Maryland's Highest Court Decision Fails to Protect Home Owners' Rights

Maurice Carter filed a class action lawsuit against Huntington Title and Escrow, alleging that it overcharged him and other Maryland homeowners for title insurance. Huntington argued that the claim belonged before the Maryland Insurance Administration (MIA) rather than the court, and that the agency required each claim be litigated individually. A trial judge agreed dismissed Carter's case, and he appealed.

Class actions challenge widespread industry practice in one single, efficient and streamlined proceeding. They have often been the only way that consumers can fight bad business practices, since many consumer disputes involve relatively small sums of money that would not be worth time and effort to litigate, even if legal help could be obtained. Individual small sums, however, can aggregate into massive ill-gotten gains, giving companies great incentive to employ practices without concern for applicable consumer protection laws.

In Carter's appeal, AARP joined an amicus brief with the Public Justice Center and Maryland Consumer Rights Coalition. The brief argued that requiring that a grievance be filed with an administrative agency — called exhaustion of administrative appeals — exceeded the MIA's institutional capacity to handle complaints, its ability to craft effective remedies, and was contrary to the intent of Maryland's consumer protection laws, which favor quick and timely resolution. The brief bolstered its argument with a 2007 memo issued by incoming Governor Martin O'Malley recommending that the MIA delegate authority to the state housing agency with regard to title insurance disputes. The brief pointed out that because most title insurance overcharge claims involve relatively small amounts of money, the lengthy MIA process — in one case noted in the litigation, it took eight months to resolve a claim — discouraged consumer complaints and effectively nullified the consumer protection law.

Finally, AARP's brief pointed out the increasing number of lawsuits across the country challenging overcharging by title insurance companies, and the increasing importance of private lawsuits in curbing these bad practices.

Unfortunately, the court ruled that the MIA had primary jurisdiction and that such jurisdiction was appropriate because of the agency's particularized expertise on insurance issues, therefore Carter must exhaust MIA's grievance procedures before he can bring his lawsuit. A dissent took issue with the majority view of MIA's expertise, noting that the practice in dispute is far from complex and that trial courts have handled much more complex issues, the judges also wrote that this decision set Maryland "against the current, as a 'clear majority' of courts have generally allowed judicial access to plaintiffs suing title insurance companies under similar circumstances."

What's at Stake

At a time when homeowners struggle to keep their homes, it is important that the title insurance industry's documented overcharging not go unchecked and that consumers' legal rights have the teeth the legislature intended.

Case Status

Carter v. Huntington Title & Escrow, LLC was decided by Maryland Court of Appeals. While directing the dispute to the MIA's internal complaint process, the court did not dismiss the case, leaving it open should Carter be dissatisfied with MIA's administrative decision.