Chapman v. Commonwealth Land Title Ins. Co.

• Citation: 814 F.Supp.2d 716
• Decision Date: 02 September 2011
• Docket Number: Civil Action No. 3:09–CV–0188–L.
• Parties: Jerry CHAPMAN, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. COMMONWEALTH LAND TITLE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Texas

814 F.Supp.2d 716

Jerry CHAPMAN, Individually and On Behalf of All Others Similarly Situated, Plaintiff,

v.COMMONWEALTH LAND TITLE INSURANCE COMPANY, Defendant.

Civil Action No. 3:09–CV–0188–L.

United States District Court, N.D. Texas, Dallas Division.

Sept. 2, 2011.

Eric G. Calhoun, Richard J. Pradarits, Jr., Travis Calhoun & Conlon PC, Dallas, TX, for Plaintiff.

Derek E. Diaz, Robert J. Fogarty, Robert B. Port, Steven A. Goldfarb, Hahn Loeser & Parks LLP, Cleveland, OH, Keith R. Verges, Lance V. Clack, Figari & Davenport, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

SAM A. LINDSAY, District Judge.

Before the court is Defendant's Motion for Summary Judgment, filed August 16, 2010. After carefully reviewing the motion, response, reply, record, and applicable law, the court grants in part and denies in part Defendant's Motion for Summary Judgment.

I. Procedural and Factual Background

Plaintiff Jerry Chapman (“Chapman” or “Plaintiff”) filed this putative class action lawsuit against Defendant Commonwealth Land Title Insurance Company (“Commonwealth” or “Defendant”) on January 29, 2009. Plaintiff's Original Complaint (the “Complaint”) asserts claims of money had and received, unjust enrichment, violations of 12 U.S.C. § 2607(b) of the Real Estate Settlement Procedures Act (“RESPA”), and breach of implied contract.

In the Complaint, Chapman contends that Defendant improperly charged him an unearned fee of $260.50 for lender title insurance in connection with the refinancing of his mortgage loan. Plaintiff contends that in December of 2002, he obtained a mortgage loan on his home from Lonestar Residential Lending in the principal amount of $148,000 (the “first loan”). Following closing, the lender required Plaintiff to purchase a lender title policy in the amount of the note on his home. Plaintiff refinanced the first loan on September 12, 2007 (the “refinance loan”). Plaintiff obtained the refinance loan from JP Morgan Chase Bank, N.A. (“Chase”) in the principal amount of $165,749. At closing, Plaintiff was required to purchase a lender title policy issued by Defendant, which insured Chase. Plaintiff was required to pay a premium of $1,303.45 to Commonwealth for the lender title policy.

Plaintiff contends that because the reissue lender title policy was issued fewer than five years after the date of the prior loan, under Texas law, Defendant was required to discount (“discount” or “R–8 credit”) the basic premium charge for the reissue policy. Plaintiff maintains that the payoff on the mortgage was $137,204.53. The title agent recorded a Release of Lien, identifying the prior mortgage in the Deed Records of Dallas County, Texas, which acknowledged that the prior loan had been paid in full. The title agent allegedly charged Plaintiff $24 to record the release. The Basic Rate premium in effect at the time based upon the payoff balance was $1,042. Chapman contends that he was entitled to a discount equal to 25% of that amount, a total of $260.50. Plaintiff contends that he was not given the discount. Consequently, Plaintiff contends that he was charged an allegedly unearned fee of $260.50 for lender title insurance. Chapman argues that Defendant did not perform any services to earn the $260.50 fee. Plaintiff contends that the allegedly illegal unearned premium was split between Commonwealth, the title agent that issued the policy, and the fee attorney that assisted with closing the transaction.

The court entered judgment on February 28, 2011, 2011 WL 721915. The court determined that Chapman failed to raise a genuine issue of material fact as to the doctrine of equitable tolling regarding the statute of limitations on his RESPA claim. Further, the court, applying principles of comity, determined that there was no reason for it to retain jurisdiction over Plaintiff's state law claims and dismissed the claims without prejudice. In a memorandum opinion and order issued on September 1, 2011, 2011 WL 3880478, the court vacated its February 28, 2011 judgment with respect to Plaintiff's state law claims and reinstated them. By reinstating these claims, the court will now consider Defendant's summary judgment arguments related to Plaintiff's state law claims as the claims were incorrectly dismissed on alternative grounds.^*

II. Defendant's Subject Matter Jurisdiction Contentions

In Defendant's motion, it argues that Plaintiff failed to exhaust his administrative remedies, and, thus, the court lacks subject matter jurisdiction over the state law claims. In the alternative, Defendant contends that even if the court could exercise jurisdiction over the state law claims, it should defer from doing so under the primary jurisdiction doctrine. Plaintiff disagrees with each of Defendant's contentions.

A. Legal Standard–Rule 12(b)(1) Subject Matter Jurisdiction

A federal court has subject matter jurisdiction over civil cases “arising under the Constitution, laws, or treaties of the United States,” or over civil cases in which the amount in controversy exceeds $75,000, exclusive of interest and costs, and in which diversity of citizenship exists between the parties. 28 U.S.C. §§ 1331, 1332. Federal courts are courts of limited jurisdiction and must have statutory or constitutional power to adjudicate a claim. See Home Builders Ass'n of Mississippi, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir.1998). Absent jurisdiction conferred by statute or the Constitution, they lack the power to adjudicate claims and must dismiss an action if subject matter jurisdiction is lacking. Id.; Stockman v. Federal Election Comm'n, 138 F.3d 144, 151 (5th Cir.1998) (citing Veldhoen v. United States Coast Guard, 35 F.3d 222, 225 (5th Cir.1994)). A federal court has an independent duty, at any level of the proceedings, to determine whether it properly has subject matter jurisdiction over a case. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (“[S]ubject-matter delineations must be policed by the courts on their own initiative even at the highest level.”); McDonal v. Abbott Labs., 408 F.3d 177, 182 n. 5 (5th Cir.2005) (“federal court may raise subject matter jurisdiction sua sponte ”).

In considering a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, “a court may evaluate (1) the complaint alone, (2) the complaint supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir.), cert. denied, 534 U.S. 1127, 122 S.Ct. 1059, 151 L.Ed.2d 967 (2002); see also Ynclan v. Dep't of Air Force, 943 F.2d 1388, 1390 (5th Cir.1991). Thus, unlike a Rule 12(b)(6) motion to dismiss for failure to state a claim, the district court is entitled to consider disputed facts as well as undisputed facts in the record. See Clark v. Tarrant County, 798 F.2d 736, 741 (5th Cir.1986). All factual allegations of the complaint, however, must be accepted as true. Den Norske Stats Oljeselskap As, 241 F.3d at 424.

B. Analysis

Commonwealth argues that the court lacks subject matter jurisdiction over Plaintiff's state law claims because the Texas Department of Insurance (“TDI”) has exclusive jurisdiction over such claims, and Plaintiff has not exhausted his administrative remedies. Specifically, Commonwealth contends that claims arising out of alleged violations of the Texas Title Insurance Act (the “TTIA”) fall within the exclusive jurisdiction of the TDI. Defendant contends that the Texas Legislature expressly wrote exclusive jurisdiction into the text of the TTIA. Further, Defendant contends that the pervasive nature of the TTIA regulatory scheme confers exclusive jurisdiction to the TDI as evidenced by the Commissioner of the TDI's roles and responsibilities. Defendant contends that the Commissioner, the chief executive of the TDI, adopted necessary rules and procedures for the enforcement of the TTIA. Thus, Defendant contends that the claims are better heard before the TDI because the Commissioner has specialized knowledge to resolve disputes concerning the TTIA.

Plaintiff responds that this court has subject matter jurisdiction over his state law claims. Specifically, Plaintiff contends that the Texas Legislature did not expressly confer exclusive jurisdiction over his state law claims. Plaintiff argues that the Texas Legislature knows how to, and does, demonstrate the intent to expressly create exclusive jurisdiction or exclusive remedies in other codes. Further, Plaintiff contends that the phrase “completely regulate” does not rise to the level of language contained in other statutes that Texas courts have held create exclusive agency jurisdiction. Plaintiff also contends that no relevant “administrative remedy” exists for resolving disputes between consumers and insurers. Plaintiff further argues that Defendant's pervasive scheme argument ignores the summary judgment evidence.

Defendant replies that the express language of the TTIA clearly grants exclusive jurisdiction to TDI. Defendant argues that the absence of the words “exclusive jurisdiction” does not negate the effect of similar words like “express legislative intent” and “completely regulate.” Defendant further contends that the use of the word “exclusive” in other statutes does not negate exclusive jurisdiction in this situation. Defendant also contends that Plaintiff's pervasive regulatory scheme arguments fail because among Texas statutes the TTIA is uniquely pervasive.

Under Texas law, there is a presumption that state “district courts are authorized to resolve disputes unless the Constitution or other law conveys exclusive jurisdiction on another court or administrative agency.” In re Southwestern Bell Tel. Co., L.P., 235 S.W.3d 619, 624 (Tex.2007). “Determining whether [an agency] has exclusive jurisdiction requires the examination and...