Federal Deposit Insurance Corporation v. Commonwealth Land Title Insurance Company

Filing 20

ORDER: Defendant's Motion for More Definite Statement 8 is GRANTED. Plaintiff shall file an amended complaint within fourteen (14) days of the date of this Order. The amended complaint should set forth a separate breach of contract claim for each CPL that Plaintiff alleges Defendant breached as well as a separate claim for declaratory relief in a manner specific to each real estate transaction. Signed by Judge James S. Moody, Jr on 3/28/2013. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

FEDERAL DEPOSIT INSURANCE
CORPORATION,
Plaintiff,
v.

Case No. 8:12-cv-2247-T-30TGW

COMMONWEALTH LAND TITLE
INSURANCE COMPANY,
Defendant.
_____________________________________/

ORDER
THIS CAUSE comes before the Court upon Defendant’s Motion for More Definite
Statement (Dkt. 8), Plaintiff’s Opposition to Defendant’s Motion for More Definite
Statement (Dkt. 10), and Defendant’s Notice of Supplemental Authority In Support of
Motion for More Definite Statement (Dkt. 19). The Court, having reviewed the motion,
response, supplemental authority, and being otherwise advised in the premises, concludes the
motion for more definite statement should be granted.
Plaintiff Federal Deposit Insurance Corporation as Receiver for Washington Mutual
Bank brings this action against Defendant Commonwealth Land Title Insurance Company
for breach of contract and declaratory relief based on two closing protection letters (“CPLs”).
A CPL is an indemnity contract issued by a title insurer to a lender and is effective when
issued in connection with the lender’s purchase of a policy from the title insurer to insure the
validity, enforceability and priority of the lender’s mortgage lien. Commonwealth issued two

CPLs to Washington Mutual Bank in connection with two separate and unrelated real estate
transactions, although the CPL language was identical for each transaction. Each CPL issued
was made in connection with loan transactions that occurred on different dates, involving
different buyers, sellers, and loan amounts. Most significantly, there were independent title
insurance policies issued in connection with each of the mortgages.
The FDIC-R alleges that Commonwealth authorized and held out an issuing agent to
issue its title insurance policies, and this agent acted as the closing agent for both abovenamed transactions. The FDIC-R alleges that Commonwealth’s agent fraudulently and
dishonestly handled documents, misappropriated Washington Mutual’s funds, and disbursed
those funds contrary to Washington Mutual’s instructions. FDIC-R alleges that Washington
Mutual suffered losses because of this fraud and that Commonwealth has refused to honor
its promises to indemnify despite FDIC-R’s demands to Commonwealth do so.
In Count One, Breach of Contract, the FDIC-R is seeking reimbursement from
Commonwealth based on the CPLs for actual losses of no less than $1.2 million that resulted
from the fraud, dishonesty, and failure of Commonwealth’s agent to comply with
Washington Mutual’s closing instructions. In Count Two, Declaratory Relief, the FDIC-R
is seeking a judgment declaring that Commonwealth has breached the CPLs and that the
FDIC-R is entitled to reimbursement for all of Washington Mutual’s actual losses arising out
of the fraud and dishonesty connected with the two transactions. Count One is premised on
a breach of both CPLs and Count Two is premised on a declaratory judgment based on both
CPLs.
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Commonwealth moves for a more definite statement based on Federal Rule of Civil
Procedure 10(b). Specifically, Commonwealth contends that the FDIC-R should be required
to plead two counts of breach of contract and two counts of declaratory relief so that each
distinct real estate transaction is contained in a separate count. Commonwealth asserts that
the FDIC-R has improperly lumped together the factual allegations of the two transactions,
making a response difficult. The Court agrees that pleading the counts separately would
promote clarity, better frame the issues, and adhere to the Federal Rules of Civil Procedure.
The combining of several claims for relief in a single count disregards the rules
governing the presentation of claims to a district court. Fikes v. City of Daphne, 79 F.3d
1079, 1082 (11th Cir. 1996). Rule 10(b) of the Federal Rules of Civil Procedure provides
that “[i]f doing so would promote clarity, each claim founded on a separate transaction or
occurrence - and each defense other than denial - must be stated in a separate count or
defense.” Fed. R. Civ. P. 10(b). Moreover, the Eleventh Circuit has stated that Rule 8 and
Rule 10 work together to
to require the pleader to present his claims discretely and succinctly, so that his
adversary can discern what he is claiming and frame a responsive pleading, the
court can determine which facts support which claims and whether the plaintiff
has stated any claims upon which relief can be granted, and, at trial, the court
can determine that evidence which is relevant and that which is not.
Fikes, 79 F.3d at 1082 (quoting T.D.S. v. Shelby Mut. Ins. Co., 760 F.2d 1520, 1543 n.14
(11th Cir. 1985) (Tjoflat, J., dissenting))).
The FDIC-R claims that Commonwealth has failed to meet its burden of
demonstrating that the complaint is so vague or ambiguous that it cannot reasonably be
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expected to respond. Although the FDIC-R neatly separates the factual allegations related
to each real estate transaction in the paragraphs preceding the two counts, it confuses the
causes of action by improperly grouping two distinct breach of contract claims in Count One
and two distinct declaratory judgments in Count Two. This improper pleading creates
confusion for Commonwealth in responding to the complaint because the factual allegations
are mixed in the paragraphs following Counts One and Two. Additionally, the combined
causes of action will generate more confusion when submitted to the Court for summary
judgment or to a jury for a verdict.1
Finally, Rule 1 of the Federal Rules of Civil Procedure require the Court to administer
the Rules “to secure the just, speedy, and inexpensive determination of every action and
proceeding.” This lawsuit will benefit from FDIC-R filing an amended complaint which will
allow Commonwealth to assert affirmative defenses, if any, in a manner specific to the
individual transactions. It will also aid in the discovery process by clarifying what defenses
are being raised with respect to each CPL as well as assist the Court in ruling on any
summary judgment motions. Moreover, amending the complaint will not be an undue burden
or expense on the FDIC-R.

1

The Court finds persuasive the ruling by the District Court of the Southern District of
Florida wherein the Honorable Patricia A. Seitz ordered the FDIC-R to detangle its breach of
contract and declaratory judgment claims into separate counts. The facts are nearly identical to the
instant case. See FDIC as Receiver for Washington Mutual Bank v. Attorneys’ Title Ins. Funs, Inc.,
Case No. 12-23599-CIV-SEITZ/SIMONTON (S.D. Fla. Feb. 13, 2013) (slip op.) (Order Granting
Defendant’s Motion For More Definite Statement).
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Accordingly, the FDIC-R shall set forth a breach of contract count for each CPL that
Commonwealth allegedly breached because each CPL represents a separate and distinct real
estate transaction. Likewise, the FDIC-R shall allege its claims for declaratory relief in a
manner specific to each real estate transaction and CPL.
It is therefore ORDERED AND ADJUDGED that:
1.

Defendant’s Motion for More Definite Statement (Dkt. 8) is GRANTED.

2.

Plaintiff shall file an amended complaint within fourteen (14) days of the date
of this Order. The amended complaint should set forth a separate breach of
contract claim for each CPL that Plaintiff alleges Defendant breached as well
as a separate claim for declaratory relief in a manner specific to each real
estate transaction.

DONE and ORDERED in Tampa, Florida on March 28, 2013.

Copies furnished to:
Counsel/Parties of Record
S:\Odd\2012\12-cv-2247.grantdefinite2.frm

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