After entering a settlement agreement with the Indiana Department of Insurance, an Ohio title agency sued Indiana Insurance Commissioner Stephen Robertson, alleging violations of the Equal Protection and Commerce Clauses. The company argued that the commissioner was harder on out-of-state insurance agencies than in-state insurance companies. Robertson moved to dismiss the complaint.
The case is American Homeland Title Agency Inc., John Yonas, Martin Rink v. Stephen Robertson, commissioner (U.S. District Court for the Southern District of Indiana, No. 1-15-cv-02059).
A January 2015 audit of American Homeland Title Agency Inc. revealed minor violations of Indiana title law. It found that between July 1, 2013, and Aug. 17, 2014, the agency charged improper rates for policy endorsements by failing to enter data into a database to track real estate transactions, as required, as well as paying the $5 title insurance enforcement fund fee out of its profits instead of charging it to consumers.
American Homeland stated that the IDOI told it that it could agree to reimburse consumers and pay a fine for its violations. The agency eventually settled with IDOI, executing an agreed entry on March 20, 2015, which required it to pay the fine and reimburse consumers, as well as consent to a permanent revocation of the agency’s Indiana license and the licenses of two employees, John Yonas and Martin Rink.
American Homeland, Yonas and Rink filed suit against Robertson, claiming violations of the Equal Protection and Commerce Clauses, declaratory judgment and injunctive relief. They argue that the IDOI has been targeting out-of-state title agencies by aggressively and selectively enforcing Indiana law. American Homeland also argued that the penalty imposed by IDOI was punitive and unduly harsh and resulted in significant business loss, damage to its reputation and essentially put American Homeland out of business in Indiana. Robertson moved to dismiss the complaint.
U.S. District Judge Sarah Evans Barker denied Robertson’s motion, finding first that the Rooker-Feldman Doctrine does not apply to administrative orders.
Robertson also argued that American Homeland’s consent to the agreed order precludes them from challenging the constitutionality of the agreed order.
“The plaintiffs have not included in their allegations ‘the ingredients of an impenetrable [estoppel] defense,’ as required to warrant dismissal of their claims under Rule 12(b)(6),” Barker said. “Accordingly, for all of the reasons explained above, we deny the defendant’s motion to dismiss based on the argument that the plaintiffs are estopped from seeking relief in light of the agreed order.”
Robertson also argued that he is entitled to immunity from these claims pursuant to the Eleventh Amendment because the plaintiffs agreed to the permanent revocation of their licenses.
“The claims here fall well within the ex parte Young exception to Eleventh Amendment immunity because plaintiffs seek injunctive and declaratory relief in the form of vacating the penalties imposed by the agreed order and reinstating plaintiffs’ insurance licenses,” Barker said. “An injunction request for reinstatement of a license is prospective relief that clearly falls within the Young doctrine.
“The language of the complaint seems to suggest that the plaintiffs are seeking prospective relief enjoining or prohibiting Robertson from enforcing the agreed order (presumably the monetary requirements) that resulted from the alleged constitutional violations and requiring him to reinstate their licenses,” Barker said. “In a case such as this, where a plaintiff seeks prospective equitable relief, the Eleventh Amendment does not provide immunity. Accordingly, we find no merit in defendant’s motion to dismiss the complaint based on Eleventh Amendment immunity.”
Barker also denied Robertson’s motion to dismiss the plaintiffs’ request for declaratory judgment and injunctive relief on the grounds that “the defendant’s arguments are based entirely on the elements required to establish an entitlement to a preliminary injunction, which the plaintiffs have not requested in their complaint.”
In addition, she held that the plaintiffs satisfied the pleading standards for an Equal Protection claim. She also noted that in Robertson’s motion to dismiss the plaintiffs’ claims regarding the dormant commerce clause that he “makes no mention of the regulations at issue or whether these laws regulate the business of insurance as defined by the three-part test.”
“The entirety of the defendant’s analysis of the McCarran-Ferguson Act’s applicability to this case is this: ‘With that in mind, the plaintiffs cannot meet their burden to show that enforcement of Indiana’s title insurance regulations violates the commerce clause.’ The defendant’s argument is sparse in the extreme, and the plaintiffs have not had an opportunity to respond given that defendant only first raised it in his reply,” Barker said. “Accordingly, we deny without prejudice the defendant’s motion to dismiss plaintiffs’ commerce clause claim at this time. The defendant shall have the right to file, within 30 days, a second motion to dismiss that is limited to plaintiffs’ commerce clause claim under the McCarren-Ferguson Act. Defendant’s second motion, if he chooses to file one, should fully explain his arguments that the McCarren-Ferguson Act bars plaintiffs’ commerce clause claim; The plaintiffs shall be afforded an opportunity to respond within 15 days thereafter.”