

Benavides sought to certify a class of “all persons who, within seven years after the date of their existing mortgage on their real property in Texas, refinanced or otherwise replaced their existing mortgage and were charged a premium for a new lender title insurance policy issued by Defendant Chicago Title Insurance Company that did not include the reissue discount.” On December 9, 2009, the district court denied Benavides's motion for class certification. In its Order, the district court examined each of Benavides's purported questions common to the class. Those questions were:

(1) Whether the plaintiffs refinanced an existing mortgage within seven (7) years after the recording of the existing mortgage;

(2) Whether the plaintiffs qualify for the mandatory reissue discount in connection with the reissue lender title policy;

(3) The dollar amount of the reissue discount required to be applied to the plaintiff's transaction;

(4) Whether Defendant split the unearned discounts with its agents;

(5) Whether Defendant's splitting of the unearned premiums with title agents violated Section 8(b) of RESPA;

(6) Whether Defendant breached other legal duties to class members by failing to give them the reissue discount mandated by Texas law and retaining those unearned premiums; and

(7) Whether plaintiffs are entitled to recover three times the amount charged to them for the reissue lender title insurance policies, pursuant to 12 U.S.C. § 2607(d)(2).

The district court determined questions 4, 5, and 7 pertained only to Benavides's RESPA claim which had been dismissed. It determined that the remaining questions, while “common” in that each purported plaintiff would need the question answered, could not be determined on a class-wide basis using class-wide proof. Rather, each of the remaining questions had to be answered specifically and individually as to each plaintiff. Accordingly, the district court determined that none of the questions advanced by Benavides was common to the class and that Benavides had therefore failed to satisfy the predominance requirement of Rule 23(b)(3). The district court noted that the only “common” question—whether a borrower who qualified for the R–8 discount and did not receive it was entitled to a refund—was not in dispute as Chicago Title admitted the discount was mandatory for all borrowers who qualified. The district court therefore based its order denying certification on two grounds: “First, certification of the class would require an extensive file-by-file review to sort out the factual details as to each plaintiff. Second, there are no truly class-wide questions that would benefit from class determination.”

Benavides filed a motion for reconsideration, arguing that Mims, which was decided by this court the same day the district court issued its order denying class certification, outlined a different evidentiary standard for liability and for class membership than followed by the district court. The district court denied the motion on December 23, 2009, noting that while the Fifth Circuit in Mims affirmed certification of a class based on factually similar state-law claims, the opinion did not call into question the district court's decision that there were no class-wide questions that would benefit from certification. Benavides was given permission to appeal the denial of class certification pursuant to Federal Rule of Civil Procedure 23(f), and this appeal followed.

II. ANALYSIS

We review the denial of class certification for abuse of discretion. See O'Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 738 (5th Cir.2003). Because, however, a court by definition abuses its discretion when it applies an incorrect legal standard, we review such errors de novo. Id. While the “party seeking certification bears the burden of proof” and the district court has substantial discretion to grant or deny certification, the “district court must conduct a rigorous analysis of the rule 23 prerequisites before certifying a class.” Castano v. American Tobacco Co., 84 F.3d 734, 740 (5th Cir.1996).

Rule 23(a) provides four prerequisites to a class action: (1) a class “so numerous that joinder of all...