Villanueva v. Fid. Nat'l Title Co.

• Decision Date: 07 September 2018
• Docket Number: H041870, H042504
• Citation: 26 Cal.App.5th 1092,237 Cal.Rptr.3d 702
• Court: California Court of Appeals Court of Appeals
• Parties: Manny VILLANUEVA et al. Plaintiffs and Appellants, v. FIDELITY NATIONAL TITLE COMPANY, Defendant and Appellant.

26 Cal.App.5th 1092

237 Cal.Rptr.3d 702

Manny VILLANUEVA et al. Plaintiffs and Appellants,

v.FIDELITY NATIONAL TITLE COMPANY, Defendant and Appellant.

H041870, H042504

Court of Appeal, Sixth District, California.

Filed September 7, 2018

Chavez & Gertler, Mill Valley, Nance F. Becker, San Francisco, Mark A. Chavez, Mill Valley, The Kick Law Firm, Taras Kick, Thomas Segal, for Plaintiffs and Appellants.

Hahn Loeser & Park, Michael J. Gleason, San Diego, Rupa G. Singh, Erica L. Calderas, Cleveland, Steven A. Goldfarb, Cleveland, for Defendant and Appellant.

ELIA, J.

In their first appeal (case No. H041870), both plaintiff Manny Villanueva, individually and as class representative, and defendant Fidelity National Title Company (Fidelity) appeal from a judgment following a bench trial in this class action lawsuit alleging violations of the unfair competition law (UCL) ( Bus. & Prof. Code, §§ 17200 et seq. ). Villanueva and the class (jointly Plaintiffs) allege Fidelity, an underwritten title company that handled Plaintiffs’ escrow accounts, engaged in unlawful conduct under the UCL when it charged overnight mail delivery fees, courier fees, and document preparation or "draw deed" fees that were not listed in its schedule of rates filed with the Department of Insurance in violation of Insurance Code provisions governing the business of title insurance ( Ins. Code, §§ 12401 –12410.10, 12414.27 ).¹ Fidelity argues, among other things, that this lawsuit is barred by the statutory immunity in section 12414.26 for matters related to ratemaking. The trial court rejected Fidelity's immunity claim based on section 12414.26. It found that Fidelity's charges for overnight mail and courier services and some of the draw deed fees were unlawful because they were not included in Fidelity's rate schedules. The court granted Plaintiffs injunctive relief under the UCL, but denied their restitution claims.

On appeal, Plaintiffs contend the trial court erred in failing to award them restitution under the UCL and by granting judgment on the pleadings on their breach of fiduciary duty claim. In its appeal, Fidelity argues the trial court lacked subject matter jurisdiction over this action because section 12414.26 confers exclusive original jurisdiction over ratemaking on the Insurance Commissioner and this case involves ratemaking. Plaintiffs respond that Fidelity waived its immunity defense by limiting it to certain claims below. Fidelity also argues the named class representative lacked standing. Fidelity contends that under the statutory scheme it was required to file rates only for services it provided and not for services provided by third parties. It argues other allegedly unlawful charges were authorized by the Insurance Code and the trial court erred by enjoining past acts that are not likely to be repeated.

We will conclude Fidelity's immunity defense (§ 12414.26) is not subject to the forfeiture doctrine because it implicates the court's subject matter jurisdiction. We will also hold that this civil action is barred by the immunity in section 12414.26 and is subject to the exclusive original jurisdiction of the Insurance Commissioner because it challenges Fidelity's ratemaking-related activity. We will therefore reverse the judgment.

In their second appeal (case No. H042504), Plaintiffs challenge the trial court's postjudgment order denying their motion for attorney fees under the private attorney general attorney fees doctrine ( Code Civ. Proc., § 1021.5 ). In that same appeal, Fidelity challenges the trial court's order awarding costs to Plaintiffs and granting Plaintiffs’ motion to tax Fidelity's costs.

Since we conclude this civil action is barred by statutory immunity (§ 12414.26), Plaintiffs are no longer the prevailing party and are therefore not entitled to an award of attorney fees. We will therefore affirm the trial court's order denying Plaintiffs’ motion for attorney fees. In light of our conclusion on the merits, we will also reverse the trial court's order awarding Plaintiffs their costs, direct the court to enter a new order awarding costs to Fidelity, and remand to the trial court to determine the amount of the costs award.

Facts and Procedural History

I. State Regulation of Title Insurance; Fidelity's Role

The California Insurance Commissioner has general regulatory authority over the business of title insurance. ( Ins. Code, § 12340 et seq. ; Cal. Code Regs., tit. 10, §§ 2355.1 - 2355.5.) The "[b]usiness of title insurance," as defined in the Insurance Code, includes in relevant part: "The performance by a title insurer, an underwritten title company or a controlled escrow company of any service in conjunction with the issuance or contemplated issuance of a title policy including but not limited to the handling of any escrow, settlement or closing in connection therewith ; or the doing of or proposing to do any business, which is in substance the equivalent of any of the above.)" (§ 12340.3, subd. (c); italics added.) The Insurance Code also defines " ‘[t]itle insurer,’ " " ‘ " ‘[u]nderwritten title company,’ " and " ‘[c]ontrolled escrow company.’ " (§§ 12340.4, 12340.5, 12340.6.) We will discuss the statutory regulatory scheme in greater detail in the "Discussion" portion of this opinion. Because the State of California regulates the business of title insurance, California title insurers are subject to very little regulation by the federal government. (Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2017) ¶¶ 3:61, pp. 3-17 to 3-18 (Greenwald), citing 15 U.S.C. Appen. §§ 1011-1015 [McCarran-Ferguson Insurance Regulation Act] & Commander Leasing Co. v. Transamerica Title Ins. Co. (10th Cir. 1973) 477 F.2d 77, 83, 89 [title insurance companies are exempt from federal antitrust laws when their business is regulated by the state where the alleged violation occurred].)

Fidelity is a subsidiary of Fidelity National Financial (FNF), which operates Fidelity and its other subsidiaries through the Fidelity National Title Group (FNTG).

Fidelity has been licensed by the Department of Insurance (DOI) to transact business as an underwritten title company since at least January 1996 in 21 California counties. Prior to that, beginning in November 1978, it was licensed as an underwritten title company to do business in Los Angeles County. The Insurance Code defines an underwritten title company as "any corporation engaged in the business of preparing title searches, title examinations, title reports, certificates or abstracts of title upon the basis of which a title insurer writes title policies." (§ 12340.5.) Fidelity is underwritten by Fidelity National Title Insurance Company (sometimes FNTIC).

The Insurance Code requires title insurers, underwritten title companies, and controlled escrow companies to file their "schedules of rates, all regularly issued forms of title policies to which such rates apply, and every modification thereof which [they] propose[ ] to use in this state" with the Insurance Commissioner and to "establish basic classifications of coverages and services to be used as the basis for determining rates." (§§ 12401.1, 12401.2.) In this litigation, Villanueva alleges—on behalf of himself and a class of similarly situated persons—that Fidelity violated the Insurance Code when it charged for certain services that were not listed on its schedule of rates filed with the Insurance Commissioner.

II. Facts Regarding the Named Plaintiff's Escrow

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The named plaintiff is Manny Villanueva. In 2006, Villanueva and his wife, Sonia Villanueva, refinanced the mortgage on their home in Santa Clara County. The refinance loan was arranged by mortgage broker UMG Mortgage. UMG Mortgage arranged for FNTIC to provide title insurance and for Fidelity to provide escrow services. Sonia Villanueva was the sole borrower. She is not a party to this action. Although Mr. Villanueva was not a party to the loan agreement, he did sign the escrow instructions. (Hereafter, we shall refer to Manny Villanueva using the singular "Villanueva," to Sonia Villanueva by her complete name, to Manny and Sonia Villanueva jointly as "the Villanuevas.")

Among other things, the refinance transaction involved: (1) obtaining a new loan from First Federal Bank of California (First Federal); (2) paying off a first mortgage with Countrywide Home Loans, (3) paying off a second mortgage with Chase Home Finance, and (4) paying various fees, which left (5) a balance of $116,238.69 that was paid to the Villanuevas.

The Villanuevas incurred several expenses in connection with refinancing their mortgage, including payments to the new lender (First Federal), the mortgage broker, the homeowners insurance carrier, the title insurer (FNTIC), escrow fees to Fidelity, and other fees. Fidelity charged the Villanuevas a base rate of $250 to handle their escrow. In addition to the base rate, Fidelity charged certain fees that are the subjects of this lawsuit, including a document preparation fee ($75), a "draw deed" fee ($50), an overnight delivery fee ($11.20), and a courier fee ($15).² Fidelity also charged other fees that are not at issue in this case. In addition, Fidelity gave the Villanuevas a $20 discount on escrow fees pursuant to the terms of a 2002 stipulated judgment in People v. Fidelity National Title Ins. Co. (Super. Ct. , Sac.County 1999, No. 99AS02793.³

This litigation concerns the legality of amounts paid for delivery services and the "draw deed" fee. In their escrow instructions, the Villanuevas "authorize[d] and instruct[ed] [Fidelity] to charge each party to the escrow for their respective Federal Express, special mail handling/courier and/or incoming/outgoing wire transfer fees" and to "select special mail/delivery or courier service to be used." In the estimated closing statement, which was part of the escrow instructions, Fidelity estimated the escrow...