This is the next in a continuing series of articles reprinted from the manuscript of the author's article published by Westlaw Publishing Co. as "Force-placed, Lender-placed Insurance Class Actions: Is the Lender Placement of Insurance Authorized by Law, Or Simply Beyond the Reach of the Courts?", 35 Insurance Litigation Reporter 221 (2013) © 2013 Thomson Reuters. Installments in this series will alternately be presented here and on Insurance Claims and Issues Blog. Permission to reprint from the author's manuscript is given by John K. DiMugno, Esquire, Editor-in-Chief of ILR, by Thomson Reuters Westlaw, and by the author.
One of the "Defenses" to FPI claims is not really a defense. It is based entirely on the fact that the amounts of money involved in FPI claims are often too small to attract legal representation absent a class action vehicle to aggregate many potential, similar FPI claims. The current state of class action procedure does not always invite FPI claims, and that too is a fact.
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This is not an article about class action procedure, except as class action procedure relates to cases which involve force-placed insurance issues. There are very few such cases, which are here supplemented with a brief foray into pertinent decisions on class action procedure which are likely to affect whether force-placed insurance cases are certified as class actions in Federal Court, or not. This brief examination brings us back to our starting point, namely, the six requirements pertinent to force-placed insurance class action cases and which are contained in the emphasized language of Rule 23, above: numerosity, "commonality," typicality, adequate representation, predominance, and superiority.
1. "Numerosity". Most of the handful of force-placed insurance cases in which class action certification has been sought in Federal cases, have been filed in U.S. District Courts of the Eleventh Circuit. Briefly stated, the Eleventh Circuit Court of Appeals has stated a preference for a satisfactory class size of more than 21 or perhaps more than 40 class members.[1] This broad preference has always it seems been found to be complied with in force-placed insurance cases whether or not a class action has ultimately been certified.[2]
2. "Commonality."[3] This Rule 23 requirement pertains to questions of law or fact which are "common" to the putative class.[4] This requirement illustrates a split in class action cases including those involving force-placed insurance.
One focus of "commonality" is that the class members have suffered the same injury as a result of a common practice or procedure. Here the focus has been found favorable to certifying a class of force-placed insurance plaintiffs:
The Plaintiffs argue that all members of the proposed class were injured in the same manner, namely by being charged inflated premiums for the force-placed insurance.
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The essence of this case, as alleged, is a common scheme to systematically, and without any individual consideration, force-place insurance at an excessive rate to every person whose self-placed property insurance had elapsed.
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Here, the ultimate question of liability is whether the force-placed insurance premiums were unlawfully inflated and excessive.... Any distinctions between class members with respect to theories of liability, as argued by Wells Fargo and QBE, could be adequately addressed through the use of discrete subclasses, if necessary at all.[5]
The District Judge who made this ruling stated at one and the same time in February, 2012, that he was following the United States Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes,[6] insofar as requiring the plaintiffs to demonstrate that the class members have suffered the same injury, yet distinguishing the Dukes majority opinion by pointing out that the instant force-placed insurance case will provide the same answer to every plaintiff without requiring "a secondary factual inquiry" as in Dukes.[7]
The split in force-placed insurance cases as to whether District Courts certify class actions, can be said to be traced to whether the case requires a "secondary factual inquiry" as in Dukes. However, it is submitted that in 2013, the "secondary factual inquiry" is best understood as a judicial impediment to certifying class actions dependent on an early judicial determination of the merits, without any jury in any case, i.e., focusing not on whether the plaintiffs' case presents questions of common law or fact but whether their claim or claims will succeed. In other words, the only "question" worth considering in this view clearly seems to be whether the plaintiffs can prove recoverable damages. In an area where a small number of Courts are sometimes complicit in the efforts of parties to redefine "security interest" to mean "investment," so that the purpose of requiring Mortgage Insurance to protect a lender's "security interest" must simultaneously be restated as protecting the lender's "investment," this development is not at all surprising.
It should however be clearly identified.
[1] E.g., Gordon v. Chase Home Finance, LLC, 2013 WL 436445 *4 (M.D. Fla. February 5, 2013); In re Checking Account Overdraft Lit., 281 F.R.D. 667, 672 (S.D. Fla. 2012).
[2] E.g., Gordon v. Chase Home Finance, LLC, 2013 WL 436445 *4 (M.D. Fla. February 5, 2013); Williams v. Wells Fargo Bank, N.A., 280 F.R.D. 665, 671-72 (S.D. Fla. 2012).
[3] "Commonality" has generally been defined as of or relating to the people in common taken as a whole. See Webster's New World Collegiate Dictionary 281 (3d ed. 1996). It does not have that meaning in class action procedure, as will be seen.
[4] Fed. R. Civ. P. 23(a)(2).
[5] Williams v. Wells Fargo Bank, N.A., 280 F.R.D. 665, 672 (S.D. Fla. 2012).
[6] Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011).
[7] Williams v. Wells Fargo Bank, N.A., 280 F.R.D. 665, 672 (S.D. Fla. 2012).
Please Read The Disclaimer. To be continued ....