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News & Press: Court Cases

Villanueva v. Fidelity National Title Company (H041870)

Tuesday, September 18, 2018  
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Cal. Ct. App., Sept. 7, 2018, No. H041870) 2018 WL 4275375, at *5

Fidelity National Title Company prevailed in the above captioned appeal establishing Fidelity’s immunity from civil suit in connection with a claim by Villanueva, on behalf of a certified class, that Fidelity had engaged in unlawful conduct under the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200) by collecting third party delivery fees or fees for preparing deeds and other documents where such fees were allegedly not listed in Fidelity’s schedule of rates filed with the Department of Insurance. Plaintiffs’ UCL claims were predicated on their contention that such charges were unlawful as violations of Sections 12401.7 and 12414.27 of the Insurance Code.

As to delivery fees, Plaintiffs asserted two alternative theories. Under Delivery Theory No. 1, also called the unfiled rate theory, Plaintiffs contended that Fidelity’s rate manual did not contain a rate for delivery fees, and, alleged that charging for those fees violated 12401.7 and 12414.27. Under Delivery Theory No. 2, also called the double charge theory, Plaintiffs contended it was an unlawful double charge to collect fees for third party deliveries because those services were already paid for with the basic escrow fee which covered “disbursements” and “making payoffs.”

With respect to document preparation, Plaintiffs asserted a “Draw Deed Theory” contending that where the settlement statement listed a fee for “draw[ing a] deed” the filed rate must also say “draw deed” and that the “document preparation” filed rate did not apply. Plaintiffs also asserted that for a period of time where there was no such filed “document preparation” rate for sale transactions (i.e., the “gap period”), Fidelity could not—under 12401.7 and 12414.27—lawfully charge for preparing deeds.

Fidelity contended on demurrer that Section 12414.26 of the Insurance Code—providing immunity from civil proceedings for activities covered by Article 5.5 of the Insurance Code—precluded Plaintiffs’ claim, which Fidelity asserted was subject to the jurisdiction of the California Department of Insurance (DOI). The trial court denied that demurrer. Fidelity also contended that the Insurance Code only required it to file rates for services it performs and disputed that it was required to file rates for the fees of third party vendors for services the vendors performed. Fidelity contended that 12414.27 was not a prohibition against collecting any charge not listed in a rate manual, but rather a statute implementing new Insurance Code provisions with a grace period and savings statute. Fidelity also contended that its filed rate for escrow did not include the third party delivery vendor fees collected by Fidelity and that making disbursements and payoffs did not also mean delivery. Fidelity also contended that a filed rate for “document preparation” applied to preparing deeds and that for the “gap period,” Fidelity was permitted to charge pursuant to certain statements in its rate manuals.

At trial, Fidelity moved for non-suit after Plaintiffs’ opening statement contending, among other things, that Plaintiffs’ claims were barred by the statutory immunity provided by Insurance Code section 12414.26 because they challenged matters related to rate-making. The trial court rejected Fidelity’s immunity arguments and proceeded to hear the matter in a four-week bench trial in which the trial court was asked to interpret Fidelity’s rate manual and determine Fidelity’s compliance with the Insurance Code. The trial court found that Fidelity violated the Insurance Code by collecting third party delivery fees and charging for document preparation during the gap period without filed rates for those services. The trial court denied the Plaintiffs restitution of those fees, however, because it determined that Plaintiffs failed to show that the alleged omissions in Fidelity’s filed rates caused any injury. The trial court issued an injunction requiring Fidelity to maintain certain “as charged by vendor”-language in its rate manuals for third party delivery fees which Fidelity had voluntarily started including in the manual a year prior to the judgment. The trial court considered such statements to satisfy the rate filing requirement for third party delivery fees that it had determined existed. The Plaintiffs were deemed the prevailing party entitled to costs. However, the trial court declined to award the Plaintiffs’ counsel any attorneys’ fees under California's "private attorney general" statute, Code of Civil Procedure section 1021.5.

On appeal, Plaintiffs sought to establish injury caused by the alleged omissions to obtain a restitution award and an award of attorneys’ fees. Fidelity argued that not only was there no violation of the Insurance Code or the UCL, but that the entire action was barred by the statutory immunity in Insurance Code section 12414.26 because Plaintiffs’ claims challenged matters related to rate-making. The court of appeal reversed, rejecting Plaintiffs’ contention that the immunity defense had been waived and determining that immunity is a non-waivable issue of the court’s subject matter jurisdiction. The court of appeal held that the Plaintiffs’ claims under each theory were subject to the exclusive original jurisdiction of the Insurance Commissioner because they challenged Fidelity’s activity related to rate-making. Accordingly, the court concluded that the Plaintiffs are no longer the prevailing party and are therefore not entitled to an award of attorney fees. The court of appeal directed the trial court to enter a new order awarding costs to Fidelity.

California Land Title Association

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