A number of years ago, class action suits were filed against many of Florida’s title insurers in which it was alleged that their agents failed to charge the lower reissue rates when required under the Florida rules. Some of those cases settled, others have continued in litigation. At the trial court level, different interpretations of Rule 69O-186.003 Fla. Admin. Code (the “Rate Rule”) were reached. One court found liability on summary judgment based on their conclusion that the rule imposed a “mandatory, non-delegable” duty to make an undefined “reasonable” search for the existence of a prior owner’s policy so that a reissue rate could be given (if appropriate). Raffone v. First American Title, (Fla. 4th Circuit, Case No. 04-78-CA) and Higgins v. Commonwealth, (Fla. 4th Circuit, Case No. 04-365-CA).
Another court reached the opposite conclusion -- that the Rate Rule does not impose a duty on the insurer or agent to affirmatively search for and find a prior qualifying owner's policy. Bleich & Elder v. Chicago Title, (Fla. 11th Circuit, Case No. 07-15721-CA-27).
The Bleich & Elder case was appealed to Florida’s Third District Court of Appeal. The appellate court was being asked to hold that a title insurer and their agents had an affirmative duty to actively search out any prior policies (even if not provided by the parties) in order to qualify a transaction for reissue rate.
It is important to note that Plaintiffs did not specify what efforts to identify a prior owner’s policy are “reasonable” or what steps an insurer or title agent would have to take to comply with this alleged obligation. Most of us routinely try to obtain a prior policy, first by asking our customer – to save our customer money, as a cross-check of our work, and potentially because we want to use the Mutual Indemnification Agreement (the Treaty) to address a title defect.
The standard proposed in this litigation would have left every agent in a Catch-22 situation if we couldn’t lay our hands on a prior policy. Prior policies are not recorded and there is no central database. So we’d always be looking over our shoulders wandering “Will a jury or our regulator think I looked hard enough?” “Should I assume that the current own must have a policy and give him the reissue rate?” “Will I be in more trouble for not having the prior policy in my file, or for not giving the reissue rate?”
Here at FLTA, we felt that what the plaintiffs were proposing would have been a major change in the law and certainly in title practice. More importantly, it would have been a huge burden on agents and insurers that would be almost impossible to meet.
Thanks to very generous funding from First American Title Insurance Company, FLTA engaged an experienced class action team, headed by Charles Newman at Dentons, US, LLP, to help us prepare an amicus brief. FLTA’s Amicus Brief was filed last January.
On June 5, 2013, the Third District Court of Appeals released its opinion. They agreed with our position that the Rate Rule should be read as written and that it does NOT impose a duty to actively search out prior policies. We are very pleased with this opinion, and expect it to be relied upon when the Raffone and Higgins cases are later appealed. Here's the opinion.
Again, FLTA would like to thank First American for its generosity in supporting our Amicus efforts to protect the entire title industry and the hard work of the team at Dentons, LLP.