Hallie v. Wells Fargo Bank, N.A.

• Decision Date: 01 May 2013
• Docket Number: 2:12-cv-235
• Parties: JUDITH HALLIE, individually and on behalf of a class, Plaintiff, v. WELLS FARGO BANK, N.A. et al. Defendants.
• Court: U.S. District Court — Northern District of Indiana

JUDITH HALLIE, individually and on behalf of a class, Plaintiff,

v.WELLS FARGO BANK, N.A. et al. Defendants.

2:12-cv-235

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF INDIANA HAMMOND DIVISION

ENTERED: May 1, 2013

OPINION AND ORDER

This matter is before the court on the Motion to Suspend Briefing on Defendant's Motion to Dismiss and Pursue Discovery [DE 41] filed on December 14, 2012. For the following reasons, the motion is GRANTED IN PART and DENIED IN PART.

Background

On June 15, 2012, the plaintiff, Judith Hallie, filed a complaint alleging that the defendants issued mortgages that included a forced-placed insurance clause, which gave the defendants the right to obtain hazard insurance on the mortgaged property in the event the borrower failed to maintain her own hazard insurance policy. The defendants entered into an arrangement with American Security Insurance Company and Assurant Inc. to provide the force-placed policies for its mortgages. Hallie alleged that under the agreement Wells Fargo charged rates that were not arrived at on a competitive basis and were in excess of those that could have been obtained in the open market. Hallie raised several counts in her complaint, including breach of contract, fraud, unjust enrichment, tortious interference with a business relationship, and violations of 12 U.S.C. § 2601 et seq. Hallie stated that the court has jurisdiction pursuant to28 U.S.C. § 1332(d), 28 U.S.C. § 1331, 28 U.S.C. § 1337, 28 U.S.C. § 1367, and 12 U.S.C. § 2614.

On November 30, 2012, the defendants filed a motion to dismiss and attached the affidavits of Ronald K. Wilson and Rebecca H. Voyles. The defendants argue, among other things, that the Indiana Department of Insurance (DOI) is entrusted with the power to regulate insurance companies and has the sole power to determine the reasonableness of a rate. Because of this exclusive power, the filed rate doctrine deprives the court of subject matter jurisdiction to hear challenges to the reasonableness of an insurance rate. Additionally, the DOI provides an administrative remedy that Hallie failed to exhaust. Because the defendants' motion attached supporting affidavits and evidence, Hallie moves to convert the motion to dismiss to a motion for summary judgment, stay briefing on the motion to dismiss, and allow time for discovery, or alternatively, to strike the affidavits and supporting exhibits from the defendants' motion to dismiss.

Discussion

Generally, the court is limited to considering only the allegations raised in the complaint when ruling on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See United States v. $85,201.00 in U.S. Currency, 2011 WL 612067, *2 (S.D.Ill. Feb.15, 2011). When a party seeks to introduce additional documents, the court may convert the motion to dismiss into a motion for summary judgment and allow the responding side to produce evidence in support of its contentions, or it may elect to disregard the extraneous evidence. Rule 12(d) ("If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56."); VentureAssociates Corp. v. Zenith Data Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993) (citing Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234, 31 L.Ed.2d 569 (1972)); Employers & Cement Masons # 90 Health & Welfare Fund v. Triple M. Contracting, Inc., 2007 WL 854004, *2, n. 1 (S.D.Ill. March 16, 2007) (finding that affidavits not referenced in the complaint may not be considered in ruling on a motion to dismiss).

However, there are exceptions to the general rule that extrinsic evidence cannot be considered. Documents that both are referred to in the complaint and are central to the claim may be considered on a motion to dismiss. Albany Bank & Trust Co. v. Exxon Mobil Corp., 310 F.3d 969, 971 (7th Cir. 2002); Venture Associates, 987 F.2d at 431-32. See also Wright v. Associated Insurance Companies, Inc., 29 F.3d 1244, 1248 (7th Cir. 1994) (discussing Venture Associates and determining that a contract on which the claim is based is central to the claim and may be considered on a motion to dismiss). The court also can consider evidence of public record by taking judicial notice of the documents without converting a motion to dismiss into a motion for summary judgment. Ennenga v. Starns, 677 F.3d 766, 773-774 (7th Cir. 2012). Additionally, the court may consider extrinsic evidence when the defendant challenges the factual basis of subject matter jurisdiction. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009) (explaining that a facial challenges requires the court to look at only the face of the complaint to determine whether the plaintiff sufficiently alleged jurisdiction, whereas with a factual challenge, jurisdiction is alleged on the complaint, but the court must consider whether there are facts to support jurisdiction).

The defendants first argue that the affidavits can be considered because the filed rate doctrine deprives this court of subject matter jurisdiction. The filed rate doctrine "forbids aregulated entity to charge rates for its services other than those properly filed with the appropriate . . . regulatory authority." Hill v. BellSouth Telecommunications, Inc., 364 F.3d 1308, 1315 (11th Cir. 2004)(citing Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577, 101 S.Ct. 2925, 2930, 69 L.Ed.2d 856 (1981)). The rate filed with the agency becomes the legal rate and governs the rights and liabilities of the carrier to the customer. Hill, 453 U.S. at 577, 101 S.Ct. at 2930. Because of this, challenges to the nature or amount of a rate that has been filed with a regulatory authority are barred by the filed rate doctrine. Taffet v. Soutehrn Co., 967 F.2d 1483, 1488 (11th Cir. 1992).

The Indiana Code imposes a rate reporting requirement on insurance companies. Indiana Code § 27-1-22-1 "empower[s] the [C]ommissioner of insurance to regulate insurance rates to the end that they shall not be excessive, inadequate, or unfairly discriminatory." Insurers are required to file every rate, rate schedule, rating plan, and modification that it proposes to use. Ind. Code § 27-1-22-4(a). The Commissioner may investigate and direct the discontinuance of any illegal or unauthorized practice. Ind. Code § 27-1-3-19. An insured may request review of an insurer by filing a written complaint and request for a hearing with the Commissioner. Ind. Code § 27-1-22-12.

Indiana courts have applied the filed rate doctrine to bar challenges to the reasonableness of rates set by utility companies. State ex rel. Indianapolis Water Co. v. Boone Circuit Court, 307 N.E.2d 870, 872 (Ind. 1974). The Indiana Supreme court noted that "[r]ate making is a legislative function in which courts are not concerned". Indianapolis Water Co. v. Moynahan Properties Co., 198 N.E. 312, 313 (Ind. 1935). See also Boone, 307 N.E.2d at 872. Other courts similarly have determined that the court is without subject matter jurisdiction to hear challengesto the reasonableness of a rate set by a utility company. In National Teleinformation Network, Inc. v. Michigan Public Service Com., 687 F.Supp. 330 (W.D. Mich. 1988), a telephone service sought an injunction to compel the Michigan Public Service Commission to provide it with access to the telephone company's multicaller recorded program service so that the telephone service could disseminate its sexually explicit messages. The court determined that it was not permitted to interfere injunctively with any aspect of a state administrative regulatory order. In reaching this conclusion, the court relied on 28 U.S.C. § 1342, which states that district courts "shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision . . ."

The defendants argue that because insurance companies are required to file their rates with the DOI, and they have done so, this court lacks subject matter jurisdiction to hear a challenge to the reasonableness of the rate. Because subject matter jurisdiction is at issue, it is the defendants' position that the affidavits attached to their motion to dismiss may be considered. In reply, Hallie states that she does not contest the consideration of the affidavits but that she is entitled to time to conduct discovery on the limited issue of subject matter jurisdiction. Although the rate-file doctrine may deprive state courts of jurisdiction to hear challenges to the reasonableness of a rate set by a state utility company and 28 U.S.C. § 1342 strips federal district courts of jurisdiction to hear challenges to the reasonableness of a rate that both is chargeable by a public utility and set by a state agency, the court is not convinced that the defendants' challenge is to the court's subject matter jurisdiction rather than to Hallie's failure to state a claim upon which relief can be granted.

Article III, Section 2 of the Constitution limits the federal courts' jurisdiction to cases arising under the laws of the United States and between citizens of different states. Federal courts have subject matter jurisdiction in all civil actions arising under the Constitution, laws, or treaties of the United States, in addition to cases between citizens of different states where the amount in controversy exceeds $75,000. 28 U.S.C. §§ 1331, 1332. The burden to prove subject matter jurisdiction falls on the party seeking the federal forum. Chase v. Shop 'N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997).

The complaint must aver facts that support the existence of federal jurisdiction. Gully v. First National Bank, 299 U.S. 109, 113, 57 S.Ct. 96, 97-98, 81 L.Ed. 70 (1936); Preston v. Purtell, 410 F.2d 234, 236 (7th Cir. 1969). To sustain jurisdiction...