Hartis v. Chi. Title Ins. Co.

• Decision Date: 17 October 2012
• Docket Number: No. 11–2552.,11–2552.
• Citation: 694 F.3d 935
• Parties: Brian D. HARTIS; Jacqueline H. Hartis, Plaintiffs–Appellants v. CHICAGO TITLE INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

694 F.3d 935

Brian D. HARTIS; Jacqueline H. Hartis, Plaintiffs–Appellants

v.CHICAGO TITLE INSURANCE COMPANY, Defendant–Appellee.

No. 11–2552.

United States Court of Appeals, Eighth Circuit.

Submitted: June 14, 2012.

Filed: Sept. 12, 2012.

Rehearing and Rehearing En Banc Denied Oct. 17, 2012.

Kirk T. May, argued, William D. Beil, on the brief, Kansas City, MO, for appellant.

Mark G. Arnold, argued, St. Louis, MO, James D. Griffin, Michael S. Hargens, Kansas City, MO, Dennis R. Rose, Steven J. Mintz, Steven A. Goldfarb, Kelly A. Kosek, Cleveland, OH, on the brief, for appellee.

Before SMITH, BEAM, and SHEPHERD, Circuit Judges.

SMITH, Circuit Judge.

Brian D. Hartis and Jacqueline H. Hartis (collectively, “the Hartises”) appeal from the district court's ¹ denial of their motion to remand their suit against Chicago Title Insurance Company (“Chicago Title”) to state court. They argue that the district court erroneously determined that the amount in controversy exceeds $5 million under the Class Action Fairness Act (CAFA). In the alternative, the Hartises argue that the district court abused its discretion in denying their motion for leave to amend their complaint to assert a punitive-damages claim. Finally, they contend that the district court erred in dismissing their claims as moot. We affirm.

I. Background

A. Hartises' Petition for Individual and Class–Action Relief

The Hartises, individually and on behalf of the putative class, filed suit in Missouri state court against Chicago Title, “alleging that Chicago Title failed to reimburse numerous customers for excess money collected at real estate closings for recording fees.” Hartis v. Chi. Title Ins. Co., 656 F.3d 778, 779 (8th Cir.2009) (per curiam). In ¶¶ 6 and 7 of their petition, the Hartises “alleged ... that Chicago Title retained $24 in excess recording fees charges related to the purchase of their home in Kansas City, Missouri, representing a $3 overcharge on one transaction and a $21 overcharge on a second transaction.” Id. Paragraph 8 of the petition alleged that

[j]ust as they did in the financings involving the Hartises, Chicago [Title] provides disbursement and escrow services in other real estate closings and financings, including collecting and possessing recording fees in escrow and disbursing and paying recording fees to the relevant governmental entity. In those other transactions a specific amount of money is entrusted to Chicago [Title] for the sole and specific purpose of possessing that money to pay fees charged to record documents in connection with the transaction. In many of those transactions, Chicago [Title], just as it did in the Hartises' transactions, is entrusted with more money than is ultimately charged by or paid by Chicago [Title] to the governmental entity with whom documents are recorded. Just as it did in the financings involving the Hartises, Chicago [Title] keeps for itself that amount of money which belongs to other individuals and entities and which was held in trust by Chicago [Title] to be paid for recording fees only but which exceeded the amount of recording fees actually charged to record documents and actually paid by Chicago [Title] to record documents. That money belongs to the individuals or entities who paid it for a sole and specific purpose, yet Chicago [Title] continues to possess that money.

In ¶ 11 of the petition, the Hartises alleged that “Chicago [Title] collected a recording fee from Missouri residents alone over a five[-]year period on more than 71,000 transactions.” They also claimed that, “[a]part from Missouri, Chicago [Title] acts as an escrow and disbursement agent in connection with real estate closings in sixteen other states and the District of Columbia.”

According to ¶ 12 of the petition,

[e]ach member of the class will have in common the following with one another and with the Hartises: what amount was entrusted to Chicago [Title] to be disbursed for recording fees, what was paid for recording fees, did Chicago [Title] retain possession of over[-]collected recording fees. The Hartises and each member will have the same relationship with Chicago [Title] and each class members['] damages will be calculated in the identical fashion. The legal theory of the Hartises and each class member is identical and based on the same conduct. These common questions of law and fact predominate over any questions affecting only individual class members.

As to typicality, the Hartises alleged in ¶ 13 of the petition that their “claims are essentially identical, and therefor[e] typical of, the claims of each other class member in that they are based on identical relationship with Chicago [Title] and identical conduct of Chicago [Title] in each transaction and are based on the same legal theory.”

“The petition asserted a claim for conversion and sought money damages for the class members that was ‘fair and reasonable,’ reasonable attorneys' fees and expenses, and other relief.” Hartis, 656 F.3d at 779.

B. Chicago Title's Removal and the Hartises' Motion to Remand

“Chicago Title filed a timely notice of removal, invoking 28 U.S.C. §§ 1332, 1441, 1446, and 1453.” Id. Chicago Title contended in its notice of removal

that it is deducible from the face of the petition that the amount in controversy exceeds $5 million. Chicago Title pointed to the petition's contention that Chicago Title collected a recording fee from Missouri residents alone on more than 71,000 transactions over a five-year period. Chicago Title reasoned that, due to the volume of transactions that it has conducted in just one state over a five-year period and the fact that the proposed class, as outlined in the petition, includes potential members in 17 states and the District of Columbia, the amount in controversy clearly exceeds $5 million. Chicago Title provided the district court with an affidavit from Janet E. Ellis, Senior Vice President and Chief Technology Officer of Fidelity National Management Services, in which Ellis stated that she provides information technology support services to Chicago Title and that, based on the information available to her in her professional capacity, Chicago Title collected recording fees in approximately 2,235,000 transactions during the five-year period between 2002 and 2006. Chicago Title suggested that if the class representatives' overcharges ($12 on average per transaction) are typical of the putative class, and if the district court looked at either 71,000, the transaction quantity figure presented by the class representatives for a five-year period in Missouri, or 2,235,000, the national figure presented in the Ellis affidavit, the $5 million jurisdictional minimum is clearly exceeded.

Id. at 780.

Following Chicago Title's notice of removal, the Hartises “moved to remand to state court, asserting that the district court lacked subject matter jurisdiction because a preponderance of the evidence does not indicate that the amount in controversy exceeds $5 million.” Id. Specifically, they argued “that Chicago Title's jurisdictional argument, as it stands, which is based on the number of transactions in which an overcharge could have occurred rather than on actual evidence of overcharges, is insufficient.” Id. According to the Hartises, “in order to meet its burden, Chicago Title must provide extensive evidence of specific overcharges sufficient to prove up the $5 million threshold.” Id.

The district court denied the Hartises' motion to remand. “In its first determination of jurisdiction,” the court concluded that the CAFA jurisdictional amount of $5 million was satisfied “ ‘[b]ased on the damages alleged in [the Hartises'] petition, the size of the potential class in this case, [the Hartises'] allegation that Chicago Title over-collected in many of its transactions, and the information provided by [Chicago Title] in the Ellis affidavit.’ ” Id. (quoting Appellants' Addendum at 4). “Later in its order, when discussing whether or not the jurisdictional threshold would be reached if Chicago Title's transactions in only 12 states were considered ..., the court did include ‘the potential for collection of significant attorneys fees' as a factor in determining that ... the $5 million threshold was met.” Id. at 780–81 (quoting Appellants' Addendum at 4–5).

C. Appeal of Denial of Motion to Remand

The Hartises appealed the district court's denial of their motion to remand, arguing, inter alia, that “the district court erred in relying on attorneys' fees to find that the requisite amount in controversy was met because only statutory attorneys' fees can be counted towards the jurisdictional amount and they sought no statutory fees in their state court petition.” Id. at 781.

Because “[i]t [was] unclear to us whether or not the district court included an amount for attorneys' fees in its calculation of the jurisdictional amount,” we “remand[ed] to the district court for a redetermination of whether Chicago Title ha[d] proven, by a preponderance of the evidence, that the amount in controversy is satisfied.” Id. at 782.

We did “not address the [Hartises'] ... argument that the record before the district court was insufficient to support the conclusion that it is more likely than not that the amount in controversy exceeds $5 million” because of our remand to the district court regarding its “possible erroneous inclusion of the [Hartises'] claim for ‘reasonable attorneys' fees.’ ” Id. at 782 n. 1.

D. Second Denial of Motion to Remand

On remand, the district court concluded that “after omitting from its consideration [the Hartises'] claim for reasonable attorneys' fees, ... Chicago Title has proven by a preponderance of the evidence that the amount in controversy in this case exceeds $5 million.” The court reached this conclusion “after considering the damages alleged in [the Hartises'] petition, the size of the potential class in this case, [the Hartises'] allegation that Chicago Title over-collected in many of...