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A lender-mortgagee foreclosed on property and sold it at a foreclosure sale. The buyer on foreclosure was Andromeda Real Estate Partners, LLC. Andromeda was sued immediately by a prior owner of the property who alleged claims in four (4) counts. At bottom, in each count the underlying plaintiff alleged that Andromeda's deed was invalid.
Andromeda held a title insurance policy issued by Commonwealth Land Title Insurance Co. Andromeda submitted the claim to Commonwealth and demanded a defense of all four counts against it in the underlying case. Commonwealth offered to defend only one count. Commonwealth contended that it had no coverage whatsoever for the other three counts in the underlying complaint against Andromeda.
Andromeda sued Commonwealth in Federal court for coverage.
The Court applied the simple rule that when there is a duty to defend one count in an underlying complaint against a policyholder, there is a duty to defend all counts in the underlying complaint against the policyholder.
"The Court finds that the entire complaint relates to an alleged defective foreclosure sale and a defect in the deed. All four counts are intimately intertwined with whether Andromeda received good title, a covered occurrence under the policy." Andromeda Real Estate Partners, LLC v. Commonwealth Land Title Ins. Co., C.A. No. 15-224-M-LDA, 2016 WL 715777, at *2 (D.R.I. February 19, 2016).
Next, after holding that Commonwealth wrongly denied a defense to Andromeda, the Court held that as a consequence of its wrongful denial Commonwealth will have to pay the attorney's fees of counsel which Andromeda, not Commonwealth, retained to defend Andromeda in the underlying case.
The Court announced the essential basis for its decision at the beginning of its opinion. The Court held the way it did "[b]ecause this Court finds that the allegations in the underlying lawsuit taken as a whole are a covered risk under the title insurance policy, and that the insured landowner was entitled to conflict-free representation …." Andromeda Real Estate Partners, LLC v. Commonwealth Land Title Ins. Co., C.A. No. 15-224-M-LDA, 2016 WL 715777, at *1 (D.R.I. February 19, 2016).
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements). The "defend one count, defend all counts" rule is set out in Volume 1, § 3:53: "Where several claims are put forward in a single case, the duty to defend is activated regarding all claims whenever coverage potentially exists even for one." All rights reserved.
Indiana State House Rotunda Image Courtesy of Library of Congress.
Late notice was held to bar a breach of contract claim and a bad faith claim against Conestoga Title Insurance Company in Pike v. Conestoga Title Ins. Co., 44 N.E.3d 787 (Ind. Ct. App. 2015).
Michael and Chassidy Pike's title insurance claim was based on a notice of tax sale. The Pikes received the notice, contacted the mortgage servicer who after all was supposed to pay the taxes out of escrow, and the mortgage servicer told them to ignore the notice of tax sale because, it said, all the taxes were paid. So, the Pikes did not notify Conestoga.
The Pikes eventually lost their house at the tax sale they previously ignored. It turns out that the taxes were not paid after all.
The instant decision may not have affected the outcome of the Pikes' pending lawsuit against the mortgage servicer and the bank which bought the Pikes' mortgage. The Indiana Court of Appeals merely affirmed the trial court's summary judgment in favor of Conestoga.
However, by this time and for whatever reason, the Pikes had already dismissed their case with prejudice against all "the bank defendants."
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements). All rights reserved.
Courthouse and Lake Eola, Orlando, Florida. Image courtesy of New York Public Library Collection.
Continued from a previous article.
Moreover, ASIC and the Florida O.I.R. entered into a Consent Order in which ASIC agreed among other things to no longer include hidden charges such as hidden "commissions" and reinsurance premiums in the premiums it charged for lender force-placed insurance.
The evidence on these matters is detailed across parts or all of four pages in Chapter 6, n. 35, of Dennis J. Wall, Lender Force-Placed Insurance Practices published by the American Bar Association in 2015. I filed comments in the rate proceeding in question.
In Florida, at least, it seems like it would be hard for a defendant to prove that the filed rate doctrine is a good defense or a bar to subject-matter jurisdiction in a case filed over lender force-placed insurance practices. In any insurance case, whether filed in Florida or elsewhere, the lesson is clear of how the filed rate doctrine is meant to be applied:
The filed rate doctrine depends upon unrebutted evidence.
More to come.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All rights reserved.
Courthouse and Lake Eola, Florida. Image Courtesy of New York Public Library Collection.
The filed rate doctrine began life in utilities regulation. It was made by judges to prevent ratepayers from filing lawsuits for lower regulated rates than what they could get from the regulators.
Now it has surfaced in the past several years in insurance cases. Lawyers and judges who are not at all familiar with the filed rate doctrine are now raising it, arguing it, and applying it, they think, in places and cases where it was never meant to go.
The filed rate doctrine flies into our radar coverage in the next several articles posted here.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All rights reserved.
Courthouse in Newburgh, New York. Image courtesy of the New York Public Library Collection.
Most courts hold that the filed rate doctrine is an affirmative defense. Other courts hold a minority view that the filed rate doctrine is inherent in subject-matter jurisdiction. The confusion is understandable. Judges in cases subject to the doctrine must decline to exercise jurisdiction in deference to regulators empowered to review and decide rate filings.
Either way, whether viewed as an affirmative defense or as an attack on subject-matter jurisdiction, the judges all agree that the party raising the filed rate doctrine has the burden of proving it.
This means evidence of course. In Florida, for example, in cases involving one of the larger force-placed insurance carriers, American Security Insurance Company ("ASIC"), the Florida Office of Insurance Regulation, i.e., Insurance Commissioner's Office, actually denied ASIC's rate request in a rate filing ASIC filed in support in 2013. I filed comments in the rate filing proceeding in which which the O.I.R. denied ASIC's request for another rate increase.
To be continued.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All rights reserved.
She who owns the information has the cybersecurity exposure. The one collecting the data has to insure that the data is protected.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016). All rights reserved.
Recent statistics about Florida and Lender Force-Placed Insurance show that total U.S. premiums for LFPI were $3.5 Billion when total Florida premiums for LFPI were over 1/3 of that amount at $1.2 Billion.
Further, 35% of all LFPI policies were written in Florida.
There is every reason to think that Florida's role in the LFPI market has not changed much.
Source: Statistics stated for 2011.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All rights reserved.