Case 2:11-cv-02173-TSZ Document 32
Filed 06/12/12 Page 1 of 11
Honorable Thomas S. Zilly
1
2
3
4
5
6
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
7
8
9
10
TIFFANY SMITH, on behalf of herself and
others similarly situated,
Plaintiff,
11
12
13
14
No. 2:11-cv-02173-TSZ
SECOND AMENDED CLASS ACTION
COMPLAINT
v.
FIRST AMERICAN TITLE INSURANCE
COMPANY, a foreign corporation
Defendant.
15
I.
16
INTRODUCTION
17
Plaintiff, Tiffany Smith, on behalf of herself and the class of all those similarly
18
situated, as identified below, brings this action against defendant First American Title
19
Insurance Company for breach of contract, breach of the duty of good faith and fair dealing,
20
violations of Washington’s Consumer Protection Act, breach of fiduciary duty, and unjust
21
22
enrichment.
II.
23
JURISDICTION AND VENUE
24
1.
Plaintiff Tiffany Smith is a resident of Selah, Washington.
25
2.
Defendant First American Title Insurance Company (“First American Title”)
26
provides title insurance, escrow/closing services, and related real estate services to
SECOND AMENDED CLASS ACTION COMPLAINT - 1
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
Filed 06/12/12 Page 2 of 11
1
homeowners and real estate professionals within the State of Washington and, at all times
2
relevant hereto, had and has continuous, systematic contacts within Washington.
3
4
3.
Defendant does business in King County, Washington, and throughout the
4.
Plaintiff filed this action in King County Superior Court and allege that court
state.
5
6
7
8
9
has jurisdiction over the parties and the subject matter of this lawsuit. Defendant timely
removed this action to this Court under the Class Action Fairness Act, 28 U.S.C. § 1332(d).
5.
10
11
Venue is proper in this Court.
III.
6.
FACTUAL ALLEGATIONS
Upon information and belief, defendant First American Title is a corporation
12
with its principal offices located in Santa Ana, California.
13
14
7.
Plaintiff and class members either obtained loans on property located in
15
Washington that were secured by deeds of trust or paid off existing loans secured by deeds
16
of trust on their property in Washington, as part of a real property sale and purchase or a
17
refinance, and, as part of these real estate transactions, defendant acted as the escrow agent.
18
19
8.
As part of its duties as the escrow agent for the aforementioned transactions,
defendant prepared Settlement Statements, also known as HUD-1s, which are required by
20
law to list, inter alia, the expenses charged to plaintiff and class members arising out of the
21
22
23
aforementioned real estate transactions.
9.
On or about February 21, 2008, plaintiff sold her home and paid off an
24
existing loan to Homecomings Financial, LLC. In the Final Settlement Statement prepared
25
by defendant for plaintiff (“Plaintiff’s Settlement Statement”), defendant listed a $125
26
charge for “Northwest Post to Northwest Post Closing Center”. “Northwest Post Closing
SECOND AMENDED CLASS ACTION COMPLAINT - 2
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
Filed 06/12/12 Page 3 of 11
1
Center” is not a third party but a division of defendant which, therefore, paid itself, but did
2
not disclose this information to plaintiff. This charge is referred to as the “reconveyance
3
4
fee” for the remainder of this complaint.
10.
In Plaintiff’s Settlement Statement, defendant also listed charges of $80.00 for
5
6
7
8
9
10
11
“Document Fee”.
According to statements later provided to plaintiff’s counsel by
defendant, this fee was charged “to prepare the Statutory Warranty Deed that was used to
convey title to the purchaser.”
11.
With respect to the $125.00 in fees charged by defendant for the reconveyance
fee, Homecomings Financial prepared and recorded on March 10, 2008, all reconveyance
documents that were required as part of the real estate transaction. Defendant neither
12
prepared nor recorded the documents nor was it required to do so.
13
14
12.
Plaintiff signed Escrow Instructions to defendant which constituted a binding
15
contract between plaintiff and defendant. Those instructions provided, among other things,
16
the following:
17
19
If there are underlying encumbrances being paid off which require the
obtaining of a Fulfillment Deed, Reconveyance, Release or Satisfaction, you
[i.e., the defendant] are instructed to pay the demand of the appropriate party
and obtain and record such a document.
20
13.
18
Plaintiff agreed to pay and did pay defendant a Settlement or Closing Fee in
21
consideration of defendant’s performance of all duties specified in the Escrow Instructions.
22
Assuring the recordation of all reconveyance documents is one of the duties specified in the
23
Escrow Instructions, as set forth above. Therefore, defendant breached its contract with
24
plaintiff by collecting from plaintiff an additional fee, above and beyond the Settlement or
25
26
Closing Fee, for any reconveyance-related services.
SECOND AMENDED CLASS ACTION COMPLAINT - 3
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
1
2
3
4
14.
Filed 06/12/12 Page 4 of 11
The reconveyance fee charged by defendant was unreasonable, unnecessary,
excessive and impermissible.
15.
With respect to the Document Fee, the Escrow Instructions acknowledge that
the Seller “herein deposit” with defendant the Warranty Deed and Excise Tax Affidavit,
5
6
7
which defendant is “instructed to record, file, release, and/or deliver when you [i.e., the
defendant] have all necessary funds and/or other documents as follows…” Thus, handling
8
of the Statutory Warranty Deed is a duty specified in the Escrow Instructions and therefore
9
should not have been subject to an additional charge beyond the Settlement or Closing Fee.
10
11
16.
In addition, there is no record in plaintiff’s escrow file of the true cost of any
service allegedly covered by the Document Fee. Upon information and belief, defendant
12
did not perform any services to support the Document Fee, or overcharged or imposed an
13
14
15
unreasonable charge for any such service.
17.
Upon information and belief, other members of the putative class were
16
similarly charged or overcharged for reconveyance fees and/or other reconveyance related
17
fees and for Document Fees.
18
19
20
IV.
18.
CLASS ALLEGATIONS
Plaintiff seeks to represent a class consisting of all persons who, within the
applicable statute of limitations, had an escrow transaction with defendant in connection with
21
22
23
24
a real estate transaction in Washington State and who were charged fees by defendant for
either (a) reconveyance related services or (b) a Document Fee.
19.
Plaintiff brings this action on behalf of herself and all other persons similarly
25
situated pursuant to Superior Court Civil Rule 23(b)(2) or, alternatively, Civil Rule 23(b)(3).
26
The class that plaintiff seeks to represent is composed of potentially thousands of individuals.
SECOND AMENDED CLASS ACTION COMPLAINT - 4
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
Filed 06/12/12 Page 5 of 11
1
20.
Joinder of all members of the class as defined herein is impractical.
2
21.
There are common issues of law and fact affecting the class with respect to the
3
4
application of the law pertaining to plaintiff’s claims of breach of contract, breach of the duty
of good faith and fair dealing, violation of the Washington Consumer Protection Act, breach
5
6
7
8
9
10
11
of fiduciary duty, unjust enrichment, and violation of applicable regulations, and the
determination of damages therefrom, because of defendant’s conduct.
22.
Plaintiff’s claims are typical of the claims of the class since plaintiff and all
class members sustained damages arising from defendant’s wrongful conduct in violation of
law as stated in this Complaint.
23.
Plaintiff will fairly and adequately protect the interests of the class. Plaintiff
12
does not have interests that are antagonistic to or in conflict with those of the members of the
13
14
15
class that plaintiff seeks to represent.
24.
The interests of the class are adequately represented by plaintiff and her
16
counsel. Plaintiff has retained counsel competent and experienced in class and consumer
17
litigation.
18
19
25.
This action seeks to enjoin the practices at issue and provide for restitution of
fees illegally collected.
20
26.
This action is also maintainable as a class action because the questions of law
21
22
and fact common to the members of the class predominate over any questions affecting only
23
individual members and because a class action is superior to other available methods for the
24
fair and efficient adjudication of the controversy. Specifically, all four of the criteria set
25
forth in Civil Rule 23(b)(3) have been satisfied in this case. First, the members of the class
26
have little, if any, interest in individually controlling the prosecution of separate actions.
SECOND AMENDED CLASS ACTION COMPLAINT - 5
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
Filed 06/12/12 Page 6 of 11
1
Second, plaintiff’s counsel is not aware of any other litigation concerning the controversy
2
already commenced by members of the class. Third, it is desirable to concentrate the
3
4
litigation of these claims in this forum given their relationship to the State of Washington.
Fourth, few difficulties likely will be encountered in the management of the class action.
5
V.
6
7
8
FIRST CAUSE OF ACTION: BREACH OF CONTRACT
27.
Plaintiff restates and realleges paragraphs 1 through 26 above.
28.
Plaintiff’s and class members’ Escrow Instructions with defendant constitute
9
contracts, which define the rights of the parties including what charges, if any, defendant
10
may assess in connection with its services. These instructions did not permit defendant to
11
charge the additional reconveyance or Document Fees described herein or to impose the
12
excessive fees identified herein.
13
29.
Defendant breached its contractual duties to plaintiff and class members by
14
15
collecting additional fees for services that were not performed, that were part of its specified
16
duties under the Escrow Instructions, or that were in excess of the true or reasonable costs
17
incurred in performing such services.
18
19
20
30.
As a proximate result of the breaches of Escrow Instructions by defendant,
plaintiff and class members have been wronged in that plaintiff and the class paid the
excessive fees set forth herein. Plaintiff and the class are entitled to restitution of excessive
21
22
fees collected.
VI.
23
SECOND CAUSE OF ACTION: BREACH OF DUTY
OF GOOD FAITH AND FAIR DEALING
24
31.
Plaintiff restates and realleges the allegations contained in paragraphs 1
25
26
through 30 above.
SECOND AMENDED CLASS ACTION COMPLAINT - 6
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
1
2
3
4
32.
Filed 06/12/12 Page 7 of 11
By virtue of the foregoing, defendant breached its duty of good faith and fair
dealing in connection with its interpretation and implementation of the terms of its Escrow
Instructions and/or contracts between plaintiff and class members and defendant. In
particular, Defendant’s contract with plaintiff provided, “If there are underlying
5
6
7
encumbrances being paid off which require the obtaining of a Fulfillment Deed,
Reconveyance, Release or Satisfaction, you [i.e., the Defendant] are instructed to pay the
8
demand of the appropriate party and obtain and record such a document.” Defendant
9
breached its duty of good faith and fair dealing in connection with its interpretation and
10
implementation of this term of the contract by charging an extra fee, beyond its Settlement or
11
Closing Fee, to perform the reconveyance services it agreed to perform as part of its contract
12
with plaintiff. Defendant’s contract also provided, with respect to the Warranty Deed, that
13
14
Defendant is “instructed to record, file, release, and/or deliver [the Deed] when you [i.e., the
15
Defendant] have all necessary funds and/or other documents as follows.” Defendant again
16
breached its duty of good faith and fair dealing in connection with its interpretation and
17
implementation of this term of the contract by assessing an additional charge to plaintiff
18
beyond the Settlement or Closing Fee for its handling of the Warranty Deed.
19
33.
As a proximate result of the breaches of defendant’s duty of good faith and
20
fair dealing, plaintiff and class members have been wronged in that plaintiff and the class
21
22
23
paid the excessive fees set forth herein. Plaintiff and the class are entitled to restitution of
excessive fees collected.
VII. THIRD CAUSE OF ACTION: VIOLATION OF
THE CONSUMER PROTECTION ACT, RCW 19.86
24
25
26
34.
Plaintiff restates and realleges the allegations contained in paragraphs 1
through 33 above.
SECOND AMENDED CLASS ACTION COMPLAINT - 7
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
1
2
3
4
35.
Filed 06/12/12 Page 8 of 11
Defendant’s practice of requiring plaintiff and the class members to pay for
reconveyance related fees or excessive Document Fees constitutes an unfair and deceptive
act and practice, which is unlawful and in violation of the Washington Consumer Protection
Act, RCW 19.86. In addition, this practice violates WAC 208-680D-040(3), as amended and
5
6
7
recodified at WAC 208-680-540(3).
36.
By including such excessive and/or unnecessary fees on the Settlement
8
Statement, and by representing or implying that such fees were necessary to complete the
9
real estate transactions involved, defendant’s practices had the capacity to deceive reasonable
10
consumers into believing that they must pay these excessive fees before the consumers’ real
11
estate transactions could or would be completed. These practices are unfair and deceptive
12
under the Consumer Protection Act. Further, defendant unfairly and deceptively claimed that
13
14
15
16
the reconveyance fees were charged to Northwest Post Closing Center without advising
plaintiff and the class that it was, in fact, paying itself.
37.
Pursuant to RCW 19.86.090, plaintiff and the class seek an injunction against
17
defendant to enjoin further violations of the practices alleged herein together with equitable
18
restitution, incidental damages, costs of suit and reasonable attorney’s fees. Plaintiff and the
19
class also seek an award of exemplary damages in the amount of three times the amount of
20
restitution paid.
21
22
VIII. FOURTH CAUSE OF ACTION: VIOLATION OF FIDUCIARY DUTY
23
38.
24
through 37 above.
25
39.
26
Plaintiff restates and realleges the allegations contained in paragraphs 1
Defendant owed a fiduciary duty to plaintiff and class members to act with
scrupulous honesty, skill and diligence as their escrow agent
SECOND AMENDED CLASS ACTION COMPLAINT - 8
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
1
2
3
4
40.
Filed 06/12/12 Page 9 of 11
By virtue of the foregoing, defendant has breached this fiduciary duty to
plaintiff and class members.
41.
As a proximate result of the breaches of defendant’s fiduciary duty, plaintiff
and class members have been wronged in that plaintiff and the class paid the excessive fees
5
6
7
set forth herein. Plaintiff and the class are entitled to be made whole by the restitution of
excessive fees collected.
IX.
8
RELIEF SOUGHT
9
42.
WHEREFORE, plaintiff requests relief as follows:
10
A.
That the Court certify the identified class pursuant to Civil Rule 23(b)(2) or
11
23(b)(3) with plaintiff as the class representative and the undersigned as class counsel;
12
B.
That the Court enter an injunction permanently forbidding defendant from
13
14
15
committing the practices alleged herein in the future or declare the same unlawful;
C.
That the Court also enter a judgment in favor of plaintiff and the class against
16
defendant for incidental recovery of damages, directing reimbursement of fees illegally
17
collected, and awarding exemplary damages pursuant to RCW 19.86.090;
18
19
D.
That the Court award plaintiff and the class their costs, including reasonable
attorneys’ fees pursuant to RCW 19.86.090 and applicable contracts;
20
E.
For pre-judgment interest at the highest allowable rate on all liquidated sums,
21
22
23
24
25
and post-judgment interest on the entire judgment amount awarded at the highest allowable
rate; and
F.
That the Court award such other and further relief that the Court deems just
and equitable.
26
SECOND AMENDED CLASS ACTION COMPLAINT - 9
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
1
2
Filed 06/12/12 Page 10 of 11
DATED this 12th day of June, 2012.
SCHROETER, GOLDMARK & BENDER
3
4
5
6
7
8
9
10
/s/ Adam J. Berger__________________
Martin S. Garfinkel, WSBA #20787
Adam J. Berger, WSBA #20714
BERRY & BECKETT, PLLP
Guy W. Beckett, WSBA #14939
1708 Bellevue Avenue
Seattle, WA 98122
(206) 441-5444 phone
(206) 838-6346 fax
13
WILLIAMSON & WILLIAMS
Rob Williamson, WSBA #11387
17253 Agate Street NE
Bainbridge Island, WA 98110
(206) 780-4447 phone
(206) 780-5557 fax
14
Attorneys for Plaintiff
11
12
15
16
17
18
19
20
21
22
23
24
25
26
SECOND AMENDED CLASS ACTION COMPLAINT - 10
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305
Case 2:11-cv-02173-TSZ Document 32
CERTIFICATE OF SERVICE
1
2
3
4
Filed 06/12/12 Page 11 of 11
I hereby certify that on June 12, 2012, I electronically filed the foregoing with the
Clerk of the Court using the CM/ECF system which will send notification of such filing to
the following:
5
6
7
8
9
10
11
12
Stephen M. Rummage, WSBA #11168
Kenneth E. Payson, WSBA #26369
Davis Wright Tremaine LLP
1201 Third Ave, Ste 2200
Seattle, WA 98101-3045
Charles A. Newman
Jason E. Maschmann
SNR DENTON LLP
One Metropolitan Square
11 North Broadway, Ste 3000
St. Louis, Missouri 63102-2750
13
14
15
16
17
18
19
Dated at Seattle, Washington this 12th day of June, 2012.
/s/ Adam J. Berger__________________
Martin S. Garfinkel, WSBA #20787
Adam J. Berger, WSBA #20714
SCHROETER, GOLDMARK & BENDER
810 Third Avenue, Suite 500
Seattle, WA 98104
Phone: (206) 622-8000
Fax: (206) 682-2305
berger@sgb-law.com
20
21
22
23
24
25
26
SECOND AMENDED CLASS ACTION COMPLAINT - 11
(No. 2:11-cv-02173 TSZ)
SCHROETER, GOLDMARK & BENDER
500 Central Building ● 810 Third Avenue ● Seattle, WA 98104
Phone (206) 622-8000 ● Fax (206) 682-2305