Doll v. Chicago Title Ins. Co.

• Decision Date: 15 October 2007
• Docket Number: No. 06-2416-JWL.,06-2416-JWL.
• Citation: 517 F.Supp.2d 1273
• Parties: James A. DOLL and Aimee Doll, Plaintiffs, v. CHICAGO TITLE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Kansas

517 F.Supp.2d 1273

James A. DOLL and Aimee Doll, Plaintiffs, v. CHICAGO TITLE INSURANCE COMPANY, Defendant.

No. 06-2416-JWL.

United States District Court, D. Kansas.

October 15, 2007.

Austin Tighe, Feazell & Tighe, LLP, Austin, TX, Jason M. Hans, Kirk T. May, Phillip G. Greenfield, Rouse Hendricks German May PC, Kansas City, MO, Robert J. Perkins, Rose & Rose, P.C., Washington, DC, for Plaintiffs.

Amii N. Castle, Douthit, Frets, Rouse, Gentile & Rhodes, LLC, Kansas City, MO, Brian C. Fries, Richard N. Bien, Lathrop & Gage, LC, Kansas City, MO, Andrew S. Pollis, Hahn, Loeser & Parks, LLP, Cleveland, OH, Carrie E. Josserand, Lathrop & Gage, LC, Overland Park, KS, for Defendant.

MEMORANDUM AND ORDER

JOHN W. LUNGSTRUM, District Judge.

In this diversity action, plaintiffs James and Aimee Doll, on behalf of themselves and numerous potential class members, have brought contract and tort claims against defendant Chicago Title Insurance Company (Chicago Title). Plaintiffs' claims are based on their allegation that Chicago Title, in acting as plaintiffs' closing agent in a real estate refinancing, collected and retained an amount for recording fees in excess of the actual fees paid by Chicago Title for recording plaintiffs' mortgage and release. Plaintiffs' motion for class certification is presently pending.

This matter presently comes before the Court on Chicago Title's motion for summary judgment (Doc. # 77). Chicago Title argues that plaintiffs' tort claims are barred by the applicable statutes of limitations, and that plaintiffs' recovery of damages is precluded by setoff relating to the amount Chicago Title undercharged plaintiffs for recording fees on a separate closing. For the reasons set forth below, the motion is granted in part and denied in part The Court agrees that plaintiffs' claims for unjust enrichment and money had and received are time-barred, and summary judgment is granted on those claims. The motion for summary judgment is denied in all other respects.

I. Facts¹

Since 1991, plaintiffs have owned and resided at a house in Westwood, Johnson County, Kansas. When plaintiffs refinanced their mortgage in 2002, Chicago Title acted as the settlement agent, with the closing occurring on January 24, 2002. The HUD-1 settlement statement prepared by Chicago Title for the closing indicated recording fees of $35.00 for the mortgage and $10.00 for the release, and those amounts were paid by plaintiffs to Chicago Title. Plaintiffs retained copies of the mortgage and release that were to be recorded. Plaintiffs knew that these documents would be recorded and therefore would be publicly available.

In fact, Chicago Title paid $34.00 in fees to the Johnson County Register of Deeds to record the mortgage and $5.00 to record the release, amounts consistent with the statutory recording fees in effect at that time. The fee amounts paid were handwritten on the face of the respective documents when recorded by the register of deeds. Chicago Title did not return to plaintiffs the excess amounts collected for recording fees.

In March 2003, Chicago Title acted as settlement agent for plaintiffs when they refinanced their mortgage yet again. In that instance, Chicago Title charged plaintiffs $40.00 for recording fees, although Chicago Title eventually paid $64.00 in fees to record the relevant documents.

Plaintiffs filed the instant action on September 28, 2006. Plaintiffs have brought claims against. Chicago Title for fraud, unjust enrichment, breach of fiduciary duty, conversion, breach of contract, and money had and received. Plaintiffs also seek to certify this action as a class action on behalf of persons in various states from whom Chicago Title collected amounts for recording fees in excess of the fees it actually paid. Plaintiffs' motion for class certification is presently pending.

II. Summary Judgment Standards

Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Burke v. Utah Transit Auth. & Local 382, 462 F.3d 1253, 1258 (10th Cir.2006). An issue of fact is "genuine" if "the evidence allows a reasonable jury to resolve the issue either way." Haynes v. Level 3 Communications, LLC, 456 F.3d 1215, 1219 (10th Cir.2006). A fact is "material" when "it is essential to the proper disposition of the claim." Id.

The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Thom v. Bristol-Myers Squibb Co., 353 F.3d 848, 851 (10th Cir.2003) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. (citing Celotex, 477 U.S. at 325, 106 S.Ct. 2548).

If the movant carries this initial burden, the nonmovant may not simply `rest upon his or her pleadings but must "bring forward specific facts showing a genuine issue for trial as to those dispositive matters for which he or she carries the burden of proof." Garrison v. Gambro, Inc., 428 F.3d 933, 935 (10th Cir.2005). To accomplish this, sufficient evidence pertinent to the material issue "must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit incorporated therein." Diaz v. Paul J. Kennedy Law Firm, 289 F.3d 671, 675 (10th Cir.2002).

Finally, the Court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1).

III. Statute of Limitations Defense

A. Fraud Claim

Chicago Title seeks summary judgment on plaintiffs' fraud claim, arguing that the claim is barred by the applicable Kansas two-year statute of limitations, Kan. Stat. Ann. § 60-513(a)(3).² The limitations statute provides, however, that such a cause of action "shall not be deemed to have accrued until the fraud is discovered." Id. The Kansas Supreme Court has interpreted "discovery of the fraud" as follows:

This rule is that in order to prevent the running of the statute of limitations in proceedings for relief on account of fraud, it must appear not only that the complainant was in ignorance of the fraud, but also that he did not have possession of the means of detecting the fraudulent arrangement. To prevent the barring of an action, it must appear that the fraud not only was not discovered but could not have been discovered with reasonable diligence, until a time falling within the statutory period before the action was begun.

. . .

[T]he phrase "discovery of the fraud", which would start the statute of limitations to running, means the discovery by the person defrauded of such facts indicating he had been defrauded as would cause a reasonably prudent person to investigate, and which, if investigated with reasonable diligence, would lead to knowledge of the fraud.

Wolf v. Brungardt, 215 Kan. 272, 281-82, 524 P.2d 726, 733-34 (1974) (citations omitted); see also Rajala v. Allied Corp., 919 F.2d 610, 625 (10th Cir.1990) (quoting Wolf for interpretation of "discovery of the fraud" under Kansas law).

Chicago Title argues that when plaintiffs' mortgage and release were recorded in early 2002, with the notation on the documents of the actual recording fees paid, plaintiffs gained constructive knowledge of the those fees and thus of the alleged fraud. Chicago Title relies on Kansas's constructive notice statute, Kan. Stat. Ann. § 58-2222, which provides as follows:

Every such instrument [conveying or affecting real estate] in writing, certified and recorded in the manner hereinbefore prescribed, shall, from the time of filing the same with the register of deeds for record, impart notice to all persons of the contents thereof; and all subsequent purchasers and mortgagees shall be deemed to purchase with notice.

Id. Chicago Title further relies on a line of Kansas cases beginning with Black v. Black 64 Kan. 689, 68 P. 662 (1902), in which the Kansas Supreme Court barred fraud claims on the basis that the statute of limitations began to run upon the recording of documents containing evidence of the alleged fraud. In Black, the court stated the rule as follows:

[T]he language employed in the statute, "until discovery of the fraud," does not mean until the party complaining had actual knowledge of the fraud alleged to have been committed, but that constructive notice of the fraud is sufficient to set the statute in motion, even though there is no actual notice, and that where the means of discovery lie in public records required by law to be kept, involving the very transaction in hand, and the interests of the parties to the litigation, in such case the public records themselves are sufficient notice of the fraud to set the statute in motion.

Id. at 704, 68 P. at 666. The court further quoted with approval the following standard:

Where the transaction is a matter of public record, either through conveyance registered as required by law, or through other means, so that the party contending has abundant means of finding out the facts of the transaction and its nature, there can be no concealment; and he will be charged with notice of the transaction, and the facts which a diligent investigation thereof would develop. A party must be presumed to know what by the exercise of reasonable diligence he might have discovered; and when the fundamental facts upon...