810 F. Supp. 2d 986
D. Ariz.2011Background
- Plaintiffs refinance loan of $343,000 and paid an ALTA Extended Coverage Loan Policy premium underwritten by First American and issued through First Financial.
- First American’s Rate Manual allowed a 65% Refiniance Rate (35% discount) for qualifying refinances; Plaintiffs were charged the Basic Rate instead of the Refinance Rate.
- First Financial acted as First American’s agent to issue policies and collect premiums in this transaction.
- First American allegedly granted the Refinance Rate to all qualifying borrowers, but Plaintiffs were denied it without justification.
- Plaintiffs sue for unjust enrichment against First American; class claims also seek relief for improper premiums under Arizona unfair discrimination statute § 20-448(C).
- The court allowed a supplemental expert report by McFarlane and scheduled responses; subsequent summary judgment proceedings addressed liability and class issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether First American is liable for unjust enrichment | First American was enriched via the premium paid to its agent for the Refinance Rate. | Enrichment requires unjust justification and may be mitigated by discretionary rate rules; agent payments may not equal enrichment. | Yes; enrichment was unjust as a matter of undisputed fact. |
| Whether First Financial’s agency makes First American liable for payments made to the agent | First Financial acted as First American’s agent; payments to the agent constitute payments to the principal. | Agency does not establish liability if no remittance occurred or if other defenses apply. | Yes; payment to an agent constitutes payment to the principal; agency established. |
| Whether the Refinance Rate denial lacked justification under the Rate Manual | First American’s policy to grant the Refinance Rate to all qualifying borrowers shows absence of justification for denial. | Discretion to grant the rate could justify denial where discretionary factors exist; no conscious denial shown. | Unjust enrichment established due to absence of justification for denial. |
| Whether the unfair discrimination claim under A.R.S. § 20-448(C) is time-barred | Discovery rule may toll accrual; plaintiffs could not have reasonably discovered the claim within one year. | Accrual was timely or discovery was not demonstrated; limitations applicable. | Disputed; issue of accrual fact is to be decided by the jury. |
| Class liability and damages postures after summary judgment | Liability to the class follows from individual unjust enrichment liability and supporting data. | Class liability requires separate proof; McFarlane’s opinions are contested. | Summary judgment denied on class liability; issues remain for trial and damages to be determined later. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standard: movant shown absence of genuine factual issues)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (genuine issue of material fact needed for trial)
- Citadel Holding Corp. v. Roven, 26 F.3d 960 (9th Cir. 1994) (summary judgment burden on movant; all facts viewed in light most favorable to nonmovant)
- Copper Hills Enters., Ltd. v. Ariz. Dep’t of Revenue, 214 Ariz. 386, 153 P.3d 407 (Ariz. Ct. App. 2007) (payment to agent constitutes payment to principal)
- Rynning v. Ariz. Storage & Distrib. Co., 37 Ariz. 232, 293 P. 16 (Ariz. 1930) (payment to agent principle applies even if not credited on principal’s books)
- Lee v. State, 242 P.3d 175 (Ariz. Ct. App. 2010) (statute of limitations accrual is generally a jury question)
- Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 898 P.2d 964 (Ariz. 1995) (illumines discovery knowledge for accrual under Arizona law)
- Ulibarri v. Gerstenberger, 871 P.2d 698 (Ariz. Ct. App. 1993) (discovery-based accrual principles)
- Patterson Motors, Inc. v. Cortez, 408 P.2d 231 (Ariz. Ct. App. 1965) (principle of allocation of loss involving third parties)