972 F. Supp. 2d 683
E.D. Pa.2013Background
- Plaintiffs allege they were victims of a mortgage rescue scheme described as equity-skimming fraud related to foreclosures.
- Fidelity National Title Insurance Co. (n/k/a Fidelity) allegedly funded, insured, and underwrote title insurance for First County Abstract in these transactions.
- Bennett & Doherty, P.C. acted as title agents and as principals of Bennett & Doherty, trading as First County, to facilitate the scheme.
- Plaintiffs sold their properties to a straw buyer and were effectively leased back with a promise to buy back, while fraudulent HUD-1s reduced cash to seller to zero.
- HUD-1 settlements showed legitimate settlement costs paid by buyers’ funds, but the final HUD-1s masked fraud through phony payoffs to third parties.
- Court granted Fidelity’s motion for summary judgment, holding plaintiffs cannot meet UTPCPL purchaser, reliance, or damages requirements and that civil conspiracy claim fails.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are UTPCPL purchasers. | Kemps argue equity funded title insurance; third-party payor status should qualify. | Plaintiffs were sellers, did not purchase goods or services, no privity or direct purchase. | No; plaintiffs are not purchasers under UTPCPL. |
| Whether plaintiffs can prove justifiable reliance and damages. | Equity used to purchase title insurance; reliance on HUD-1 misrepresentations. | No interaction with Fidelity; reliance not justifiable; injuries stem from fraud by others. | Unable to establish justifiable reliance or damages from Fidelity. |
| Whether Fidelity can be vicariously liable for First County’s actions. | Agency/ratification overlapped; Fidelity controlled agents; apparent authority. | First County's role limited to selling title insurance; no agency outside scope; no causal link. | Insufficient agency/causation to impute liability. |
| Whether civil conspiracy claim lies. | Conspiracy among Fidelity and agents caused harm to plaintiffs. | Intracorporate conspiracy doctrine applies; no underlying tort; no conspiracy. | Civil conspiracy claim fails. |
| Whether UTPCPL applies given lack of direct sale to plaintiffs. | UTPCPL protects consumers in broad sense; third-party payors included. | UTPCPL requires a purchaser of goods/services; no purchase by plaintiffs. | UTPCPL claim rejected on purchaser and causation grounds. |
Key Cases Cited
- Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53 (3d Cir. 1992) (requires a sale/purchaser to sue under UTPCPL; privity not strictly required but purchase needed)
- DeFazio v. Gregory, 836 A.2d 935 (Pa. Super. Ct. 2003) (defines 'purchase' for UTPCPL; seller not purchaser when no acquisition of goods by seller)
- Schwarzwaelder v. Fox, 895 A.2d 614 (Pa. Super. Ct. 2006) (seller not purchaser where funds indirect; no direct purchase of title insurance by plaintiffs)
- Hunt v. United States Tobacco Co., 538 F.3d 217 (3d Cir. 2008) (UTPCPL standing requires justifiable reliance; causal link insufficient)
- Morrison v. Wells Fargo Bank, N.A., 711 F. Supp. 2d 369 (M.D. Pa. 2010) (purchaser/lessee analysis; not a purchaser here)
- Valley Forge Towers S. Condo. v. Ron-Ike Foam Insulators, Inc., 574 A.2d 641 (Pa. Super. Ct. 1990) (no broad expansion of UTPCPL beyond purchaser context)