DEBRA SIMPKINS, MARK BIDDISON, and JAMES COCKES, individually and on behalf of all others similarly situated, Plaintiffs,
WELLS FARGO BANK, N.A., WELLS FARGO INSURANCE CO., ASSURANT, INC., STANDARD GUARANTY INSURANCE CO., and AMERICAN SECURITY INSURANCE CO., Defendants.
MEMORANDUM AND ORDER
DAVID R. HERNDON, District Judge.
I. Introduction and Background
Now pending before the Court are defendant Well Fargo's motion to sever claims (Doc. 100) and its memorandum in support (Doc. 101), and defendants' Assurant, Inc., Standard Guaranty Insurance Company, and American Security Insurance Company's joint motion to sever (Doc. 118) and memorandum in support (Doc. 119). Plaintiffs oppose Wells Fargo's motion (Doc. 127) and Assurant, Standard Guaranty and American Security's motion (Doc. 134).
Plaintiff Debra Simpkins, a resident of Belleville, Illinois, claims that when her homeowners policy was not renewed effective April 30, 2007, Wells Fargo force-placed a temporary 60-day insurance binder with American Security at an annual premium of $1, 141.00. Simpkins claims the force-placed policy was more than twice the cost of her previous policy and provided less coverage, protected only Wells Fargo, and covered only the structure of the home. Although the policy was not placed until June 7, 2007, it was backdated to April 30, 2007. On July 17, 2007, Simpkins claims Wells Fargo force-placed an additional policy on her dwelling effective from April 30, 2007 through April 30, 2008 with the same annual premium of $1, 141.00 as the 60 day force-placed policy, and the same coverage only for the dwelling and protecting only Wells Fargo. Simpkins contends that Wells Fargo received a commission or other financial benefit from Assurant and/or American Security connected to the force-placed policy. Subsequently, Simpkins obtained her own non-force-placed hazard insurance policy and on October 18, 2007, Wells Fargo issued a notice of cancellation as to the previously force-placed coverage through American Security. Simpkins subsequently filed for Chapter 7 bankruptcy relief on January 8, 2008. At the time she filed for bankruptcy, Simpkins was unaware of her claims against defendants.
On May 10, 2010, plaintiff Mark Biddison, a resident of New York, received a notice of non-renewal of his homeowner's insurance policy that his coverage would expire on July 3, 2010. Wells Fargo filed a foreclosure proceeding against Biddison's property in September 2010. Subsequently, Wells Fargo force-placed an insurance policy through American Security on Biddison's property. Biddison claims his force-placed policy was backdated to July 3, 2010 and Wells Fargo added a debit of $4, 483.00 to his escrow account to cover the cost of the coverage. Biddison claims that the force-placed policy had a premium significantly higher than that of his previous policy, and provided coverage only to the structure of the house and protected Wells Fargo only. On July 27, 2011, Wells Fargo accepted Biddison's application for a loan modification. When he received his loan modification settlement statement, Biddison's outstanding principal had increased over $30, 000.00, including a negative balance from his escrow account, which included the charges for the force-placed insurance policy. In June 2012, Biddison obtained his own homeowners policy for $1, 356, for substantially more coverage. Biddison contends that Wells Fargo received a financial benefit for force-placing the insurance that is a breach of fiduciary duty and contrary to the doctrine of good faith and fair dealing.
Plaintiff James Cockes, a resident of Frisco, Texas, had a homeowners insurance policy in place from July 28, 2010, until July 28, 2011. The policy had an annual premium of $2, 401.42. On or about September 28, 2011, Wells Fargo sent Cockes a letter stating that its records indicated his policy had lapsed in September 2011, and that Standard Guaranty had issued temporary coverage for two months at an annual cost of $7, 688.65. The coverage extended only to the building and structure. Cockes secured his own policy to cover October 15, 2011 to October 15, 2012, with an annual premium of $2, 563.00. Cockes alleges that although he provided proof of this to Wells Fargo, it force-placed a policy from Security Guaranty backdated more than a year to cover Cockes' property from September 2010 to September 2011 and charged his escrow account $7, 688.65. Cockes also alleges that Wells Fargo received a financial benefit from force-placing the insurance coverage with Security Guaranty.
Defendants are Wells Fargo Bank, which originates and/or services residential mortgage loans, sometimes doing business as Wells Fargo Home Mortgage; Wells Fargo Insurance, an affiliate of Wells Fargo Bank and Wells Fargo Home Mortgage (collectively "Wells Fargo"); Assurant, Inc.; American Security Insurance Company; Standard Guaranty Insurance Company; and any other force-place insurance provider subsidiary of Assurant.
This is a putative class action brought by plaintiffs Simpkins, Biddison, and Cockes, on behalf of themselves and other similarly situated plaintiffs. Plaintiffs filed this case July 6, 2012 and amended their complaint on January 15, 2013. All of the plaintiffs allege they have residential mortgage loans that originated with Wells Fargo Home Mortgage, and allege that they were required to pay for lender-placed or "force-placed" hazard insurance policies provided by Assurant, American Security, Standard Guaranty or other force-placed subsidiaries of Assurant. Additionally, plaintiffs allege Wells Fargo charged them for backdated policies and that Wells Fargo received a commission for the significantly higher priced policies providing substantially less coverage.
Plaintiffs alleged six counts in their complaint: (1) breach of contract including breach of the implied covenant of good faith and fair dealing, against Wells Fargo; (2) unjust enrichment/disgorgement, against all defendants; (3) breach of fiduciary duty/misappropriation of funds held in trust, against Wells Fargo; (4) aiding and abetting a breach of fiduciary duty, against Assurant, Standard Guaranty, and American Security; (5) violations of the Illinois Consumer Fraud and Deceptive Practices Business Act, 815 ILCS 505/1, et seq., against all defendants on behalf of the Illinois class; and (6) violations of New York General Business Law § 349, against all defendants on behalf of the New York class.
On February 22, 2013, Wells Fargo filed their motion to sever the claims of Biddison and Cockes. On March 15, 2013, Assurant, Standard Guaranty, and American Security filed their respective motion to sever Biddison's and Cockes' claims. Plaintiffs oppose Wells Fargo's motion to sever (Doc. 127) and Assurant, Standard Guaranty and American Security's motion to sever (Doc. ...