Grosso v. Fidelity Nat. Title Ins. Co.

• Decision Date: 16 January 2008
• Docket Number: No. 3D07-466.,No. 3D06-2725.,3D07-466.,3D06-2725.
• Citation: 983 So.2d 1165
• Parties: Carmen J. GROSSO and James Chereskin, Appellants, v. FIDELITY NATIONAL TITLE INSURANCE CO. and Janet Figueroa, Appellees.
• Court: Florida District Court of Appeals

983 So.2d 1165

Carmen J. GROSSO and James Chereskin, Appellants, v. FIDELITY NATIONAL TITLE INSURANCE CO. and Janet Figueroa, Appellees.

No. 3D07-466.

No. 3D06-2725.

District Court of Appeal of Florida, Third District.

January 16, 2008.

Rehearing and Rehearing En Banc Denied June 23, 2008.

Ferrell Law, P.A. and H. Eugene Lindsey, George G. Mahfood, and Jennifer J. Soulikias, Miami; P. Scott Russell; Pomerantz, Haudek, Block, Grossman & Gross and Robert J. Axelrod; Liggio Benrubi & Williams, West Palm Beach, for appellants.

Baker & Hostetler and Jerry R. Linscott, Robert W. Thielhelm, Jr., and Julie E. Singer, Orlando; Wites & Kapetan and Marc A. Wites, for appellees.

Before GERSTEN, C.J., and SUAREZ and ROTHENBERG, JJ.

ROTHENBERG, J.

Carmen J. Grosso ("Grosso") and James Chereskin ("Chereskin") argue in these appeals that the trial court erred in certifying the settlement class, approving the settlement agreement, and approving the award of attorneys' fees and costs issued in the class action lawsuit brought by Janet Figueroa ("Figueroa") against Fidelity National Title Insurance Company ("Fidelity National"). We agree and reverse.

These appeals arise out of three competing class action lawsuits: (1) the lawsuit filed by Figueroa in Miami-Dade County against Fidelity National on April 20, 2004; (2) the lawsuit filed by Grosso in Broward County against Fidelity National Title Insurance Company of New York ("Fidelity N.Y.") on August 24, 2004; and (3) the lawsuit filed by Chereskin in Nassau County against Fidelity N.Y. on September 21, 2004. When Figueroa filed her class action lawsuit, Fidelity National and Fidelity N.Y. were separate entities. During the pendency of the litigation, Fidelity National and Fidelity N.Y. merged, with Fidelity National assuming the obligations of Fidelity N.Y.

Despite this merger, Figueroa amended her complaint twice without attempting to expand her class action lawsuit to include the Fidelity N.Y. plaintiffs, and she continued to litigate solely against Fidelity National. Moreover, Fidelity N.Y. continued to defend itself in the Grosso and Chereskin class action lawsuits and, in fact, filed a motion in Nassau County to stay the Chereskin litigation, pending disposition of the Grosso action. Fidelity N.Y. did not move to stay the Chereskin litigation pending the Figueroa action, did not claim that the Figueroa action had priority over the Chereskin and Grosso actions, and did not suggest that it no longer existed due to its merger with Fidelity National. In fact, after the merger, Fidelity National and Fidelity N.Y. continued to defend these class action lawsuits as if they were two separate entities.

On January 20, 2005, Figueroa filed her third amended complaint. Subsequently, without notice to the Grosso and the Chereskin plaintiffs, Figueroa: (1) amended her complaint to expand her class action lawsuit against Fidelity National to include the Fidelity N.Y. plaintiffs; (2) negotiated with Fidelity National to settle the claims against both Fidelity National and Fidelity N.Y.; (3) entered into a settlement agreement with "Fidelity," which was defined in the agreement to include both Fidelity National and Fidelity N.Y.; and (4) received class certification and preliminary approval of the settlement agreement from the Miami-Dade Circuit Court. Fidelity National then sought and obtained stays in Broward and Nassau Counties in the Grosso and Chereskin class action lawsuits. It is only then that the Grosso and Chereskin plaintiffs learned that their claims were being settled in Miami-Dade County.

Both Grosso and Chereskin moved to intervene and to replace class counsel in the Figueroa action, but the Miami-Dade trial court denied their motions. Although Chereskin was not permitted to file his objections because the trial court found that he lacked standing, Grosso filed his objections, a Fairness Hearing was conducted, and the trial court issued its final order certifying the class, approving the settlement, and awarding attorneys' fees and costs.

THE LAWSUITS

In all three class action lawsuits, it is alleged that the plaintiffs, title insurance purchasers, were overcharged by the applicable Fidelity entity (Fidelity National or Fidelity N.Y.) and/or their agents in connection with the refinancing of their real estate transactions in Florida from April 20, 1999, through November 29, 2005.

In 1999, the Florida Legislature enacted legislation for title insurance premium rates, specifying the amounts to be charged when issuing a new policy ("original rates") and when reissuing a policy ("reissue rates"). The reissue rates established by the Legislature are substantially lower than the original rates. See § 627.7825(1), (2), Fla. Stat. (1999); see also Fla. Admin. Code R. 69O-186.003 (providing for the same original rates and reissue rates that were codified in subsections 627.7825(1) and (2) of the Florida Statutes from 1999 through 2002). Title insurance companies and their agents are required to charge the rates specified by statute and set by the Florida Insurance Commission.

All three complaints allege that the applicable Fidelity entity and/or its agents charged the plaintiffs the higher original rates when reissuing their title insurance rather than the required lower reissue rates. Grosso estimates that from 1999 to 2004, the Fidelity entities improperly issued 185,288 lender policies in Florida at the original rates instead of the reissue rates, and that the overcharges to class members are in excess of $45 million.

The Figueroa complaints allege that Figueroa purchased her title insurance through an agent of Fidelity National. Figueroa initially alleged causes of action for unjust enrichment, breach of contract, breach of a third-party beneficiary contract, and breach of implied contract. Figueroa's contract claims, however, were dismissed without prejudice, and therefore, when she entered into the settlement agreement, only the unjust enrichment claim remained.

Grosso's complaint alleges that he purchased a title insurance policy from Fidelity N.Y. through its agent, Home Title Agency, Inc. The Grosso complaint alleges a cause of action against Fidelity N.Y. for unjust enrichment.

Chereskin's complaint alleges that he purchased a title insurance policy through an agent of Fidelity N.Y., and his complaint alleges causes of action against Fidelity N.Y. for unjust enrichment, breach of contract, and breach of a third-party beneficiary contract. Unlike Figueroa, Chereskin's contract claims are still pending.

THE SETTLEMENT AGREEMENT

The settlement agreement identifies the settlement class as all persons and entities who, during the "class period," either purchased title insurance from Fidelity National or Fidelity N.Y. (referred to in the agreement as "Fidelity") in Florida, or who purchased title insurance from "Fidelity" and live in Florida, and the policies were issued at the original rate when they were entitled to the reissue rate. Pursuant to the settlement, "Fidelity" is required to establish a fund of $1,405,025 to satisfy potential claims of the class. The class members who purchased their title insurance directly from Fidelity National or Fidelity N.Y. are to receive 75% of the overcharge, whereas those class members who purchased their policies from an agent of Fidelity National or Fidelity N.Y. are to receive only 75% of the overcharge Fidelity National and Fidelity N.Y. actually received. Thus, the class members who purchased their policies through either of the entities' agents, are to receive a reimbursement of only 22.5% of the overcharge, whereas, those who purchased their policies directly from the Fidelity entities, are to receive reimbursements of 75% of the overcharge. Figueroa, who purchased her policy from a "Fidelity" agent, and under the terms of the agreement would be entitled to receive only 22.5% reimbursement, which would amount to just a few dollars, is to receive, pursuant to the settlement agreement, $5,000 which is roughly one hundred times greater than what the other similarly situated class plaintiffs will receive.

Additionally, the attorneys handling the Figueroa lawsuit will receive $500,000 in fees.

CLASS CERTIFICATION

The threshold requirements for class certification are outlined in Florida Rule of Civil Procedure 1.220. A class action may only be certified after the court determines that: (1) there is sufficient numerosity of class members; (2) there is commonality of the claims or defenses of the named class representative and each member of the class; (3) the claims or defenses of the class representative are typical of that of the class; and (4) the class representative can fairly and adequately represent the interests of each member of the class. Fla. R. Civ. P. 1.220(a); Ortiz v. Ford Motor Co., 909 So.2d 479, 481 (Fla. 3d DCA 2005); Braun v. Campbell, 827 So.2d 261, 266 (Fla. 5th DCA 2002).

Rule 1.220(d)(1) also directs that "[a]s soon as practicable after service of any pleading alleging the existence of a class ... after hearing the court shall enter an order determining whether the claim ... is maintainable on behalf of a class." Fla. R. Civ. P. 1.220(d)(1). "Deliberately delaying a class certification determination does not represent an effort to resolve the issue `as soon as practicable.'" In re Gen. Motors Corp. Pick-Up Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 787 (3d Cir.1995) (quoting Fed.R.Civ.P. 23(c)).

Because the certification of a class and settlement of the class representative's claims will ultimately bind absentee class members, there are constitutional due process implications which must be satisfied. Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 377-78, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996). Therefore, the trial court, and this Court must conduct a rigorous analysis to determine whether the elements of the class action requirements have been satisfied. Baptist Hosp. of Miami,...