AMERICAN HOMELAND TITLE AGENCY, INC. et al v. ROBERTSON

Filing 69

ORDER - denying 35 Motion to Dismiss for Failure to State a Claim. *** SEE ORDER ***. Signed by Judge Sarah Evans Barker on 9/30/2016. Copy Mailed (CKM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
AMERICAN HOMELAND TITLE
AGENCY, INC., JOHN YONAS,
MARTIN RINK,

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Plaintiffs,
vs.
STEPHEN W. ROBERTSON
Commissioner,
Defendant.

1:15-cv-02059-SEB-DKL

ORDER ON DEFENDANT’S MOTION TO DISMISS
This matter is before us on Defendant Stephen W. Robertson’s Motion to Dismiss
[Dkt. No. 36] Plaintiff’s Complaint. For the following reasons, we DENY the Motion.
Facts
Plaintiffs American Homeland Title Agency, Inc., John Yonas, and Martin Rink
have asserted claims against defendant Stephen W. Robertson in his individual capacity as
well as in his official capacity as Commissioner of the Indiana Department of Insurance.
Plaintiffs allege that Defendant has violated the Equal Protection and Commerce Clauses
and request Declaratory Judgment and Permanent Injunction.
Plaintiff American Homeland Title Agency, Inc. (“American Homeland”) is an
Ohio Company with its principal place of business in Cincinnati, Ohio. For more than ten
years, American Homeland has provided title insurance, which is a contractual obligation
between a real estate purchaser or lender and the title company. [Compl. ¶¶ 9, 11.] A title

insurer, such as American Homeland, conducts title searches, examining property records
to confirm that the putative owner indeed owns the property. [Id. ¶ 11.] In doing so,
American Homeland looks for outstanding mortgages, liens, judgments, unpaid taxes,
restrictions, easements, leases, and any other issue that might impact free and clear
ownership. [Id.] American Homeland then ensures the legitimacy of a title by selling title
insurance which protects against future losses resulting from defects of title. [Id.]
The Indiana Department of Insurance (“IDOI”) regulates title insurance companies
doing business in Indiana. [Id. ¶ 10.] American Homeland alleges that Indiana’s laws
regarding the premiums that can be charged for title insurance sold to a consumer have
“changed dramatically in the last couple of years.” [Id. ¶ 14.] Specifically, American
Homeland contends that as of July 1, 2013, all title insurance rates must be approved by
the IDOI, whereas, in the past rates varied from agency to agency. [Id.]
In January 2015, American Homeland was audited by the IDOI. [Id. ¶ 16.] The
audit revealed that beginning in July, 2013, American Homeland engaged in conduct which
constituted “minor violations” of Indiana title law. [Id. ¶ 15.] Between July 1, 2013 and
August 17, 2014, American Homeland charged improper rates for policy endorsements.
American Homeland was required to enter data into a database for the purpose of tracking
real estate transactions, but admits that it fell behind on its data entry. [Id.] The State of
Indiana imposes a $5 Title Insurance Enforcement Fund Fee, per transaction, which a title
company is required to charge the consumer and remit to the insurance company. [Id.]
American Homeland paid the $5 fee out of its profits and did not collect the fee directly
from consumers, thereby violating Indiana law. [Id.] According to American Homeland,
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the auditor indicated that “it was ‘obvious’ that American Home[land] Title did not
knowingly fail to comply with Indiana law.” [Id.]
According to American Homeland, the IDOI told it in February 2015 that American
Homeland could agree to reimburse consumers $42,202 and pay a fine in the amount of
$70,082 for its violations of Indiana law. [Id. ¶ 20.] American Homeland alleges that it
attempted to engage in settlement discussions with the IDOI, but was told it had somehow
managed to insult Defendant Robertson, and that hiring an attorney would be harmful to
the negotiations, likely resulting in a greater fine.

Allegedly, the IDOI threatened

American Homeland with a fine of $9.5M and individual fines against American Homeland
employees in the amount of $10,000 each. Defendant Robertson required American
Homeland to forfeit its Indiana license as a condition of settlement. [Id. ¶¶ 21-22.] On
February 17, 2015, the auditor allegedly stated, “If you guys were not writing this business
in Indiana, people in Indiana would be writing it.” [Id. ¶ 29.]
American Homeland opted to settle with the IDOI, executing an Agreed Entry on
March 20, 2015, which required American Homeland to pay a $70,082 fine and reimburse
consumers $42,202, the original IDOI proposed remedy, and to consent to a permanent
revocation of American Homeland’s Indiana license, as well as the licenses of Plaintiffs
Yonas and Rink. [Id. ¶¶ 23-24.] On March 20, 2015, Robertson, as Indiana Commissioner
of Insurance, entered a Final Order on the Agreed Entry (“Agreed Order”).
It is American Homeland’s contention in this lawsuit that the IDOI and Robertson
personally have been targeting out-of-state title agencies by aggressively and selectively
enforcing Indiana laws in an effort to enhance Robertson’s political profile and to protect
3

in-state Indiana businesses. [Id. ¶¶ 28-29.] American Homeland cites as examples: press
releases touting fines imposed on out-of-state companies, while not publicizing fines
charged to in-state companies, and the IDOI stating that American Homeland’s fines are
“a perfect example of why out of state title companies shouldn’t be handling Indiana deals.”
[Id. ¶ 29.]

The Complaint contains IDOI data evincing, says American Homeland,

preferential treatment of Indiana insurance companies over their out-of-state competitors.
For example, a majority of fines in excess of $10,000 are assessed against out-of-state
companies [id. ¶ 31], a majority of enforcement actions are against out-of-state companies
[id. ¶ 32], enforcement actions against out-of-state companies are for multiple violations,
whereas enforcement actions against Indiana companies are limited to a single violation
[id. ¶ 33], and when out-of-state companies fail to enter the requisite data on transactions,
the fines charged against them are greater than those charged against in-state companies
for similar violations [id. ¶ 34].
American Homeland complains that the penalty imposed by the IDOI against it was
punitive and unduly harsh and has resulted in significant business loss, damage to its
reputation and goodwill, and has essentially put American Homeland out of business in
Indiana. [Id. ¶¶ 25, 27.] It suggests in its Complaint that other Cincinnati-area title
companies have also been targeted for aggressive enforcement by the IDOI and those
companies have voluntarily ceased doing business in Indiana out of fear that the IDOI will
aggressively and selectively enforce Indiana laws against them.
The Complaint contains three counts: Violation of the Equal Protection and
Commerce Clauses based on a violation of 42 U.S.C. § 1983 (Count I), Declaratory
4

Judgment (Count II), and Injunctive Relief (Count III). Defendant moves to dismiss the
Complaint on several theories, each discussed below.
Standard of Review
The Federal Rules of Civil Procedure command courts to dismiss any suit over
which they lack subject matter jurisdiction-whether acting on the motion of a party or sua
sponte. See Fed. R. Civ. P. 12(b)(1). In ruling on a motion to dismiss under Rule 12(b)
(1), we “must accept the complaint’s well-pleaded factual allegations as true and draw
reasonable inferences from those allegations in the plaintiff’s favor.”

Franzoni v.

Hartmarx Corp., 300 F.3d 767, 771 (7th Cir. 2002) (citing Transit Express, Inc. v. Ettinger,
246 F.3d 1018, 1023 (7th Cir. 2001)). We may, however, “properly look beyond the
jurisdictional allegations of the complaint and view whatever evidence has been submitted
on the issue to determine whether in fact subject matter jurisdiction exists.” Estate of
Eiteljorg ex rel. Eiteljorg v. Eiteljorg, 813 F. Supp. 2d 1069, 1074 (S.D. Ind. 2011); Capitol
Leasing Co. v. FDIC., 999 F.2d 188, 191 (7th Cir. 1993).
Defendants’ 12(b)(6) Motion to Dismiss requires the Court to accept as true all wellpled factual allegations in the Complaint and draw all ensuing inferences in favor of the
non-movant. Lake v. Neal, 585 F.3d 1059, 1060 (7th Cir. 2009). Nevertheless, the
Amended Complaint must “give the defendant fair notice of what the . . . claim is and the
grounds upon which it rests,” and its “[f]actual allegations must be enough to raise a right
to relief above the speculative level.” Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633
(7th Cir. 2007) (citations omitted). The Complaint must therefore include “enough facts
to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
5

544, 570 (2007); see also Fed. R. Civ. P. 8(a)(2). A facially plausible complaint is one
which permits “the court to draw the reasonable inference that that the defendant is liable
for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Analysis
Our efforts here have been complicated by the parties’ briefing which, to put it
mildly, is disjointed, incomplete, and riddled with citation to inapplicable authority and/or
mischaracterizations of the authority cited. Even when the parties seemingly stumbled
upon arguments that may have merit, their analysis is limited to a sentence or two and lacks
sufficient legal citations for the court to rely on them in its attempt to issue a well-reasoned
ruling. It is not the court’s obligation to make arguments for the parties. Spath v. Hayes
Wheels Int’l-Ind., Inc., 211 F.3d 392, 397 (7th Cir. 2000) (“[I]t is not this court’s
responsibility to research and construct the parties’ arguments.” (citing United States v.
Lanzotti, 205 F.3d 951, 957 (7th Cir. 2000))). We will address each issue to the extent
possible; any arguments the parties attempted to raise, or simply alluded to, but that the
Court is unable to grasp or otherwise address, are considered waived for the purposes of
the pending motion. Kramer v. Banc of Am. Sec., LLC, 355 F.3d 961, 964 n.1 (7th Cir.
2004) (citing United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir. 1991) (“We have
repeatedly made clear that perfunctory and undeveloped arguments, and arguments that are
unsupported by pertinent authority, are waived (even where those arguments raise
constitutional issues).”)).

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1.

Rooker-Feldman Doctrine.
Defendant construes Plaintiffs’ claim as one seeking only to invalidate an Order

entered by the IDOI, which request would strip us of jurisdiction pursuant to the RookerFeldman doctrine. The Rooker-Feldman doctrine, named after the Supreme Court’s
decisions in Rooker v. Fidelity Trust Co. 1 and District of Columbia Court of Appeals v.
Feldman, 2 provides that the federal district courts must decline to entertain “cases brought
by state-court losers complaining of injuries caused by state-court judgments rendered
before the district court proceedings commenced and inviting district court review and
rejection of those judgments.” Exxon Mobil, Corp. v. Saudi Basic Indus. Corp., 544 U.S.
280, 284 (2005); Kelley v. Med-1 Sols., LLC, 548 F.3d 600, 603 (7th Cir. 2008).
The Agreed Order reflects the IDOI’s approval of an Agreed Entry between the
IDOI and American Homeland, Yonas, and Rink. “The [Rooker-Feldman] doctrine has no
application to judicial review of executive action, including determinations made by a state
administrative agency.” Verizon Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635,
644 n.3 (2002). The Seventh Circuit has held that:
Countless cases . . . allow people who lose in state administrative
proceedings to seek relief in federal district court under civil rights legislation
such as 42 U.S.C. § 1983; and Patsy v. Board of Regents, 457 U.S. 496, 102
S.Ct. 2557, 73 L.Ed.2d 172 (1982), expressly rejected a requirement of
exhausting administrative remedies before suing under that section. We
cannot believe that these cases were decided as they were simply because the
defendants failed to argue Rooker–Feldman. If the Rooker–Feldman

1

263 U.S. 413 (1923).

2

460 U.S. 462 (1983).

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doctrine is to be extended to administrative judgments, it will have to be done
by the Court that created it.
Van Harken v. City of Chicago, 103 F.3d 1346, 1349 (7th Cir. 1997). 3 Verizon Maryland
and Van Harken teach that Rooker-Feldman does not apply to administrative orders. The
order at issue is an administrative order with no accompanying state court judgment and,
thus, Rooker-Feldman simply does not apply here. We therefore DENY Defendant’s
Motion to Dismiss on the ground that the Rooker-Feldman doctrine divests us of
jurisdiction. 4
2.

Estoppel/Agreed Order
We do not entirely understand Defendant’s argument that “Plaintiffs’ claims should

be found to be precluded by the clear language of their Agreed Entry.” [Dkt. No. 36 at 7.]
Defendant’s briefing asserts defenses of estoppel, 5 res judicata, waiver, and a failure to
exhaust administrative remedies. It is quite possible that one of these theories might

3

Defendant cites to two cases where the Rooker-Feldman doctrine divested the federal court of
jurisdiction because the plaintiff in those cases sought to invalidate a state court dismissal order
and a state court entry of an agreed order, respectively. See 4901 Corp v. Town of Cicero, 220
F.3d 522, 528 (7th Cir. 2000) (plaintiff sought to have the court set aside an agreed judgment);
Johnson v. Orr, 551 F.3d 564, 567 (7th Cir. 2008) (order at issue was a state court’s entry of an
agreed order). Those cases, however, are inapposite because no state court judgment is at issue.

4

Confusingly, Defendant relies on Indiana case law espousing the principle that consent judgments
entered by a court should be enforced and have “preclusive effect.” [Dkt. No. 36 at 7.] Defendant
seemingly asks us to treat the Agreed Order from the IDOI as a consent judgment entered by a
court of law without providing any authority to do so. We will not do so.

5

Defendant also uses the term “equitable estoppel,” which, of course, is a term of art having an
entirely different meaning from what Defendant intends: “Equitable estoppel is a doctrine which
precludes one party from asserting a claim or defense against another party who has detrimentally
altered her position in reliance on the former’s misrepresentation or failure to disclose a material
fact.” Kennedy v. United States, 965 F.2d 413, 417 (7th Cir. 1992). We see no reasonable
application of “equitable estoppel” to the dispute between the parties or the motion before us.

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provide a basis for a resolution of this case in Defendant’s favor, but without more
expansive and competent briefing, we cannot make that determination at this juncture.
In arguing for a dismissal on the basis of “estoppel,” Defendant contends that the
claims “are precluded by the clear language of their Agreed Entry.” [Dkt. No. 36 at 7-8
(“Because Plaintiffs voluntarily waived their right to proceed in State Court, where they
could have addressed all of their claims, they are precluded from seeking relief from this
Court.”); Dkt. No. 50 at 1 (“Plaintiffs are now estopped from challenging [the]
constitutionality” of the Final Order and defining “estoppel” and “equitable estoppel”).]
Defendant contends that Plaintiffs’ “behavior” in consenting to the Agreed Order precludes
them from challenging the constitutionality of the Agreed Order. [Dkt. No. 50 at 1.] Again,
Defendant provides no controlling authority to support this argument.
In their Response, Plaintiffs open the door to the possibility that Defendant seeks to
invoke res judicata as grounds of dismissal of the Complaint. It is well-established that
for res judicata to apply, the prior action must have resolved the same issue(s) litigated in
the second action. See Indiana v. Washington (In re Washington), 547 B.R. 802, 805
(Bankr. N.D. Ind. 2016). Here, the administrative action did not involve a claim brought
pursuant to § 1983. We are aware of no authority, and the parties provide us with none,
that an agreed order in an administrative audit has preclusive effect in a federal case
alleging constitutional violations by the agency.
Defendant’s argument in the motion to dismiss could possibly be construed as a
defense based on Plaintiffs’ failure to exhaust their administrative remedies. [Dkt. No. 36
at 8 (“Plaintiffs could have chosen to proceed with a full evidentiary hearing and judicial
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review. Instead, they chose to sign the Agreed Entry.”).] However, “it is well settled that
exhaustion of administrative remedies is generally not a prerequisite to bringing an action
under § 1983 in federal court.” King ex rel. Jacob v. Sec’y, Ind. Family & Soc. Servs.
Admin., No. 1:12-CV-312, 2013 WL 594094, at *3 (N.D. Ind. Feb. 15, 2013); see also
Porter v. Nussle, 534 U.S. 516, 523 (2002) (“Ordinarily, plaintiffs pursuing civil rights
claims under 42 U.S.C. § 1983 need not exhaust administrative remedies before filing suit
in court.” An exception exists for prisoner suits alleging constitutional deprivations.).
The basis for Defendant’s motion remains anything but clear; a motion to dismiss
based on Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the
complaint and whether the facts, taken as true, state a claim upon which relief can be
granted.

Defendant’s “estoppel” argument does not identify a defect in Plaintiffs’

Complaint, appearing instead to provide a possible basis for his affirmative defenses. See
Fed. R. Civ. P. 8(c)(1) (identifying “estoppel” as an affirmative defense). “Orders under
Rule 12(b)(6) are not appropriate responses to the invocation of defenses, for plaintiffs
need not anticipate and attempt to plead around all potential defenses. Complaints need
not contain any information about defenses and may not be dismissed for that omission.”
Xechem, Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004); see also Nat’l
Found. for Special Needs Integrity, Inc. v. Reese, No. 1:15-cv-545-TWP-DKL, 2016 WL
454805, at *3 (S.D. Ind. Feb. 5, 2016) (quoting id.). “[O]nly when the plaintiff pleads itself
out of court – that is, admits all the ingredients of an impenetrable defense – may a
complaint that otherwise state a claim be dismissed under Rule 12(b)(6).” Xechem, Inc.,
372 F.3d at 901.
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Plaintiffs have not included in their allegations “the ingredients of an impenetrable
[estoppel] defense,” as required to warrant dismissal of their claims under Rule 12(b)(6).
Accordingly, for all of the reasons explained above, we DENY Defendant’s Motion to
Dismiss based on the argument that Plaintiffs are estopped from seeking relief in light of
the Agreed Order.
3.

Eleventh Amendment
Defendant argues that he is entitled to immunity from Plaintiffs’ claims pursuant to

the Eleventh Amendment because Plaintiffs agreed to the permanent revocation of their
licenses and, as such, there can be no ongoing alleged violation of federal law. By virtue
of their voluntary agreement, Plaintiffs will not be doing business in Indiana and thus no
prospective relief is available. [Dkt. No. 50 at 4.] 6 Defendant’s argument is not well-taken.
The Eleventh Amendment bars suits against state agencies and state officials.
“[A]lthough not explicitly provided for in the text, ‘the Eleventh Amendment guarantees
that an ‘unconsenting State is immune from suits brought in federal courts by her own
citizens as well as by citizens of another State.’” Counsel 31 of the Am. Fed. of State, Cty.
& Mun. Emps., ALF-CIO v. Quinn, 680 F.3d 875, 881 (citation omitted). “If properly
raised, the amendment bars actions in federal court against a state, state agencies, or state
officials acting in their official capacities.” Id. at 882 (citation omitted). “The ‘Ex parte

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Defendant does not contend that the Eleventh Amendment bars Plaintiffs’ claim against him in
his individual capacity.

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Young Doctrine’ allows private parties to sue individual state officials for prospective relief
to enjoin ongoing violations of federal law.” Id.
The claims here fall well within the Ex parte Young exception to Eleventh
Amendment immunity because Plaintiffs seek injunctive and declaratory relief in the form
of vacating the penalties imposed by the Agreed Order and reinstating Plaintiffs’ insurance
licenses. [Compl. ¶¶ 62-63.] An injunction request for reinstatement of a license is
prospective relief that clearly falls within the Young doctrine. Tsirelman v. Daines, 794
F.3d 310, 313-14 (2d Cir. 2015) (prayer for injunction requiring either reinstatement of
medical license or hearing that comports with due process sought prospective relief within
Young doctrine), cert. denied, 136 S. Ct. 811 (2016); Pascarella v. Swift Transp. Co., 643
F. Supp. 2d 639, 648-49 (D.N.J. 2009) (reinstatement of drivers’ licenses is “the type of
injunctive, ‘forward-looking’ relief cognizable under Ex parte Young”) (quoting Kosolow
v. f Pennsylvania, 302 F.3d 161, 179 (3d Cir. 2002)).
The language of the Complaint seems to suggest that Plaintiffs are seeking
prospective relief enjoining or prohibiting Robertson from enforcing the Agreed Order
(presumably the monetary requirements) that resulted from the alleged constitutional
violations and requiring him to reinstate their licenses. In a case such as this, where a
plaintiff seeks prospective equitable relief, the Eleventh Amendment does not provide
immunity. Accordingly, we find no merit in Defendant’s Motion to Dismiss the Complaint
based on Eleventh Amendment immunity.

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4.

Declaratory Relief and Injunctive Relief
On the basis that Plaintiffs have a right to “equal access to compete in the title

agency market in Indiana, as guaranteed by the Commerce Clause” and “to be free from
discrimination on the basis of state residency as guaranteed by the Equal Protection
Clause,” they seek a “declaration that the Defendant has violated Commerce Clause [and
Equal Protection] rights of the Plaintiffs” and an injunction “prohibiting Defendant in his
official capacity from enforcing the March 20, 2015 Final Order” and enforcing the Indiana
insurance laws in a manner that favors in-state companies.” [Compl. ¶¶ 57-58, 62-63.]
Defendant argues that because the Agreed Order is an enforceable contract between
the parties according to which the parties agreed to settle their dispute(s) and allow their
licenses to be revoked, “there is no threat of future action against them,” which deprives
them of an actual case or controversy as required by Article III of the U.S. Constitution.
[Dkt. No. 36 at 10 (citing City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983).]
Defendant invokes the Lyons case as support, but we fail to perceive how it is applicable
here. In Lyons, the plaintiff sought an injunction barring future use of chokeholds by
police. Because the plaintiff could not show that there was a real and immediate threat that
he would be subjected to an illegal chokehold again, the court found that no case or
controversy existed relative to the plaintiff’s request for an injunction.
The situation here is not anything like Lyons. Plaintiffs are seeking an injunction
preventing the enforcement of the Agreed Order that requires their payment of fines and
the permanent revocation of their insurance licenses. That is clearly an actual case or
controversy that provides a predicate for Plaintiffs’ request for declaratory relief.
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Defendant’s Motion to Dismiss the request for a permanent injunction is denied on
the grounds that Defendant’s arguments are based entirely on the elements required to
establish an entitlement to a preliminary injunction, which Plaintiffs have not requested in
their Complaint. [See Dkt. No. 36 at 10-12 (citing to factors such as “likelihood of success
on the merits” and irreparable harm, as well, as harm to the public interest).] Defendant
makes no persuasive argument that Plaintiffs’ request for a permanent injunctive relief fails
to state a claim upon which relief can be granted.
Accordingly, we DENY Defendant’s Motion to Dismiss Plaintiffs’ requests for
declaratory judgment and injunctive relief.
5.

Equal Protection
Defendant’s Motion to Dismiss Plaintiffs’ Equal Protection Claim is nearly

unintelligible. 7 It appears that Defendant believes only those in constitutionally protected
classes, such as gender, race, or religion, have standing to bring an Equal Protection claim.
[Dkt. No. 50 at 4-5.] In asserting this as a basis for his motion to dismiss, Defendant
confuses the level of scrutiny applicable to alleged violations of the Equal Protection
Clause with the sufficiency of an Equal Protection claim.
The Supreme Court has held that the “Equal Protection Clause of the Fourteenth
Amendment commands that no State shall ‘deny to any person within its jurisdiction the

7

We note that the majority of Defendant’s argument in support of his Motion to Dismiss Plaintiffs’
Equal Protection Claim is, to the extent we understand it at all, more appropriately framed as a
motion for summary judgment. [See Dkt. No. 36 at 14.] Defendant attacks Plaintiffs’ “proof” as
insufficient, seeking to require Plaintiffs to “prevail on [their] class of one claim,” and urging us
to conclude that the “Agreed Entry was more than fair under [the] circumstances.” [Id.] We will
not take the bait and will thus limit our analysis to the allegations of the Complain taken as true.

14

equal protection of the laws,’ which is essentially a direction that all persons similarly
situated should be treated alike.” City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432,
439 (1985) (citation omitted). When an Equal Protection claim relates to a protected class,
such as race, the disparate treatment must satisfy a strict scrutiny review to overcome a
constitutional challenge. This level of scrutiny is not a limitation on the breadth of the
Equal Protection clause, but rather the lens through which such alleged violations are
viewed.
The Equal Protection Clause forbids a state to discriminate in favor of its own
residents solely by burdening the residents of other states. Metropolitan Life Ins. Co. v.
Ward, 470 U.S. 869, 878 (1985) (“[W]ith respect to general tax burdens on business, ‘the
foreign corporation stands equal, and is to be classified with domestic corporations of the
same kind.’” (citation omitted)); Cecil v. Duck Head Apparel Co., 895 F. Supp. 155, 158
(W.D. Ky. 1995); Moore v. Samuel Miller & Co., No. CIV. A. 87-G-0345-S, 1987 WL
342392, at *2 (N.D. Ala. Oct. 7, 1987) (“While holding an Alabama statute void which
gave preferential treatment to Alabama corporations over foreign corporations wishing to
conduct business in Alabama, the Supreme Court said: ‘[T]his Court always has held that
the Equal Protection Clause forbids a State to discriminate in favor of its own residents
solely by burdening ‘the residents of other state members of our federation.’” (citation
omitted)).
Plaintiffs have brought an Equal Protection claim by alleging that in-state title
companies in Indiana were treated more favorably by Defendant than out-of-state title
companies both in the number of violations for which they were cited as well as the amount
15

of fines assessed. Moreover, Plaintiffs allege that based on conversations with auditors,
Defendant’s office, and IDOI press releases, the IDOI intentionally treated Plaintiffs
different from in-state title companies simply because Plaintiffs are out-of-state companies.
Finally, Plaintiffs allege that this distinction and disparate treatment has no rational basis.
[Compl. ¶ 43.]
Defendant characterizes Plaintiffs’ Equal Protection claim as a “class-of-one” claim
in that it alleges that Plaintiffs suffered discrimination without regard to membership in
any specific, identifiable group, such as based on race or gender. Enquist v. Oregon Dep’t
of Ag., 553 U.S. 591, 601 (2008). In those circumstances, a plaintiff must show “(1) that
he has been intentionally treated differently from others similarly situated, and (2) that
there is no rational basis for the difference in treatment.” Fares Pawn, LLC v. Ind. Dep’t
of Fin. Insts., 755 F.3d 839, 845 (7th Cir. 2014) (citing Village of Willowbrook v. Olech,
528 U.S. 562, 564 (2000)). Although Plaintiffs object to this characterization of their Equal
Protection claim as a “class-of-one” claim, even assuming Defendant is correct, Plaintiffs’
Complaint survives his Motion to Dismiss. Plaintiffs allege “not only that similarly
situated group [sic] of Indiana title agents received preferential treatment, but also that
there was discriminatory intent in the actions of the Defendant,” and the difference in
treatment lacks a rational basis. [Dkt. No. 41 at 11; Compl. ¶ 43.] 8
8

Defendant argues that a rational basis exists for fining Plaintiffs for their violations of Indiana
law. [Dkt. No. 36 at 14-15.] Defendant’s argument however, misses the point. Plaintiffs’ claim
is not that they were treated unfairly by being fined. Plaintiffs’ argument is that they were treated
unfairly by being an out-of-state title company and agents and Defendant is intentionally and with
animus treating all out-of-state title companies more harshly as compared to in-state title
companies.

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Plaintiffs thus satisfy the pleading standards for an Equal Protection claim. The
motion before to dismiss this claim for failure to state a claim upon which relief can be
granted is DENIED.
6.

Commerce Clause
Plaintiffs allege that Defendant’s actions in fining out-of-state insurers at a rate

higher than in-state insurers violates the Dormant Commerce Clause. The United States
Constitution allocates to Congress the power to “regulate Commerce . . . among the several
States.” U.S. Const. Art. I, § 8. Implicit in Congress’s exclusive authority over interstate
commerce is a restriction on states from intruding on that power. See New Energy Co. of
Ind. v. Limbach, 486 U.S. 269, 273 (1988). The Dormant Commerce Clause prohibits
“regulatory measures designed to benefit in-state economic interests by burdening out-ofstate competitors . . . Thus, state statutes that clearly discriminate against interstate
commerce are routinely struck down . . . unless the discrimination is demonstrably justified
by a valid factor unrelated to economic protectionism . . . .” Id. at 273-74; Midwest Title
Loans, Inc. v. Ripley, 616 F. Supp. 2d 897, 903 (S.D. Ind. 2009), aff’d sub nom. Midwest
Title Loans, Inc. v. Mills, 593 F.3d 660 (7th Cir. 2010).
According to Defendant, “[b]ecause Plaintiffs freely entered into the Agreed Entry,
they cannot claim that Defendant’s acts affected their ability to engage in commerce with
Indiana” and that Plaintiffs themselves are the source “of their present legal woes.” [Dkt.
No. 36 at 15.] Here Defendant reaches beyond the scope of a motion to dismiss, attempting
to refute Plaintiffs’ allegations by describing any such violations as minor and “nit-picky”
by contending argues that because Plaintiffs violated the applicable regulations, they
17

cannot successfully bring a Commerce Clause claim. [Id.] Plaintiffs’ allegations might be
sufficient to allege a violation of the Dormant Commerce Clause; however, the McCarrenFerguson Act complicates their claim.
In his Reply Brief consisting of a single paragraph, Defendant contends for the first
time that the “McCarren-Ferguson Act ‘declares’ that ‘regulation of the business of
insurance belongs with the States, and to implement that declaration, the Act explicitly
protects from a dormant Commerce Clause challenge (1) any state law that ‘relates to the
regulation of the business of insurance;’ or (2) any state law ‘enacted for the purposes of
regulating the business of insurance.’” [Dkt. No. 50 at 6 (citing Life Partners, Inc. v.
Morrison, 484 F.3d 284, 293 (4th Cir. 2007)).] The McCarren-Ferguson Act provides:
“[n]o Act of Congress shall be construed to invalidate, impair, or supersede any law
enacted by any State for the purpose or regulating the business of insurance, or which
imposes a fee or tax upon such business.” 15 U.S.C. §§ 1011, 1012. “As the text itself
makes clear, the point of McCarran-Ferguson’s legislative choice of leaving insurance
regulation generally to the States was to limit congressional preemption under the
commerce power, whether dormant or exercised.” Am. Ins. Ass’n v. Garamendi, 539 U.S.
396, 428 (2003). The Supreme Court has set forth a three-part test to determine if an
activity constitutes “the business of insurance”:
[T]he practice has the effect of transferring or spreading a policyholder’s
risk; second, whether the practice is an integral part of the policy relationship
between the insurer and the insured; and third, whether the practice is limited
to entities within the insurance industry.
Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982).

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Defendant makes no mention of the regulations at issue or whether these laws
regulate the “business of insurance” as defined by the three-part test above. The entirety
of Defendant’s analysis of the McCarran-Ferguson Act’s applicability to this case is this:
“With that in mind, Plaintiffs cannot meet their burden to show that enforcement of
Indiana’s Title Insurance regulations violates the Commerce Clause.” [Dkt. No. 50 at 6.]
Defendant’s argument is sparse in the extreme, and Plaintiffs have not had an opportunity
to respond given that Defendant only first raised it in his Reply. Accordingly, we DENY
WITHOUT PREJUDICE Defendant’s Motion to Dismiss Plaintiffs’ Commerce Clause
claim at this time. Defendant shall have the right to file, within thirty (30) days, a second
motion to dismiss that is limited to Plaintiffs’ Commerce Clause claim under the
McCarren-Ferguson Act. Defendant’s second motion, if he chooses to file one, should
fully explain his arguments that the McCarren-Ferguson Act bars Plaintiffs’ Commerce
Clause claim; Plaintiffs shall be afforded an opportunity to respond within fifteen (15) days
thereafter.
7.

Personal Involvement
Defendant contends that Robertson lacks sufficient personal involvement to be held

liable for a § 1983 violation. An individual cannot be held liable for a § 1983 violation
unless he caused or participated in the alleged constitutional deprivation. Zimmerman v.
Tribble, 226 F.3d 568, 574 (7th Cir. 2000). No cause of action can be maintained under
§ 1983 against an individual acting in a mere supervisory role, rather, the law requires a
defendant to personally participate in the conduct that causes a deprivation of a federal
right. Id.; see also Burks v. Raemisch, 555 F.3d 592, 593-94 (7th Cir. 2009).
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According to Defendant, the Complaint does not allege that Mr. Robertson was
“directly involved in the negotiation of their settlement” with the IDOI and his only act
was approving the Agreement Entry, which is insufficient to satisfy § 1983’s “personal
involvement” requirement. [Dkt. No. 36 at 16.] Plaintiffs rejoin that, as alleged in the
Complaint, not only was Robertson responsible for the discriminatory enforcement of the
Indiana laws, but he personally made the decision to approve and accept the Agreed Order.
[Dkt. No. 41 at 14.] Robertson ignores additional Complaint allegations that “Defendant
Robertson required that American Homeland Title forfeit its Indiana license as a condition
of any settlement” [Compl. ¶ 22] and that Defendant targeted out-of-state title agencies “to
enhance the political profile of Robertson and protect in-state businesses” [id. ¶ 29].
At this stage of the proceedings, we assume these allegations are true, as we must.
Thus, Plaintiffs have sufficiently alleged Robertson’s personal involvement in the alleged
constitutional deprivation to shape a § 1983 claim. See Titus v. Illinois Dept. of Transp.,
828 F. Supp. 2d 957, 972 (N.D. Ill. 2011) (“Plaintiff has sufficiently alleged the personal
involvement of [defendants] . . . in that they authored and/or signed his suspension
orders.”); Daley v. Gorajec, 2007 WL 2286132 (S.D. Ind. Aug. 7, 2007) (recognizing
viable § 1983 claim against commissioner who made the decision to deny a license and
signed the refusal of the license). Defendant’s Motion to Dismiss on the grounds that
Robertson lacks the personal involvement necessary to plead a viable § 1983 claim is
DENIED.

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8.

Qualified Immunity
“[A] complaint is generally not dismissed under Rule 12(b)(6) on qualified

immunity grounds.” Alvarado v. Litscher, 267 F.3d 648, 651-52 (7th Cir. 2001) (citing
Jacobs v. City of Chicago, 215 F.3d 758, 765 n.3 (7th Cir. 2000)). “Because an immunity
defense usually depends on the facts of the case, dismissal at the pleading stage is
inappropriate: ‘[T]he plaintiff is not required initially to plead factual allegations that
anticipate and overcome a defense of qualified immunity.’” Id. at 651 (citing Jacobs, 215
F.3d at 765 n.3). “As noted in Jacobs’ concurrence, ‘Rule 12(b)(6) is a mismatch for
immunity and almost always a bad ground for dismissal . . . . and when defendants do assert
immunity it is essential to consider facts in addition to those in the complaint.’” Id. at 652
(citing Jacobs, 215 F.3d at 775 (Easterbrook, J., concurring)).
In any event, “[q]ualified immunity shields government officials from civil damages
liability unless the official violated a statutory or constitutional right that was clearly
established at the time of the challenged conduct.” Reichle v. Howards, 132 S. Ct. 2088,
2093 (2012). A qualified immunity analysis consists of two parts. Pearson v. Callahan,
555 U.S. 223, 232 (2009). First, a determination of whether the facts alleged constitute a
violation of a constitutional right.

Id.

Second, a determination of whether that

constitutional right was “clearly established” at the time of defendant’s alleged misconduct.
Id. Here, the parties again have given short shrift to their qualified immunity arguments,
failing to identify with any specificity the applicable constitutional right at issue and
lacking any explanation to show that such a right was clearly established at the time of the
misconduct.
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A plaintiff who is seeking to defeat a defendant’s claim of qualified immunity bears
the burden of proving that the underlying constitutional right was “clearly established.”
Kroger v. Bryan, 523 F.3d 789, 802 (7th Cir. 2008); see also Estate of Escobedo v. Bender,
600 F.3d 770, 779 (7th Cir. 2010). “A right is clearly established when, at the time of the
challenged conduct, the contours of [the] right are sufficiently clear that every reasonable
official would have understood that what he is doing violates that right.” Hernandez ex
rel. Hernandez v. Foster, 657 F.3d 463, 474 (7th Cir. 2011) (citations omitted). A plaintiff
can demonstrate this by either “identifying a closely analogous case” or presenting
evidence that the defendant’s conduct was “patently violative of the constitutional right.”
Id. (citing Estate of Escobedo, 600 F.3d at 780) (emphasis added). Plaintiffs have done
neither here.
The parties have both dropped the ball in analyzing the issue of qualified immunity.
The entirety of Defendant’s analysis and argument that qualified immunity applies here is
as follows:
In the instant case, Plaintiffs have presented no facts to establish that
Defendant personally violated any clearly established law. Plaintiffs chose to
sign an Agreed Entry rather than have a fact finding hearing on the issues
they complain of in this matter. Defendant’s official act, as agency head,
incorporating their Agreed Entry into a final order does not constitute an act
that could reasonably be known by Defendant to violate any clearly
established law. Therefore, Defendant is immune from suit and this matter
should be dismissed.
[Dkt. No. 36 at 18.] Not to be outdone, Plaintiffs’ entire argument consists of two
sentences, as follows:
The Complaint, assuming all of the facts alleged are true, alleges the
violations of two clearly established rights – both equal protection and the
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commerce clause. See supra. At no point does the Defendant suggest that
the rights involved in this case are not “clearly established;” all of the
Defendant’s arguments are geared toward the suggestion that there was no
violation. See Def. Memo. at 17-18 (referring to Agreed Entry).
[Dkt. No. 41 at 15.] The arguments advanced by the parties barely scratch the surface of a
sufficient analysis of qualified immunity. Defendant misstates the real claim, to wit, that
Defendant violated the Equal Protection and Commerce Clauses through intentional or
purposeful discrimination to give in-state title agents an advantage over out-of-state title
agents, and not that he signed an Agreed Order. Plaintiffs completely fail to show that a
clearly-established constitutional right was violated, beyond pointing generally to the
Equal Protection Clause and the Commerce Clause. See Hinnen v. Kelly, 992 F.2d 140,
142 (7th Cir. 1993) (“A clearly established right is one that is established in a particularized
sense rather than a general one like the Fourth Amendment's right to be secure against
unreasonable searches.” (citations omitted)). Because we cannot make a reasoned ruling
based on the parties’ cursory and undeveloped argument, we send the issue of qualified
immunity back to the parties for thorough, instructive briefing. Defendant may file a
renewed Motion to Dismiss within thirty (30) days to which Plaintiffs may respond fifteen
(15) days thereafter.
9.

Standing
Although neither party raises to the doctrine of standing as a potential stumbling

block, a court is empowered, indeed required, to raise it sua sponte. Gov’t Suppliers
Consol’g Servs., Inc. v. Bayh, 734 F. Supp. 853, 857 (S.D. Ind. 1990) (citing United States
v. Storer Broadcasting Co., 351 U.S. 192, 197 (1956). “Standing under Article III of the

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United States Constitution involves a tripartite test; a plaintiff needs to show (1) that it has
suffered a distinct and palpable injury, (2) caused by the challenged activity, (3) for which
the court can provide a remedy.” Id. The concern we identify here is whether the court
can provide a remedy for Plaintiffs’ claims in light of the Agreed Order.
Although we are denying Defendant’s Motion to Dismiss, the survival of Plaintiffs’
claims is suspect. The parties have not fully explored the impact, if any, the Agreed Order
has on Plaintiffs’ rights and potential remedies. The Plaintiffs have agreed to pay a fine,
agreed to refund customers amounts certain sums, and agreed to allow the permanent
revocation of their licenses. There is a lack of explanatory allegations in the Complaint
and in the Motion to Dismiss as to what relief we could award in light of the Agreed Order,
even if Defendant is found to have violated the Equal Protection Clause and the Commerce
Clause. Because we have a duty to raise sua sponte the issue of standing which Plaintiffs
must ultimately prove, we ORDER Plaintiffs to file within thirty (30) days a statement
explaining their standing to bring these claims. Defendant shall have fifteen (15) days
thereafter to respond.
Conclusion
For the foregoing reasons, we DENY Defendants’ Motion to Dismiss. Plaintiffs
shall file within thirty (30) days a statement explaining the basis for their standing to bring
their claims, to which Defendant may respond within fifteen (15) days thereafter. As to
Plaintiffs’ Commerce Clause claim, Defendant may file, within thirty (30) days, a second
Motion to Dismiss limited to the applicability of the McCarren-Ferguson Act. Plaintiffs
shall have fifteen (15) days thereafter to respond. With respect to Defendant’s qualified
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immunity defense, Defendant may file a renewed Motion to Dismiss within thirty (30) days
to which Plaintiffs may respond within fifteen (15) days thereafter.

Date: _____________
9/30/2016

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Distribution:
Harry Kennard Bennett
[e-mail]
Sara Marie McClammer
BENNETT & MCCLAMMER LLP
[e-mail]
Joshua Adam Engel
ENGEL AND MARTIN LLC
[e-mail]
Mary Martin
ENGEL AND MARTIN LLC
[e-mail]
Rebecca A. Brelage
INDIANA ATTORNEY GENERAL
[e-mail]
Caryn Nieman Szyper
OFFICE OF THE ATTORNEY
GENERAL
[e-mail]
David A. Arthur
OFFICE OF THE ATTORNEY
GENERAL
[e-mail]
Melinda Jae Schwer
OFFICE OF THE ATTORNEY
GENERAL
[e-mail]
Charissa Diane Payer
Ohio Attorney General - 2
150 East Gay Street
22nd Floor
Columbus, OH 43215

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