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FIDELITY NAT. TITLE INS. v. INTERCOUNTY NAT. TITLE INS.

April 29, 2003

FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK, PLAINTIFF,
v.
INTERCOUNTY NATIONAL TITLE INSURANCE COMPANY, ET AL., DEFENDANTS. STEWART TITLE GUARANTY COMPANY, PLAINTIFF, V. FIDELITY NATIONAL TITLE INSURANCE CO. OF NEW YORK, DEFENDANT.



The opinion of the court was delivered by: Suzanne B. Conlon, United States District Judge.

MEMORANDUM OPINION AND ORDER

Fidelity National Title Insurance Company of New York ("Fidelity") sues remaining defendants Intercounty Title Company, Intercounty National Title Insurance Co. ("INTIC"), Susan Peloza and Terry Cornell (collectively, "the Intercounty defendants"), Stewart Title Company, Stewart Title Guaranty Company ("Stewart") and Stewart Information Services Corp. (collectively, "the Stewart defendants") and Jack Hargrove to recover damages caused by an allegedly fraudulent scheme to loot millions of dollars from real estate escrow accounts held first by Intercounty Title Company of Illinois ("Old Intercounty") and later by Intercounty Title Company ("New Intercounty"). The Intercounty defendants, along with INTIC Holding Co. ("INTIC Holding") (collectively, "counterplaintiffs"), counterclaim for damages caused by Fidelity and bring a third party complaint against Fidelity National Financial, Inc. ("Fidelity Financial") and Fidelity Financial's senior vice president Thomas Simonton (collectively, "counterdefendants"). Stewart brings a related case against Fidelity for tortious interference with contract. The two cases are consolidated for trial.

Five of Fidelity's claims remain for trial: fraudulent concealment (Count I) brought on Fidelity's own behalf against the Intercounty defendants and Hargrove; breach of fiduciary duty (Count II) brought as assignee and/or subrogee of the escrow beneficiaries against New Intercounty and INTIC, Peloza, Cornell and Hargrove as alter egos of New Intercounty and/or ITI Enterprises; violation of the Illinois Title Insurance Act, 215 ILCS § 155/21(a) (Count VI), brought as assignee and/or subrogee of the escrow beneficiaries against the Intercounty defendants and Hargrove; unjust enrichment (Count VII) brought as assignee and/or subrogee of the escrow beneficiaries against the Stewart defendants; and conversion (Count VIII) brought as assignee and/or subrogee of the escrow beneficiaries against New Intercounty and Hargrove. The counterplaintiffs have seven pending claims: breach of contract brought by INTIC against Fidelity (Counts III and IV); breach of fiduciary duty (Count V) brought by INTIC and New Intercounty against Fidelity and Simonton; fraud (Count VII) brought by INTIC, New Intercounty, INTIC Holding and Peloza against counterdefendants; fraud (Counts VIII and IX) brought by INTIC, New Intercounty and INTIC Holding against counterdefendants; and negligent misrepresentation (Count X) brought by INTIC, New Intercounty, INTIC Holding against Fidelity. Stewart has a claim for tortious interference with contract against Fidelity. All other claims have been dismissed or defaulted. All parties move in limine to bar evidence at trial.

DISCUSSION

I. Standard of Review

The background of these cases is discussed in the court's orders addressing the parties' summary judgment motions. See Fidelity Nat'l Title Ins. Co. of New York v. Intercounty Nat'l Title Ins. Co., 2002 WL 1466806 (N.D. Ill. July 8, 2002); Fidelity Nat'l Title Ins. Co. of New York v. Intercounty Nat'l Title Ins. Co., 2001 WL 1414517 (N.D. Ill. Nov. 13, 2001). Evidence is excluded on a motion in limine only if the evidence is clearly inadmissible for any purpose. See Hawthorne Partners v. AT&T Technologies, 831 F. Supp. 1398, 1400 (N.D. Ill. 1993). Motions in limine are disfavored; admissibility questions should be ruled upon as they arise at trial. Id. Accordingly, if evidence is not clearly inadmissible, evidentiary rulings must be deferred until trial to allow questions of foundation, relevancy and prejudice to be resolved in context. Id. at 1401. Denial of a motion in limine does not indicate evidence contemplated by the motion will be admitted at trial. Instead, denial of the motion means the court cannot or should not determine whether the evidence in question should be excluded before trial. United States v. Connelly, 874 F.2d 412, 416 (7th Cir. 1989).

II. Fidelity's Motions in Limine

A. Insurance Coverage

Fidelity moves to bar evidence relating to its insurance coverage. The Intercounty defendants do not object to the extent Fidelity seeks to bar reference to its insurance as proof of wrongdoing or as a possible source of compensation. Rather, the Intercounty and Stewart defendants argue that evidence relative to Fidelity's insurance claim may be relevant to the disputed issue of control over the escrow accounts. The Stewart defendants further claim evidence relating to Fidelity's insurance coverage may be used to refute Fidelity's possible arguments.

Federal Rule of Evidence 411 provides:

Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership or control, or bias or prejudice of a witness.
Rule 411 was adopted to address the concern that "knowledge of the presence or absence of liability insurance would induce juries to decide cases on improper grounds." Advisory Committee Notes to Fed.R.Evid. 411. Although the Intercounty defendants' argument tracks the language of the rule, they fail to offer evidence that Fidelity made any statement to its insurance carrier bearing on the issue of control over the escrow accounts. Similarly, the Stewart defendants claim that Fidelity "may have made statements or taken positions inconsistent with its positions in this action," but fail to provide any evidence of Fidelity's purported statements or inconsistent positions. Stewart Response at 2. The Intercounty defendants acknowledge that Fidelity was not forthcoming with this information during discovery. Intercounty Response at 2. This motion is predicated on speculation Trial is not the appropriate forum to conduct a potentially prejudicial fishing expedition. Therefore, Fidelity's motion to exclude insurance coverage evidence is meritorious.

The Stewart defendants' other arguments lack merit. They claim that evidence of Fidelity's insurance coverage is necessary to rebut theoretical arguments by Fidelity that: (1) Stewart "would have acted the same as Fidelity" in allowing a deficiency in New Intercounty's escrow account in 2000; and (2) Stewart considered "purchasing title reinsurance in the early 1990s." Stewart Response at 2. This argument is also speculative and not based on the issues framed in the pretrial order or Fidelity's trial brief. The Stewart defendants implicitly acknowledge that any evidence offered by Fidelity to show Stewart considered purchasing reinsurance is inadmissible under Rule 411 as it would "suggest negligent behavior or other wrongdoing." Id. Absent evidence supporting an exception to Rule 411, Fidelity's motion to bar evidence relating to its insurance coverage must be granted.

B. Frank Casillas

Fidelity moves to bar former Illinois Department of Financial Institutions ("Department") director Frank Casillas from testifying at trial, claiming his testimony would violate a Department confidentiality regulation. Section 8100.3000 of the Illinois Administrative Code provides:

Information or documents obtained by employees of the Department in the course of any examination, audit visit, registration, certification, review, licensing or investigation pursuant to the Act, shall, unless made a mailer of public record, be deemed confidential. Employees are hereby prohibited from making disclosure of such confidential information or production of documents or any other non-public records of the Department or other governmental agency, unless the Director or the Director's authorized representative authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest.
(emphasis added). Fidelity did not object to Casillas' disclosure of alleged confidential information at his deposition. See Motion at Ex. A. Nor did Fidelity object or request a protective order when the Intercounty defendants attached Casillas' deposition transcript to their claim summary filed in September 2002. More importantly, Fidelity attached Casillas' entire deposition transcript to its motion. Id. Nor has Fidelity established it has standing to enforce Casillas' obligations under the confidentiality regulation. Moreover, Fidelity has already made public the information it seeks to shield from disclosure at trial. Under these circumstances, Fidelity's motion must be denied.

Fidelity's reliance on the court's opinion addressing the Stewart defendants' summary judgment motion does not change this result. In a footnote, the court stated:

Fidelity cannot rely on Simonton's conversation with Harry Stirmwell at the Illinois Department of Financial Institutions to show reasonable inquiry. Stirmwell was prohibited from disclosing confidential financial information to third parties. See 215 Ill. Admin. Code § 8100.3000; Def. 56.1 Facts at ¶ 93.
Fidelity, 2001 WL 1414517, at *5 n. 2. Contrary to Fidelity's position, the court did not rule that Fidelity was precluded from relying on Simonton's conversation with Stirmwell at all. Rather, the court found that on summary judgment, Fidelity failed to show reasonable inquiry based upon Simonton's asking for information that Stirmwell was prohibited by regulation from releasing. Id. Therefore, Fidelity's motion to bar Frank Casillas' testimony must be denied.

C. Assignments

Finally, Fidelity moves to bar evidence challenging the validity of approximately 1,900 assignments underlying Counts II, VI, VII and VIII. In its claim summary filed in September 2002, Fidelity recognized it is required to prove additional elements associated with its assignments. See Summary at 4. Specifically, Fidelity must show each escrow beneficiary intended to transfer to Fidelity all of the assignor's right, title or interest in the subject of the assignment. Board of Managers of the Medinah on the Lake Homeowners Ass'n v. Bank of Ravenswood, 295 Ill. App.3d 131, 134-35, 692 N.E.2d 402, 405 (3rd Dist. 1998). Once established, an assignment places the assignee in the shoes of the assignor. Board of Managers, 295 Ill. App.3d at 135, 692 N.E.2d at 405.

Contrary to Fidelity's position, the Intercounty and Stewart defendants are entitled to put Fidelity's proof to the test by challenging Fidelity's right to bring its claims for the benefit of the escrow beneficiaries. Unlike the defendants in the controlling cases cited by Fidelity, the Intercounty and Stewart defendants do not claim the assignments fail for lack of consideration. See Liu v. T&H Machine, Inc., 191 F.3d 790, 796 (7th Cir. 1996); Elzinga & Volkers, Inc. v. LSSC Corp., 47 F.3d 879, 882 (7th Cir. 1995); Matter of Assured Fastener Products Corp., 773 F.2d 105, 107 (7th Cir. 1985). Rather, the Intercounty and Stewart defendants accept the purported assignments on their face, but challenge Fidelity's right to pursue the relief sought in this action under the terms of the assignments, some of which are unexecuted. See Board of Managers, 295 Ill. App.3d at 134, 692 N.E.2d at 405 ("When the assignment has not been reduced to writing, the parties' intentions in must be determined based upon the instruments executed as ...


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