PNC Bank N.A. v. Fidelity National Title Insurance Company

Filing 13

ORDER & REASONS granting 5 Motion to Dismiss Case under Rule 12(b)(3). Signed by Judge Martin L.C. Feldman on 8/7/2013. (caa, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PNC BANK N.A.

CIVIL ACTION

VERSUS

NO. 13-19

FIDELITY NATIONAL TITLE
INSURANCE COMPANY

SECTION “F”

ORDER AND REASONS
Before the Court is defendant’s motion to dismiss
plaintiff’s claim under Rule 12(b)(3) for improper venue.

For

the reasons that follow, the motion is GRANTED.
Background
This case arises out of an insurance dispute.
BMC Capital, L.P. issued a $2.5 million loan to the Irvin
Family Partnership on August 29, 2007, and, to secure repayment,
Irvin Family Partnership granted BMC a mortgage security interest
in several parcels of property located in Gonzales, Louisiana.1
In connection with this property, BMC obtained a title insurance
policy with coverage limits of $2.5 million from Lawyers Title
Insurance Corporation on September 29, 2007.2

Fidelity National

Title Insurance Company subsequently acquired Lawyers Title

1

Specifically, the mortgage secured an interest in parcels of
property located at "1026, 1028, 1056, 1060, 1064, 1068, and 1078
E. Worth."
2

The title insurance policy number is L20-000183.
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Insurance Corporation and the policy in question.
BMC later assigned the entire loan package, note, security
interest, and insurance policy to PNC Bank N.A., who is currently
the holder in due course of the loan and the security on the
Gonzalez property.

Irvin Family Partnership defaulted on its

loan in 2010, and PNC Bank made demand for payment and attempted
to foreclose on its mortgage, discovering numerous flaws with the
title in doing so.

As a result, on July 1, 2011, PNC Bank sent a

written notice of the defects to Lawyers Title Insurance
Corporation in accordance with the title insurance policy.

After

learning that Fidelity acquired Lawyers Title Insurance
Corporation, PNC Bank forwarded its demand letter to Fidelity,
who acknowledged receipt of PNC Bank's claim on August 18, 2011.
On November 22, 2011, approximately three months after
receipt of the claim, Fidelity accepted the tender of PNC Bank's
claim and agreed to defend title under the policy.

PNC Bank

contends that the policy "obligates Fidelity to pay the Insured
or tender payment of the amount of the insurance or purchase the
indebtedness, or to pay the Insured or otherwise settle the
insured claims with other parties, including the obligation to
pay for the costs of the effort to cure, losses, damages, and
attorneys' fees and expenses incurred by the Insured."

PNC Bank

alleges that Fidelity has failed to fulfil its obligations under
the policy for the last seventeen months.

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On January 1, 2013, PNC Bank sued Fidelity in this Court,
invoking diversity jurisdiction,3 and alleging that venue is
proper because a substantial part of the events or omissions
giving rise to the claim occurred in this district.

PNC Bank

asserts that fidelity breached the title policy and the insurer's
duty of good faith and fair dealing under Louisiana law.
Fidelity now moves to dismiss plaintiff's claims under Federal
Rule of Civil Procedure 12(b)(3) for improper venue.
I. Legal Standard
Venue is governed by 28 U.S.C. § 1391, which provides that a
civil action may be brought in
(1) a judicial district in which any defendant
resides, if all defendants are residents of the State in
which the district is located;
(2) a judicial district in which a substantial part
of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the
subject of the action is situated; or
(3) if there is no district in which an action may
otherwise be brought as provided in this section, any
judicial district in which any defendant is subject to
the court's personal jurisdiction with respect to such
action.
28 U.S.C. § 1391(b).

Plaintiff alleges that venue is proper

under § 1391(b)(2), because a substantial part of the events
or omissions giving rise to the claim occurred in the

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PNC Bank is a national banking association chartered in
Delaware with its principal place of business in Pittsburgh,
Pennsylvania. Fidelity is a California corporation with its
principal place of business in Jacksonville, Florida. The amount
in controversy exceeds $75,000.
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Eastern District of Louisiana.

"When venue is challenged,

the burden is on the plaintiff to establish that the
district he chose is a proper venue."

Ross v. Digioia, No.

11-1827, 2012 WL 72703, at *2 (E.D. La. Jan. 10, 2012)
(citing Perez v. Pan Am. Life Ins. Co., 70 F.3d 1268 (5th
Cir. 1995)).

For purpose of a Rule 12(b)(3) motion, the

court must accept as true all allegations in the complaint
and resolve all conflicts in favor of the plaintiff.
Braspetro Oil Servs., Co. v. Modec (USA), Inc., 240 F. App'x
612, 615 (5th Cir. 2007).

Further, in deciding whether

venue is proper, the court may look outside the complaint
and its attachments.

Amraco Inc. v. Bossclip B.V., 570 F.3d

233, 238 (5th Cir. 2009).
II. Discussion
Defendant contends that venue is improper because a
substantial part of the events did not arise in the Eastern
District of Louisiana.

The Court agrees.

For breach of contract claims, a court may consider factors
such as “where the contract was negotiated or executed, where the
contract was to be performed, and where the alleged breach
occurred.”

Ross v. Digioia, No. 11-1827, 2012 WL 72703, at *3

(E.D. La. Jan. 10, 2012).
two causes of action:

The Court notes that plaintiff asserts

breach of the insurance policy and breach

of the insurer’s duty of good faith and fair dealing.

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Specifically, PNC alleges:
PNC Bank properly notified Fidelity of its loss;
there is no dispute that Fidelity accepted the claim and
committed to remedy many title defects.
. . . .
Fidelity’s failure to act promptly and diligently is
in breach of the Policy’s express language.
. . . .
Fidelity, an insurer, breaches its duty by delaying
payment of a claim when it knows or should have known
that its liability was reasonably clear and the claim is
not paid within sixty (60) days . . . after receipt of
satisfactory proof of loss, when such failure is
arbitrary, capricious, or without probable cause.
. . . .
Fidelity’s failure to act in over seventeen months
and refusal to cure promptly the title defect and/or to
pay the Insured the reasonable amount of its losses
constitutes acts and omissions that are arbitrary,
capricious, and without probable cause under the
circumstances.
As PNC clearly asserts in its complaint, the main issue is
Fidelity’s handling of the claim and curing of the defects with
respect to the Gonzales, Louisiana property.

Fidelity does not

dispute that PNC is an insured under the policy and that PNC has
asserted a covered claim.

All of Fidelity’s alleged actions that

form the basis of plaintiff’s claim occurred outside the Eastern
District of Louisiana.
The title insurance policy was written by Lawyers Title, a
former Nebraska corporation that was later acquired by Fidelity,
which is a California corporation with its principal place of
business in Florida.

The claim made by PNC to Fidelity was made

through its Louisville, Kentucky office and forwarded to
Fidelity’s office in Omaha, Nebraska.
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Fidelity sent PNC its

claim determination letter from Fidelity’s office in Omaha,
Nebraska.

PNC’s counsel in Baton Rouge “made an initial review

of the title issues,” which was sent to Fidelity in Omaha,
Nebraska.

Further, Fidelity has proceeded to perform its

curative work, albeit not at a rate to PNC’s liking, on the
Gonzales property through its counsel (Seale, Smith, Zuber, &
Barnette) located in Baton Rouge.
Plaintiff asserts that even though Lawyers Title issued the
insurance policy, Lawyers Title engaged Distinct Title, LLC, a
New Orleans-based company, to be the “approved closer” for the
transaction in 2007.

Therefore, plaintiff contends that the

negotiation and issuance of the contract occurred in New Orleans.
Distinct Title also communicated with BMC Capital (which later
assigned its rights to PNC Bank) and issued the endorsements for
the insurance policy.

In addition, PNC Bank notes that demands

for payment under the policy were issued by PNC’s counsel located
in New Orleans.

As a result, plaintiff submits that a

substantial part of the events that gave rise to its cause of
action arose in this judicial district.

The Court does not

agree.
Distinct Title’s actions do not give rise to the cause of
action in this case:

plaintiff is challenging Fidelity’s

handling of the claim and curing of the defects.

Plaintiff and

defendant are in agreement that plaintiff is covered under the

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policy and has asserted a covered claim.

Plaintiff’s reliance on

Clarendon National Insurance Co. v. T.M.I. Enterprises, LLC for
the proposition that venue is proper in this judicial district is
also unpersuasive.
Aug. 14, 2008).

No. 07-1637, 2008 WL 3838025, at *2 (W.D. La.

In Clarendon, the court held that venue in the

Western District of Louisiana was proper because the insurance
company’s agent was located in Shreveport; the insurance
application was received in Shreveport; the insurance policy was
bound and generated in Shreveport; the policy was issued from
Shreveport; the coverage decisions were made in Shreveport; and
all claims-handling activities occurred in Shreveport.

Id.

Notably, the coverage decisions and the claims-handling
activities of Fidelity (which constitute the alleged contract
breaches) did not occur in New Orleans.
The Court is guided by the district court’s reasoning in
Consolidated Insurance Co. v. Vanderwoude, 876 F. Supp. 198 (N.D.
Ind. 1995).

In Consolidated, the court noted:

There are no allegations in [plaintiff’s] complaint,
however, that have anything to do with the application
for, or making of, the contract . . . . While it is true
that making the contract in Indiana was an event without
which the present suit would not exist, that event does
not constitute a “substantial part” of the events giving
rise to [plaintiff’s] claim.
Id. at 201.

Thus, it is the nature of plaintiff’s claim that

leads the Court to find that venue is improper in this district.
To repeat, the events that gave rise to PNC Bank’s claim are

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Fidelity’s handling and curing of the claim (which, to put
simply, PNC alleges is not happening in a timely manner)—these
events all occurred outside the Eastern District of Louisiana.
They are the driving events of this lawsuit.
Accordingly, the defendant’s motion to dismiss under Rule
12(b)(3) is GRANTED.

New Orleans, Louisiana, August 7, 2013

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

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