Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 1 of 26 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA A.D. ALBERTON and MARK C. KESSLER, on behalf of themselves and all others similarly situated, v. Plaintiffs, COMMONWEALTH LAND TITLE INSURANCE COMPANY, Defendant. ) ) ) ) ) ) ) ) ) ) ) Case No. 06-3755 CLASS ACTION ANSWER AND DEFENSES TO THE SECOND AMENDED COMPLAINT Defendant, Commonwealth Land Title Insurance Company ( Commonwealth or Defendant ), answers the correspondingly numbered paragraphs of the Second Amended Complaint (the Complaint ) as follows: I. BACKGROUND 1. The allegations set forth in paragraph 1 of the Complaint are 2. With respect to the first sentence of paragraph 2 of the Complaint, it is admitted that there is a charge for title insurance where it is obtained in connection with an original or refinanced mortgage on real property. With respect to the second sentence of paragraph 2 of the Complaint, it is admitted that lenders are beneficiaries of certain types of title insurance policies known as lender s or mortgagee title insurance policies. Otherwise, the allegations in paragraph 2 of the Complaint are 3. The allegations set forth in paragraph 3 of the Complaint are admitted.
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 2 of 26 4. The allegations set forth in paragraph 4 of the Complaint are admitted, except that the document attached to the Complaint as Exhibit A speaks for itself and all allegations inconsistent therewith are 5. The document referenced in paragraph 5 of the Complaint and attached to the Complaint as Exhibit A speaks for itself and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 5 of the Complaint, including all subparts, are 6. The allegations set forth in paragraph 6 of the Complaint are 7. With respect to the first sentence in paragraph 7 of the Complaint, it is admitted that Reissue Rates and Refinance Rates are lower than Original Rates or Basic Rates. Further, Commonwealth cannot speak to the intention behind such rates because the allegations attempt to speak for the entire industry and infer that all involved had the same intention and, therefore, those allegations in the first sentence of paragraph 7 are Additionally, because the allegations in the first sentence of paragraph 7 of the Complaint are directed to title insurance companies other than Commonwealth, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations and, therefore, those allegations are With respect to the second sentence of paragraph 7 the Complaint, the circumstances for which a Reissue Rate or Refinance Rate are applicable are set forth in writing and all allegations inconsistent therewith are With respect to the third sentence of paragraph 7 of the Complaint, as such allegations are directed to title insurers generally, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations and, therefore, those The allegations in the fourth and fifth sentences of paragraph 7 the Complaint refer to documents which speak for themselves and all allegations 2
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 3 of 26 inconsistent therewith are Otherwise, the allegations in paragraph 7 of the Complaint are 8. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 8 of the Complaint, and, therefore, those 9. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in the first sentence of paragraph 9 of the Complaint, and, therefore, those With respect to the second sentence in paragraph 9 of the Complaint, it is admitted that Commonwealth is a member of the American Land Title Association ( ALTA ). Otherwise, the allegations set forth in the second sentence of paragraph 9 refer to and purport to quote an article which is a writing that speaks for itself and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 9 of the Complaint are 10. The allegations set forth in the third sentence of paragraph 10 refer to an article which is a writing that speaks for itself and all allegations inconsistent therewith are Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 10 of the Complaint, and, therefore, those 11. The allegations set forth in the first sentence of paragraph 11 refer to an article which is a writing that speaks for itself and all allegations inconsistent therewith are Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 11 of the Complaint, and, therefore, those 3
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 4 of 26 12. The allegations set forth in the second and third sentences of paragraph 12 refer to and purport to quote articles which are writings that speak for themselves and all allegations inconsistent therewith are Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 12 of the Complaint, and, therefore, those 13. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 13 of the Complaint, and, therefore, those II. THE PARTIES 14. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 14 of the Complaint, and, therefore, those 15. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 15 of the Complaint, and, therefore, those 16. The allegations set forth in the first sentence of paragraph 16 of the Complaint are By way of further answer, as of 2006, Commonwealth is incorporated in the State of Nebraska. With respect to the allegations set forth in the second sentence of the Complaint, it is admitted that Commonwealth was incorporated in Pennsylvania prior to becoming incorporated in Nebraska and regularly conducted business in Pennsylvania. The remaining allegations in the second sentence of paragraph 16 are 4
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 5 of 26 III. JURISDICTION AND VENUE 17. The allegations set forth in the first sentence of paragraph 17 of the Complaint state a legal conclusion to which no response is required. The allegations in the second sentence of paragraph 17 of the Complaint state a legal conclusion to which no response is required. To the extent a response is deemed necessary to the second sentence of paragraph 17 of the Complaint, such allegations are admitted except that it is denied that there is any merit to the alleged claims. With respect to the third sentence of paragraph 17 of the Complaint, it is admitted that Commonwealth is now incorporated in Nebraska and that Commonwealth removed this case to this Court pursuant to the Class Action Fairness Act. Otherwise, the allegations of the third sentence of paragraph 17 of the Complaint are 18. The allegations set forth in paragraph 18 of the Complaint are admitted for purposes of venue only. Otherwise, the allegations set forth in paragraph 18 are IV. CLASS ALLEGATIONS 19. Commonwealth admits that Plaintiffs purport to bring this lawsuit as a class action. Otherwise, the allegations in paragraph 19 of the Complaint are 20. Commonwealth admits that Plaintiffs purport to bring this lawsuit on behalf of themselves and Class members. Otherwise, the allegations in paragraph 20 are 21. The allegations set forth in paragraph 21 of the Complaint are 22. The Court s January 31, 2008 Class Certification Order speaks for itself and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 22 are 5
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 6 of 26 23. The allegations set forth in paragraph 23 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 24. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 24 of the Complaint, and, therefore, those 25. The allegations set forth in the first sentence of paragraph 25 state a legal conclusion to which no response is required. To the extent a response may be required, those With respect to the allegations set forth in the second sentence of paragraph 25, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of those allegations and, therefore those 26. The allegations set forth in paragraph 26 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 27. The allegations set forth in paragraph 27 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 28. The allegations set forth in paragraph 28 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 29. The allegations set forth in paragraph 29 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 6
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 7 of 26 30. The allegations set forth in paragraph 30 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 31. The allegations set forth in paragraph 31 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 32. The allegations set forth in paragraph 32 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations, including all subparts, are 33. The allegations set forth in paragraph 33 of the Complaint state a legal conclusion to which no response is required. To the extent a response may be required, those allegations are 34. The Court s January 31, 2008 Class Certification Order speaks for itself and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 34 of the Complaint are V. FACTUAL ALLEGATIONS 35. The allegation set forth in the first sentence of paragraph 35 of the Complaint is denied except that it is admitted that the Commonwealth provides title insurance in connection with real estate transactions. In response to the allegations set forth in the second sentence of paragraph 35 of the Complaint, the purpose of each title insurance policy is set forth in the terms of each such policy and such title insurance is not a guarantee as alleged and, therefore, the allegations in the second sentence of paragraph 35 are 36. The allegations set forth in paragraph 36 of the Complaint are admitted. 7
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 8 of 26 37. With respect to the allegations set forth in the first sentence of paragraph 37 of the Complaint, Commonwealth admits that a title insurance policy may be purchased from a title insurer authorized by law to issue title insurance in Pennsylvania. With respect to the allegations set forth in the second sentence of paragraph 37 of the Complaint, Commonwealth admits that a lender s policy of title insurance insures the lender. Otherwise, the allegations set forth in paragraph 37 of the Complaint are 38. With respect to the allegations set forth in the second sentence of paragraph 38 of the Complaint, Commonwealth s website speaks for itself and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 38 of the Complaint are 39. The allegations set forth in paragraph 39 of the Complaint are 40. With respect to the allegations set forth in the second sentence of paragraph 40 of the Complaint, Commonwealth admits that it and/or its agents may undertake the function of searching and examining the chain of title and liens on property in connection with the underwriting and issuance of a title insurance policy. Otherwise, the allegations set forth in paragraph 40 of the Complaint are 41. With respect to the allegations set forth in the first sentence of paragraph 41 of the Complaint, Commonwealth admits that a title search may show the existence of a lien or encumbrance on the subject property. Otherwise, the allegations set forth in paragraph 41 of the Complaint are 42. The statute referenced in paragraph 42 of the Complaint speaks for itself and all allegations inconsistent therewith are 8
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 9 of 26 43. The statute referenced in paragraph 43 of the Complaint speaks for itself and all allegations inconsistent therewith are 44. The statute referenced in paragraph 44 of the Complaint speaks for itself and all allegations inconsistent therewith are 45. The allegations set forth in paragraph 45 of the Complaint reference the TIRBOP Manual, which is a document that speaks for itself and all allegations inconsistent therewith are 46. With respect to the allegations set forth in paragraph 46 of the Complaint, while it is admitted that the rates charged by Commonwealth were approved by the Pennsylvania Insurance Commission and that Commonwealth did not receive authorization to deviate from such rates, the allegations of paragraph 46 of the Complaint are otherwise The Alberton Refinance Transaction 47. Commonwealth admits that Plaintiff Alberton purchased property located at 901 Kings Arm Drive, Downingtown, Pennsylvania 19335 in 1996. Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 47 of the Complaint, and, therefore, those 48. Commonwealth admits that Plaintiff Alberton obtained a mortgage on the property located at 901 Kings Arm Drive, Downingtown, Pennsylvania 19335 in 1996. Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 48 of the Complaint, and, therefore, those 49. Commonwealth admits that Plaintiff Alberton refinanced the mortgage on the property located at 901 Kings Arm Drive, Downingtown, Pennsylvania 19335 in 2001. 9
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 10 of 26 Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 49 of the Complaint, and, therefore, those 50. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 50 of the Complaint, and, therefore, those 51. With regard to the allegations set forth in the third sentence of paragraph 51 of the Complaint, Commonwealth admits that $1,155.38 was the amount charged for the title insurance obtained in connection with the referenced refinance transaction. Otherwise, the allegations set forth in paragraph 51 of the Complaint are 52. Commonwealth admits that Camelot Abstract Incorporated ( Camelot ) is an independent title agent for Commonwealth and that the Alberton Refinance Transaction took place at Camelot s office. Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 52 of the Complaint and, therefore, those 53. The referenced document speaks for itself and all allegations inconsistent therewith are To the extent a response may be required, Commonwealth admits that Camelot prepared the HUD-1 settlement statement and that Camelot appears to have collected $1,155.38 for title insurance. Otherwise, the allegations set forth in paragraph 53 of the Complaint are 54. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 54 of the Complaint and, therefore, those 10
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 11 of 26 The Kessler Refinance Transaction 55. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 55 of the Complaint and, therefore, those 56. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 56 of the Complaint and, therefore, those 57. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 57 of the Complaint and, therefore, those 58. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 58 of the Complaint and, therefore, those 59. Commonwealth admits that Broker s Settlement Services, Inc. is an independent agent for Commonwealth. Otherwise, the allegations set forth in paragraph 59 of the Complaint are 60. The referenced document speaks for itself and all allegations inconsistent therewith are Otherwise, Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 60 of the Complaint and, therefore, those 61. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 61 of the Complaint and, therefore, those 11
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 12 of 26 62. The allegations set forth in the first, second, and third sentences of paragraph 62 of the Complaint are By way of further answer, any underwriting was performed by Camelot Abstract, Inc. and/or Broker s Settlement Services, Inc., both independent entities, not Commonwealth. The remaining allegations set forth in paragraph 62 of the Complaint state legal conclusions to which no response is required. To the extent a response is deemed necessary, those 63. Admitted that Commonwealth is a member of TIRBOP. Further, the referenced Rate Manual is a document that speaks for itself and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 63 of the Complaint are 64. The allegations set forth in paragraph 64 of the Complaint state legal conclusions to which no response is required. To the extent a response may be required, those allegations are 65. The allegations set forth in paragraph 65 of the Complaint state legal conclusions to which no response is required. To the extent a response may be required, those allegations are 66. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 66 of the Complaint and, therefore, those 67. The allegations set forth in paragraph 67 of the Complaint are 68. The allegations set forth in paragraph 68 of the Complaint are 69. Certain of the allegations set forth in paragraph 69 of the Complaint state legal conclusions to which no response is required. To the extent a response may be required, those Otherwise, the allegations set forth in paragraph 69 are 12
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 13 of 26 70. The allegations set forth in paragraph 70 of the Complaint are 71. The allegations set forth in paragraph 71 of the Complaint are 72. The allegations set forth in paragraph 72 of the Complaint are 73. The allegations set forth in paragraph 73 of the Complaint are 74. The allegations set forth in paragraph 74 of the Complaint are 75. The terms of the title insurance policies issued by Commonwealth speak for themselves and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 75 of the Complaint are 76. Commonwealth admits that it has contractual relationships with various independent entities that serve as its title insurance agents in Pennsylvania and that, pursuant to the specific terms of such contracts, Commonwealth may agree with those independent agents to share a portion of title insurance premiums collected by the independent agent. Otherwise, the allegations set forth in paragraph 76 of the Complaint are 77. Commonwealth admits that Plaintiffs purport to seek recovery of damages in this lawsuit, but Commonwealth denies that Plaintiffs are entitled to such relief. Otherwise, the allegations set forth in paragraph 77 of the Complaint are COUNT I (BREACH OF EXPRESS CONTRACT) 78. Commonwealth incorporates its responses to the prior paragraphs. 79. Commonwealth admits that it issued lender s title insurance policies to lenders in return for payment. Otherwise, the allegations set forth in paragraph 79 of the Complaint are 80. The allegations set forth in paragraph 80 of the Complaint are 81. The allegations set forth in paragraph 81 of the Complaint are 13
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 14 of 26 82. The allegations set forth in paragraph 82 of the Complaint are 83. The allegations set forth in paragraph 83 of the Complaint are 84. The allegations set forth in paragraph 84 of the Complaint are 85. The allegations set forth in paragraph 85 of the Complaint are 86. The allegations set forth in paragraph 86 of the Complaint are COUNT II (Breach of Implied Contract) 87. Commonwealth incorporates its responses to the prior paragraphs. 88. The allegations set forth in paragraph 88 of the Complaint are 89. The allegations set forth in paragraph 89 of the Complaint are 90. The allegations set forth in paragraph 90 of the Complaint are 91. The allegations set forth in paragraph 91 of the Complaint are 92. The allegations set forth in paragraph 92 of the Complaint are 93. The allegations set forth in paragraph 93 of the Complaint are 94. The allegations set forth in paragraph 94 of the Complaint are 95. The allegations set forth in paragraph 95 of the Complaint are COUNT III (Money Had and Received) 96. Commonwealth incorporates its responses to the prior paragraphs. 97. The allegations set forth in paragraph 97 of the Complaint are 98. The allegations set forth in paragraph 98 of the Complaint are 99. The allegations set forth in paragraph 99 of the Complaint are 100. The allegations set forth in paragraph 100 of the Complaint are 14
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 15 of 26 COUNT IV (Pennsylvania Unfair Trade Practices Act and Consumer Protection Law) 101. Commonwealth incorporates its responses to the prior paragraphs. 102. The allegations set forth in paragraph 102 of the Complaint are 103. The allegations set forth in paragraph 103 of the Complaint are 104. The allegations set forth in paragraph 104 of the Complaint are 105. The allegations set forth in paragraph 105 of the Complaint, including all subparts, are 106. The allegations set forth in paragraph 106 of the Complaint are 107. The allegations set forth in paragraph 107 of the Complaint are 108. The allegations set forth in paragraph 108 of the Complaint are 109. The allegations set forth in paragraph 109 of the Complaint are 110. The allegations set forth in paragraph 110 of the Complaint are 111. The allegations set forth in paragraph 111 of the Complaint are 112. The allegations set forth in paragraph 112 of the Complaint are COUNT V (Fraudulent Misrepresentation) 113. Commonwealth incorporates its responses to the prior paragraphs. 114. The allegations set forth in paragraph 114 of the Complaint are 115. The allegations set forth in paragraph 115 of the Complaint are 116. The allegations set forth in paragraph 116 of the Complaint are 117. The allegations set forth in paragraph 117 of the Complaint are 118. The allegations set forth in paragraph 118 of the Complaint are 119. The allegations set forth in paragraph 119 of the Complaint are 15
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 16 of 26 120. The allegations set forth in paragraph 120 of the Complaint are 121. The allegations set forth in paragraph 121 of the Complaint are COUNT VI (Negligent Misrepresentation) 122. Commonwealth incorporates its responses to the prior paragraphs. 123. The allegations set forth in paragraph 123 of the Complaint are 124. The allegations set forth in paragraph 124 of the Complaint are 125. The allegations set forth in paragraph 125 of the Complaint are 126. The allegations set forth in paragraph 126 of the Complaint are 127. The allegations set forth in paragraph 127 of the Complaint are 128. The allegations set forth in paragraph 128 of the Complaint are 129. The allegations set forth in paragraph 129 of the Complaint are 130. The allegations set forth in paragraph 130 of the Complaint are COUNT VII (Negligent Supervision) 131. Commonwealth incorporates its responses to the prior paragraphs. 132. Commonwealth admits that Count VII purports to be brought as a class action. Otherwise, the allegations set forth in paragraph 132 of the Complaint are 133. Commonwealth admits that it has contractual relationships with its independent agents in Pennsylvania. The terms of those contracts speak for themselves and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 133 of the Complaint are 16
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 17 of 26 134. The terms of Commonwealth s contracts with its independent agents speak for themselves and all allegations inconsistent therewith are Otherwise, the allegations set forth in paragraph 134 of the Complaint are 135. Commonwealth is without knowledge or information sufficient to form a belief as to the truth of the allegations set forth in paragraph 135 of the Complaint and, therefore, those 136. The allegations set forth in paragraph 136 of the Complaint are 137. The allegations set forth in paragraph 137 of the Complaint are 138. The allegations set forth in paragraph 138 of the Complaint are 139. The allegations set forth in paragraph 139 of the Complaint are 140. The allegations set forth in paragraph 140 of the Complaint are COUNT VIII (Accounting) 141. Commonwealth incorporates its responses to the prior paragraphs. 142. Commonwealth admits that Count VIII purports to be brought as a class action. Otherwise, the allegations set forth in paragraph 142 of the Complaint are 143. The allegations set forth in paragraph 143 of the Complaint are 144. The allegations set forth in paragraph 144 of the Complaint are 145. The allegations set forth in paragraph 145 of the Complaint are COUNT IX (Unjust Enrichment) 146. Commonwealth incorporates its responses to the prior paragraphs. 147. The allegations set forth in paragraph 147 of the Complaint are 148. The allegations set forth in paragraph 148 of the Complaint are 17
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 18 of 26 149. The allegations set forth in paragraph 149 of the Complaint are 150. The allegations set forth in paragraph 150 of the Complaint are 151. The allegations set forth in paragraph 151 of the Complaint are 152. The allegations set forth in paragraph 152 of the Complaint are 153. The allegations set forth in paragraph 153 of the Complaint are 154. The allegations set forth in paragraph 154 of the Complaint are ALL ALLEGATIONS NOT SPECIFICALLY ADMITTED ARE EXPRESSLY DENIED. DEFENSES 1 1. The Complaint and each of the counts asserted therein fail to state a claim upon which relief can be granted. 2. The Complaint is improperly pleaded to the extent Plaintiffs purport to incorporate by reference into each count of the Complaint, the allegations contained in each and every other count that precedes it in the Complaint. 3. Commonwealth acted at all times in good faith and in accordance with the custom and practice within the title insurance industry in Pennsylvania with respect to the interpretation of the rate manual. 4. Plaintiffs have failed to join indispensable parties, including but not limited to the Plaintiffs respective spouses who were co-owners of the real property at issue and co-borrowers on the loans obtained for those properties. 5. To the extent some of Commonwealth s independent agents in Pennsylvania are attorneys licensed by the Pennsylvania Supreme Court to practice law in Pennsylvania, the 1 By denominating the matters alleged below as Defenses, Commonwealth is not intending to shift, and is not shifting, the burden of proof as to any matters for which Plaintiffs already have such burden. 18
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 19 of 26 UTPCPL does not apply to any allegation of misconduct governed by Pennsylvania s Rules of Professional Conduct and Rules of Disciplinary Enforcement. 6. Federal law places the duty of disclosure of the availability of Reissue Rates on lenders, not title insurers. 12 U.S.C. 2604; 24 C.F.R. 3500.6. The Pennsylvania title insurance rate statute and rate manual do not impose any additional duties of disclosure on Commonwealth. As such, Commonwealth was under no duty to explain to Plaintiffs or putative class members that of which they were already on notice. Commonwealth s only duty was to charge the Basic Rate for the lender s title policy if no prior policy was provided. 7. Plaintiff and the putative class members are not entitled to recover under a balancing of the equities. 8. Plaintiffs and putative class members, on their own behalf or through their agents or representatives, knew, should have known, or had constructive knowledge or notice that a Reissue or Refinance Rate was available if all conditions for it were satisfied. As such, the claims of Plaintiffs and the putative class members are barred by the doctrines of waiver, estoppel, ratification, and unclean hands. 9. The parties insured under the title insurance policies that are the subject of this lawsuit i.e. the lenders knew full well of the availability of, and conditions for, lower Reissue or Refinance Rates. Yet with full knowledge of the availability and conditions for such rates, and with full knowledge that the higher Basic Rate was being charged, the insureds did not take steps to obtain the lower rate or object to the rates charged. As such, the Plaintiffs and putative class members, are estopped, have waived, or ratified the amount contracted to be paid, and the amount in fact paid, for the title policies issued. 19
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 20 of 26 10. The only contract Commonwealth entered into was that between Commonwealth and its insured. Simply because Plaintiffs and putative class members, pursuant to their own contracts with their lenders, satisfied their lenders obligations to Commonwealth to pay the premium due for their lenders policies, did not create an express or implied contract between Commonwealth and Plaintiffs or putative class members. Whatever agreement Plaintiffs and putative class members reached with their lenders concerning who would pay for the policies or on what conditions Plaintiffs or putative class members would pay for them, was a matter between Plaintiffs and putative class members and their lenders. Commonwealth s only contract with respect to the policies was with its insured. The statute and rate manual relied upon by Plaintiffs and putative class members do not purport to create any contractual rights in favor of the Plaintiffs or putative class members. 11. To the extent members of the class had no contact, communication, or relationship with Commonwealth, they lack standing to contend they were the subject of any misrepresentation, duty of disclosure, express contract, implied contract, or other obligations by Commonwealth. 12. To retroactively impose a duty of disclosure on Commonwealth when there is no such duty set forth in the statute or rate manual, and where the only duty of disclosure under federal law is placed on the lender, not the title insurer, is not constitutionally permissible and would constitute a violation of the separation of powers and the due process clauses of the Pennsylvania and United States Constitutions and result in an unconstitutional penalty and taking of Commonwealth s property without due process of law. 13. In those instances where a title insurance policy is issued by an independent agent, only a portion of the title insurance premium is remitted to Commonwealth. The 20
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 21 of 26 remaining portion of the premium is retained by the independent agent. Because Commonwealth does not receive 100% of the alleged overcharge, any claim of unjust enrichment against Commonwealth must be limited to the portion retained by Commonwealth. Further, to the extent Plaintiff and putative class members seek to recover 100% of the alleged overcharge, the only way to grant such relief is if the independent agents are also defendants. Thus, the independent agents are indispensable parties to the action. Moreover, since the claims are premised on actions of the independent agents, not Commonwealth directly, there is the risk of inconsistent adjudications and inefficient use of judicial resources by not naming the independent agents as parties to this action. 14. The UTPCPL is not applicable, in whole or in part, to the claims made in the Complaint. 15. Plaintiffs claims and the claims of unnamed class members are barred, in whole or in part, on the basis that Plaintiffs and members of the proposed class would be unjustly enriched if they were allowed to recover the damages being sought in the Complaint. 16. Plaintiffs and members of the proposed class lack standing to sue. 17. To the extent there is any failure to satisfy any duty toward Plaintiffs or putative class members, such duty is outside the scope of Commonwealth s role in the transaction, and Commonwealth cannot be held liable as a result. 18. Because a contract governing the transaction which is the subject matter of the Complaint exists, Plaintiffs and putative class members cannot maintain an action for unjust enrichment or for breach of an implied contract. 19. The implied contract claim asserted by Plaintiffs and the putative class members in Count II is barred to the extent any express contract is found. 21
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 22 of 26 20. Some or all of the claims asserted by Plaintiffs or the putative class members, are barred or limited by the failure of Plaintiffs or putative class members to mitigate their damages. 21. Neither the rate statute nor the rate manual upon which the allegations of the Complaint depend create any private right of action, yet Plaintiffs and putative class members attempt indirectly to privately enforce the title insurance rate statute and manual. 22. Commonwealth acted properly and consistent with any legal obligations it may have owed to Plaintiffs or the putative class members and it did not have any special duty or any duty to speak or disclose as alleged by Plaintiffs. Commonwealth was neither an agent nor a fiduciary of Plaintiff nor of the putative class members. 23. The TIRBOP Rate Manual is a publicly available document, and each Plaintiff and class member knew or had an obligation to know of its terms, and to comply with its terms and conditions precedent for obtaining any discounted rate set forth therein. The Plaintiffs and putative class members did not provide the closer who issued the subject title policy with the information and documentation they were obligated to provide in order to obtain the discounted rates to which they claim they were allegedly entitled, and did not otherwise comply with the conditions of the TIRBOP Rate Manual setting forth the required conditions precedent to obtain any discounted premiums or rates. 24. The existence of a contract is a pre-requisite to an action for breach of contract. A plaintiff may not maintain such an action unless he or she is a party to, or an intended third-party beneficiary of, the contract alleged to have been breached. Plaintiffs and putative class members are neither parties to, nor intended third-party beneficiaries of, the contract alleged to have been breached. Alternatively, any express contract alleged by Plaintiffs and the putative class 22
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 23 of 26 members fails for lack of consideration, lack of assent to mutual contract terms, lack of breach, and lack of damages. 25. Commonwealth has complied with the requirements of the TIRBOP Rate Manual and any other applicable regulation or law. 26. Commonwealth is not liable to the extent that any of its independent agents acted beyond the scope of their agency relationship with Commonwealth. 27. To the extent either Plaintiffs or the putative class members suffered damages, if any, those damages were caused by entities or individuals not parties to this lawsuit and for whom Commonwealth is not responsible. 28. The Complaint fails to satisfy the requirements for a class action as set forth in the Federal Rules of Civil Procedure and under applicable law. 29. Plaintiffs and the Complaint fail to satisfy the requirements for class certification and the class and/or sub-classes should be de-certified. 30. Commonwealth s conduct and statements were truthful and/or justified as were those of any agents and/or employees to the extent that such took place within the scope of their authority or employment. 31. Neither Plaintiffs nor the putative class members relied on any alleged conduct or representations by Commonwealth or its independent agents. To the extent Plaintiffs or the putative class members may have relied on any alleged conduct or representations by Commonwealth or its independent agents, such reliance was neither justifiable nor reasonable. 32. The Plaintiffs and the putative class members have failed to exhaust administrative remedies regarding their purported causes of action. The claims asserted by 23
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 24 of 26 Plaintiffs and the putative class members are preempted by the provisions of Article VII of the Pennsylvania Insurance Code. 33. The claims of Plaintiffs and the putative class members are barred by the doctrines of contributory negligence and/or comparative negligence. To the extent either Plaintiffs or the putative class members may have suffered any damages, those damages resulted from Plaintiffs or the putative class members own conduct or the conduct of individuals acting on their behalf. 34. The claims of Plaintiffs and the putative class members are barred by the statute of frauds. 35. The claims of Plaintiffs and the putative class members are barred by the doctrines of voluntary payment, accord and satisfaction, and ratification. 36. The claims of Plaintiffs and the putative class members are barred by the parol evidence rule. 37. The claims of Plaintiffs and the putative class members are barred to the extent that the individual or entity that handled the transaction for Plaintiffs or the putative class members acted outside the scope of any agency relationship with Commonwealth. 38. The Complaint fails to plead fraud with the required particularity and, therefore, should be dismissed. 39. The non-contract claims are barred by the Gist of the Action doctrine. 40. Plaintiffs claims and/or the claims of the putative class members are barred or limited, in whole or in part, pursuant to the applicable statutes of limitations. 41. Plaintiff s claims are barred by the filed rate doctrine. 24
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 25 of 26 42. The presence of a mortgage in the chain of title is not evidence of title insurance triggering a discount under the applicable regulation. 43. The amended manuals are neither applicable nor relevant to the claims of the Plaintiffs or the class and/or sub-classes. Respectfully submitted: April 25, 2008 /s/ Cindy Dunlap Hinkle Samuel W. Braver (#19682) Stanley J. Parker (#66013) Cindy Dunlap Hinkle (#86318) BUCHANAN INGERSOLL & ROONEY PC One Oxford Centre 301 Grant Street, 20th Floor Pittsburgh, PA 15219 (412) 562-8800 - and - /s/ Paul D. Weller Paul D. Weller (# 61175) pweller@morganlewis.com Kristofor T. Henning (# 85047) khenning@morganlewis.com MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Telephone: (215) 963-5000 Facsimile: (215) 963-5001 /s/ Mark A. Brown Mark A. Brown (admitted pro hac vice) mbrown@carltonfields.com Marty J. Solomon (admitted pro hac vice) msolomon@carltonfields.com Mac R. McCoy (admitted pro hac vice) mmccoy@carltonfields.com CARLTON FIELDS, P.A. Corporate Center III at International Plaza 4221 West Boy Scout Boulevard (33607) P.O. Box 3239 Tampa, Florida 33601-3239 Telephone: (813) 223-7000 Facsimile: (813) 229-4133 Attorneys for Commonwealth Land Title Insurance Corporation - and - 25
Case 2:06-cv-03755-ER Document 136 Filed 04/25/2008 Page 26 of 26 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 25th day of April, 2008, a copy the foregoing was electronically filed via the ECF system. Electronic notice that the document is available for viewing and downloading from the ECF system will be sent to all counsel of record. /s/ Paul D. Weller Paul D. Weller (# 61175) 26