Azran v. Fidelity National Title Company LLC

Filing 73

MEMORANDUM Opinion and Order. Fidelity National Financial, Inc.'s motion to dismiss the Second Amended Complaint 25 is granted; plaintiff's motion for leave to file a supplemental response to Fidelity National Financial, Inc.'s motio n to dismiss 65 is granted; and Ticor Title Insurance Company andChicago Title Insurance Company's motion to dismiss the Second Amended Complaint 26 is granted in part and denied in part. Fidelity National Financial, Inc. is dismissed from t his action without prejudice. Counts III and IV are dismissed with prejudice. Count II is dismissed with prejudice to the extent that it is premised on the failure to record and alleged concealment, and dismissed without prejudice to the extent that it is based on other alleged misconduct. Count I is dismissed without prejudice as to Chicago Title. What remains of the complaint is the breach of contract claim against Ticor in Count I. Signed by the Honorable Jorge L. Alonso on 8/3/2016. Notice mailed by judge's staff (ntf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DAVID AZRAN,
Plaintiff,
v.
FIDELITY NATIONAL FINANCIAL, INC.,
TICOR TITLE INSURANCE COMPANY,
and CHICAGO TITLE INSURANCE
COMPANY,
Defendants.

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No. 15 C 5116
Judge Jorge L. Alonso

MEMORANDUM OPINION AND ORDER
Before the Court are three motions. For the reasons explained below, Fidelity National
Financial, Inc.’s motion to dismiss the Second Amended Complaint [25] is granted; plaintiff’s
motion for leave to file a supplemental response to Fidelity National Financial, Inc.’s motion to
dismiss [65] is granted; and Ticor Title Insurance Company and Chicago Title Insurance
Company’s motion to dismiss the Second Amended Complaint [26] is granted in part and denied
in part.
BACKGROUND
Plaintiff, David Azran, brought this suit for breach of contract, common-law and
statutory fraud, and a bad-faith failure to pay a title insurance claim. He alleges that on March 5,
2008, he loaned Cesareo Olivo $65,000 after Olivo had purchased a property at 6638 South
Albany Avenue (the “Albany Property”) in Chicago. The loan was secured by a mortgage on the
Albany Property. In connection with the loan, Ticor Title Insurance Company (“Ticor”) issued
Azran a lender’s title policy, effective March 5, 2008. Ticor recorded the mortgage on August

11, 2008. Unbeknown to Azran, Olivo sold the Albany Property on July 28, 2008, before the
mortgage was recorded. Olivo failed to pay the balance on the loan, and Azran says that he did
not find out about the sale until January 2010. He contends that if Ticor had promptly recorded
his mortgage, the loan would have been paid in full at the closing on Olivo’s sale of the Albany
Property in 2008.
Plaintiff names as defendants Ticor; Chicago Title Insurance Company (“Chicago
Title”); and Fidelity National Financial, Inc. (“Fidelity”). Before the Court are defendants’
motions to dismiss the Second Amended Complaint (the “complaint”).
DISCUSSION
A.

Legal Standards
On a Rule 12(b)(6) motion to dismiss, the Court construes the complaint in the light most

favorable to the plaintiff, accepts as true all well-pleaded facts in the complaint, and draws all
reasonable inferences in plaintiff’s favor. Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946
(7th Cir. 2013). “[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations” but must contain “enough facts to state a claim for relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
District courts exercising diversity jurisdiction must apply the choice-of-law rules of the
forum state to determine what substantive law governs the case. See Klaxon Co. v. Stentor Elec.
Mfg. Co., 313 U.S. 487, 496 (1941). The parties rely on Illinois law, so the Court will apply
Illinois law. See Harter v. Iowa Grain Co., 220 F.3d 544, 559 n.13 (7th Cir. 2000) (the court
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will not perform an independent choice-of-law analysis where the parties agree on the governing
law and the choice bears a “reasonable relation” to their dispute).
B.

Fidelity’s Motion
Fidelity moves to dismiss the complaint on the ground that it “is not a proper defendant”

and “[t]here is nothing that links [it] to any of the facts or allegations contained in” the
complaint. (ECF No. 25, Fidelity’s Mot. at 3.) The complaint alleges that Fidelity is the parent
company of Fidelity National Title Group (“FNTG”), of which the other defendants are a part.
(ECF No. 17-1, Second Am. Compl. at 2.) Plaintiff’s claims against Fidelity appear to rely on
the allegations that his title insurance claim was wrongfully denied, “FNTG” then accused him
of “wrongful conduct,” and Fidelity tried to “substitute a bogus title insurance policy” issued in
the name of Chicago Title. The complaint often treats defendants as a group or refers to FNTG,
a non-party (and, evidently, merely a business name), as having engaged in misconduct. The
Court is unable to discern a complete claim against Fidelity itself. Plaintiff’s assertion that
Fidelity had an “active role” in the denial of his insurance claim is misplaced because he does
not allege that he had a contract with Fidelity. Similarly, plaintiff’s contention that “FNTG and
each of FNTG’s members are simply acting as [Fidelity’s] alter egos under the direction of
[Fidelity’s] CEO,” (ECF No. 31, Pl.’s Resp. at 4), is unpersuasive because there are no alter-ego
allegations in the complaint. The fact that Fidelity may be the parent company of one of the
other defendant entities is not enough to allege alter-ego liability.1 See, e.g., Zurich Am. Ins. Co.

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To expand upon his arguments regarding Fidelity’s control over the handling of plaintiff’s
title insurance claim, plaintiff moved for leave to file a supplemental response to Fidelity’s motion.
The motion is granted, but plaintiff’s arguments are beside the point because he does not allege
alter-ego liability, and Fidelity’s alleged role in handling the denial of plaintiff’s claim does not help
plaintiff establish any of the elements of his fraud claims.
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v. Watts Indus., 417 F.3d 682, 688 (7th Cir. 2005). To the extent that plaintiff is attempting to
allege that Fidelity engaged in fraud, the Court addresses plaintiff’s deficient fraud allegations
below.
Fidelity is therefore dismissed from this action. Although Fidelity requests a withprejudice dismissal, the dismissal will be without prejudice. It appears unlikely that plaintiff will
be able to state a claim against Fidelity, but at this juncture the Court is unable to say that it is
impossible.
C.

Ticor and Chicago Title’s Motion
1.

Breach of Contract (Count I)

In Count I, plaintiff alleges that under his title insurance policy, Ticor had a duty to
record Olivo’s mortgage on the Albany Property in a timely manner, and it breached this
contractual obligation by failing to do so for almost six months, causing Azran to suffer damages
in excess of $75,000. Although plaintiff seeks a judgment against “defendants” on Count I, the
only defendant who is alleged to have breached a contract is Ticor. Plaintiff argues that the
other defendants are “liable for the breach of contract,” (ECF No. 32, Pl.’s Resp. at 4), yet he has
pleaded no facts from which such liability can reasonably be inferred. Accordingly, the breach
of contract claim against Chicago Title is dismissed without prejudice.
As for Ticor, it argues that because plaintiff has not pleaded “evidence” of breach, Count
I fails. But all plaintiff need plead are facts sufficient to allow a reasonable inference that Ticor
is liable for breach of contract. Plaintiff has done so. Whether Ticor actually breached the title
policy is a merits issue, which the Court does not address on a motion to dismiss. Furthermore,
Ticor’s argument regarding declaratory relief misses the mark because plaintiff is not seeking a
declaratory judgment. Accordingly, defendants’ motion to dismiss is denied as to the claim
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against Ticor in Count I.2
2.

Common-Law and Statutory Fraud (Counts II and IV)

Count II is a claim for common-law fraud.

In Illinois, the limitations period for

common-law fraud is five years. See 735 ILCS 5/13-205; Chi. Park Dist. v. Kenroy, Inc., 402
N.E.2d 181, 184 (Ill. 1980). Count IV is a claim under the Illinois Consumer Fraud and
Deceptive Business Practices Act (the “Act”), 815 ILCS 505/1 et seq. Claims under the Act are
subject to a three-year limitations period. See 815 ILCS 505/10a(e). Illinois uses the “discovery
rule,” pursuant to which the statute of limitations is tolled “until the injured party knows or
reasonably should know of the injury and knows or reasonably should know that the injury was
wrongfully caused.” Khan v. Deutsche Bank AG, 978 N.E.2d 1020, 1028-29 (Ill. 2012).
Count II is based in part on plaintiff’s allegations that defendants “knowingly and
intentionally failed to record” the mortgage on the Albany Property and “knowingly and
intentionally” concealed that failure. (Second Am. Compl. ¶ 28.) Count IV is based wholly on
that alleged misconduct. Defendants contend that Counts II and IV are time-barred because
plaintiff pleads that in January 2010, he became aware of Olivo’s sale of the Albany Property.
(See id. ¶ 16.) Thus, plaintiff discovered at that time that his mortgage had not been recorded,
yet he did not file the original complaint in this action until June 10, 2015. In response, plaintiff
maintains that the statute of limitations on the fraud claims did not begin running until January 8,

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Defendants argue in their reply brief that plaintiff “does not point to any term of the title
policy requiring a mortgage to be recorded in a certain timeframe [sic].” (ECF No. 34, Defs.’ Reply
at 2.) They have waived this argument by raising it for the first time in their reply brief. See Darif
v. Holder, 739 F.3d 329, 336-37 (7th Cir. 2014). However, a review of Ticor’s commitment to issue
a title policy, which is attached to the complaint as Exhibit B, suggests that plaintiff faces an uphill
battle in proving that Ticor undertook a contractual obligation to record the mortgage at all, let alone
promptly.
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2014, when he received notice of the denial of his title insurance claim. Plaintiff cites no
authority in support of this argument, which is rejected. The allegedly fraudulent acts are the
failure to promptly record the mortgage and the subsequent concealment. Plaintiff does not
dispute that in January 2010, he discovered the injury that allegedly flowed from those acts. The
Court therefore dismisses Count II with prejudice as time-barred, to the extent that it is premised
on the failure to record and the failure to disclose, and dismisses Count IV in its entirety as timebarred. To the extent that plaintiff is attempting in Count II to allege fraud based on other
misconduct (this claim, like the complaint generally, is inartfully pleaded), it is dismissed
without prejudice for failure to state a claim. Plaintiff is attempting to refashion a claim for
wrongful denial of insurance coverage as fraud.3 The allegations do not comply with Federal
Rule of Civil Procedure 9(b), which requires fraud claims to be pleaded with particularity.
Furthermore, plaintiff fails to allege that he relied on any misrepresentation and suffered damage
as a result, which are required elements of a common-law fraud claim under Illinois law. See
Massuda v. Panda Express, Inc., 759 F.3d 779, 783 (7th Cir. 2014).
3.

Violation of 215 ILCS 5/155 (Count III)

Count III is a claim under section 155 of the Illinois Insurance Code (the “Code”), 215
ILCS 5/155, for a bad-faith denial of insurance coverage. Ticor and Chicago Title contend that
this claim must be dismissed because the Code exempts title insurance companies from its
provisions. See 215 ILCS 5/451. Plaintiff ignores this statutory language; his only response to

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As to Count IV, plaintiff asserts in his response that this claim is based upon “a number of
unfair practices” that defendants allegedly employed in processing his claim. But Count IV does
not allege unfair practices. Other than citing the “repeated denials” of his claim, plaintiff does not
explain in his brief what these “practices” were.
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defendants’ argument is to cite three decisions in which the Seventh Circuit and two district
courts dismissed § 155 claims against a title company on grounds other than § 451. These
decisions neither cite § 451 nor address the applicability of the Code to title insurance
companies. Because Ticor and Chicago Title are title insurance companies and therefore exempt
from the provisions of the Code, Count III is dismissed with prejudice.
CONCLUSION
Fidelity National Financial, Inc.’s motion to dismiss the Second Amended Complaint
[25] is granted; plaintiff’s motion for leave to file a supplemental response to Fidelity National
Financial, Inc.’s motion to dismiss [65] is granted; and Ticor Title Insurance Company and
Chicago Title Insurance Company’s motion to dismiss the Second Amended Complaint [26] is
granted in part and denied in part. Fidelity National Financial, Inc. is dismissed from this action
without prejudice. Counts III and IV are dismissed with prejudice. Count II is dismissed with
prejudice to the extent that it is premised on the failure to record and alleged concealment, and
dismissed without prejudice to the extent that it is based on other alleged misconduct. Count I is
dismissed without prejudice as to Chicago Title. What remains of the complaint is the breach of
contract claim against Ticor in Count I.

SO ORDERED.

ENTERED:

August 3, 2016

__________________________________
JORGE L. ALONSO
United States District Judge

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