Gale v. Chicago Title Insurance

274 F.R.D. 361, 2011 U.S. Dist. LEXIS 29745, 2011 WL 1105816
CourtDistrict Court, D. Connecticut
DecidedMarch 23, 2011
DocketNo. 3:06-cv-1619 (CFD)
StatusPublished
Cited by1 cases

This text of 274 F.R.D. 361 (Gale v. Chicago Title Insurance) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gale v. Chicago Title Insurance, 274 F.R.D. 361, 2011 U.S. Dist. LEXIS 29745, 2011 WL 1105816 (D. Conn. 2011).

Opinion

RULING ON MOTION FOR CLASS CERTIFICATION

CHRISTOPHER F. DRONEY, District Judge.

I. Introduction

Plaintiffs ask the Court to certify the proposed class for their claims for declaratory and injunctive relief, and for damages under several Connecticut statutes regulating who may serve as a title insurance agent in Connecticut. Plaintiffs propose the following class definitions:

Sub-Class 1: All persons who, at any time during the period October 17, 2003 to the present (“Class Period”) were (a) Connecticut-licensed attorneys in good standing and/or (b) individuals who held a valid title insurance license on or before June 12, 1984, and (c) who, whether individually or through a partnership, corporation, or other business entity authorized to do business in Connecticut as a law firm or that held a valid title insurance license on or before June 12, 1984 and had “grandfathered-in” status as a licensed title agent company on or before June 2, 1996, were authorized in writing by a title insurer to solicit title insurance business, collect title insurance premiums, determine the insurability of a risk, or issue title policies in Connecticut.
Sub-Class 2: All partnerships, corporations, or other business entities (a) author[364]*364ized to do business in Connecticut as a law firm and/or (b) that held a valid title insurance license on or before June 12, 1984 and had “grandfathered-in” status as a licensed title agent company on or before June 2, 1996, and (c) through which, at any time during the Class Period, Connecticut-licensed attorneys or individuals who held a valid title insurance on or before June 12, 1984 were authorized in writing by a title insurer to solicit title insurance business, collect title premiums, determine the insurability of a risk or issue title policies in Connecticut.

II. Background

Gale is a licensed attorney living in Connecticut. For many years, Gale has had a real estate practice in which he represents sellers, buyers, and lenders in residential and commercial real estate transactions. Since 1981, he has been a licensed title agent for Connecticut Attorneys Title Insurance Company (“CATIC”), a title insurance company that is owned and controlled by attorneys and operates primarily through lawyers who issue title policies. The second named plaintiff is Gale & Kowalyshyn, LLC, a Hartford law firm that is a shareholder and active member of CATIC. Defendants are ten national underwriters of title insurance policies issued in residential and commercial real estate transactions.

Title insurance is designed to guarantee clear ownership of real property and insures against defects in title. Title agents, such as Gale, solicit title insurance business, collect title insurance premiums, determine the insurability of a risk, and issue title policies. At closing, a title insurer typically issues a “closing protection letter” to the mortgage lender, indemnifying the lender against any losses incurred as a result of fraud or mistake by the title agent.

The central issue in this case is the meaning of a provision of the Connecticut Title Insurance Act, Conn. Gen.Stat. § 38a-402(13), which provides:

“ ‘Title agent’ or ‘agent’ means any person authorized in writing by a title insurer to (A) solicit title insurance business, (B) collect premiums, (C) determine the insurability of a risk in accordance with underwriting rules and standards prescribed by the title insurer or (D) issue policies of the title insurer. No person may act as a title agent unless he is a commissioner of the Superior Court in good standing, except any individual who held a valid title insurance license on or before June 12, 198f” (Emphasis supplied.)

In recent years, “closing service vendors” have supplanted Connecticut attorneys at many real estate closings, and execute tasks such as performing title examinations, issuing title opinions, preparing closing documents, providing notary services, and filing documents with town clerks — actions which had traditionally been performed by Connecticut attorneys or grandfathered-in individuals. Despite the statutory requirement that only attorneys may act as title agents, title insurance companies such as the defendants have responded to the growth of these closing service vendors by entering into title agency agreements with them, authorizing them to write title insurance for their companies in Connecticut. Title insurance companies have also allegedly been issuing closing protection letters to lenders on behalf of these closing vendors. Plaintiffs argue that through these arrangements, closing service vendors are “acting as title agents” in violation of § 38a-402(13).

Plaintiffs argue in order to satisfy the requirements of the statute, title insurance companies may only engage title agents (who must be Connecticut lawyers) directly or through law firms, not through other business entities such as closing service vendors. The reason for this, plaintiffs argue, is that by hiring a law firm to provide title agents, the insurance companies are assured that only lawyers will perform the title agent work, and that only the lawyer will receive the commission or fee.1

[365]*365Defendants argue that their arrangements with closing service vendors do not violate Connecticut law, because closing service vendors have Connecticut-licensed attorneys ultimately sign the policies. For example, some companies reminded their agents working in Connecticut that those who were not Connecticut-licensed attorneys were prohibited from issuing policies in Connecticut, but could provide “back office support and processing” for a Connecticut-licensed attorney who “served as a counter-signing agent.” See Defs.’ Mem. In Opposition 4-6, ECF No. 215. Defendants argue these practices satisfy the requirements of § 38a-402(13).

Plaintiffs argue that the defendants’ decision to utilize closing service vendors has resulted in significant reductions in this practice area for Connecticut lawyers and the creation of unlicensed, illegal title agents. As a result of the defendants’ practices, the putative class of Connecticut attorneys has been deprived of a practice area that was statutorily reserved for them, and has excluded them from serving as title agents, causing them to lose revenues. Plaintiffs also allege substantial public harm from this development. The plaintiffs and the putative class contend that if the Court does not enjoin the defendants from hiring non-attorneys to serve as title agents, they the public will continue to be harmed by this “deceptive and illegal practice.”

This lawsuit was filed in October 2006, seeking declaratory and injunctive relief, as well as compensatory and punitive damages, for violations of the Connecticut Unfair Trade Practices Act (“CUPTA”), for tortious interference with business expectations, and for violations of the Connecticut Unfair Sales Practices Act (“CUSPA”). Plaintiffs now move to certify the class.

III. Applicable Law and Discussion

The district court must determine through “rigorous analysis” that all Rule 23 requirements are met in order to certify the class. In re Initial Public Offerings Sec.,

Related

Mahon v. Chicago Title Insurance
296 F.R.D. 63 (D. Connecticut, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
274 F.R.D. 361, 2011 U.S. Dist. LEXIS 29745, 2011 WL 1105816, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gale-v-chicago-title-insurance-ctd-2011.