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Cliff Lang and Betsy Lang, Individually and On Behalf of All Others Similarly Situated v. First American Title Insurance Company of New York

September 10, 2011


The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court



Presently before this Court is Defendant First American Title Insurance Company of New York's Motion to Dismiss (Docket No. 4) the third and fourth counts of Plaintiffs Cliff and Betsy Lang's complaint, which allege violations of the Real Estate Settlement Procedures Act of 1974 ("RESPA") and New York General Business Law § 349, respectively. For the following reasons, Defendant's motion is granted.


Plaintiffs are residents of New York who refinanced their home mortgage loan in 2007. (Complaint, Docket No. 1, ¶¶ 2, 13). Defendant is a New York corporation and a provider of title insurance. (Complaint ¶ 1). When mortgagors seek to refinance an existing mortgage they must purchase title insurance policies, such as those offered by Defendant, for the benefit of the mortgage lender. (Complaint ¶ 7). These policies insure the mortgage lender against defects in the title to the property. (Complaint ¶ 6).

Plaintiffs obtained their original mortgage in 2004. (Complaint ¶ 13). In 2007, when Plaintiffs refinanced their existing mortgage, they purchased a title insurance policy from Defendant. (Complaint ¶ 14). Defendant issued the title insurance with the assistance of subsidiary or independent title agents, who conduct title examinations and issue title commitments before the issuance of an actual policy. (Complaint ¶¶ 8, 14-15). Plaintiffs paid Defendant and the title agent $749.01 for their work. (Complaint ¶ 14).

In New York, title insurers must file their policy rates with the State Superintendent of Insurance for approval. See N.Y. Ins. Law § 2305-06 (McKinney 2006). Once filed and approved, title insurers may not deviate from the rates. See N.Y. Ins. Law § 2314. Defendant's filed rate schedule provides that Defendant will discount the charge for a refinance title insurance policy by 50% if the policy is issued no more than ten years after the mortgagor obtained his or her original loan and the new mortgage is for less than $475,000. (Complaint ¶¶ 11,15).

Plaintiffs allege that they were entitled to the discounted rate because their prior mortgage was less than ten years old and their new refinanced mortgage was for less than $475,000 but did not receive it. (Complaint ¶ 15). Plaintiffs therefore allege that Defendant collected from them an extra $327.01 in violation of the RESPA. (Complaint ¶ 15).

Plaintiffs filed this suit on January 11, 2008, as a putative class action, seeking to represent all persons in New York similarly aggrieved. (Complaint ¶ 1). Plaintiffs plead one federal and three state causes of action: (1) money had and received; (2) unjust enrichment; (3) RESPA § 8(b); and (4) New York General Business Law § 349. (Complaint ¶¶ 33-59). Plaintiffs seek injunctive and declaratory relief, remedies under RESPA, and compensatory damages. (Complaint ¶ 60).


A. Legal Standard

Rule 12 (b)(6) allows dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12 (b)(6). Federal pleading standards are generally not stringent: Rule 8 requires only a short and plain statement of a claim. Fed. R. Civ. P. 8 (a)(2). But the plain statement must "possess enough heft to show that the pleader is entitled to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1966, 167 L.Ed.2d 929 (2007).

When determining whether a complaint states a claim, the court must construe it liberally, accept all factual allegations as true, and draw all reasonable inferences in the plaintiff's favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). Legal conclusions, however, are not afforded the same presumption of truthfulness. See Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ("the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions").

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1945 (quoting Twombly, 550 U.S. at 570). Labels, conclusions, or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Facial plausibility exists when the facts alleged allow for a reasonable inference that the defendant is liable for the misconduct charged. Iqbal, 129 S.Ct. at 1949. The plausibility standard is not, however, a probability requirement: the pleading must show, not merely allege, that the pleader is entitled to ...

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