Chicago Title Ins. Co. v. Butler

Decision Date19 October 2000
Docket NumberNo. SC95312.,SC95312.
Citation770 So.2d 1210
PartiesCHICAGO TITLE INSURANCE CO., et al., Appellants, v. S. Clark BUTLER, et al., Appellees.
CourtFlorida Supreme Court

Davisson F. Dunlap, Jr., and Robert Pass of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tallahassee, Florida, and Mark A. Brown of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tampa, Florida; Michael E. Marder and Stephanie A. Yelenosky of Greenspoon, Marder, Hirschfeld, Rafkin, Ross & Berger, P.A., for Commonwealth Land Title Insurance Company, Orlando, Florida; Zollie M. Maynard and William C. Owen of Panza, Maurer, Maynard & Neel, P.A., Tallahassee, Florida; Douglas A. Mang and Wendy Russell Wiener of the Mang Law Firm, P.A., Tallahassee, Florida; Lee Huszagh, Florida Land Title Association, Tallahassee, Florida; Michael L. Peterson, Florida Association of Independent Title Agents, Inc., Apollo Beach, Florida; William H. Hughes, III and Kevin X. Crowley of Pennington, Moore, Wilkinson, Bell and Dunbar, P.A., Tallahassee, Florida; and George P. Daniels, American Pioneer Title Insurance Company, Casselberry, Florida, for Appellants.

Thomas J. Guilday, Vikki R. Shirley and Roberto M. Vargas of Huey, Guilday & Tucker, P.A., Tallahassee, Florida; Daniel Y. Sumner, General Counsel, and S. Marc Herskovitz, Senior Attorney, Division of Legal Services, Florida Department of Insurance, Tallahassee, Florida; and B. Forest Hamilton and Benjamin K. Phipps of The Phipps Firm, Tallahassee, Florida, for National Title Insurance Company, for Appellees.

John G. Crabtree, Ocala, Florida; and G. Thomas Smith of Smith, Sauer, DeMaria, Pensacola, Florida, for The Real Property, Probate & Trust Law Section of The Florida Bar, Amicus Curiae.

PER CURIAM.

We have for review a trial court order declaring several anti-rebate statutes regarding the premiums to be negotiated between title insurance agents and consumers to be unconstitutional. The district court certified the issue as one involving a question of great public importance, requiring immediate resolution by this Court. We have jurisdiction. Art. V, § 3(b)(5), Fla. Const. For reasons expressed below, we affirm the trial court's order declaring the statutes unconstitutional.

MATERIAL FACTS

S. Clark Butler, a builder and developer, challenges the constitutionality of sections 626.611(11),1 626.8437,2 626.9541(1)(h)3.a.,3 627.780,4 627.7825 and 627.7836 of the Florida Statutes (1997) and rule 4186.003(13)(a) of the Florida Administrative Code,7 which prohibit title insurance agents from negotiating or rebating to their clients any portion of the risk premium charged for the issuance of title insurance. The risk premium, as defined by statute, is the charge by a title insurer for assuming the risk of issuing the title insurance. See § 627.7711, Fla. Stat. (1997).8 Under the Insurance Code and administrative rules in effect at the time Butler filed suit, for policies sold by agents, title insurers are guaranteed thirty percent of the risk premium and title insurance agents retain the remaining seventy percent. See § 627.782(1). Butler seeks the right to negotiate the agent's share of the risk premium only.

In pursuit of this end, Butler filed a complaint against the Department of Insurance seeking a declaratory judgment that sections 626.572, 626.9541(1)(h)3.a., and 626.611(11), Florida Statutes (1997), and rule 4-186.003(13) were unconstitutional as a violation of his substantive due process rights under article I, section 9 of the Florida Constitution.9 The Florida Home Builders Association and National Title Insurance Company subsequently intervened as plaintiffs. On the other hand, several title insurance agents and companies intervened as defendants, including Chicago Title Insurance Company, American Pioneer Title Insurance Company, Florida Land Title Association, Attorney's Title Insurance Fund, Inc., Florida Association of Independent Title Insurance Agents, Commonwealth Land Insurance Company, Lawyers Title Insurance Company, and Stewart Title Guaranty Company (hereinafter referred to as "Appellants").

Butler moved for partial summary judgment to establish that section 626.572, Florida Statutes (1997), which permits rebates by insurance agents in certain circumstances, applies to title insurance agents as well. The circuit court denied Butler's motion, finding that section 626.572 does not apply to title insurance agents. Butler then filed a second amended complaint, adding sections 626.8437, 627.780, 627.782 and 627.783 to his constitutional challenge. Subsequently, all parties moved for summary judgment.

Butler claimed that the statutory and rule provisions prohibiting title insurance agents from negotiating partial rebates of their fees with their customers deprived him of his constitutionally secured property interest in contracting and negotiating a commission paid to title insurance agents. Although the circuit court recognized the defendants' interest in "maintaining a `viable and orderly private sector market for property insurance in this state'" which it felt justified the regulation of rates and rebates in the challenged provisions, the court nonetheless invalidated the anti-rebate statutes under the authority of Department of Insurance v. Dade County Consumer Advocate's Office, 492 So.2d 1032 (Fla.1986), which held that similar statutes prohibiting rebates of commissions paid to insurance agents were unconstitutional. In a separate order, the circuit court clarified that it declared unconstitutional "only those provisions of the statutes that prohibit an agent from rebating any portion of his or her commission" and that by use of the term "commission" the court meant "the agent's share of the risk premium."

The parties on both sides appealed to the First District Court of Appeal.10 Upon the parties' motion, the district court certified this case as one involving an issue of great public importance requiring immediate resolution by this Court.11 This appeal follows.

APPEAL

Appellants argue that the trial court erred in declaring the anti-rebate statutes unconstitutional under Dade County because title insurance agents are different from the insurance agents at issue in that case. They contend that title insurance agents are unique in that their responsibilities and quality of performance directly affect the soundness of the policy, the total premium customers pay, and the solvency of the title insurance industry. Butler, on the other hand, argues that the anti-rebate statutes infringe on a citizen's right to bargain or negotiate for insurance rates, thereby violating his substantive due process rights under article I, section 9 of the Florida Constitution.12

We begin our analysis with the premise that all laws are presumed constitutional. See Florida Dept. of Educ. v. Glasser, 622 So.2d 944, 946 (Fla.1993)

; Larson v. Lesser, 106 So.2d 188, 191 (Fla. 1958). The burden rests on the party challenging the law to show that it is invalid. See Village of North Palm Beach v. Mason, 167 So.2d 721, 726 (Fla.1964). The test to be applied in determining whether a statute violates due process is whether the statute bears a rational relation to a legitimate legislative purpose in safeguarding the public health, safety, or general welfare and is not discriminatory, arbitrary, or oppressive. See Lane v. Chiles, 698 So.2d 260, 263 (Fla.1997); Lite v. Slate, 617 So.2d 1058, 1059 (Fla.1993); Belk-James, Inc. v. Nuzum, 358 So.2d 174, 175 (Fla.1978); Lasky v. State Farm Ins. Co., 296 So.2d 9, 15 (Fla.1974); Stadnik v. Shell's City, Inc., 140 So.2d 871, 874 (Fla.1962).

After considering these well-established principles of law, we conclude, as did the trial court, that this case is virtually indistinguishable from the circumstances and statutes at issue in Department of Insurance v. Dade County Consumer Advocate's Office, 492 So.2d 1032 (Fla.1986), which declared similar statutes to be invalid as an unconstitutional infringement on the public's right to effective bargaining power with those from whom they seek to purchase services.

Dade County Consumer Advocates' Office

In Dade County, the Consumers Advocate's Office (Consumer Advocate) filed a complaint against the Department of Insurance alleging that certain anti-rebate statutes prevented price competition with respect to insurance agents' commissions, thereby depriving consumers of their property without due process in violation of article I, section 9 of the Florida Constitution.13 The Department of Insurance argued that the anti-rebate statutes guaranteed insurer solvency and prevented discrimination against insureds in the same actuarial class. The Department and various amici further argued that the antirebate statutes advanced the economic protection of Florida consumers by establishing uniform rates; that, in the absence of these laws, similarly situated consumers would pay different prices for the same policy; that consumers' efforts to compare prices would be thwarted; that consumers would focus on the size of the rebate rather than the quality of insurance; that premiums would increase as a result of pressure by agents for larger commissions so as to offer large rebates; and that many policies would lapse because consumers would replace their policies each year with new policies by different agents offering larger rebates, resulting in higher administrative costs. The trial court found the challenged statutes to be a valid exercise of police power and regulatory authority to protect the public from discrimination. The district court reversed, concluding that it was unable to find a legitimate state interest "justifying the continued existence of the anti-rebate statutes." Dade County Consumer Advocate's Office v. Department of Ins., 457 So.2d 495, 497 (Fla. 1st DCA 1984).

On review, this Court affirmed, finding that the anti-rebate statutes at issue unconstitutionally interfered with a citizen's property rights by...

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