UNITED STATES DISTRICT COURT FOR THE 

DISTRICT OF NEW HAMPSHIRE

James Scott, Sue Scott,

Stephen St. Louis, and

Ellen St. Louis

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

Opinion No. 2008 DNH 090

First American Title

Insurance Company

O R D E R

The plaintiffs, James and Sue Scott and Stephen and Ellen

St. Louis, brought a putative class action against First American

Title Insurance Company, alleging breach of the duty of good

faith and fair dealing and unjust enrichment. The court denied

their first motion for preliminary approval, without prejudice,

because they failed to satisfy the requirements of Federal Rule

of Civil Procedure 23(a) as to numerosity and typicality of Rule

23(b)(3). The parties now renew their joint motion for

certification of a settlement class and for preliminary approval

of their class action settlement agreement. In addition, First

American filed its own supplemental memorandum in support of

class certification to address the predominance requirement under

Rule 23(b)(3).

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Discussion

The plaintiffs’ claims in this case arose from the rate they

were charged by First American for title insurance when they

refinanced the mortgages on their homes. The plaintiffs contend

that they were entitled to a lower reissue rate because they

refinanced their homes within ten years of their original

mortgages and title searches but were instead charged the

standard rate. The plaintiffs filed their suit as a putative

class action.

The parties have reached a settlement. They jointly propose

a class, for purposes of settlement, defined as:

All owners of New Hampshire property who, during the

Class Period June 30, 2003 to this Court’s preliminary

approval date, refinanced mortgages on such property

within ten years after the date of the issuance of a

prior lenders [sic] policy of title insurance insuring

a mortgage covering the same property, where there was

no change in ownership, and who paid a premium for a

lenders [sic] policy of title insurance issued by First

American in an amount in excess of the Reissue Rate.

They ask the court to certify their proposed class and to approve

their settlement under Federal Rule of Civil Procedure 23(e).

As the court stated in its previous order, when the parties

seek certification for purposes of a settlement, “the moment of

certification requires heightened attention . . . to the

justifications for binding the class members." Ortiz v.

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Fibreboard Corp., 527 U.S. 815, 849 (1999). The parties must

show that the proposed class satisfies the requirements of

Federal Rule of Civil Procedure 23, not merely that the

settlement is fair. Id.; Amchem Prods., Inc. v. Windsor, 521

U.S. 591, 621-627 (1997). "To obtain class certification, the

plaintiff must establish the four elements of Rule 23(a) and one

of the several elements of Rule 23(b)." Smilow v. Southwestern

Bell Mobile Sys., Inc., 323 F.3d 32, 38 (1st Cir. 2003); accord

In re New Motor Vehs. Canadian Export Antitrust, --- F.3d ---,

2008 WL 820922, at *10 (1st Cir. Mar. 28, 2008). 

 

I. Rule 23(a)

Through their prior briefing, the parties have satisfied the

requirements of Rule 23(a) to show common questions of law or

fact and that the representatives are typical of the class. In

their renewed motion, the parties address the requirements of

numerosity and adequate representation.

A. Numerosity

To satisfy the numerosity requirement of Rule 23(a), the

parties must show that “the class is so numerous that joinder of

all members is impracticable.” Berenson v. Nat’l Fin. Servs.

LLC, 485 F.3d 35, 38 (1st Cir. 2007). In their initial motion

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for certification and approval, the parties based their showing

of numerosity on plaintiff counsel’s belief and “common sense”

that the number of affected consumers of mortgages from First

American would be “quite high.” The court found that showing to

be inadequate. 

In support of their renewed motion, the parties now rely on

information retrieved from First American’s computer systems. 

Based on that information, First American determined that it sold

56,233 “lenders policies of title insurance covering New

Hampshire property,” between June 30, 2003, and July 11, 2007. 

Because additional policies have been sold since July 11, 2007,

the total number is growing. First American’s systems cannot

determine how many of the 56,233 policies sold in New Hampshire

qualified for the reissue rate but were sold at the standard

rate. The 56,233 policies sold between June 30, 2003, and July

11, 2007, were issued without simultaneous owner’s policies, 

however, which suggests that the policies were for refinancing

rather than initial mortgages, and the policies were not sold at

the reissue rate. 

The parties represent that a substantial portion of the

56,233 lender’s policies issued were for refinancing. They also

contend that based on a housing study conducted by Harvard

University’s Joint Center for Housing Studies homeowners on

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average hold a mortgage before refinancing for only two years. 

Based on that statistic, the parties assert that most of the

refinancing policies would have been issued within ten years of

the original mortgage. They acknowledge that some of the

policies would cover transactions that would not qualify but

argue that because so few policies were sold at the reissue rate,

that number would not affect the overall potential for class

size.

The new information provided by the parties substantiates

their claim that the putative class is likely to number in the

thousands if not tens of thousands. Although numbers alone will

not necessarily meet the numerosity requirement of Rule 23(a),

thousands of members of a proposed class will usually satisfy

that requirement. See Daffin v. Ford Motor Co., 458 F.3d 549,

552 (6th Cir. 2006); Andrews v. Bechtel Power Corp., 780 F.2d

124, 131 (1st Cir. 1985). The parties have met their burden of

showing numerosity under Rule 23(a).

B. Adequacy

Rule 23(a) also requires that the class representatives be

able to fairly and adequately protect the interests of the class. 

Berenson, 485 F.3d at 38. The purpose of the adequacy

requirement is “to uncover conflicts of interest between named

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parties and the class they seek to represent.” Amchem, 521 U.S.

at 625. The named representatives must “possess the same

interest and suffer the same injury shared by all members of the

class [they] represent[].” Id. (internal quotation marks

omitted). 

The parties failed to meet this requirement in their prior

motion because, under the settlement stipulation, the two named

plaintiff couples were to receive $3,000 each as representatives’

fees and the court could not determine whether the settlement

fund would be adequate to cover the claims of all of the class

members along with the representatives’ fees. If the class were

too numerous to recover from the settlement fund, the named

plaintiffs’ right to receive representatives’ fees would conflict

with the interests of the class.

In their renewed motion, the parties address the award

structure under their stipulation. They represent that each

eligible class member, meaning those who submit valid claims,

which the parties represent is likely to be only between 5% and

10% of the potential class, will receive at least fifty percent

of their claimed losses. The parties also represent that the

representatives’ fees will not be paid from the settlement fund.

Under the stipulation, the settlement fund would initially

hold $166,000, but First American would be required to provide

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1The parties characterize the $330,200 amount as “the total

minimum consideration for the settlement.” Renewed Jt. Mot. at

14 n.3. That statement is contrary to the plain language of the

amended stipulation: “First American’s total maximum settlement

liability will not exceed $330,200 inclusive of the settlement

fund, administrative expenses, class representative fees, costs,

expenses, attorneys’ fees, and any other charge, as outlined

below, except as provided in Section (V)(E)(4)(c) below.” Ex. B,

Ren. Jt. Mot., Am. Stip. (emphasis added).

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additional funds as necessary to compensate class members for

reduced percentages of their claims if the total of the claims

exceeds $166,666. As amended, however, the stipulation

guarantees that First American’s total liability will be capped

at $330,200, which includes administrative costs of $74,200,

attorneys’ fees of $83,333, and $6,000 in fees to the class

representatives, making the amount of the attorneys’ fees and the

class representatives’ fees factors in the total fund available

to pay claims.1 Class representative fees, attorneys’ fees, and

administrative costs combined are almost 50% of First American’s

maximum liability. See Staton v. Boeing Co., 327 F.3d 938, 964-

65 (9th Cir. 2003) (discussing potential conflict in settlement

of class action involving disproportionate attorneys’ fees).

The limitation on First American’s liability under the

settlement does not apply, however, “if the aggregate amount of

all Claimant Shares is more than $333,333, [in which case] each

Claimant Share shall be reduced by 50% and . . . First American

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shall pay that amount . . . .” Ex. B, Ren. Jt. Mot., Stip.

Sections B(2) & V(E)(4)(c). The liability limitation does apply,

however, to the circumstance described in Section V(E)(4)(b),

which would appear to significantly change the operation of that

provision, limiting the fund available for payment of claims to

$166,667 and allowing a 50% payment (a payment of $100 as

suggested by the parties) to only 1666 class members, which is

slightly less than 3% of a potential class of 56,000 purchasers

of First American policies.

As currently structured, the interests of the class

representatives in receiving both representatives’ fees and

recoveries for their claims, along with the amount agreed to by

the parties for payment of attorneys’ fees and administrative

costs, could conflict with the interests of the potential class

although not necessarily with the eligible class. Therefore, the

adequacy of representation depends upon the number in the class

who will be eligible to receive awards under the settlement

stipulation. Because that number is not now available, no

determination can be made as to the adequacy of representation.

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II. Rule 23(b)(3)

Certification under Rule 23(b)(3) requires that the court

find “that the questions of law or fact common to the members of

the class predominate over any questions affecting only

individual members, and that a class action is superior to other

available methods for the fair and efficient adjudication of the

controversy.” Fed. R. Civ. P. 23(b)(3). In its prior order, the

court concluded that the parties had not sufficiently addressed

the requirements of Rule 23(b)(3) to permit a ruling. The

parties have now filed a renewed joint motion, addressing the

Rule 23(b)(3) requirements, and First American filed a separate

supplemental memorandum further addressing the predominance

requirement of Rule 23(b)(3).

Rule 23(b)(3) “is a joinder device for consolidating

separate but similar claims.” Tardiff v. Knox County, 365 F.3d

1, 4 (1st Cir. 2004). Under the Rule 23(b)(3) analysis, the

court “must formulate some prediction as to how specific issues

predominate in a given case.” In re New Motor Vehs., 2008 WL

820922, at *11 (internal quotation marks omitted). When common

questions predominate as to liability, courts will ordinarily

find predominance even if individual issues concerning

affirmative defenses or damages exist. Smilow, 323 F.3d at 39-

40. In addition, when individual claims would be too small to

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2An absence of any explanation of the asserted common issues

arising from First American’s protocols, guidelines, and

oversight prevented the court from finding that common issues

predominated under Rule 23(b)(3) in its first order. 

Surprisingly, the plaintiffs continue to argue that the class

would share these issues, which appear to pertain to a negligence

claim that was not pled in the plaintiffs’ complaint. Given the

lack of relevance, issues about First American’s protocols,

guidelines, and oversight of its agents are not considered for

purposes of class certification. 

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litigate separately, a class action is superior to individual

litigation. Id. at 40.

In this case, the parties contend that each potential class

member’s claim is based on the same issue: whether the applicant

for First American title insurance was eligible for the reissue

rate but was charged a higher premium. The plaintiffs also argue

that the potential class members share an issue as to whether

First American’s protocols, guidelines, and lack of oversight of

its agents caused eligible applicants not to receive the reissue

rate.2 First American explains that because of the proposed

settlement, individual proof issues are eliminated by the form

through which potential class members would submit their claims.

As the court previously held, First American’s liability to

each of the class members depends upon the same issue, whether

the applicant was eligible for the reissue rate but was charged a

higher premium. Eligibility will be determined based on the same

claim form, which simplifies the process and avoids individual

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investigations into files and records. When class certification

is sought for settlement only, the court need not consider class

management problems. Waste Mgmt. Holdings, Inc. v. Mowbray, 208

F.3d 288, 298 (1st Cir. 2000).

The potential class shares the common issue of determining 

First American’s liability and each members eligibility for a

claim, which predominate over any individual issues. Because the

new issues raised by the plaintiffs about First American’s

protocols, guidelines, and oversight are irrelevant to the claims

in this case, it is not necessary for the potential class members

to share those issues nor is it necessary for common questions

pertaining to those issues to predominate over individual

questions. Therefore, common questions of law and fact

predominate. Further, because each individual claim would be too

small for potential class members to litigate separately, a class

action is superior to individual litigation. 

III. Certification

Because the issue of adequacy of representation remains

unsettled, a class cannot be certified for settlement purposes

based on the stipulation and supporting memoranda presented. 

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Conclusion

For the foregoing reasons, the parties’ renewed joint motion

(document no. 62) is denied without prejudice to file a new

proposed stipulation and a joint motion for approval that

satisfies the requirements of adequate representation.

SO ORDERED.

____________________________

Joseph A. DiClerico, Jr.

United States District Judge

April 28, 2008

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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