Court Opinion

ID: 9753226
Source: CourtListenerOpinion
Date Created: 2023-08-28 19:04:15.400324+00
Date Added: 2024-06-11T07:27:32.392723
License: Public Domain

ADKINS, J., dissenting, in which BELL, C.J., joins.
When a plaintiff seeking a remedy under the Insurance Code also asserts a cause of action in negligent misrepresentation, the administrative remedy is concwrent with the judicial remedy. See Zappone v. Liberty Life Ins. Co., 349 Md. 45, *63966-68, 706 A.2d 1060, 1071 (1998). Here, Carter successfully alleged negligent misrepresentation, and thus, under Zappone, he is not required to first pursue administrative remedies. Because the majority ignores the Zappone rule, and effectively forecloses a judicial remedy that is an equal or more efficient forum for resolution of Carter’s claim, I most respectfully dissent.
I.
Judge Eldridge, writing for the Zappone court, clearly articulated when the Insurance Commissioner’s jurisdiction over a cause of action was primary, and when it was concurrent. See Zappone, 349 Md. 45, 706 A.2d 1060 (1998). There, a plaintiff brought suit in circuit court, alleging violation of the Unfair Trade Practices subtitle of the Insurance Code, as well as acts of fraud, negligent misrepresentation, and negligence. Id. at 50, 706 A.2d at 1062. The circuit court dismissed, believing the administrative remedies to be primary. Id. at 56-67, 706 A.2d at 1066. The circuit court relied on Vicente v. Prudential Ins. Co. of America, 105 Md.App. 13, 658 A.2d 1106 (1995), in which the Court of Special Appeals similarly held that the Insurance Commissioner had primary jurisdiction over a lawsuit involving similar claims, i.e., violations of the Insurance Code, fraud, and negligent misrepresentation.
The Zappone Court carefully detailed the standards of primary and concurrent administrative remedies, concluding that a remedy was concurrent to a judicial, common-law remedy when “[1] the alternative judicial remedy is entirely independent of the statutory scheme containing the administrative remedy, and [2] the expertise of the administrative agency is not particularly relevant to the judicial cause of action!.]” Zappone, 349 Md. at 65-66, 706 A.2d at 1070. This Court then applied these standards to the subject lawsuit, which was a combination of Insurance Code and common-law negligence actions, including negligent misrepresentation, and concluded that, with regard to those common-law tort claims, the Insurance Code remedies were not primary. Id. at 66-67, *640706 A.2d at 1070-71.1 Notably, the Court had no problem concluding that agency expertise was “irrelevant,” even while observing that resolution of the common-law torts at issue might require application of various provisions of the Insurance Code. See id. at 51, 706 A.2d at 1063.2
The status of the law after Zappone is clear: a plaintiff bringing common-law claims sounding in fraud, deceit, or negligence is not required to exhaust administrative remedies in the Insurance Code before seeking judicial remedies. Indeed, the majority embraces the Zappone rule and its applicability to cases involving negligent misrepresentation. See Maj. Op. at 626, 24 A.3d at 734 (because Zappone plaintiffs “possessed a ‘recognized independent tort remedy’ ” sounding in fraud and negligent misrepresentation, they “could seek relief outside of the administrative regulatory scheme.”). The majority, however, then makes a volte-face by embracing Zap-*641pone, but then deciding not to follow it. Compare Maj. Op. at 626, 24 A.3d at 734 (In Zappone, “we were able to conclude that the Legislature did not intend the Insurance Article to subsume or swallow the entirely independent causes of action”) with Maj. Op. at 637, 24 A.3d at 741 n. 15 (holding that the Insurance Article subsumes Carter’s claim of negligent misrepresentation).
The majority’s puzzling reversal in course is explained in its final footnote. After applying the Zappone factors to Carter’s other cause of action, a “money had and received claim,” and concluding that the Insurance Commissioner has primary jurisdiction over that statutory claim, the majority extends that holding to Carter’s negligent misrepresentation allegations as well:
We hold that the MIA should consider initially Carter’s claim [regarding the “money had and received” claim]. Our decision is based, at least in part, on the fact that the agency is better equipped to decide, in the first instance, whether Carter qualified for the reissue rate—a predicate of his claim. The same may be said for the negligent misrepresentation count, which alleges that Huntington “[mis]represent[ed] and/or omi[tted] and conceal[ed]” information about “the terms and pricing of title insurance,” thereby inducing Carter “to purchase title insurance at rates ... prohibited under the law of Maryland.” Whether Huntington charged actually a legally-prohibited rate depends on whether Carter, in fact, qualified for the lower reissue rate.
Maj. Op. at 637, 24 A.3d at 741 n. 15. Although the discussion is brief, it seems that the majority believes the negligent misrepresentation claim should be heard by the Insurance Commissioner because it fails one of the two so-called Zap-pone factors, i.e., because the agency is “better equipped” to decide whether Carter qualified for the reissue rate.
Yet, in another part of its opinion, the majority seemingly rejects Huntington’s claim that the Insurance Code provisions addressing who qualifies for the reissue rate for title insurance was a complicated matter needing expertise, declaring that “[a]fter a thorough review of the Insurance Article, we found *642no support for this averment.” Maj. Op. at 634, 24 A.3d at 738-39. The majority goes on to describe Huntington’s claim that the issue requires agency expertise as an “unsupported, but strenuosly-made avouchment[.]” Maj. Op. at 634, 24 A.3d at 739. Indeed, the title company’s “Manual of Charges,” clearly states that an owner who “has had the title to the property insured as owner, within the prior ten (10) years, ... will be entitled to the ... reissue charge,” which is 40% less. At oral argument, moreover, members of the Court pressed Huntington’s counsel to explain where the complications arise, and he came up with only one example, i.e., when there was a divorce and remarriage. This hypothetical did not impress the majority as a situation requiring agency expertise, and it impresses me even less.
Accordingly, I cannot see why the majority capitulated to Huntington’s “agency expertise” argument on the off-chance that sometime, somewhere, a “unique” situation will arise “requiring agency expertise to help determine whether a homeowner/borrower qualifies for the reissue rate” Maj. Op. at 634, 24 A.3d at 739. Unlike the majority, I am unwilling to deny Carter access to the court out of the fear that some unnamed, unique situation might arise and befuddle a trial court judge, especially when the criteria for determining qualification for a reissue rate, i.e., whether a property owner has bought title insurance within the last ten years, is so simple. Moreover, uncertainty and complexity are the stock and trade of trial court judges, and the determination of whether a property owner who seeks to refinance has bought owner’s title insurance for his property within the last ten years is, when compared to other determinations a circuit court must make, a relative “piece of cake.” If an unusual, complex situation arises, which is highly unlikely, the parties could provide expert testimony, as is routinely done in trial courts.
There also seems to be a trend emerging across the nation favoring court adjudication of actions alleging similar malfeasance by title companies over the last decade. The majority’s resolution would set Maryland against the current, as a “clear majority” of courts have generally allowed judicial access to *643plaintiffs suing title insurance companies under similar circumstances. See Campbell v. First Am. Title Ins. Co., 644 F.Supp.2d 126, 131 n. 3 & n. 4, 133 (D.Me.2009) (surveying cases and agreeing with the “clear majority” of cases which have not first required administrative pursuit of the claims). See also White v. Conestoga Title Ins. Co., 982 A.2d 997 (Pa.Super.Ct.2009) (allowing class of plaintiffs to bring suit against title insurance companies for failure to give discounted rates without exhausting administrative remedies); Randleman v. Fid. Nat’l Title Ins. Co., 465 F.Supp.2d 812 (N.D.Ohio 2006) (for claims arising out of overcharges of title insurance premiums, court had “exclusive jurisdiction” over claims of breach of contract, fraud, breach of fiduciary duty, conversion, unjust enrichment, and breach of the duty of good faith and fair dealing); Cf. Hoving v. Lawyers Title Ins. Co., 256 F.R.D. 555, 573 (E.D.Mich.2009) (refusing to allow defendant to amend its answer to include an exhaustion defense because of an “apparent lack of merit” of that defense). The majority fails to explain why Maryland should depart from this emerging nationwide consensus.
In sum, both stare decisis and the strong logic of Judge Eldridge’s analysis in Zappone, as well as the trend elsewhere to allow pursuit of these cases in the courts, persuade me that the majority’s cursory analysis and contrary conclusion is erroneous.
II.
Because the majority’s rejection of Carter’s claim depended not on the sufficiency of his allegations, but on the broader conclusion that his “negligent misrepresentation” claim failed the Zappone test of allowing concurrent judicial remedies, I have thus far not addressed the sufficiency of Carter’s allegations to state a claim for negligent misrepresentation. This issue, however, is one on which we granted certiorari and is sharply contested by Huntington.
To state a claim in negligent misrepresentation, a plaintiff must show that:
*644(1) the defendant, owing a duty of care to the plaintiff, negligently asserts a false statement, (2) the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will probably rely on the statement, which, if erroneous, will cause loss or injury; (4) the plaintiff, justifiably, takes action in reliance on the statement; and (5) the plaintiff suffers damage proximately caused by the defendant’s negligence.
Lloyd v. Gen. Motors Corp., 397 Md. 108, 135-36, 916 A.2d 257, 273 (2007). In this case, the only dispute is whether Carter satisfies the first requirement.
Huntington argues that Carter has not alleged a “false statement,” and thus does not state a claim for negligent misrepresentation. In particular, Huntington argues that the allegedly illegal charge listed on the HUD-1 form was merely a statement of actual charges, and, illegal or not, could not have been “false.” Huntington draws support from the factually similar Arthur v. Ticor Title Ins. Co., 569 F.3d 154 (4th Cir.2009), in which the Fourth Circuit held, inter alia, that a similar statement on a HUD-1 form was not an “affirmative statement” that could support a negligent misrepresentation claim:
Plaintiffs’ complaint alleged only that each HUD-1 form that Ticor gave to plaintiffs contained a false statement because the charge listed on each form for title insurance was unlawfully high. But as the district court correctly held, plaintiffs “admit that the dollar amount listed on the HUD-1 statement under title insurance was the amount charged and collected by Ticor,” so plaintiffs “do not [validly] assert that Ticor made any false statements.”
Id. at 162 n. 3.
This footnote holding in Arthur has been recently rejected by the U.S. District Court in the Eastern District of Pennsylvania, in Levine v. First Am. Title Ins. Co., 682 F.Supp.2d 442, 463-64 (E.D.Pa.2010). There, the court considered claims quite similar to those in Arthur and in this case: that, “unbeknownst to insurance purchasers, title insurance compa*645nies systematically misrepresented the amount of money due and owing for title insurance by failing to disclose that purchasers who paid an overcharged amount at settlement were entitled to a discounted rate based on the history of the property being insured.” Id. at 463. The Levine court thus confronted the same question considered in Arthur: whether the HUD-1 statement is a misrepresentation or simply an accurate statement of the amount paid and, if there was a misrepresentation, whether the defendant was obligated to communicate this error to the plaintiffs. Id.
The Levine court distinguished its case from Arthur, stating that the plaintiff had alleged a scheme to defraud under the mail and wire fraud statutes, whereas Arthur had involved no such scheme. See Levine, 682 F.Supp.2d at 463 n. 9. The Levine court, however, met head-on Arthur’s distinction between “receipt” statements and other, false statements of legality:
Regardless of how one views the HUD-1, Plaintiffs have alleged facts which raise the inference that the HUD-1 served as a step in the plot to cause pecuniary loss to innocent purchasers of title insurance, and the creation of the HUD-1 was an incidental part of the scheme, even if it merely reflected the amount paid by the purchaser____The information on the HUD-1 would lull title insurance purchasers into believing that the amount listed represents the correct statutory rate when it does not. Although on its face a HUD-1 shows the amount charged and collected by a title insurance company and in this sense may not be a misrepresentation as argued by Defendant, this analysis is far from complete or persuasive when there is an allegation of fraud as advanced here. Plaintiffs claim that the amount shown on the HUD-1 is an overcharge and part of the scheme is to misrepresent to Plaintiffs the correct amount of the premium for title insurance that should have been charged. In this sense, it is a misrepresentation that the correct premium was charged. Given the requirement under RESPA that a uniform settlement statement be used at settlement, 12 U.S.C. § 2603, the HUD-1 has the impri*646matur that the figures reflected on it are true and correct. A purchaser of title insurance, or Plaintiffs in this case, would reasonably assume that the charges listed on the HUD-1 were the charges legally due and owing and not an inflated amount.
Id. at 463-64 (emphasis added). Although the Levine decision, read most narrowly, would apply “when there is an allegation of fraud,” its conclusion with regard to the nature of the HUD-1 is applicable in any tort claim arising from false statements on the HUD-1 form; those statements are “a misrepresentation that the correct premium was charged.” Id.
Moreover, given the nature of the relationship between a title insurance company and a real estate purchaser, the title insurance company has a duty to disclose the correct rate, outside of any representation, correct or otherwise, made on the HUD-1 form. “Patently, the duty to furnish the correct information arises when the relationship is of the nature that one party has the right to rely upon the other for information.” Giant Food, Inc. v. Ice King, Inc., 74 Md.App. 183, 189, 536 A.2d 1182, 1185 (1988). As the Levine Court reasoned:
[The] Defendant [Title Insurance Company] [o]wed Plaintiffs a [d]uty to [d]isclose ...
The duty to disclose arises [because] the burden [is] on the title insurer or its agent to conduct a title search on the property, which included an investigation of the existence of prior title insurance, and to issue the insurance rate based on the findings. Placing this burden on the title insurance company without a duty to disclose and charge the correct amount would render the [requirement] meaningless. Defendant has cited no case which stands for the proposition that ... the purchasers of title insurance are presumed to know the correct rates which they are charged.3
*647Levine v. First Am. Title Ins. Co., 682 F.Supp.2d at 464-65. Thus, clearly, the plaintiffs have adequately alleged that Huntington has failed to provide the correct rate of insurance, as it had a duty to do.
This is the only sound conclusion given the dynamics at play during a real estate closing. In the typical real estate transaction, title insurance is presented as a fixed cost, among various other costs, as required by Federal regulation, on the HUD-1 form. The home purchaser or homeowner who refinances his mortgage relies on the settlement attorney or other settlement agent to prepare the HUD-1 form, and accurately notify him what are his settlement costs. Representations on HUD-1 forms are taken seriously and relied on for their accuracy:
[Fjederal law requires the use of the HUD-1 form at closings, and ... the form is important in the closing, the mortgage process, and the lender’s decision.... [T]he form explains the purchase price and the loan amount, as well as all fees and charges, to all parties involved in the transaction. Moreover, under the Real Estate Settlement Procedures Act of 1974 (“RESPA”), 12 U.S.C. § 2601 et seq., a HUD-1 form is required at all real estate settlements. It is meant to “conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement.” 12 U.S.C. § 2603. Because of the stated importance of the disclosures on the HUD-1 form, then, statements on the form have a “natural tendency to influence” [the parties to the transaction.]
United States v. Wilkins, 308 Fed.Appx. 920, 926-27 (6th Cir.2009). Indeed, the overall gravity of a HUD-1 form is evident in the fact that incorrect statements on a HUD-1 form can support a criminal conviction. See, e.g., United States v. Gaudin, 28 F.3d 943 (9th Cir.1994) (false statement on a HUD-1 form may be sufficient to support criminal charges, although it is a question for the jury).
*648Maryland’s regulation of title insurers only further supports the conclusion that an incorrectly charged rate can support the tort claims here. As alleged in Carter’s complaint, the Maryland Insurance Code provides that a Title Insurer must file “all rates or premiums, supplementary rate information, forms of contracts, policies, or guarantees of insurance ... that it proposes to use” with the Maryland Insurance Administration. Md.Code Ann., (1997, 2006 Repl.Vol.), § 11-403(a)(1) & (2) of the Insurance Article. Further, as alleged in the complaint, the title agent is prohibited from making or issuing any “contract, policy or guarantee of insurance except in accordance with the filing approved as provided in this subtitle ...” Finally, quoting the Maryland Insurance Commission guidelines, the complaint alleges that the title agent is required to “place a consumer in the most favorable priced tier for which the consumer qualifies.”
Given the strict regulation by the Maryland Insurance Administration of what title insurance companies may charge, it is reasonable for a person who comes to a real estate settlement with a title agent to expect that the title agent has correctly stated on the HUD 1 form, the amount that can legitimately be charged for title insurance. Thus, there is a duty for the title agent to accurately disclose the legitimate rates, which is sufficient to comply with the first criteria for a negligent misrepresentation claim. I would, therefore, allow Petitioners’ complaint to go forward in Circuit Court.
Chief Judge BELL authorizes me to state that he joins in this dissenting opinion.

. The Zappone Court stated:
The plaintiffs’ asserted causes of action in deceit and negligence are wholly independent of the Insurance Code's Unfair Trade Practices subtitle. No interpretations or applications of the Insurance Code or of any regulations by the Insurance Commissioner are involved. Instead, under the plaintiff’s allegations and theory of the case, their right to recover money damages is totally dependent upon the common law tort principles applicable to deceit and negligence actions. Moreover, the expertise of the Insurance Commissioner would appear to be irrelevant to these common law causes of action.
Zappone v. Liberty Life Ins. Co., 349 Md. 45, 67, 706 A.2d 1060, 1071 (1998).

. The Zappone Court recognized that the "pertinent provisions” of the Insurance Code included, but were not limited to, the following provisions:
48A, § 217, prohibits any person from, inter alia, making or causing to be made any "statement misrepresenting ... the benefits or advantages” because of any insurance policy. Section 218, inter alia, prohibits a statement or representation with respect to the conduct of insurance business "which is untrue, deceptive or misleading.” Section 233(d)(1) makes it a "fraudulent insurance act” for a person to make, knowingly or willfully, "any false or fraudulent statement or representation ... with reference to any application for insurance.” Section 216 authorizes the Insurance Commissioner to define unfair practices in the business of insurance in addition to those unfair practices defined in the subtitle.
Zappone, 349 Md. at 51, 706 A.2d at 1063.

. In Schwartz, the Court relied on the regulations of the Title Insurance Rating Bureau of Pennsylvania [TIRBOP], which imposed duties on title insurance companies similar to those imposed by Maryland's regulation scheme.