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American Homeland Title Agency, Inc. v. Robertson

United States District Court, S.D. Indiana, Indianapolis Division

September 30, 2016

STEPHEN W. ROBERTSON Commissioner, Defendant.



         This matter is before us on Defendant Stephen W. Robertson's Motion to Dismiss [Dkt. No. 36] Plaintiff's Complaint. For the following reasons, we DENY the Motion.


         Plaintiffs American Homeland Title Agency, Inc., John Yonas, and Martin Rink have asserted claims against defendant Stephen W. Robertson in his individual capacity as well as in his official capacity as Commissioner of the Indiana Department of Insurance. Plaintiffs allege that Defendant has violated the Equal Protection and Commerce Clauses and request Declaratory Judgment and Permanent Injunction.

         Plaintiff American Homeland Title Agency, Inc. (“American Homeland”) is an Ohio Company with its principal place of business in Cincinnati, Ohio. For more than ten years, American Homeland has provided title insurance, which is a contractual obligation between a real estate purchaser or lender and the title company. [Compl. ¶¶ 9, 11.] A title insurer, such as American Homeland, conducts title searches, examining property records to confirm that the putative owner indeed owns the property. [Id. ¶ 11.] In doing so, American Homeland looks for outstanding mortgages, liens, judgments, unpaid taxes, restrictions, easements, leases, and any other issue that might impact free and clear ownership. [Id.] American Homeland then ensures the legitimacy of a title by selling title insurance which protects against future losses resulting from defects of title. [Id.]

         The Indiana Department of Insurance (“IDOI”) regulates title insurance companies doing business in Indiana. [Id. ¶ 10.] American Homeland alleges that Indiana's laws regarding the premiums that can be charged for title insurance sold to a consumer have “changed dramatically in the last couple of years.” [Id. ¶ 14.] Specifically, American Homeland contends that as of July 1, 2013, all title insurance rates must be approved by the IDOI, whereas, in the past rates varied from agency to agency. [Id.]

         In January 2015, American Homeland was audited by the IDOI. [Id. ¶ 16.] The audit revealed that beginning in July, 2013, American Homeland engaged in conduct which constituted “minor violations” of Indiana title law. [Id. ¶ 15.] Between July 1, 2013 and August 17, 2014, American Homeland charged improper rates for policy endorsements. American Homeland was required to enter data into a database for the purpose of tracking real estate transactions, but admits that it fell behind on its data entry. [Id.] The State of Indiana imposes a $5 Title Insurance Enforcement Fund Fee, per transaction, which a title company is required to charge the consumer and remit to the insurance company. [Id.] American Homeland paid the $5 fee out of its profits and did not collect the fee directly from consumers, thereby violating Indiana law. [Id.] According to American Homeland, the auditor indicated that “it was ‘obvious' that American Home[land] Title did not knowingly fail to comply with Indiana law.” [Id.]

         According to American Homeland, the IDOI told it in February 2015 that American Homeland could agree to reimburse consumers $42, 202 and pay a fine in the amount of $70, 082 for its violations of Indiana law. [Id. ¶ 20.] American Homeland alleges that it attempted to engage in settlement discussions with the IDOI, but was told it had somehow managed to insult Defendant Robertson, and that hiring an attorney would be harmful to the negotiations, likely resulting in a greater fine. Allegedly, the IDOI threatened American Homeland with a fine of $9.5M and individual fines against American Homeland employees in the amount of $10, 000 each. Defendant Robertson required American Homeland to forfeit its Indiana license as a condition of settlement. [Id. ¶¶ 21-22.] On February 17, 2015, the auditor allegedly stated, “If you guys were not writing this business in Indiana, people in Indiana would be writing it.” [Id. ¶ 29.]

         American Homeland opted to settle with the IDOI, executing an Agreed Entry on March 20, 2015, which required American Homeland to pay a $70, 082 fine and reimburse consumers $42, 202, the original IDOI proposed remedy, and to consent to a permanent revocation of American Homeland's Indiana license, as well as the licenses of Plaintiffs Yonas and Rink. [Id. ¶¶ 23-24.] On March 20, 2015, Robertson, as Indiana Commissioner of Insurance, entered a Final Order on the Agreed Entry (“Agreed Order”).

         It is American Homeland's contention in this lawsuit that the IDOI and Robertson personally have been targeting out-of-state title agencies by aggressively and selectively enforcing Indiana laws in an effort to enhance Robertson's political profile and to protect in-state Indiana businesses. [Id. ¶¶ 28-29.] American Homeland cites as examples: press releases touting fines imposed on out-of-state companies, while not publicizing fines charged to in-state companies, and the IDOI stating that American Homeland's fines are “a perfect example of why out of state title companies shouldn't be handling Indiana deals.” [Id. ¶ 29.] The Complaint contains IDOI data evincing, says American Homeland, preferential treatment of Indiana insurance companies over their out-of-state competitors. For example, a majority of fines in excess of $10, 000 are assessed against out-of-state companies [id. ¶ 31], a majority of enforcement actions are against out-of-state companies [id. ¶ 32], enforcement actions against out-of-state companies are for multiple violations, whereas enforcement actions against Indiana companies are limited to a single violation [id. ¶ 33], and when out-of-state companies fail to enter the requisite data on transactions, the fines charged against them are greater than those charged against in-state companies for similar violations [id. ¶ 34].

         American Homeland complains that the penalty imposed by the IDOI against it was punitive and unduly harsh and has resulted in significant business loss, damage to its reputation and goodwill, and has essentially put American Homeland out of business in Indiana. [Id. ¶¶ 25, 27.] It suggests in its Complaint that other Cincinnati-area title companies have also been targeted for aggressive enforcement by the IDOI and those companies have voluntarily ceased doing business in Indiana out of fear that the IDOI will aggressively and selectively enforce Indiana laws against them.

         The Complaint contains three counts: Violation of the Equal Protection and Commerce Clauses based on a violation of 42 U.S.C. § 1983 (Count I), Declaratory Judgment (Count II), and Injunctive Relief (Count III). Defendant moves to dismiss the Complaint on several theories, each discussed below.

         Standard of Review

         The Federal Rules of Civil Procedure command courts to dismiss any suit over which they lack subject matter jurisdiction-whether acting on the motion of a party or sua sponte. See Fed. R. Civ. P. 12(b)(1). In ruling on a motion to dismiss under Rule 12(b) (1), we “must accept the complaint's well-pleaded factual allegations as true and draw reasonable inferences from those allegations in the plaintiff's favor.” Franzoni v. Hartmarx Corp., 300 F.3d 767, 771 (7th Cir. 2002) (citing Transit Express, Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001)). We may, however, “properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.” Estate of Eiteljorg ex rel. Eiteljorg v. Eiteljorg, 813 F.Supp.2d 1069, 1074 (S.D. Ind. 2011); Capitol Leasing Co. v. FDIC., 999 F.2d 188, 191 (7th Cir. 1993).

         Defendants' 12(b)(6) Motion to Dismiss requires the Court to accept as true all well-pled factual allegations in the Complaint and draw all ensuing inferences in favor of the non-movant. Lake v. Neal, 585 F.3d 1059, 1060 (7th Cir. 2009). Nevertheless, the Amended Complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests, ” and its “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (citations omitted). The Complaint must therefore include “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Fed. R. Civ. P. 8(a)(2). A facially plausible complaint is one which permits “the court to draw the reasonable inference that that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).


         Our efforts here have been complicated by the parties' briefing which, to put it mildly, is disjointed, incomplete, and riddled with citation to inapplicable authority and/or mischaracterizations of the authority cited. Even when the parties seemingly stumbled upon arguments that may have merit, their analysis is limited to a sentence or two and lacks sufficient legal citations for the court to rely on them in its attempt to issue a well-reasoned ruling. It is not the court's obligation to make arguments for the parties. Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 397 (7th Cir. 2000) (“[I]t is not this court's responsibility to research and construct the parties' arguments.” (citing United States v. Lanzotti, 205 F.3d 951, 957 (7th Cir. 2000))). We will address each issue to the extent possible; any arguments the parties attempted to raise, or simply alluded to, but that the Court is unable to grasp or otherwise address, are considered waived for the purposes of the pending motion. Kramer v. Banc of Am. Sec., LLC, 355 F.3d 961, 964 n.1 (7th Cir. 2004) (citing United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir. 1991) (“We have repeatedly made clear that perfunctory and undeveloped arguments, and arguments that are unsupported by pertinent authority, are waived (even where those arguments raise constitutional issues).”)).

         1. Rooker-Feldman Doctrine.

         Defendant construes Plaintiffs' claim as one seeking only to invalidate an Order entered by the IDOI, which request would strip us of jurisdiction pursuant to the Rooker-Feldman doctrine. The Rooker-Feldman doctrine, named after the Supreme Court's decisions in Rooker v. Fidelity Trust Co.[1] and District of Columbia Court of Appeals v. Feldman, [2] provides that the federal district courts must decline to entertain “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil, Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005); Kelley v. Med-1 Sols., LLC, 548 F.3d 600, 603 (7th Cir. 2008).

         The Agreed Order reflects the IDOI's approval of an Agreed Entry between the IDOI and American Homeland, Yonas, and Rink. “The [Rooker-Feldman] doctrine has no application to judicial review of executive action, including determinations made by a state administrative agency.” Verizon Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 644 n.3 (2002). The Seventh Circuit has held that:

Countless cases . . . allow people who lose in state administrative proceedings to seek relief in federal district court under civil rights legislation such as 42 U.S.C. § 1983; and Patsy v. Board of Regents, 457 U.S. 496, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982), expressly rejected a requirement of exhausting administrative remedies before suing under that section. We cannot believe that these cases were decided as they were simply because the defendants failed to argue Rooker-Feldman. If the Rooker-Feldman doctrine is to be extended to administrative judgments, it will have to be done by the Court that created it.

Van Harken v. City of Chicago, 103 F.3d 1346, 1349 (7th Cir. 1997).[3] Verizon Maryland and Van Harken teach that Rooker-Feldman does not apply to administrative orders. The order at issue is an administrative order with no accompanying state court judgment and, thus, Rooker-Feldman simply does not apply here. We therefore DENY Defendant's Motion to Dismiss on the ground that the Rooker-Feldman doctrine divests us of jurisdiction.[4]

         2. Estoppel/Agreed Order

         We do not entirely understand Defendant's argument that “Plaintiffs' claims should be found to be precluded by the clear language of their Agreed Entry.” [Dkt. No. 36 at 7.] Defendant's briefing asserts defenses of estoppel, [5]res judicata, waiver, and a failure to exhaust administrative remedies. It is quite possible that one of these theories might provide a basis for a resolution of this case in ...

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