The opinion
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
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No. 10-2387
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PATRICIA MITCHELL-TRACEY; MILTON D. BROWN; FRANCINE C. BYRD-
BROWN; HELEN KLATSKY,
Plaintiffs - Appellants,
v.
UNITED GENERAL TITLE INSURANCE COMPANY; FIRST AMERICAN TITLE
INSURANCE COMPANY,
Defendants - Appellees.
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Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District
Judge. (1:05-cv-01428-WDQ)
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Submitted: June 12, 2011 Decided: August 2, 2011
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Before WILKINSON, MOTZ, and DUNCAN, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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Philip S. Friedman, FRIEDMAN LAW OFFICES, PLLC, Washington,
D.C.; Martin E. Wolf, Richard S. Gordon, Benjamin H. Carney,
QUINN, GORDON & WOLF, CHTD., Towson, Maryland, for Appellants.
Charles A. Newman, Jason E. Maschmann, Michael J. Duvall, SNR
DENTON US LLP, Saint Louis, Missouri; Ira L. Oring, FEDDER &
GARTEN, P.A., Baltimore, Maryland, for Appellees.
__________________
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Plaintiff-Appellants are Maryland homeowners who
purchased title insurance from Defendant-Appellees First
American Title Insurance Company and United General Title
Insurance Company (collectively, “defendants”) when they
refinanced their mortgages. In April 2005, plaintiffs filed a
class-action lawsuit, alleging, inter alia, that defendants
illegally charged higher rates than those they had filed with
the Maryland Insurance Commissioner (“MIC”). After plaintiffs’
class was certified, we decided Arthur v. Ticor Title Insurance
Co., 569 F.3d 154 (4th Cir. 2009), which dismissed similar
claims on account of plaintiffs’ failure to exhaust
administrative remedies under Maryland’s Insurance Code (the
“Code”) before proceeding with litigation. In light of our
decision, and plaintiffs’ own failure to exhaust administrative
remedies before filing suit, the district court decertified
plaintiffs’ class and dismissed their claims. For the reasons
discussed below, we affirm. 1
1
We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
2
I.
We briefly review the relevant facts and procedural
history. Defendants are both title insurance companies who do
business in Maryland. 2 Pursuant to Maryland law, each company
has filed its insurance rates with the MIC. See Md. Code Ann.,
Ins. §§ 11-403, 11-404. Both companies have also filed
discounted “reissue” rates with the MIC. Although the language
of their respective policies differs slightly, each company’s
reissue rate purports to offer a forty percent discount to
consumers who apply for mortgage title insurance for property
that the consumer has had insured within the preceding ten
years. Maryland law mandates that both companies adhere to
their rates as published. Id. § 11-407(b).
Plaintiffs purchased title insurance from defendants
while refinancing their homes. Plaintiffs claim to have
qualified for defendants’ discounted reissue rates, but contend
that defendants nevertheless charged them higher premiums. In
April 2005, plaintiff Patricia Mitchell-Tracey filed a class-
2
Title insurance plays a key role in most real estate
transactions, as it “insures the buyer of real property, or a
lender secured by real property, against defects in the legal
title . . . and guarantees that, in the event a defect in title
surfaces, the insurer will reimburse the insured for losses
associated with the defect, or will take steps necessary to
correct it.” Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 66 (2d
Cir. 1999).
3
action complaint in Maryland circuit court, alleging violations
of the Real Estate Settlement Procedures Act (“RESPA”), 12
U.S.C. § 2607, 3 money had and received, negligent
misrepresentation, and civil conspiracy. The following month,
defendants removed the case to the federal district court of
Maryland. Later that year, Mitchell-Tracey filed an amended
complaint, which included the other named plaintiffs.
In September 2006, the district court granted class
certification for
[a]ll persons or entities in Maryland who within 10
years of having previously purchased title insurance
in connection with their mortgage or fee interest,
refinanced the identical mortgage or fee interest, and
were charged a title insurance premium by [either of
the defendants] that exceeded the applicable premium
discount or “reissue rate” for title insurance on file
with the Maryland Insurance Administration that such
persons or entities should have been charged.
Mitchell-Tracey v. United General Title Ins. Co., 237 F.R.D.
551, 554-55 (D. Md. 2006). The court referred the matter to a
magistrate for mediation and the parties engaged in settlement
efforts over the ensuing two-and-half years.
In June 2009, we decided Arthur, 569 F.3d at 154, in
which we held, on facts similar to those presented here, that
Maryland law required prospective litigants to exhaust
3
The district court granted summary judgment for defendants
on plaintiffs’ RESPA claim in September 2006. We do not discuss
it further.
4
administrative remedies made available by the Code before
proceeding with judicial action. 4 See id. at 161-62. Following
Arthur, the parties concluded that further mediation would not
be productive and sought to resume litigation. In October 2009,
Plaintiffs moved to amend their complaint to abandon their
claims for negligent misrepresentation and civil conspiracy and
to add claims for negligence, breach of contract, and violations
of the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. § 1962(d). The following month, plaintiffs
also initiated MIC administrative proceedings against
defendants. That administrative action is currently pending.
In February 2010, the district court denied
plaintiffs’ motion to amend their complaint, holding that
plaintiffs’ proposed amendments were futile. The court
explained that, as in Arthur, each of plaintiffs’ claims relied
on a threshold determination by the MIC that plaintiffs were
correctly interpreting the rate structure that defendants had
filed with the state. As plaintiffs had not exhausted
Maryland’s mandatory administrative process, the court reasoned,
their arguments could not survive a motion to dismiss. On that
basis, the court denied plaintiffs’ subsequent motion for
4
We discuss Arthur in greater detail below, as part of our
evaluation of plaintiffs’ claims on appeal.
5
reconsideration and granted defendants’ motions for judgment on
the pleadings and to decertify plaintiffs’ class. It later
denied plaintiffs’ motion to reconsider those determinations.
This appeal followed.
II.
We review de novo the district court’s grant of
judgment on the pleadings, “applying the same standard for
Federal Rule of Civil Procedure 12(c) motions as for motions
made pursuant to Rule 12(b)(6).” Independence News, Inc. v.
City of Charlotte, 568 F.3d 148, 154 (4th Cir. 2009). We review
the district court’s denial of plaintiffs’ motions for
reconsideration of (1) plaintiffs’ motion to amend and (2) its
dismissal of their claims for abuse of discretion. Robinson v.
Wix Filtration Corp. LLC, 599 F.3d 403, 407 (4th Cir. 2010);
Laber v. Harvey, 438 F.3d 404, 428 (4th Cir. 2006).
A discussion of Arthur, and its applicability here,
sets the stage for plaintiffs’ arguments on appeal. In Arthur,
we upheld the dismissal of a similar Maryland suit against title
insurers. See 569 F.3d at 156. Plaintiffs in that case were
also Maryland homeowners who alleged that their title insurer
charged them higher rates than the insurer had filed with the
MIC. Id. We affirmed the dismissal of plaintiffs’ claims,
6
relying primarily on their failure to exhaust available
administrative remedies under the Code. See id. at 161.
Our decision cited, inter alia, Maryland courts’
presumption that “when the statutory text creating an
administrative remedy is not dispositive” as to whether
exhaustion is mandatory, “the administrative remedy is intended
to be primary, and that a claimant cannot maintain the
alternative judicial action without first invoking and
exhausting the administrative remedy.” Id. at 161 (quoting
Zappone v. Liberty Life Ins. Co., 706 A.2d 1060, 1069 (Md.
1998)). We explained that plaintiffs’ claim was “dependent on
the Insurance Code because that claim will succeed only if
plaintiffs show that [the insurer] violated the Code.” Id. We
further observed that assessment of plaintiffs’ claim would
benefit from the MIC’s expertise, as the MIC “would be in a
better position than a federal court to determine, for example,
whether plaintiffs are correctly interpreting the rate structure
that [the defendant insurer] filed with the [MIC].” Id.
Here, too, plaintiffs’ claims for money had and
received, negligent misrepresentation, and civil conspiracy turn
on the threshold question of whether defendants failed to comply
with their published insurance rates. Plaintiffs can only
succeed on a showing that defendants violated the very insurance
code at issue in Arthur. That comprehensive state statutory
7
scheme plainly gives the MIC authority to grant administrative
remedies, including restitution for any overcharge. 5 See Md.
Code Ann., Ins. § 4-113(b), (d)(1)-(2); see also Arthur, 569
F.3d at 162. As the district court concluded, on these facts,
Arthur mandates dismissal to allow the MIC to assess, in the
first instance, “whether the Insurance Code has been violated
and the remedy, if any, to which the Plaintiffs are entitled.”
J.A. 2458.
III.
Plaintiffs nevertheless make three distinct arguments
as to why Arthur should not compel dismissal here. First, they
urge that the Supreme Court’s decision in Shady Grove Orthopedic
Associates v. Allstate Insurance Co., 130 S. Ct. 1431 (2010),
superseded Arthur. Second, they assert that even if Arthur
remains good law, the district court erred by dismissing their
case rather than staying it pending exhaustion of administrative
proceedings. Finally, plaintiffs argue that the district court
erroneously denied their motion to amend, which, they allege,
would have insulated their complaint from dismissal under
Arthur. We consider each contention in turn.
5
Indeed, the MIC accepted jurisdiction over plaintiffs’
case when they belatedly filed their November 2009
administrative complaint.
8
A.
Plaintiffs’ argument that Shady Grove superseded
Arthur is unpersuasive. In Shady Grove, the Supreme Court
considered whether a New York plaintiff could file a federal
class action lawsuit for statutory penalties despite a state
statute that prohibited “class actions in suits seeking
penalties or statutory minimum damages.” 130 S. Ct. at 1436
(citing N.Y. Civ. Prac. Law Ann. § 901). The Court held that
the New York statute did not trump Fed. R. Civ. P. 23, which,
“[b]y its terms . . . creates a categorical rule entitling a
plaintiff whose suit meets the specified [class-action] criteria
to pursue his claim as a class action.” Id. at 1437.
Plaintiffs interpret the decision as creating an absolute
entitlement to proceed with a class action lawsuit regardless of
whether pertinent state procedural steps have been completed.
We disagree.
Plaintiffs read Shady Grove at a level of generality
that is simply unsupported by its text. Shady Grove addressed
an explicit state-law prohibition on class-action suits that
expressly contradicted Fed. R. Civ. P. 23. Id. at 1437, 1441.
The Supreme Court did not consider exhaustion or similar state-
mandated intermediate procedures. Nor can we discern any basis
on which to read it as excusing named class-action plaintiffs
from the threshold procedural requirements that they would face
9
as individual litigants. Cf. Broussard v. Meineke Discount
Muffler Shops, Inc., 155 F.3d 331, 345 (4th Cir. 1998). We are
loathe to “lightly infer that a prior panel decision has been
overruled,” Cent. W. Va. Energy, Inc. v. Bayer Cropscience LP,
Nos. 10-1706, 10-1934, 2011 WL 2725819 at *7 n.7 (4th Cir. July
14, 2011), and see no cause to do so here.
B.
Plaintiffs’ abbreviated argument that the district
court should have stayed their claim pending exhaustion is
similarly unavailing. Under Maryland law, the decision to stay
judicial proceedings pending the exhaustion of administrative
remedies is a discretionary one. See, e.g., Md.-Nat’l Cap. Park
& Planning Comm’n v. Crawford, 511 A.2d 1079, 1087-88 (1986);
cf. Mardirossian v. Paul Revere Life Ins. Co., 286 F.3d 733, 735
(4th Cir. 2002) (noting that, to the extent the Code “requir[es]
that a claimant first invoke and exhaust the administrative
remedies,” a plaintiff who fails to do so “is improperly before
the court and the court should dismiss for lack of subject
matter jurisdiction” (emphasis added)). Nothing in the record
suggests that the district court abused its discretion by
determining that dismissal, rather than a stay, was warranted.
To the contrary, plaintiffs’ failure to initiate administrative
proceedings until four years after filing suit supports the
10
court’s discretionary determination that dismissal was the
proper course of action. 6
C.
Finally, we are not persuaded by plaintiffs’ claim
that the district court abused its discretion by dismissing
their complaint rather than granting them leave to amend. A
district court may deny leave to amend a complaint when
amendment would be futile or would not survive a motion to
dismiss. U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525
F.3d 370, 376 (4th Cir. 2008). Here, each of the claims
plaintiffs sought to add--breach of contract, negligence, and
RICO violations--suffered from the same defect as plaintiffs’
original causes of action: dependence on a threshold
determination that defendants violated the Code. Consequently,
6
The Court of Appeals of Maryland’s recent decision in
Carter v. Huntington Title & Escrow, LLC, No. 116, 2011 WL
2721926 (Md. July 14, 2011), which prompted Fed. R. App. P.
28(j) letters from both parties, only reinforces our conclusion.
The Court of Appeals explicitly found that the MIC has primary
jurisdiction over title-insurance overcharge claims. See id. at
*1. Although the majority found that a stay, rather than
dismissal, was warranted on Carter’s facts, it did not revisit
its settled precedent that the choice of whether to grant a stay
is discretionary, noting that a “court may stay its
consideration of the invoked judicial remedy and await the
result of the administrative proceedings before addressing the
appropriateness of the relief sought in the litigation.” Id. at
*16 (quoting Converge Servs. Group, LLC v. Curran, 860 A.2d 871,
881 (Md. 2004)) (emphasis added).
11
the district court did not abuse its discretion by denying leave
to amend.
As discussed above, Arthur mandates administrative
exhaustion when plaintiffs’ claims are “dependent” on the Code.
569 F.3d at 161. By its terms, plaintiffs’ proposed breach of
contract claim turns on the allegation that defendants “fail[ed]
to charge them the discounted refinance rate in accordance with
Defendants’ filed and approved rates.” J.A. 2269 (emphasis
added). This claim inescapably relies on an initial finding
that defendants were, in fact, statutorily obligated to charge
plaintiffs the discounted rate--a determination that should be
made in the first instance by the MIC. See Arthur, 569 F.3d at
161. Even if plaintiffs are correct that their implied contract
with defendants incorporated any statutory obligations, that
does not obviate the need for a threshold assessment of whether
those obligations were fulfilled. 7
7
Neither of the Maryland cases on which plaintiffs rely
compels a different result. See Mardirossian v. Paul Revere
Life Ins. Co., 831 A.2d 60, 64 (Md. 2003); Zappone, 706 A.2d at
66-67. Unlike the plaintiffs' claims in Mardirossian and
Zappone, which were “wholly independent” of the Code, Zappone,
706 A.2d at 67, here, under plaintiffs' implied contract theory,
the terms of the contract are statutorily-derived. See
Appellants’ Br. at 26 (“Critically, the implied contract
incorporates Appellees' statutory obligation to charge a premium
in accord with its filed rates.”). In other words, plaintiffs
explicitly invoke the Code.
12
Plaintiffs’ proposed negligence claim is similarly
flawed. In Maryland, as elsewhere, “[i]t is axiomatic that
actionable negligence is the breach of a duty that is owed to
another.” Harrison v. Harrison, 285 A.2d 590, 592 (Md. 1972).
Absent a duty, “no action can be sustained.” Id.; see also
Green v. N.B.S., Inc., 976 A.2d 279, 289 (Md. 2009). The sole
duty that plaintiffs identify as a basis for their negligence
claim is defendants’ alleged statutory obligation “not to
collect a premium or charge for insurance that exceed[ed] the
premium or charge to which [plaintiffs] were entitled.” J.A.
2352. Once again, the existence of a duty depends on a
threshold determination by the MIC that defendants were required
to charge plaintiffs a particular rate.
Plaintiffs’ RICO claims are also dependent on the
Code. As the district court explained, in order to succeed on
these claims, plaintiffs must substantiate their allegation that
they “were induced ‘to unwittingly pay excessive and illegal
fees in respect [of] mortgage loan transactions.’” J.A. 2398
(quoting plaintiffs’ proposed amended complaint) (emphasis
added); see also Am. Chiropractic Ass’n v. Trigon Healthcare,
Inc., 367 F.3d 212, 233 (4th Cir. 2004) (noting civil RICO
claims’ injury requirement). Accordingly, the appropriateness
of defendants’ rates presents a threshold question for the MIC.
13
In sum, plaintiffs’ proposed new claims rely on the
same underlying determination as their earlier allegations--
namely, that defendants charged plaintiffs fees in excess of
their filed insurance rates. As a result, plaintiffs’ causes of
action “explicitly depend[] on the statute that also makes
administrative remedies available to plaintiffs.” Arthur, 569
F.3d at 161. On these facts, the district court did not abuse
its discretion by finding that amendment would be futile, as
each new claim “requires proof of a violation of the Maryland
Insurance Code.” J.A. 2398.
IV.
For the foregoing reasons we affirm the district
court’s denial of plaintiffs’ motions for reconsideration, grant
of defendants’ motion for judgment on the pleadings, and
decertification of plaintiffs’ class.
AFFIRMED
14