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

October 21, 2012


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



Plaintiffs Cliff and Betsy Lang commenced this putative class action on behalf of themselves and all others similarly situated seeking damages and declaratory relief in connection with Defendant First American Title Insurance Company's alleged collection of excessive premiums. Presently before this Court are Defendant's motion to stay the action and compel arbitration, and its purported 'renewal' of that motion. This Court has considered the parties' submissions and finds oral argument unnecessary. For the reasons that follow, Defendant's motions are denied.


Plaintiffs are New York state residents who obtained a mortgage loan on their home in October 2004. (Am. Compl. ¶ 5, Docket No. 16.) As required by the lender, Plaintiffs purchased a lender title policy in the amount of the mortgage on their home. (Id.) In January 2007, Plaintiff refinanced the prior mortgage loan. (Id. ¶ 6.) They obtained a new mortgage loan from Fremont Investment & Loan ("Fremont") in the amount of $155,760. (Id.) Plaintiffs were required by that lender to pay for another loan title policy issued by Defendant insuring Fremont. (Id. ¶¶ 6, 13.) The premium for the policy, $749.01, was paid by Plaintiffs to Defendant and its agent at closing. (Id. ¶ 7.) A copy of this lender title policy was provided to Fremont, but not to Plaintiffs. (Id.; Def's Reply Mem of Law at 6 n 2, Docket No. 24.) Instead, Plaintiffs were presented with an itemized statement of costs associated with the closing, including the premium charged by Defendant. (Id. ¶ 28.)

In New York, title insurers must file their policy rates with the State Superintendent of Insurance for approval. See N.Y. Ins. Law § 2305 (b)(7). Once filed and approved, title insurers may not deviate from the rates or "make any policy or contract involving a violation thereof." 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. (Am. Compl. ¶¶ 16-18, 27-29.)

Plaintiffs allege that they were entitled to, but did not receive, the discounted rate because their prior mortgage was less than ten years old and their new refinanced mortgage was for less than $475,000. (Am. Compl. ¶¶ 9-11.) Plaintiffs therefore allege that Defendant unlawfully collected an unearned premium of $327.01. (Id. ¶ 11.) They initially commenced a putative class action in this Court in January 2008, alleging that Defendant's collection of excessive premiums violated the Real Estate Settlement Procedures Act ("RESPA") as well as New York state law. (Lang v. First Am. Title Ins. Co. of N.Y., 816 F. Supp. 2d 214, 215 (W.D.N.Y. 2011); see 12 U.S.C. § 2607(b).) In a September 2011 Decision and Order, this Court dismissed Plaintiffs' RESPA claim with prejudice, and declined to assert supplemental jurisdiction over Plaintiffs' remaining state law claims. (Lang, 816 F.Supp.2d at 221.) Those claims were therefore dismissed without prejudice. (Id.)

Plaintiffs then commenced a putative class action in New York State Supreme Court, Niagara County, in March 2012. (Compl., Docket No. 1-1.) In this complaint, Plaintiffs asserted causes of action for (1) money had and received; (2) unjust enrichment; (3) violation of New York's General Business Law § 349; and (4) breach of implied contract. (Id.) Defendant removed the matter to this Court, asserting that federal jurisdiction was properly based on the diversity of citizenship between Defendant and the putative class members and an amount in controversy in excess of $5,000,000. (Notice of Removal, Docket No. 1; see 28 U.S.C. § 1332 (d).) Following removal, Defendant moved to stay the action and compel arbitration.*fn1 (Docket No. 7.)

Prior to responding to Defendant's motion, Plaintiffs filed an Amended Complaint as of right, in which they again asserted claims for money had and received, unjust enrichment, and violation of NY GBL § 349, but abandoned the breach of implied contract claim. (Am. Compl., Docket No. 16.) They then filed a Memorandum of Law in opposition to Defendant's motion. (Docket No. 21 with Exs. A-B.) Defendant moved to "renew" its prior motion to stay the action and compel arbitration, (Docket No. 22), and also filed a reply Memorandum of Law to Plaintiff's opposition.*fn2 (Docket No. 24.)


"In the context of motions to compel arbitration brought under the Federal Arbitration Act ('FAA'), 9 U.S.C. § 4 (2000), the court applies a standard similar to that applicable for a motion for summary judgment." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003) (citing Par-Knit Mills v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n. 9 (3d Cir.1980)). "If there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary." Id. (citing 9 U.S.C. § 4). "Whether a dispute is arbitrable comprises two questions: '(1) whether there exists a valid agreement to arbitrate at all under the contract in question ... and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement.' " Hartford Acc. & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001) (quoting National Union Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d 129, 135 (2d Cir. 1996)). "While the interpretation of an arbitration agreement is generally a matter of state law, the FAA imposes certain rules of fundamental importance, including the basic precept that arbitration is a matter of consent, not coercion." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., __ U.S. __, 130 S.Ct. 1758, 1773, 176 L. Ed. 2d 605 (2010) (internal citations and quotation marks omitted); Schnabel v. Trilegiant Corp., __ F.3d __, 2012 WL 3871366, *6 (2d Cir. 2012) (existence of agreement to arbitrate is question of state law). Specifically, a party may not be compelled under the FAA to submit to arbitration "unless there is a contractual basis for concluding that the party agreed to do so." Stolt-Nielsen S.A., 130 S. Ct at 1775; Ross v. American Exp. Co., 547 F.3d 137, 143 (2d Cir. 2008).

Here, the lender title policy between Defendant and Fremont contains the following arbitration provision:


Unless prohibited by applicable law, either the Company or the insured may demand arbitration pursuant to the Title Insurance Arbitration Rules of the American Arbitration Association. Arbitrable matter may include, but are not limited to, any controversy or claim between the Company and the insured arising out of or relating to this policy, any service of the Company in connection with its issuance or the breach of a policy provision or other obligation. All arbitrable matters when the Amount of Insurance is $1,000,000 or less shall be arbitrated at the option of either the Company or the insured. All arbitrable matters when the Amount of Insurance is in excess of $1,000,000 shall be arbitrated only when agreed to by both the Company and the insured. Arbitration pursuant to this policy and under the Rules in effect on the date the demand for arbitration is made or, at the option of the insured, the Rules in effect at Date of Policy shall be ...

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