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American Homeland Title Agency, Inc. v. Robertson

United States Court of Appeals, Seventh Circuit

July 15, 2019

American Homeland Title Agency, Inc., John Yonas, and Martin Rink, Plaintiffs-Appellants,
Stephen W. Robertson, Commissioner of the Indiana Department of Insurance, Defendant-Appellee.

          Argued April 1, 2019

          Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:15-cv-02059-SEB-DML - Sarah Evans Barker, Judge.

          Before Easterbrook, Sykes, and Brennan, Circuit Judges.


         During a random audit, the Indiana Department of Insurance ("the Department") discovered that American Homeland Title Agency had committed hundreds of regulatory violations. After several rounds of negotiation, American Homeland agreed to pay a fine and relinquish its licenses. But just a few months later, American Homeland sued the Department's commissioner, Stephen Robertson, for allegedly discriminating against the company because of its out-of-state residency.

         We need not reach the merits of that discrimination claim. In its agreement with the Department, American Homeland consented to the same penalties it now challenges. It hasn't provided a valid reason to void that agreement, so judicial review is unavailable. We therefore affirm summary judgment in favor of Robertson.

         I. Background

         American Homeland Title Agency is a Cincinnati-based company that performs title searches and sells title insurance. Its owners are John Yonas and Martin Rink, both of whom are attorneys. In 2015 the Department randomly audited American Homeland's files and found hundreds of code violations, none of which American Homeland denies.

         The Department's examiners recommended that the Commissioner fine American Homeland $70, 082 and order $42, 202 in consumer reimbursements. To calculate those penalties, the examiners started with what their guidelines recommended but then deviated upward. The guidelines are fully advisory, so everyone agrees that the examiners had the discretion to do so.

         The parties then went through several rounds of negotiation. But not only did the examiners refuse to adjust the fines, they added a new sanction: Yonas and Rink would lose their licenses to do business in Indiana. Later, one of the Department's attorneys informed American Homeland that if it refused to agree to the penalties, it could seek administrative review. But if American Homeland did that, it could face the maximum fine of $9.5 million. Fearing that exposure, American Homeland agreed to the recommended sanctions.

         After the Commissioner's approval, the parties signed the "Agreed Entry." American Homeland accepted the penalties and "voluntarily and freely waive[d] the right to judicial review of th[e] matter." After settling the dispute, American Homeland paid the fees, and Yonas and Rink gave up their licenses.

         A few months later, American Homeland sued Commissioner Robertson. The complaint alleged that the Department imposed higher penalties because American Homeland is based in Ohio, not Indiana. American Homeland initially contended that this disparate treatment violated the Constitution's Commerce and Equal Protection Clauses. But as everyone now agrees, "the McCarran-Ferguson Act exempts the insurance industry from Commerce Clause restrictions." Metro. Life Ins. Co. v. Ward, 470 U.S. 869, 880 (1985); see 15U.S.C. §§ 1011-1015. Still, the McCarran-Ferguson Act "does not purport to limit in any way the applicability of the Equal Protection Clause." Metro. Life Ins., 470 U.S. at 880 (striking down, under rational-basis scrutiny, a tax regime that favored in-state insurers). So American Homeland's second claim proceeded.

         American Homeland's equal-protection case rests on three pieces of evidence. First, the company offers the expert testimony of Dr. Daniel Voss, who conducted a statistical analysis and found that when the Department audits out-of-state companies, it tends to deviate more from its guidelines than when it audits in-state companies. Second, American Homeland points to a stray comment that a Department examiner made during a recorded phone call while negotiating the penalties. When Yonas and Rink insisted that the sanctions would put them out of business, the examiner said, "[P]lease understand if you ... guys aren't writing this business in Indiana[, ] people in Indiana would probably be writing it." Third, American Homeland emphasizes that Robertson was unable to say definitively during his deposition that no one in his department was motivated by in-state bias-though he did say that he himself would never consider that factor.

         If the case were to go to trial, American Homeland would seek three kinds of relief. First, it asks for damages. The complaint is somewhat unclear, but the company presumably wants to be reimbursed for whatever amount it overpaid because of its out-of-state residency. Second, it wants an injunction ordering that the licenses be reinstated. And third, it wants a declaratory judgment stating that the ...

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