Commonwealth Land Title Ins. Co. v. Higgins

• Decision Date: 06 March 2008
• Docket Number: No. 1D07-0946.,1D07-0946.
• Citation: 975 So.2d 1169
• Parties: COMMONWEALTH LAND TITLE INSURANCE COMPANY, Petitioner, v. Kenneth HIGGINS and Deete Higgins, on behalf of themselves and all others similarly situated, Respondents.
• Court: Florida District Court of Appeals

975 So.2d 1169

COMMONWEALTH LAND TITLE INSURANCE COMPANY, Petitioner, v. Kenneth HIGGINS and Deete Higgins, on behalf of themselves and all others similarly situated, Respondents.

No. 1D07-0946.

District Court of Appeal of Florida, First District.

March 6, 2008.

Mark A. Brown, Joseph Hagedorn Lang, Jr., and Marty J. Solomon of Carlton Fields, P.A., Tampa, for Petitioner.

P. Scott Russell, IV, of P. Scott Russell, P.A., Jacksonville; Stanley M. Grossman, D. Brian Hufford, and Robert J. Axelrod of Pomerantz, Haudek, Block, Grossman & Gross, LLP, New York; and Jeffrey M. Liggio of Liggio, Benrubi & Williams, P.A., West Palm Beach, for Respondents.

VAN NORTWICK, J.

Commonwealth Land Title Insurance Company has filed a petition for writ of certiorari seeking this court's review of an order granting a motion to compel discovery filed by Kenneth E. Higgins and Deete Higgins, respondents and plaintiffs below. The respondents sued Commonwealth on their own behalf and on behalf of a putative class of homeowners, alleging that they were not provided a discounted title insurance rate, known as the "reissue rate," for which they may have been eligible when they refinanced their homes for the period July 1, 1999 to the present. The question presented here is whether the trial court abused its discretion when, prior to a class certification determination, it ordered, in effect, full merits discovery of all "documents concerning, referring or relating to title insurance reissue rates" in the possession of Commonwealth and approximately 1,000 of its independent title insurance agents.¹ We find that Commonwealth introduced uncontradicted evidence demonstrating that the precertification discovery requested is unduly burdensome and will result in irreparable injury at this stage of the litigation; and that the trial court departed from the essential requirements in ordering full merits discovery of the closing files of Commonwealth and its agents. Accordingly, we conclude that the trial court abused its discretion and grant certiorari relief.

Factual and Procedural Background

In their putative class action suit, the respondents raise claims of breach of third party beneficiary contract and unjust enrichment on behalf of themselves and others who did not receive a discounted title insurance reissue rate when they refinanced their home mortgages. Commonwealth is a title insurance underwriter, licensed to sell title insurance in the State of Florida. See § 627.7711(3), Fla. Stat. (2003). The respondents allege that they were entitled to receive the statutory reissue premium rate for title insurance from Commonwealth, pursuant to section 627.7825(27), Florida Statutes, and Florida Administrative Code Rule 69O-186.003, when they refinanced their mortgage on June 6, 2003.² The respondents assert that under section 627.780, Florida Statutes (2003), a title insurance company and its agents are prohibited from deviating from the rates established by Florida law.³ The complaint alleges that Commonwealth "has a non-delegable duty associated with the sale of title insurance ... to calculate the correct premium;" that the actions of Commonwealth's agents involved in the sale of title insurance are attributable to Commonwealth; that Commonwealth "systematically failed to train its sales and other agents, employees, apparent agents, and representatives adequately concerning the applicability of the reissue rates that should have been made available to" the respondents and the other members of the class; and that, in the course of conducting title searches on the property of the respondents and other class members, Commonwealth would have learned that the parties were refinancing their mortgages.

The complaint further alleges that when the respondents purchased their home in 1999 they obtained an owner's title insurance policy from Commonwealth. When they refinanced their mortgage loan in 2003, the new lender obtained a lender's title insurance from Commonwealth under which the respondents were third party beneficiaries. At the time of the 2003 refinancing, the respondents were charged and paid at closing a premium of $1,390.00, which is the full premium based upon the applicable initial loan rate under Florida law. The reissue rate applicable to refinancing of their home, however, was $819.00. Thus, according to the complaint, Commonwealth overcharged the respondents by $571.00 in 2003.

The respondents filed requests for production and sets of interrogatories seeking, among other things, "documents concerning, referring, or relating to title insurance reissue rates." Commonwealth objected to each request and interrogatory and ultimately filed a Motion for Protective Order. In this motion, Commonwealth stated that complying with the discovery requests "would be a monumental task" because Commonwealth has over 1,000 independent agents who issue hundreds of policies each year. Commonwealth further claimed it had "no practicable systematic method for locating such documentation within agents' files because each agent documents its files in its own way, and such documentation is not ordinarily provided by the agent to Commonwealth." Commonwealth further stated:

While Commonwealth recognizes that there is likely some documentation in these files that may be relevant to the class certification issues in this case, the overwhelming burden presented by review of independent agents' files is not justified in light of the relationship between these documents and the burden Plaintiffs bear on their anticipated motion for class certification.

Commonwealth asserted that, although some documents in the agents' files would show that some transactions involved consumers eligible for the reissue rate who were not told of their right thereto, "the individual issues of what unnamed members of the putative class knew and were told overwhelm any common issues in this case" and "this documentation cannot assist Plaintiffs in carrying their burden on class certification" because "Plaintiffs could carry that burden only by demonstrating that there is a method whereby, at trial, they could prove their own case and simultaneously prove the case of each unnamed member of the putative class." Commonwealth concludes, "In other words, only by demonstrating that they do not need these documents could Plaintiffs prevail on the issue of class certification."

In support of its Motion for a Protective Order, Commonwealth introduced an affidavit of the Florida general counsel for Land America Financial Group, Inc., Commonwealth's parent corporation. This affidavit shows that Commonwealth does not maintain the closing files which contain the requested documents. Rather, the files are maintained by 1,073 title insurance agents which are separate, distinct, and independent entities from Commonwealth, including 445 lawyers and law firms in Florida. These agents and the requested documents are located in separate facilities in 168 cities throughout Florida. In response to the discovery request, Commonwealth produced a CD-Rom containing the equivalent of 6,155 pages of Excel spreadsheets detailing the agent number, policy number, policy date, amount of insurance, type of premium (i.e. original or reissue), and amount of premium for each of the 319,744 non-simultaneously issued loan policies from July 1999 (the beginning of the putative class period) through April 2006 (when the data were generated).⁴ The affidavit further states that, based on the experience of the affiant in the title insurance industry, the issuance of non-simultaneously issued loan policies "most often suggest[ ] a financing transaction." As a result, the affidavit states that the respondents are seeking production of approximately 319,744 loan closing files in the possession of the independent title agents. The affiant explained that the respondents' loan closing file produced below contains 216 pages of documents, which, in affiant's view, is not unusual in size. Thus, if each of the 319,774 closing files contains an average of 216 pages, the discovery request involves 69,064,704 pages of documents.

The respondents then filed a Motion to Compel Discovery from Defendant. A hearing occurred and, in an order rendered on January 26, 2007, the trial court granted the motion to compel. The subject order directs Commonwealth to "forthwith respond fully and completely to interrogatories and request for production at issue on this motion." The order further provides: "To the extent that information sought can not be derived except by review of paper files, [Commonwealth] may implement alternatives which have been suggested by Plaintiffs through counsel in their discussions and correspondence with [Commonwealth], including producing files to Plaintiffs so that Plaintiffs may review the files themselves." Commonwealth now seeks relief in the form of a writ of certiorari.

Precertification Discovery

Under rule 1.220(d)(1), Florida Rules of Civil Procedure, a court "may order postponement of the determination [of class certification] pending the completion of discovery concerning whether the claim or defense is maintainable on behalf of a class." As a general rule, however, precertification discovery should be limited to matters relevant to class certification, not the merits of the case. Policastro v. Stelk, 780 So.2d 989, 991 (Fla. 5th DCA 2001); see also Baptist Hosp. of Miami v. DeMario, 683 So.2d 641, 643 (Fla. 3d DCA 1996) (granting a petition for certiorari, quashing the trial court's order denying petitioner's motion for protective order, and remanding with directions that the trial court stay merits discovery "pending its determination of [respondent's] standing to serve as the class representative"); and Taran v. Blue Cross Blue Shield of Fla., Inc., 685 So.2d 1004, 1006 (Fla. 3d DCA 1997) (affirming denial of full merits discovery pending determination of plaintiffs' standing, citing Baptist Hosp....