UNITED STATES DISTRICT COURT FOR THE 

DISTRICT OF NEW HAMPSHIRE

James Scott, et al.

v. Civil No. 06-cv-286-JD

Opinion No. 2007 DNH 007

First American Title

Insurance Company

O R D E R

James and Sue Scott brought suit in state court as a

putative class action challenging the premiums charged by First

American Title Insurance Company for issuing title insurance on

refinancing transactions. First American removed the action to

this court based on diversity jurisdiction under 28 U.S.C. §

1332(d)(2)(A). The plaintiffs filed two amended complaints,

adding named plaintiffs Stephen and Ellen St. Louis and alleging

federal jurisdiction. First American moved to dismiss the

claims. While the motion to dismiss was pending, the plaintiffs

moved to remand the case to state court, asserting that the

amount in controversy does not meet the jurisdictional minimum. 

Because the motion to remand challenges the court’s jurisdiction,

that motion will be addressed first.

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I. Motion to Remand

When diversity jurisdiction is challenged, the party seeking

to invoke the court’s jurisdiction bears the burden of showing

that the statutory requirements are met. Spielman v. Genzyme

Corp., 251 F.3d 1, 4 (1st Cir. 2001). To meet the challenge,

that party must “alleg[e] with sufficient particularity facts

indicating that it is not a legal certainty that the claim

involves less than the jurisdictional amount.” Id. at 5

(internal quotation marks omitted). The court looks at the

circumstances existing when the complaint was filed to determine

whether the amount in controversy requirement is met. Coventry

Sewage Assocs. v. Dworkin Realty Co., 71 F.3d 1, 5 (1st Cir.

1995).

The Class Action Fairness Act added a new provision

governing diversity jurisdiction, which requires that the amount

in controversy exceed $5,000,000. § 1332(d)(2). That amount is

determined based on the aggregate amount of the class members’

claims. Frazier v. Pioneer Americas LLC, 455 F.3d 542, 545 (5th

Cir. 2006). Despite the new requirements under the Class Action

Fairness Act, the burden remains on the defendant in a removed

case to establish that federal subject matter jurisdiction

exists. See Morgan v. Gay, --- F.3d. ---, 2006 WL 3692552 at *1

Case 1:06-cv-00286-JD Document 37 Filed 01/17/07 Page 2 of 16
1The Kashulines plaintiffs voluntarily dismissed that case

on August 1, 2006.

3

(3d Cir. Dec. 15, 2006); Miedema v. Maytag Corp., 450 F.3d 1322,

1328 (11th Cir. 2006).

To establish removal jurisdiction, First American relied on

the allegations in the complaint in this case and on the more

specific jurisdictional allegations in a related case filed in

this court by the plaintiffs’ counsel. The first complaint in

this case, which was filed in state court, alleged: “It is

reasonable to presume that First American has collected several

million dollars in unlawful premiums from thousands of New

Hampshire homeowners during the class period--and all of such

homeowners can be readily identified for the purpose of returning

their money to them.” 1st Comp. ¶ 13. Several days before

commencing the state court action, the plaintiffs’ counsel filed

a related case in federal court, Kashulines v. First Am. Title

Ins. Co., 06-cv-235-JM (D.N.H. June 27, 2006). The plaintiffs in

Kashulines alleged the same claims against First American that

are alleged in this case and also filed the case as a putative

class action. To show federal jurisdiction, the plaintiffs

alleged: “the matter in controversy exceeds $5 million,

exclusive of interests and costs . . . .”1 Kashulines Comp. ¶

12. In addition, after removal, the plaintiffs in this case

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filed two amended complaints in this court in which they

asserted: “Plaintiffs, having engaged in substantial pre- and

post-filing fact investigation, have likewise concluded that more

than $5 million is in dispute.” 2d Am. Compl. ¶ 17.

The plaintiffs acknowledge those jurisdictional allegations

but argue that the court should disregard them. They contend

that the allegations in the Kashulines complaint should be

disregarded because the case has been dismissed. They also

contend that they did not know whether this case would satisfy

the jurisdictional minimum when the case was commenced in state

court. They argue that, after filing the amended complaints

here, in which they alleged in good faith that more than

$5,000,000 was in controversy, they have discovered that not all

of First American’s agents charged the higher rate during the

class period. In support, they have moved for leave to file the

affidavit of a homeowner, David McCarthy, who refinanced his

mortgage twice in 2006 and was charged the lower rate for the

lender’s title insurance policy. The plaintiffs argue that

because at least one agent was not charging the inflated rate,

the amount in controversy will be reduced.

Once jurisdiction attaches, based on a jurisdictional amount

that is alleged in good faith, “it is not ousted by a subsequent

change of events.” Coventry, 71 F.3d at 7. Even the discovery

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of an error or different circumstances that reduces the amount

initially claimed does not affect jurisdiction. Id. at 7-8. In

contrast, if jurisdiction were never established, subsequent

events might preclude jurisdiction. See, e.g., Terry v. Ford

Motor Credit Co., 2006 WL 3455076 at *1 (D.R.I. Nov. 27, 2006). 

The McCarthy affidavit, by itself, is not sufficient to rebut the

defendant’s showing that “it is not a legal certainty that the

claim involves less than” $5,000,000. Spielman, 251 F.3d at 5.

 First American’s removal notice adequately alleged the

amount in controversy to satisfy § 1332(d)(2)(A). The

plaintiffs’ jurisdictional allegations in the subsequent amended

complaints established jurisdiction. The second amended

complaint, filed on September 5, 2006, remains the operative

pleading in this case. New information that may raise questions

as to the accuracy of those allegations does not undermine the

jurisdiction that the plaintiffs allegations previously

established. Therefore, the motion to remand is denied.

II. Motion to Dismiss

In the second amended complaint, the plaintiffs pared their

claims down to three: breach of contract, breach of the implied

duty of good faith and fair dealing, and unjust enrichment. 

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First American moves to dismiss all three claims. The plaintiffs

object and move to file a surreply.

In considering a motion to dismiss, the court “take[s] as

true all well-pleaded allegations and draw[s] all reasonable

inferences in the plaintiff’s favor.” Ezra Charitable Trust v.

Tyco Int’l, Ltd., 466 F.3d 1, 5-6 (1st Cir. 2006). “The court

need not accept a plaintiff’s assertion that a factual allegation

satisfies an element of a claim, however, nor must a court infer

from the assertion of a legal conclusion that factual allegations

could be made that would justify drawing such a conclusion.” 

Cordero-Hernandez v. Hernandez-Ballesteros, 449 F.3d 240, 244 n.3

(1st Cir. 2006). “‘A complaint should not be dismissed unless it

is apparent beyond doubt that the plaintiff can prove no set of

facts in support of his claim that would entitle him to relief.’” 

Stanton v. Metro Corp., 438 F.3d 119, 123-24 (1st Cir. 2006)

(quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)) (other

quotation marks omitted).

Background

The plaintiffs are James and Sue Scott, who own their home

in Goffstown, New Hampshire, and Stephen and Ellen St. Louis, who

own their home in Manchester, New Hampshire. The plaintiffs

allege that the Scotts obtained a first mortgage of $153,000 when

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they bought their home in 1999, which was covered by a title

insurance policy. The Scotts refinanced in 2002 with a new

mortgage from Ameriquest Mortgage Company in the amount of

$223,000, which was again covered by a title insurance policy. 

They refinanced a second time in 2003 with a new mortgage in the

amount of $261,000 and a title insurance policy to cover that

amount from First American.

The St. Louises bought their home in 1998 with a mortgage of

$98,000 that was covered by a title insurance policy. They

refinanced in 2003 with a mortgage of $150,000 that was also

covered by a title insurance policy. In 2004, they refinanced

their home with a mortgage from Washington Mutual Bank in the

amount of $164,000 and purchased a title insurance policy from

First American with Washington Mutual as the insured.

The plaintiffs allege that First American is required to

charge a lower rate for its premiums when the title insurance

policy is reissued for a refinanced mortgage and certain

conditions are met. They argue that the lower rate is required

because the title search is expedited by the existence of a

previous title search. Based on their interpretation of First

American’s rate manual, they assert that if the refinance occurs

within ten years of the original mortgage for the same owner and

property, the lower reissue rate applies to the amount of the

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refinanced mortgage to the extent of the amount of the original

mortgage. They contend that because they met those conditions,

they were entitled to the lower reissue rate but were charged the

standard rate instead. Based on that theory, the plaintiffs

allege breach of contract, breach of the covenant of good faith

and fair dealing, and unjust enrichment.

A. Breach of Contract

The plaintiffs allege that the circumstances of obtaining

title insurance from First American provided an implied-in-fact

contract between them and First American. They contend that

First American breached the contract by failing to use the

reissue rate in calculating their premiums, by failing to request

copies of their prior policies for purposes of using the reissue

rate, and by failing to inform the plaintiffs of the reissue rate

and its requirements. First American moves to dismiss the claim

on the ground that the plaintiffs have not alleged the existence

of a valid contract between them and First American. 

“A valid, enforceable contract requires offer, acceptance,

consideration, and a meeting of the minds.” Durgin v. Pillsbury

Lake Water Dist., 903 A.2d 1003, 1006 (N.H. 2006). “For a

meeting of the minds to occur, the parties must assent to the

same contractual terms.” Id. “A contract implied in fact is

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based on a promise manifested in language, conduct, silence or by

implication from the circumstances, including a course of dealing

or course of performance.” Lorenz v. N.H. Admin. Off. of Courts,

152 N.H. 632, 269 (2005). Although the meaning of a written

contract is a legal issue, “where there is a disputed question of

fact as to the existence and terms of a contract it is to be

determined by the trier of facts, provided there is any evidence

from which it could be found there was a contract between the

parties.” Goodwin R.R., Inc. v. State, 128 N.H. 595, 604 (1986). 

 The plaintiffs allege that First American offered to sell

title insurance with the mortgage lenders as the insureds, that

the plaintiffs accepted the offer by applying for coverage under

the policies, and that they paid First American consideration in

the form of premiums for the policies. Based on those

allegations, an implied contract existed, requiring First

American to issue title insurance, as applied and paid for by the

plaintiffs, with their lenders as the insureds. The plaintiffs

allege that First American issued those policies and, therefore,

do not allege a breach of that agreement. 

Instead, the plaintiffs’ breach of contract claim is based

on their theory that the terms of New Hampshire Revised Statutes

Annotated 416-A:17, II & III, were incorporated into the implied

contract and that they qualified for the reissue rate under the

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2One of the cited decisions, Slapikas v. First Am. Title

Ins. Co., Civil No. 06-cv-84-JFC (W.D. Pa. May 8, 2006), merely

states that First American’s motion to dismiss the breach of

contract claims was denied without prejudice to filing a motion

for summary judgment on those claims, but did not provide any

reasoning or analysis or explanation of the nature of the claims.

10

terms of First American’s rate manual, which was not applied to

their premiums. They allege that RSA 416-A:17, II & III, as

incorporated into the implied contract, required First American

“to use reasonable efforts to ascertain the plaintiffs’ . . .

applicable title insurance premium charges in accordance with its

filed rate manual and . . . prohibited [First American] from

charging for services not actually rendered and from charging any

more for the applied-for coverage than the maximum applicable

premium rate specified in its filed rate manual.” 2d Am. Comp. ¶

41. First American contends that no such agreement existed and

argues that even if it did, the plaintiffs did not qualify for

the reissue rate under the terms of the rate manual. 

The plaintiffs provide no factual allegations to support

their conclusory assertion that RSA 416-A:17 was incorporated by

implication into the implied contract. The cases they cite in

support of their opposition to the motion to dismiss the breach

of contract claim recognized an implied-in-fact contract as

outlined above, without the additional implied terms

incorporating RSA 416-A:17, II & III.2 Therefore, the plaintiffs

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3Subsection III was deleted effective July 23, 2004. 

Therefore, the plaintiffs cannot base claims on that subsection

if the refinancing occurred after the effective date of the

amendment.

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have not alleged sufficient facts to support their breach of

contract claim.

In addition, even if the plaintiffs had properly alleged

that RSA 416-A:17 was an implied term of the implied contract,

the statute does not appear to support their claim. RSA 416-

A:17, II & III, provide as follows:

II. Every title insurance company shall file with the

commissioner its schedule of fees, every manual of

classifications, rules and plans pertaining thereto,

and every modification of any of the foregoing which it

proposes to use in this state. In every such filing,

the company shall set forth that portion of the fee

which is designated as premium as herein defined.

III. No schedule of fees or premium rates shall take

effect until the commissioner shall approve the same as

adequate, reasonable, and non-discriminatory; and no

company authorized to transact business in this state

shall make, write, place, or cause to be made any title

insurance policy except at a rate approved by the

commissioner.3

The plaintiffs have not alleged that First American breached any

of the provisions of that statute. Instead, the plaintiffs

assert that First American failed to comply with the requirements

of the rate manual, but they do not explain how the provisions of

the rate manual became part of the implied contract between the

plaintiffs and First American. Further, the rate manual does not

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4The rate manual appears to provide instruction and guidance

to agents for processing First American insurance policies. The

section that addresses the reissue rate provides, in pertinent

part, as follows:

7. Premiums for Reissue of First American Policies: 

First American grants reissue loan and reissue owner’s

rates if certain conditions exist as shown below.

 . . .

A. Standard Loan Policy Reissues:

If the borrower refinances within TEN years of the

first mortgage, the original loan is discharged, and a

new mortgage placed of record, the loan reissue rate

may be used to the extent of the amount of the first

mortgage policy. Original or First Mortgage rates must

be used on amounts in excess of the first policy. If

the prior policy was not a First American policy, you

must obtain a copy of the prior policy to qualify for

the re-issue rate.

2d Am. Compl. Ex. B § 7 (emphasis added). 

5In the cases cited by the plaintiffs, the Northern District

of Ohio district court denied First American’s motions to dismiss

the breach of contract claims, finding that the plaintiffs

alleged an implied contract in a three-way transaction or under

an agency theory. See Barnes v. First Am. Title Ins. Co., 2006

WL 2265553 at *4-*5 (N.D. Ohio Aug. 8, 2006); Chesner v. Stewart

Title Guar. Co., 2006 WL 2252542 at *4-*5 (N.D. Ohio Aug. 4,

12

appear to require First American to provide the reissue rate but

rather offers the option of the reissue rate, perhaps as a

marketing tool for agents of First American policies.4

Therefore, even if the statute were incorporated into the implied

contract, it would not provide the obligations the plaintiffs are

seeking here.5

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2006). The plaintiffs here have not made that argument. 

13

In summary, implied contracts existed between the plaintiffs

and First American that required First American to issue title

insurance to cover the lenders on the plaintiffs’ mortgages in

exchange for the premiums paid by the plaintiffs. Those implied

contracts did not include a requirement that the plaintiffs be

informed of the reissue rate or that the reissue rate be used to

calculate their premiums. Therefore, the plaintiffs’ breach of

contract claim, based on a theory that RSA 416-A:17 was

incorporated into the implied contract, making the reissue rate

mandatory, and that First American breached the agreement by not

providing the reissue rate, does not state a cause of action and

is dismissed.

B. Breach of the Duty of Good Faith and Fair Dealing

The plaintiffs allege that First American breached the duty

of good faith and fair dealing by using a shortened title

examination in reliance on the plaintiffs’ prior title insurance

policies while charging the standard, higher, premium. The

plaintiffs contend that First American should have requested

copies of their prior policies, should have informed them of the

availability of the reissue rate, and should have used the

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reissue rate for calculating their premiums. First American

denies that any contract existed between it and the plaintiffs.

Under New Hampshire law, contracts that are not governed by

the Uniform Commercial Code may incorporate an implied duty of

good faith performance. Centronics Corp. v. Genicom Corp., 132

N.H. 133, 143-44 (1989). Whether that duty applies in a given

case depends on the results of four questions: (1) whether the

agreement allows or confers discretion on the defendant to

deprive the plaintiff of a substantial portion of the benefit of

the agreement, (2) whether the parties intended to enter a

legally enforceable contract, (3) whether the defendant exercised

its discretion reasonably, and (4) whether the defendant’s abuse

of discretion caused the damage complained of. Ahrendt v.

Granite Bank, 144 N.H. 308, 312-13 (1999). 

In this case, First American argues that the plaintiffs have

not alleged the existence of an enforceable contract, which stops

the analysis at the second step. As is discussed above, however,

implied contracts were created between First American and the

plaintiffs that required First American to issue a title

insurance policy with the lender as the insured in exchange for

the premiums paid by the plaintiffs. Therefore, First American’s

motion to dismiss the claim of breach of the implied duty of good

faith and fair dealing is denied.

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C. Unjust Enrichment

The plaintiffs also allege that First American’s conduct

constitutes unjust enrichment. In support of that claim, the

plaintiffs allege that they were entitled to have their premiums

calculated under the reissue rate and that First American was

unjustly enriched by retaining the premiums calculated under the

standard rate. They contend that they are entitled to

restitution of the amounts paid in excess of the reissue rate.

Under a theory of unjust enrichment, a defendant must make

restitution if he has obtained a benefit “either through wrongful

acts or passive acceptance of a benefit that would be

unconscionable to retain.” Kowalski v. Cedars of Portsmouth

Condo. Ass’n, 146 N.H. 130, 133 (2001). Unjust enrichment is an

equitable remedy, which is available only in the absence of a

breach of contract remedy. See In re Haller, 150 N.H. 427, 430

(2003); see also Mass. Eye & Ear Infirmary v. WLT

Phototherapeutics, Inc., 412 F.3d 215, 234 (1st Cir. 2005).

First American argues that the plaintiffs’ unjust enrichment

claim must be dismissed because it is based on a statutory duty

under RSA 416-A:17 and because the plaintiffs also allege breach

of contract. As pled, the plaintiffs’ unjust enrichment claim

makes no mention of RSA 416-A:17, and the plaintiffs deny that

their claim is based on a statutory requirement. Although First

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American is correct that the plaintiffs cannot recover under both

a breach of contract theory and an unjust enrichment theory, that

differentiation does not need to be made now. Pleading in the

alternative is an appropriate course to follow at this stage of

the proceedings. Fed. R. Civ. P. 8(a).

Conclusion

For the foregoing reasons, the plaintiffs’ motion for leave

to file a substitute affidavit (document no. 35) is granted, and

the substitute affidavit was considered. The plaintiff’s motion

to remand (document no. 18) is denied. The defendant’s motion to

dismiss (document no. 14) is granted as to the plaintiffs’ first

breach of contract claim (count one) and is otherwise denied. 

The plaintiffs’ motion for leave to file a surreply (document no.

20) is granted, and the surreply was considered.

SO ORDERED.

____________________________

Joseph A. DiClerico, Jr.

United States District Judge

January 17, 2007

cc: Christopher D. Baucom, Esquire

Elizabeth T. Ferrick, Esquire

Wilbur A. Glahn, III, Esquire

Douglas W. King, Esquire

Charles A. Newman, Esquire

Edward K. O’Brien, Esquire

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