Thursday, February 17, 2011

Insurance class certification affirmed, merits avoided

Because a ruling for defendant on the merits of plaintiffs' claims makes it unlikely that a court will certify a class action, some Florida courts (and Federal courts in particular) have tended to decide pivotal merits issues prior to deciding class certification issues.  In a departure from that tendency, a Florida appeals court affirmed a trial court order certifying an insurance class in Commonwealth Land Title Ins. Co. v. Higgins (Fla. 1st DCA, Feb. 7, 2011).   

In Commonwealth, the insureds were homeowners who sued their title company, alleging they were not provided a discount title insurance rate, known as the “reissue rate,” when they refinanced their homes.  The title insurer argued that, if the trial court were to rule in its favor on the merits of the case -- that Florida law places the burden on the homeowners to determine when the reissue rate applied -- then there would be no "common questions of law" and the class could not be certified.

In certifying the class, the trial court avoided deciding the pivotal merits issueThe appeals court upheld the trial court's decision on the basis that "[w]e review class certification orders for abuse of discretion" and "[d]oubts about certification should be resolved in favor of certification, particularly in the early stages of litigation."

The appeals court was not unsympathetic to the insurer’s argument about deciding the merits issue first and, indeed, recognized the dilemma of its ruling:
"We recognize that it is rather inefficient to proceed with the “expensive and involved steps” of class notification when resolution of the initial common question of legal duty will be only a small step forward and one that will likely be answered in summary judgment. . . ."
The appeals court referred to Ameriquest Mortgage Co. v. Scheb (Fla. 2d DCA 2008), which recognized that "[u]nder the proper circumstances -- where it is more practicable to do so and where the parties will not suffer significant prejudice," the trial court has the discretion to rule on the merits of the alleged law violation before it decides the certification issue.

This summary was prepared by Perry Cone and is posted at

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