Title Insurance Policy Rights

Title insurance policy holders in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, Garland, Mesquite, Richardson, Irving, Grapevine, Colleyville, and other places in Texas know very little about the laws dealing with title insurance policies.
The United States Court of Apeals for the Firth Circuit issued an opinion on March 23, 2011, that dealt with title insurance policies and one of the laws that deal with those policies. The style of the case is, Emma Benavides, individually and on behalf of all others similarly situated v. Chicago Title Insurance Co.
The primary reason this case was in the court of appeals was because the district court had refused to allow the case to go forward as a class action lawsuit. The court spends a good amount of time discussing the class action laws but that is not the purpose of this article. The basis of the lawsuit is what is kinda interesting.
Here are some of the underlying facts of the case. Benavides sued Chicago Title on behalf of a purported class for refusing to give her a title insurance premium discount mandated by Texas law.
Benavides filed a Complaint in district court on August 22, 2007, against Chicago Title, alleging that she and others similarly situated were denied a mandatory title insurance discount when she purchased a title insurance policy from Chicago Title. Specifically, Texas Insurance Code Rate Rule 8 (“R-8”) entitles a mortgage borrower to a discount on a title insurance policy issued on a loan to fully take-up, renew, extend, or satisfy an old mortgage when the new loan is issued within seven years of the initial mortgage and the initial mortgage was also covered by a title insurance policy. Benavides alleges she was entitled to a discount of $370.40 after she refinanced her mortgage within two years after taking out the initial mortgage loan. Benavides alleged violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. Section 2607(b), and state law causes of action for unjust enrichment, money had and received, and breach of implied contract.
Chicago Title, like other title insurance companies, had a policy of giving the discount when the borrower’s file contained certain circumstantial evidence that the prior mortgage was insured. Benavides alleges that, regardless of Chicago Title’s ad hoc policies, it routinely fails to give the discount when required. Chicago Title admits that, regardless of the circumstantial evidence in the borrower’s file, the discount is mandatory for all borrowers who qualify.
In this opinion there is not a decision reached as to whether or not Chicago Title actually did anything wrong. Again, the issue on this appeal dealt with whether or not the claim of Benavides was the same type of claim that thousand’s of other people might have. If it was that type of claim then it would classify as a class action lawsuit.
The purpose of this article is to point out to readers that there are laws associated with title insurance policies that few people are going to know about. This lack of knowledge is just a further example of why people should take the time to consult with an experienced Insurance Law Attorney on all matters related to insurance. On this particular issue Real Estate Attorneys should have some knowledge.
This is probably a good place to point out a little about class action lawsuits.
Class action lawsuits are lawsuits where there is usually a very small amount of money involved for any one person in a claim they may have. However, the company against whom the claim is asserted is usually facing multi-millions of dollars in claims for the same reason. The problem for the one individual is that the small amount of money for the one person does not justify the time and expense of getting an attorney involved. Yet the company is illegally benefitting millions of dollars for the reason that the individual claimants don’t have the time or money to pursue such small claims. The case above is a good example. Each policy involved in the case involves a claim of only a few hundred dollars. Too small an amount to justify thousands of dollars in court costs and legal fees. Yet the company by cheating each policy purchaser out of a few hundred dollars is benefitting by multi-millions of dollars. Thus the need to be able to bring a class action lawsuit to protect all of the people who are being cheated by the company and to prevent a company from unjustly benefitting from their violation of the laws and to deter other companies from doing the same to other members of the public.