Am. Homeland Title Agency, Inc. v. Robertson
| Decision Date | 28 September 2018 |
| Docket Number | No. 1:15-cv-02059-SEB-DML,1:15-cv-02059-SEB-DML |
| Citation | 348 F.Supp.3d 852 |
| Parties | AMERICAN HOMELAND TITLE AGENCY, INC., John Yonas, Martin Rink, Plaintiffs, v. Stephen W. ROBERTSON, Commissioner, Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
Sara Marie McClammer, Bennett & McClammer LLP, Harry Kennard Bennett, Indianapolis, IN, Joshua Adam Engel, Mary Martin, Engel and Martin LLC, Mason, OH, for Plaintiffs.
Christopher Andrew Farrington, David A. Arthur, Indiana Attorney General, John R. Maley, Leah Lewis Seigel, Barnes & Thornburg, LLP, Indianapolis, IN, for Defendant.
ORDER ON PENDING MOTIONS
Plaintiffs American Homeland Title Agency, Inc., John Yonas, and Martin Rink, have brought this action against Defendant Stephen W. Robertson in his individual capacity as well as his official capacity as Commissioner of the Indiana Department of Insurance, claiming that their constitutional rights under the Equal Protection Clause of the Fourteenth Amendment were violated by the Department. Plaintiffs seek a Declaratory Judgment and Permanent Injunction as well as money damages. Now pending before the Court are Defendant's Motion to Dismiss for Lack of Standing [Dkt. No. 110]; Motion in Limine (to Exclude Expert Testimony) [Dkt. No. 112]; Motion for Oral Argument on Pending Motions [Dkt. No. 117], and Motion for Summary Judgment [Dkt. No. 120], all of which were filed on October 16, 2017. Plaintiffs responded on November 22, 2017 [Dkt. No. 129] and Defendant replied on December 13, 2017 [Dkt. No. 144]. The motions are ripe for ruling. For the reasons detailed below, we DENY Defendant's Motion to Dismiss Plaintiffs' Complaint for lack of Standing, DENY Defendant's Motion for Oral Argument, GRANT Defendant's Motion in Limine, and GRANT Defendant's Motion for Summary Judgment.
The facts of this case have been set forth in detail in our ruling on Defendant's first Motion to Dismiss (Dkt. No. 69) and were summarized thereafter in our order on Defendant's second Motion to Dismiss (Dkt. No. 80). For convenience, we recount again here the relevant facts underlying our previous orders as well as the procedural history of the case, adding certain facts that have been recently advanced in the parties' current briefing. Dkt. No. 111, Defendant's Brief in Support of Motion to Dismiss for Lack of Standing ("Def.'s Br."); Dkt. No. 129, Plaintiffs' Response in Opposition to Defendant's Motions ("Pls' Resp.").
Plaintiff American Homeland Title Agency, Inc. ("American Homeland"), an Ohio company, performs title searches of real property and sells title insurance policies to protect purchasers against future losses resulting from defects of title. In the title insurance business for over ten years primarily in Ohio, American Homeland entered the Indiana market and began providing these services here some time prior to January 2015. The co-owners of American Homeland, Martin Rink and Josh Yonas, are both licensed attorneys who have invested many years in the insurance business.
The IDOI is the Indiana government entity charged with regulating title insurance companies doing business in Indiana. To perform this function, the IDOI employs a team of examiners who conduct audits of insurers' agencies pursuant to Ind. Code § 27-1-3.1-10 in order to ensure compliance with Indiana statutes and regulations. Following the audit, the IDOI follows a process for determining fines and penalties for companies found to have violated Indiana law, which includes providing the company with a copy of an examination report within sixty days of the completion of an examination. Ind. Code § 27-1-3.1-10(b). At the time of the events leading up to this litigation, IDOI's staff included Jonathan Handsborough, a non-attorney investigator/auditor, and attorney Joshua Harrison.
In or around September 2014 at the direction of Commissioner Robertson, the IDOI began using an internally produced document as guidance for its examiners in exercising its regulatory discretion and determining "generally reasonable" fines and penalties to impose on agencies or agents found to have committed violations of Indiana insurance law. Deposition of Joshua Harrison, Dkt. No. 118-1 ("Harrison Dep.") at 17-18. IDOI examiners understood that "in every instance, specific facts and circumstances must be considered to determine an appropriate outcome." Id. at 19.
As former IDOI Commissioner Randall Evans explained, in conducting an audit an IDOI examiner makes findings, determines the appropriate fines and penalties per applicable guidelines, and then brings the information to the IDOI enforcement division director. Dkt. No. 118-7, Deposition of Randall Evans ("Evans Dep."). Once the agency formulates an Agreed Entry, the examiner drafts the Final Order, which goes to the director, back to the examiner, on to an attorney within the Department, then back to the examiner, and finally to the Commissioner. Deposition of Jonathan Handsborough, Dkt. No. 118-8 ("Handsborough Dep.") at 29. Commissioner Robertson's role is to "review and sign off on [ ] recommendations to him for fines and penalties, revocations of licenses." Evans Dep. at 11. Although the Commissioner is the "final decision-maker," as a general matter, he "tends to follow" the recommendations of his staff. Id. at 27.
In January 2015, the IDOI selected American Homeland for audit, pursuant to which Handsborough, then-Senior Insurance Examiner at the IDOI, after reviewing 166 incidents involving American Homeland, discovered hundreds of violations, including deficiencies such as the following: 148 files in which unlicensed employees signed HUD-1 Settlement Statements; numerous outstanding checks that were six months old or older; 145 policies in which the Title Insurance Enforcement Fund Fee was not disclosed on the HUD-1 Settlement Statement as required by law; 93 transactions with excessive lag times for policy remittance; 250 policies that were not submitted for inclusion into the Residential Real Estate Acquisition of Licensee Information and Numbers Database; 139 files in which customers were overcharged for premiums by amounts ranging from $75 and $625, amounts in some instances up to four times the underwriter listed rates; and files lacking the provision of Closing Protection Letters when required.1 Dkt. No. 118-2.
Based upon Handsborough's findings, the IDOI determined that American Homeland had engaged in conduct violative of Indiana title statutes and regulations and recommended imposition of a $70,082 fine and a requirement that the company reimburse Indiana consumers in the amount of $42,202.
On February 11, 2015, Handsborough emailed Plaintiffs Rink and Yonas a detailed list of violations along with corresponding fines and penalties. Dkt. No. 118-4 (2/20/2017 Letter). A few days later, Handsborough contacted Yonas and Rink by phone to follow up.2 During the call, Handsborough emphasized that "the reimbursement piece [of the recommended sanctions] is a must." Dkt. No. 118-5 at 2 (Trans. 2/17/2015) He also encouraged Rink and Yonas to request that their internal accountants "come up with your number then we can actually look at the two and see where we might have discrepancies, so on and so forth," acknowledging that he (Handsborough) himself "is not perfect either." Id.
After asking for some "wiggle room" regarding these penalties for unlicensed individuals signing documents, Yonas said to Handsborough, "I'm not trying to be confrontational but if this is not negotiable, I can tell you, no Indiana consumer's going to get reimbursed 'cause we're going to close the doors." Id. at 3-4. In the response to the remark about Plaintiffs' ability to remain in business, Handsborough said:
Yeah, I mean it's definitely not our intent to put people out of Business. I mean obviously I don't want people out of work and so on and so forth and yeah you guys could go find jobs, but there are people that work there in the office that probably wouldn't be as easy for them as it is for you all. But at the same time please understand if you guys aren't writing this business in Indiana[;] people in Indiana probably would be writing it, so I do see both sides of it in terms of [how] that goes but yeah you've got people there are just trying to feed their family.
Id. Yonas and Rink apparently heard that comment as proof that the IDOI prefers in-state companies over out-of-state companies like theirs. When asked later about the meaning of this comment, Handsborough stated: "[M]y intent was that if they don't write the business in Indiana, then the Indiana business will get written." Handsborough Dep. at 129. There is no evidence in the record before us that Commissioner Robertson endorsed, let alone knew about this comment.
During the same telephone conversation, Rink and Yonas voluntarily offered to give up their Indiana insurance licenses; Yonas remarked: Id. at 5.
Handsborough informed Plaintiffs that they had two options going forward: (1) to pay the fine and penalty and also reimburse the customers of Indiana for the amounts they were overcharged; or (2) engage in a hearing with an administrative law judge to review and perhaps challenge the violations uncovered during the audit examination and the corresponding penalties and fines. Id. at 6-7. Handsborough further advised that if a hearing were requested it could involve a longer period of review than the three years he had included in his examination and might entail "the possibility of additional fines." Id. at 6-7. In terms of lowering the fine amount, Handsborough explained that his "ability to be flexible" was limited "based on the numbers." Id. at 8. Specifically, Handsborough said that nearly "every...
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...law governs issues concerning the formation, construction, and enforcement of settlement agreements." Am. Homeland Title Agency, Inc. v. Robertson, 348 F. Supp. 3d 852 (S.D. Ind. 2018) (citing Beverly v. Abbott Labs., 817 F.3d 328, 333 (7th Cir. 2016)). The Indiana Court of Appeals has expl......