Although class treatment might be preferable in a case alleging that the Chicago Title Insurance Co. overcharged customers, a federal judge decertified the class in light of the Third Circuit’s reading of state court precedent on the contours of the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
The opinion turned on the U.S. Court of Appeals for the Third Circuit’s holding in Hunt v. United States Tobacco, issued in 2008, two years after the case against Chicago Title Insurance was filed and a year after lead plaintiff Pearl Cohen was granted class status.
"The holding in Hunt creates a difficult obstacle for a plaintiff pursuing a class action based on the UTPCPL’s catch-all provision," said U.S. District Judge Juan R. Sanchez of the Eastern District of Pennsylvania, since plaintiffs must prove they justifiably relied on the defendant’s allegedly misleading representation and that is typically only able to be determined on a case-by-case basis.
The focus on individual circumstances would defeat the class action requirement that there are common questions of law and fact.
"The court finds Cohen cannot maintain a class action for a violation of the UTPCPL’s catch-all provision because the need to show justifiable reliance on Chicago’s deceptive conduct renders such claims unsuitable for class treatment," Sanchez said in Cohen v. Chicago Title Insurance.
"Justifiable reliance requires an individual inquiry into each of the class member’s transactions with Chicago," he said. "The individual questions of justifiable reliance, misrepresentation, and entitlement of a discount would be questions of both law and fact affecting individual class members, which would predominate over the issues common to the class," Sanchez said.
The case is based on Cohen’s argument that she was entitled to a lower rate from Chicago Title when she refinanced her house because she had bought title insurance within the last three years. According to the Manual of Title Insurance Rating, under which the insurer operates, there are three rate tiers: basic; reissue, which is 90 percent of the basic rate; and refinance, which is 80 percent of the reissue rate.
When Cohen got title insurance through Chicago Title in 2002, she was charged the basic rate of $606.75, according to the opinion.
In 2006, she brought various claims against the title insurer in the Philadelphia Court of Common Pleas, but the only remaining claim after the case was removed to federal court is the one she made under the catch-all provision of the UTPCPL.
"The statute prohibits a range of unfair and deceptive practices, including a catch-all provision, which prohibits ‘fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding,’" Sanchez said, quoting from the text of the law.
Although the Third Circuit’s opinion in Hunt noted that the Superior Court has carved out a narrow exception to the general rule that justifiable reliance can’t be presumed, Cohen’s case doesn’t fit it. The exception allows for a presumption of reliance if there is a fiduciary relationship, Sanchez said.
While Cohen argued that Chicago Title had a fiduciary relationship to her, Sanchez wasn’t convinced. Beyond that, he said, "determining whether the class members had a fiduciary relationship with Chicago would also involve individual inquiries and demonstrates a lack of commonality and predominance."
Sanchez also denied Cohen’s motion for summary judgment. Cohen didn’t offer enough evidence to the court in order to prove that she justifiably relied on the form that she signed when buying title insurance, he said.
Martin Wolf of Gordon & Wolf in Towson, Md., represented Cohen and couldn’t be reached for comment.
David Pittinsky of Ballard Spahr in Philadelphia represented Chicago Title Insurance and declined to comment.
(Copies of the 13-page opinion in Cohen v. Chicago Title Insurance, PICS No. 13-0546, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •