Singleton v. Wells Fargo Bank, N.A. et al

Filing 61

MEMORANDUM OPINION re 60 Order on Motion to Dismiss, Order on Motion to Dismiss for Failure to State a Claim. Signed by Neal B. Biggers on 09/26/2013. (jlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
DELTA DIVISION

GLYNN J. SINGLETON
V.

PLAINTIFF
CASE NO. 2:12CV216-NBB-SAA

WELLS FARGO BANK, N.A.,
WELLS FARGO INSURANCE, INC.
QBE INSURANCE CORPORATION,
and STERLING NATIONAL INSURANCE AGENCY, INC.

DEFENDANTS

MEMORANDUM OPINION
Presently before the court are the motions of Defendants Wells Fargo Bank, N.A., Wells
Fargo Insurance, Inc., QBE Insurance Corporation, and QBE Insurance Agency, Inc. also known
as Sterling National Insurance Agency, Inc., for dismissal. Upon due consideration of the
parties’ filings and supporting and opposing authority, the court is ready to rule.
Factual and Procedural Background
In March 2008, Glynn Singleton obtained a $74,5000 loan from Bankers Mortgage
Center, Inc. secured by a deed of trust on real property in DeSoto County, Mississippi. Wells
Fargo is the servicer of the loan. Pursuant to the deed of trust, Singleton is required to maintain
insurance on the property, and if she fails to do so, “Lender may obtain insurance coverage, at
Lender’s option and Borrower’s expense. Lender is under no obligation to purchase any
particular type or amount of coverage.” Further, the agreement provides that “Borrower
acknowledges that the cost of the insurance coverage so obtained might significantly exceed the
cost of the insurance that Borrower could have obtained.” See Compl. at 35.

In March 2009, Wells Fargo informed Singleton that the flood insurance she had
purchased for the property was inadequate. When Singleton failed to obtain the additional
coverage as requested by Wells Fargo, the company purchased the insurance from QBE
Insurance and charged Singleton. The charged rate was first reviewed and approved by the
Mississippi Department of Insurance.
Plaintiff Singleton filed this potential class action alleging that Wells Fargo and QBE
Insurance impermissibly entered into an arrangement wherein QBE would be the sole provider
for Wells Fargo’s force placed policies. Plaintiff alleges that this arrangement allows Defendants
to charge exorbitant rates which were not arrived at on a competitive basis and were well in
excess of those rates which could have been obtained in the open market. Singleton’s complaint
pleads the following claims against Wells Fargo: breach of implied covenant of good faith and
fair dealing, violation of the Real Estate Settlement Procedure Act (“RESPA”),
unconscionability, an additional claim of tortious interference with a business relationship
against QBE Insurance, as well as a claim of assumpsit to recover the amount that Defendants
were enriched.
Defendants Wells Fargo and QBE Insurance subsequently filed separate motions to
dismiss for failure to state a claim, both of which will be addressed herein.
Standard of Review
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the legal
sufficiency of the complaint and raises an issue of law. When reviewing a motion to dismiss, the
court “accepts all well pleaded facts as true, viewing them in the light most favorable to the
plaintiff.” Guidry v. American Pub. Life Ins. Co., 512 F.3d 117, 180 (5th Cir. 2007). “Factual
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allegations must be enough to raise a right to relief above the speculative level, on assumption
that all allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v.
Twombly, 550 U.S. 554, 555 (2007). This court cannot dismiss a complaint “unless it appears
beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would
entitle [her] to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Determining whether a
complaint states a plausible claim for relief is a context-specific task that requires the court to
draw on its judicial experience and common sense. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
Discussion
Defendants argue that Plaintiff’s claims are barred in their entirety by the filed rate
doctrine since the charged rate was first presented to the Mississippi Department of Insurance.
“Under the filed rate doctrine, any ‘filed-rate’ - that is, a rate approved by the governing
regulatory agency - is ‘per se reasonable and unassailable in judicial proceedings brought by
ratepayers.’” American Bankers’ Ins. Co. of Fla. v. Wells, 819 So. 2d 1196, 1203-04 (¶ 23)
(Miss. 2001) (quoting Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994); citing
United Gas Pipe Line Co. v. Willmut Gas & Oil Co., 97 So. 2d 530, 535 (1957)). The
Mississippi Supreme Court has determined:
The filed rate doctrine is based upon sound considerations of law and judicial policy.
A civil juror, who likely has little, if any, expertise in the area of insurance rates and
policies, should not be permitted to reject and thereupon impose liability based on the
rates of a policy which was expressly approved by the Department of Insurance.
Wells, 819 So.2d at 1204 (¶ 24) (citing Miss. Code Ann. tit. 83 (1999)).
Plaintiff semantically argues that the doctrine does not apply because she is not
challenging the rates, but rather the manner in which the rates were attained, the manipulation of

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the force-placed insurance process, the impermissible commissions and kickbacks included in the
premiums, and the cost of the administrative services, while also asserting that she challenges
“the particular rate chosen by Defendants for unnecessary coverage.” Pls.’ Resp. at 3. Moreover,
Plaintiff specifically alleges that under Defendants’ arrangement, the companies “charge
exorbitant rates to Plaintiff and the Class . . . .” and that the rates are “illegal because they not
only include the excessive cost of insurance, but also include illegal kickbacks and the cost of the
bundle of administrative services that QBE is providing to Wells Fargo.” Compl. at ¶¶ 19, 28.
In her response to both motions to dismiss, Plaintiff states that she “brought this class action
against several defendants . . . for their common pattern and practice of force-placing insurance
upon Plaintiff and Class Members at grossly excessive rates. . . .” Pls.’ Resp. at 1.
It appears to the court that Plaintiff is essentially alleging that the policy rates are too high
and that recovery is sought based on this issue. The alleged kickbacks and other costs were
included in the amount of the premium approved by the regulatory agency. The court finds that
filed-rate doctrine applies because Plaintiff’s claims implicate the reasonableness of the filed
rates, notwithstanding Plaintiff’s cited persuasive authority to the contrary.1 See Korte v. Allstate
Ins. Co., 48 F.Supp.2d 647, 652 (E.D. Tex. 1999). While the Mississippi Supreme Court noted
in its opinion in Wells that various types of claims arguably fall outside the scope of the filed rate
doctrine, none of such claims are pled by Plaintiff. See Wells, 819 So.2d at 1204-05 (¶ 27).

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Plaintiff primarily relies on two cases for the proposition that her claims are not barred
by the doctrine. See Ables v. JPMorgan Chase Bank, N.A., 678 F.Supp.2d 1273, 1277 (S.D. Fla.
2009); see also Kunzelman v. Wells Fargo Bank, N.A., No. 9:11-cv-81373-DMM, 2012 WL
2003337, at *2-3 (S.D. Fla. June 4, 2012). Because this court’s jurisdiction is invoked through
diversity, it must apply the laws of the State of Mississippi.
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Because the court determines that the filed rate doctrine bars Plaintiff’s claims in their
entirety, it need not address Defendants’ remaining arguments for dismissal.
Conclusion
For the foregoing reasons, the court finds that Wells Fargo and QBE’s motions to dismiss
should be and the same are hereby granted. A separate order in accord with this opinion will issue
this day.
This, the 26th day of September, 2013.

/s/ Neal Biggers
NEAL B. BIGGERS, JR.
UNITED STATES DISTRICT JUDGE

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