Friday, February 01, 2008

consumer protection - title insurance - fraudulent OR deceptive conduct

Alberton, et al. v. Commonwealth Land Title Insurance Co. - ED Pa. - January 31, 2008

The court certified a class of consumer who had purchased title insurance from defendant within 10 years of a prior purchase of title insurance. The court said that "[i]n doing so, it joins a growing list of courts around the country that have certified similar classes of insurance purchasers bringing similar cases against insurance sellers and arising from practices nearly identical to the sales practices challenged here."

Title insurance is regulated by the Pennsylvania Title Act, 40 P.S. 910-1 et seq., and the Title Insurance Rating Bureau Manual (Manual), which establishes a mandatory 3-tier pricing structure - basic, reissue, and refinance. The named plaintiff claimed that he was entitled to the lowest rate (refinance) but was charged the higher reissue rate, which cost him $234.08 more.

Plaintiff sued under various causes of action (contract, UTPCPL, fraudulent misrepresentation, etc. etc.) who elements differed "but each turns on the question of whether plaintiff was required to request a discounted rate and produced evidence showing his entitlement to that rate when he purchases title insurance from Commonwealth; or whether Commonwealth should have automatically offered plaintiff discounted rate upon learning, through the title search, that he had refinanced in the [recent] past," thus entitling him to a discount.

Of particular note was the court's discussion of the UTPCPL claim, in the context of Rule 23(b)'s requirement that common questions of law/fact predominate over individual questions. The court said that

A plaintiff seeking to recover under the UTPCPL once was required to prove all the elements of common law fraud; however, a 1996 amendment made the law “less restrictive.”9 Commonwealth v. Percudani, 825 A.2d 743, 747 (Pa. Cmwlth. 2003). Plaintiffs must now show conduct that is “deceptive to the ordinary consumer,” but need not prove all the elements of fraud.10 Id. at 746. Thus, individualized proof of justifiable reliance is no longer required to succeed on a claim under the UTPCPL. Instead, “[a] policy of not applying published insurance rates, if proven, would satisfy the requirement of a deceptive practice under the UTPCPL.” Cohen, 242 F.R.D. at 301. Because plaintiffs can succeed as a class by showing Commonwealth’s policy rather than individual reliance, common questions predominate on this claim.

9 Section 202-2(4)(xxi) now prohibits “engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” 73 Pa. Cons. Stat. Ann. § 202-2(4)(xxi)..... Prior to 1996, the section addressed only “fraudulent,” not “deceptive,” conduct.....

10 Pennsylvania courts are divided as to the import of the 1996 amendment to the UTPCPL: the superior courts continue to require plaintiffs under the UTPCPL to prove all the elements of common law fraud whereas the Commonwealth court has abandoned that requirement. See Com. ex rel. Corbett v. Mason, 903 A.2d 69, 74 (Pa. Cmwlth. 2006) (recognizing split among Pennsylvania courts). The Commonwealth court reasons that “(1) the statute is to be liberally construed to effectuate the legislative goal of consumer protection; (2) the legislature’s addition of the words ‘or deceptive’ signals a less restrictive interpretation; and (3) maintaining the pre-1996 requirement would render the words ‘or deceptive conduct’ redundant and superfluous, contrary to the rules of statutory construction.” Id. Other federal courts that have considered the effect of the 1996 amendment have agreed with the Commonwealth court’s conclusion. See, e.g., Cohen, 242 F.R.D. 295; Flores v. Shapiro & Kreisman, 246 F. Supp. 2d 427, 432 (E.D. Pa. 2002) (holding that, to survive a motion to dismiss, plaintiff seeking relief under UTPCPL need allege only that conduct was deceptive; all six elements of common law fraud are not necessary); In re Patterson, 263 B.R. 82, 91-92 (Bankr. E.D. Pa. 2001). Persuaded by the reasoning of the Commonwealth court and these federal courts, this Court also concludes that the addition of “deceptive” conduct to the UTPCPL signals the legislature’s intent that plaintiffs proceeding under the UTPCPL no longer be required to establish the elements of common law fraud.

The Title Insurance statute is also discussed in the recent ED Pa. case of Markocki v. Old Republic National Title Insurance Company

real property - judicial sale - petition to set aside - due process rights of owner

Fulton v. Bedford County Tax Claim Bureau - Commonwealth Court - January 31, 2008

A person who holds legal title to property which he purchased at a judicial sale is an indispensable party to and has a due process right to get notice of and take part in the prior owner's subsequent petition to set aside the judicial sale because of alleged lack of notice. The lower court erred in denying the purchaser's petition to intervene in the proceedings on the prior owner's petition.

The purchaser was more than just a successful bidder at a tax upset sale, but rather held title to the property as owner, after title passed first to the taxing bureau as trustee, which then conveyed its title to purchaser, who became the legal title holder. "As legal owner, Purchaser is entitled to due process before title to the Property may be transferred to another....To that end, appellate courts consistently hold property owners are indispensable parties to lawsuits affecting their property rights."