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FIDELITY NATIONAL TITLE v. INTERCOUNTY NATIONAL TITLE

April 26, 2004.

FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK, a New York corporation, Plaintiff;
v.
INTERCOUNTY NATIONAL TITLE INSURANCE COMPANY, et al., Defendants



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Stewart Information Services Corporation's, Stewart Title Guarantee Company's, and Stewart Title Company's (collectively referred to as "Stewart parties") motion for a judgment as a matter of law on the claims brought against them by Plaintiff Fidelity National Title Insurance Company of New York ("Fidelity"). This matter is also before the court on Defendant Jack Hargrove's ("Hargrove") motion for a judgment as a matter of law on the claims brought against Jack Hargrove by Fidelity and on Fidelity's motion for judgment as a matter of law on the tortious interference with contractual relations counterclaim brought against Fidelity by Stewart Title Guarantee Company. For the reasons stated below we deny all three motions for judgment as a matter of law in their entirety.

LEGAL STANDARD

  Federal Rule of Civil Procedure 50(a) states the following:
a) Judgment as a Matter of Law.
(1) If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue.
(2) Motions for judgment as a matter of law may be made at any time before submission of the case to the jury. Such a motion shall specify the judgment sought and the law and the facts on which the moving party is entitled to the judgment.
Fed.R.Civ.P. 50(a). The standard used to determine whether to grant a motion for judgment as a matter of law "mirrors" the standard for a motion for summary judgment. Murray v. Chicago Transit Authority, 252 F.3d 880, 886-87 (7th Cir. 2001). Thus, for a Rule 50(a) motion the court must "examine the record in its entirety, [and] view the evidence in the light most favorable to the party against whom judgment was granted." Id, DISCUSSION

 I. Unjust Enrichment Claims

  The Stewart parties seek a judgment as a matter of law on the unjust enrichment claims brought against them.

  A. Detriment

  The Stewart parties correctly state that Fidelity, acting as a subrogee, is required to prove a detriment to the New Intercounty 2000 payees, rather than a detriment to Fidelity. Fidelity incorrectly argues in its answer brief that Fidelity has suffered a detriment and Fidelity's only argument relates to the costs incurred by Fidelity due to the payouts to the New Intercounty 2000 payees. Fidelity's reliance on the quoted standard at the beginning of Judge Conlon's November 2, 2001 ruling on motions for summary judgment is misplaced. A look at the substantive meaning belying the entire ruling shows that, for the remaining unjust enrichment claims, Fidelity must show a detriment to the New Intercounty 2000 payees. In the November 2 opinion, in a section dealing with Fidelity's claim in its own right, Judge Conlon begins by stating that Fidelity must show a benefit to Stewart "to Fidelity's detriment." (p. 12). However, in the section of the ruling dealing with Fidelity's unjust enrichment claim in its own right Judge Conlon finds that "Fidelity failed to engage in reasonable due diligence" and that "Fidelity's conduct precludes it from establishing Stewart's retention of a benefit is unjust" thus foreclosing Fidelity from pursuing an unjust enrichment claim in its own right, (p. 12). In the next section of the ruling, dealing with Fidelity's claim as a subrogee or assignee, which is the claim that is still alive in this case, Judge Conlon specifically stated that "Fidelity must demonstrate the subrogors suffered a detriment and their loss is traceable to Stewart's liability as underwriter before September 1995." (p. 13)(emphasis added). Thus, it is clear from Judge Conlon's opinion that the New Intercounty 2000 payees, who are the subrogors in this case, are the relevant parties for assessing a detriment for the unjust enrichment claim.

  Despite Fidelity's failure to recognize the proper application of the unjust enrichment standard we cannot, even accepting the Stewart parties' standard, find for the Stewart parties as a matter of law. There is a genuinely disputed issue as to whether Fidelity has made a sufficient showing of a detriment to the New Intercounty 2000 payees. There was sufficient evidence presented regarding the alleged shortfalls in the escrow accounts in Old Intercounty and sufficient evidence regarding the connection of those shortfalls and the eventual refusal of payment by New Intercounty to the 2000 payees that this issue should go to the jury. B. Benefit

  The Stewart parties argue that Fidelity has not shown that the Stewart parties received a benefit. However, the Stewart parties received a benefit when they were relieved of the liability for the Old Intercounty escrow account shortfalls. Although, Judge Conlon held that the unjust enrichment claim is essentially seeking restitution which sounds as a claim in law, the action being equitable in nature is flexible and is intended to prevent unfairness and injustice. Stewart cites no controlling precedent that holds that the extinguishment of Stewart's liability for the Old Intercounty escrow shortfalls would not constitute a benefit for the purposes of an unjust enrichment claim. Also, the Stewart parties did not object to a jury instruction indicating that the extinguishment of a defendant's liability constitutes a benefit. See Reich v. Continental Cas. Co., 33 F.3d 754, 756 (7th Cir. 1994)( recognizing theory of a "`negative unjust enrichment,' consisting of the unjust avoidance of a loss.").

  C. Unjust Retention

  The Stewart parties argue that their alleged retention of the benefit secured by the extinguishment of its liability is not unjust. The Stewart parties first argue that they received the benefit in good faith. We find that there is sufficient evidence to make this assertion a genuinely disputed issue for the jury. Generally, a plaintiff bringing an unjust enrichment claim is seeking to recover a benefit that "proceeded directly from him to the defendant," HPI Health Care Services, Inc. v. Mt Vernon Hosp., Inc., 545 N.E.2d 672, 679 (Ill. 1989). However, where a plaintiff is seeking "recovery of a benefit that was transferred to the defendant by a third party" the benefit would be unjust if "(1) the benefit should have been given to the plaintiff, but the third party mistakenly gave it to the defendant instead . . . (2) the defendant procured the benefit from the third party through some type of wrongful conduct . . ., or (3) the plaintiff for some other reason had a better claim to the benefit than the defendant." (citations omitted).

  In this case Fidelity acting as the subrogee of the New Intercounty 2000 payees is not seeking to recover a benefit that proceeded directly to it from Stewart Thus, the three alternatives for an indirect benefit scenario are pertinent in this case. The first alternative clearly does not apply because Old Intercounty did not mistakenly bestow the benefit on the Stewart parties of extinguishing their liability. We cannot, however, find as a matter of law that the second alternative does not apply in this case. The court in HPI Health Care Services, Inc., indicates that the defendant must have "procured the benefit from the third party through some type of wrongful conduct." 545 N.E.2d at 679. This language would appear to indicate that the defendant must have actively attempted to procure the benefit and that there is some type of wrongful intent by the defendant in procuring the benefit. However, in Midcoast Aviation, Inc. v. General Electric Credit Corp., the Seventh Circuit addresses the three alternatives in HP1 Health Care Services, Inc. and the Seventh Circuit concluded that the "requirement of `wrongfulness' does not mean that a defendant must perform illegal acts or manifest signs of moral depravity . . .[but rather that] [i]t means merely that a defendant does something unjust." 907 F.2d 732, 738 n.3 (7th Cir. 1990). The Court in Midcoast Aviation, Inc. v. General Electic Credit Corp., also concluded that the alternatives listed in HPI Health Care Services, Inc. for an indirect benefit are not an exhaustive list of possible scenarios that could involve an unjust retention of a benefit, Id.

  Therefore, in this case there is sufficient evidence to create a jury question as to whether the Stewart parties had knowledge of the escrow deficiencies in Old Intercounty and whether the Stewart parties acted in bad faith in failing to prevent or expose the deficiencies. Thus, there is evidence that could be construed in a manner that would merit ...


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