Buyers of property in Florida sued their title insurer for being charged closing services fees in an all-cash transaction, allegedly in violation of the Florida Bar contract.
The title insurer moved to dismiss, but the district court denied the motion on two of the three charges.
The case is Antao Properties, LLC and Samir Kolar v. First American Title Insurance Co. (U.S. District Court, M.D. Florida, 19-cv-3058).
The case stems from an all-cash purchase in November 2017, with First American designated as the closing agent by the property seller, and the contract the standard Florida Bar, or FARBAR, contract.
In the contract, Antao Properties and Kolar checked the option specifying that the seller shall designate the closing agent and pay for the owner’s title policy and charges, while the buyer shall pay the premium for the lender’s policy and charges for closing services related to the lender’s policy, endorsements and loan closing.
“Pursuant to Paragraph 9(c)(i), charges and fees are only to be paid by the buyer in the event the transaction is being financed by a lender,” it stated.
Antao Properties and Kolar alleged that, because the contract involved an all-cash transaction with no lender, they were not responsible for any loan or title agent closing fees, title policy premiums or lender endorsements.
First American charged a $150 closing services fee, and Antao sued.
In the motion to dismiss, First American first argued that Antao failed to state a claim, saying the FARBAR contact is not between First American and Antao Properties or Kolar.
“The court will not resolve the parties’ disagreement over the correct interpretation of the contract at the motion to dismiss stage,” the district court wrote. “Upon review, the court finds that Antao Properties and Kolar’s theory — that the ‘closing services’ fees to be paid by the seller included all closing services fees charged by First American, except closing services fees related to a lender’s policy — is plausible. That is sufficient for now.”
The court ruled it would not dismiss the motion on that charge.
The next charge was Antao and Kolar’s charge of gross negligence. According to First American, Antao Properties and Kolar “have not sufficiently pled that First American ‘consciously disregard[ed]’ that imminent harm would be the result of its actions.”
First American said the allegation that it “made the conscious or active decision to either not read, or to ignore what it did read in the contract” is an improper legal conclusion that cannot support a claim.
The district court, however, disagreed.
“While Antao Properties and Kolar’s allegations of First American’s knowledge are thin, they are sufficient,” the court wrote. “The second amended complaint alleges that First American charged Antao Properties and Kolar, as well as other class members, the closing services fee despite knowing that it was not permitted to do so under the FARBAR contract. Furthermore, the second amended complaint alleges that First American ‘wholly failed to review’ or ‘recklessly disregarded’ Paragraph 9(c) of the FARBAR contract ‘when allocating and charging costs to the buyer and seller.’
“Taken together and accepted as true at this stage, these allegations plausibly support that First American had ‘chargeable knowledge or awareness of the imminent danger’ of charging Antao Properties and Kolar — as well as potential class members — with an improper fee. The court will not dismiss the gross negligence claim.”
Finally, the court examined a charge under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). First American argued that it was statutorily exempt from the claim because it is under the authority of the Office of Insurance Regulation.
“First American is correct,” the district court wrote, citing a ruling from Zarrella v. Pac. Life Ins. Co.(S.D. Fla. 2010) which said, “FDUTPA does not apply to insurance companies.”
“Thus, because First American is an insurance company regulated by the OIR, the FDUPTA claim must be dismissed with prejudice,” the court concluded.