Wendell L Hawkins PA v. Fidelity National Title Insurance Company

Filing 21

ORDER finding as moot (1) Motion to Stay; finding as moot (1) Motion to Dismiss in case 6:16-cv-00455-MGL; dismissing without prejudice (1) Motion to Compel in case 6:16-cv-00531-MGL. Signed by Honorable Mary Geiger Lewis on 5/17/2016.Associated Cases: 6:16-cv-00455-MGL, 6:16-cv-00531-MGL(abuc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
WENDELL L. HAWKINS, PA,
Plaintiff,
vs.
FIDELITY NATIONAL TITLE
INSURANCE COMPANY,
Defendant.

FIDELITY NATIONAL TITLE
INSURANCE COMPANY,
Plaintiff,
vs.
WENDELL L. HAWKINS, PA,
Defendant.

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CIVIL ACTION NO. 6:16-0455-MGL

CIVIL ACTION NO. 6:16-0531-MGL

MEMORANDUM OPINION AND ORDER
DISMISSING FIDELITY NATIONAL INSURANCE COMPANY’S PETITION
WITHOUT PREJUDICE
I.

INTRODUCTION
Underlying the arguments in these actions is Fidelity National Title Insurance Company’s

(FNTIC)’s professional negligence claim against Wendell L. Hawkins, PA (Hawkins). Each of the
separately filed cases involves a dispute over the propriety of whether arbitration compelled by this
Court is the proper manner in which to settle the matter.

Pending before the Court is FNTIC’s Petition for an Order Compelling Arbitration and
Hawkins’s Motion to Stay and/or Dismiss FNTIC’s Petition for an Order Compelling Arbitration.
Having carefully considered the petition, the motion, the responses, the supplemental briefing, the
record in each of the cases, and the applicable law, it is the judgment of the Court that FNTIC’s
Petition for an Order Compelling Arbitration will be dismissed without prejudice and Hawkins’s
Motion to Stay and/or Dismiss FNTIC’s Petition for an Order Compelling Arbitration will be
rendered moot.

II.

FACTUAL AND PROCEDURAL HISTORY
Hawkins, an attorney licensed in the State of South Carolina, entered into a Title Insurance

Agency Agreement with Lawyers Title Insurance Company (LTIC) on or about June 1, 2001. Civil
Action No. 6:16-0455-MGL (Hawkins I), ECF No. 1-1. As is applicable here, the Agreement set
forth the following:
Unless prohibited by applicable law or regulation, either [LTIC] or [Hawkins] may
demand arbitration pursuant to the Arbitration Rules of the American Arbitration
Association. Arbitrable matters may include any controversy or claim between
[LTIC] and [Hawkins] arising out of or relating to [the agreement between [LTIC
and Hawkins]. Arbitration pursuant to th[e] Agreement shall be under the rules in
effect on the date the demand for arbitration is made. Judgment upon the award
rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.
Id. at 5. FNTIC is LTIC’s successor in interest. Hawkins I, ECF No. 8 at 1.
The facts of the underlying dispute are set out in the “American Arbitration Association
Online Filing Acknowledgement,” which states, in relevant part, that
[FNTIC] seeks indemnification for a claim it paid under the provisions of Title
Insurance Policy Number G910045489 (“Policy”) that it issued through its agent,
[Hawkins]. [Hawkins] conducted a loan closing for Mary-Frances Liggett
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(“Mortgagor”) involving a mortgage given to Greenpointe Mortgage Funding, Inc.
(“Insured”) for which real property served as collateral (“Property”). The Mortgagor,
as a Member of Jasmine Place, LLC (“LLC”) had previously conveyed the Property,
which at the time was titled in the name of the LLC, to herself. [Hawkins] conducted
a title search and failed to recognize that the Property was not properly vested in the
name of the Mortgagor. Thereafter, as the result of a foreclosure action brought by
Federal National Mortgage Association (“FNMA”), as successor in interest to the
Insured, the LLC fought the foreclosure claiming, among other defenses, that the
transfer of the Property to Mortgagor was invalid because the LLC required all
members to sign the deed to the Mortgagor and not just one Member. [FNTIC]
retained counsel and negotiated settlement and paid a Claim under the provisions of
the Policy in the amount of $65,000 and incurred expenses in the amount of
$9,821.93 as a result of the foreclosure action.
Claim Amount
$74,821.93
Hawkins I, ECF No. 1-2 at 4.
The procedural history is this case is somewhat unusual. FNTIC filed its Petition for an
Order Compelling Arbitration on February 17, 2016. Civil Action No. 6:16-0531-MGL (Hawkins
II), ECF. No. 1. On the same date, Hawkins opened a new case in which he filed his Motion to Stay
Arbitration, and/or to Dismiss FNTIC’s Petition for an Order Compelling Arbitration on the same
date. Hawkins I, ECF No. 1. On March 10, 2016, Hawkins filed his response in opposition to
FNTIC’s Petition for an Order Compelling Arbitration, Hawkins II, ECF No. 6, and FNTIC
responded in opposition to Hawkins’s Motion to Stay and/or Dismiss on March 18, 2016, Hawkins
I, ECF No. 8. The Court subsequently asked for supplemental briefing on several issues, which the
parties filed, along with their responses in opposition to the other parties’ briefs.

III.

STANDARD OF REVIEW
The Federal Arbitration Act (FAA) provides a federal district court with the authority to

enforce an arbitration agreement by compelling parties to arbitrate their dispute. 9 U.S.C. § 4 (“A
party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written
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agreement for arbitration may petition any United States district court which, save for such
agreement, would have jurisdiction under Title 28 . . . for an order directing that such arbitration
proceed in the manner provided for in such agreement.”). States are vested with the same authority.
See Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 (1983). Section 2 of the
FAA applies to any “contract evidencing a transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract,” and it provides that the written agreements to
arbitrate contained in such contracts “shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The United
States Supreme Court has also noted a strong federal policy favoring arbitration. See Moses H.
Cone, 460 U.S. at 24-25.
The Fourth Circuit Court of Appeals recognized the FAA’s strong federal policy favoring
arbitration agreements in Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th Cir. 2002), where the court
stated, “A district court . . . has no choice but to grant a motion to compel arbitration where a valid
arbitration agreement exists and the issues in a case fall within its purview.” Id. at 500 (citing United
States v. Bankers Ins. Co., 245 F.3d 315, 319 (4th Cir. 2001)). The court further stated: “In the
Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate ‘(1) the
existence of a dispute between the parties, (2) a written agreement that includes an arbitration
provision [that] purports to cover the dispute, (3) the relationship of the transaction, which is
evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal
of the defendant to arbitrate the dispute.’” Id. at 500-01 (quoting Whiteside v. Teltech Corp., 940
F.2d 99, 102 (4th Cir. 1991)). Because “arbitration constitutes a more efficient dispute resolution
process than litigation . . . ‘due regard must be given to the federal policy favoring arbitration, and
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ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.’” Id. at
500 (quoting Volt Info. Sciences, Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468,
475-76 (1989)) (citing Hightower v. GMRI, Inc., 272 F.3d 239, 241 (4th Cir. 2001)).
For this Court to hear the dispute and rule on Petitioner’s motion, the Court must have
subject matter jurisdiction under 28 U.S.C. § 1332. Importantly, the FAA alone does not supply
jurisdiction to the Court, because although it is a federal law, “it does not create any independent
federal question jurisdiction under 28 U.S.C. § 1331.” Moses H. Cone, 460 U.S. at 25 n.32. Rather,
the Supreme Court has held that “there must be diversity of citizenship or some other independent
basis for federal-question jurisdiction before the order [compelling arbitration] can issue.” Id. (citing
Commercial Metals Co. v. Balfour, Guthrie, & Co., 577 F.2d 264, 268-69 (5th Cir. 1978)). A federal
district court has subject matter jurisdiction through diversity of citizenship when the action is
between citizens of different states and the amount in controversy is greater than $75,000. 28 U.S.C.
§ 1332(a).

IV.

CONTENTIONS OF THE PARTIES
Hawkins’s argument that this Court should not enter an order compelling arbitration rests

upon three bases. First, Hawkins contends that the controversy between the parties does not involve
interstate commerce. Second, Hawkins avers that S.C. Code § 15-36-100(B) applies.* Section 1536-100(B) provides that, when suing one for professional negligence, “the plaintiff must file as part
of the complaint an affidavit of an expert witness which must specify at least one negligent act or
*

Although Hawkins cites to S.C. Code § 15-39-100 in his motion, Hawkins I, ECF No. 1
at 5, this is evidently a scrivener’s error. The statute that he quotes is actually § 15-36-100. See
id.
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omission claimed to exist and the factual basis for each claim based on the available evidence at the
time of the filing of the affidavit.” Id. Hawkins maintains that because FNTIC failed to file an
affidavit as required by § 15-36-100(B), its demand for arbitration should be dismissed. And, third,
after the Court directed the parties to brief the Court on the issue as to whether the jurisdictional
amount of $75,000, as required by 28 U.S.C. § 1332, has been satisfied, Hawkins argues in his
supplemental briefs that it has not been met.
FNTIC asserts that Hawkins is mistaken as to each of its arguments. FNTIC also avows that
it has standing to seek arbitration in this matter. Although Hawkins briefly suggested otherwise in
his motion, he made no argument in support of it. Therefore, the issue of standing is not before the
Court.
The Court now turns to its discussion and analysis of the merits of the parties’ contentions.

V.

DISCUSSION AND ANALYSIS
First, Hawkins avers that the controversy between the parties does not involve interstate

commerce. This declaration is without merit.
Hawkins, an attorney licenced in the state of South Carolina, entered into an agreement with
LTIC, a Virginia title insurance corporation with its headquarters in Glen Allen, Virginia. FNTIC,
another title insurance corporation, whose headquarters is located in California, later acquired LTIC,
and, as already stated, became its successor in interest. The underlying claim occurred before
FNTIC’s acquisition of LTIC. Consequently, as LTIC’s successor in interest, FNTIC is stepping in
the shoes of LTIC for purposes of the present dispute.

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The agreement contains an arbitration clause, which provides that either party can request
arbitration under the FAA. Hawkins was allegedly negligent in a title search causing LTIC to pay
a claim that FNTIC now seeks to indemnify.
The Supreme Court has “interpreted the term ‘involving commerce’ in the FAA as the
functional equivalent of the more familiar term ‘affecting commerce’–words of art that ordinarily
signal the broadest permissible exercise of Congress’ Commerce Clause power.” Citizens Bank v.
Alafabco, Inc. v. Alafabco, 539 U.S.C. 52, 56 (2003) (citing Allied-Bruce Terminix Cos. v. Dobson,
513 U.S. 265, 271 (1995)). “Because the statute provides for ‘the enforcement of arbitration
agreements within the full reach of the Commerce Clause,’” id. (quoting Perry v. Thomas, 482 U.S.
483, 490 (1987)), “it is perfectly clear that the FAA encompasses a wider range of transactions than
those actually ‘in commerce’–that is, ‘within the flow of interstate commerce,’” id. (quoting
Allied-Bruce Terminix Cos., 513 U.S. at 271).
According to the terms of the Agreement,
[Hawkins] shall retain sixty percent (60%) of each title insurance policy premium as
commission and remit the remainder to [LTIC] together with reports, policies and
endorsements monthly, to the National Processing Center at the address specified
below:
LandAmerica Financial Group, Inc.
Agency Service Center
7707 National Turnpike, Unit 170
Louisville, Kentucky 40214-4803
P.O. Box 35180
Louisville, Kentucky 40232-5180
Hawkins I, ECF No. 8-1 at 2.
As a preliminary matter, Hawkins’s statement that he delivered the premiums and supporting
documentation to LTIC’s office in Columbia, South Carolina, and not directly to Louisville,
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Kentucky, is of no aid to his argument. By the terms of the agreement, Hawkins knew or should
have known that anything he delivered to LTIC’s office in Columbia, South Carolina, was going to,
in turn, be delivered out of state–to Kentucky. But even if that were not enough to meet the
“affecting commerce,” there is more.
As noted in Fidelity’s Memorandum in Opposition to Hawkins’s Motion to Stay Arbitration
and Dismiss,
The Claim that is the subject of the Petition by which Fidelity seeks
arbitration involves a payment made to a claimant under the provisions of a title
insurance policy issued by Hawkins. The Claim was administered by the LTIC
service center located in Jacksonville, Florida. Claims administration included, but
was not limited to, reviewing the Claim and its supporting documentation and
obtaining local counsel to resolve issues with the Claim. The law firm of Callison,
Tighe, and Robinson, LLC (its “Counsel”) in Columbia, South Carolina was obtained
to represent LTIC in resolving the Claim. The transmission and review of documents
related to the Claim and obtaining its Counsel all would have involved the use of
modes of transmission involving interstate commerce, e.g., interstate telephone
communications, interstate electronic transmission, United States Postal Service, or
overnight shipping service provider, all of such services involving interstate
commerce and all regulated by the United States government.
When the decision was made by LTIC to pay the Claim, based on
recommendation of its Counsel, the Claim payment check was issued by its office
located in Jacksonville, Florida and sent to its Counsel in the state of South Carolina
for further disbursement to the claimant. The Claim payment was made by a check
drawn on a National Bank located in California and deposited into an account
maintained by its Counsel in a National Bank located in South Carolina. Such
transmission of funds involved interstate commerce between the National Banks,
which are regulated by the United States government.
Hawkins I, ECF No. 8 at 5 (citations omitted).
Further, the Court notes that the parties who entered into the agreement were two
sophisticated parties: a licensed attorney and a title insurance company. There can be no dispute that
the agreement plainly states that arbitration would proceed under the FAA. As such, the parties

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knew or should have know that any controversy between the two would involve interstate in that the
FAA is inapplicable if interstate commerce is not involved. But, even assuming that Hawkins was
somehow and for some reason unfamiliar with that law, as discussed above, his argument that the
dispute fails to involve interstate commerce is incredible.
Second, Hawkins states that S.C. Code § 15-36-100(B) is applicable to this case. FNTIC
argues that it does not. The Court finds neither parties’ arguments on this issue particularly
compelling. Accordingly, assuming without deciding that S.C. Code § 15-36-100(B) has some
bearing on this action, in the interests of justice and an abundance of caution, as well as at the
suggestion of Hawkins, the Court will dismiss Fidelity’s case “without prejudice to re-file,” Hawkins
I, ECF No. 18 at 15, so it can obtain an affidavit from an expert as required by S.C. Code § 15-36100(B) .
Third, after being prompted by the Court, Hawkins states in his supplemental briefing that
FNTIC has failed to satisfy the 28 U.S.C. § 1332 jurisdictional requirement of $75,000. FNTIC
argues that it has not. Given the Court’s dismissal of the action without prejudice, the Court will
save its adjudication of this argument for another day.

VI.

CONCLUSION
Wherefore, based on the foregoing discussion and analysis, it is the judgment of this Court

that FNTIC’s Petition for an Order Compelling Arbitration is DISMISSED WITHOUT
PREJUDICE with leave to re-file; and Hawkins’s Motion to Stay and/or Dismiss FNTIC’s Petition
for an Order Compelling Arbitration is RENDERED MOOT.

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IT IS SO ORDERED.
Signed this day of 17th day of May, 2016, in Columbia, South Carolina.
s/Mary Geiger Lewis
MARY GEIGER LEWIS
UNITED STATES DISTRICT

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