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Camden Vicinage Miriam Haskins, et al v. First American Title Insurance Company

October 18, 2012

CAMDEN VICINAGE MIRIAM HASKINS, ET AL, PLAINTIFFS,
v.
FIRST AMERICAN TITLE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Joel Schneider United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

This matter is before the Court on plaintiffs' discovery application. See Plaintiffs' Sept. 4 and 10, 2012, Letter Briefs ("LB"); Defendant's Sept. 10, 2012, Letter Brief ("LB"). The issues before the Court generally involve whether defendant, First American Title Insurance Company ("First American"), is in "possession, custody, or control" of documents held by its "independent title agents," and whether First American is under a duty to direct its agents to "preserve" the documents.

Plaintiffs filed suit against First American because of an alleged scheme to overcharge customers for title insurance when they refinanced their residential mortgages. See Complaint at ¶1, Doc. No. 1. Most of First American's New Jersey title insurance policies are issued by "independent title agents."*fn1

Plaintiffs seek copies of a representative sample of the agents' closing files to determine if and why other customers were overcharged. First American entered into separate agency contracts with each agent, which addressed the agent's duties and responsibilities, including the maintenance of their First American files. Plaintiffs seek class certification and define the proposed class as all New Jersey consumers who paid premiums in excess of regulated title insurance refinance rates during the defined class period. See id. at ¶9. This Opinion and Order memorializes the Court's rulings on the record after completion of the recent oral argument.

Discussion

Plaintiffs present two unresolved discovery disputes. First, whether First American has possession, custody, or control of the requested documents (closing files) in the physical possession of its agents such that it must produce the documents. Second, whether First American must issue a "litigation hold" to its agents to ensure that the requested documents are preserved. The parties recently reached an agreement on the first issue. First American agreed to contact its agents and to request them to produce approximately 300-400 agreed upon representative closing files. Because the parties reached an agreement about what files to produce, the Court did not specifically rule at oral argument whether First American had possession, custody, or control of its agents' closing files. However, in order to decide whether First American must direct its agents to implement a litigation hold, the Court must decide whether it has possession, custody, or control over its agents' closing files.

Pursuant to Fed. R. Civ. P. 34(a) a party may request another party to produce documents within that party's "possession, custody, or control." See Camden Iron & Metal, Inc. v. Marubeni Am. Corp., 138 F.R.D. 438, 442 (3d Cir. 1991). Federal courts construe "control" very broadly for Rule 34 purposes. See id. Consequently, there is control if a party "has the legal right or ability to obtain the documents from another source upon demand." Mercy Catholic Med. Ctr. v. Thompson, 380 F.3d 142, 160 (3d Cir. 2004). A party is not required to have physical possession of documents for control to be present. See Camden Iron & Metal, 138 F.R.D. at 441. It logically follows that a litigating party has control of documents if a contractual obligation requires a non-party to provide requested documents to the litigating party upon demand. See id. at 160-61 (finding control because manual specifically requires that papers and files of non-party be made available to appellant at all "reasonable times"); Boucher v. First Am. Title Ins. Co., No. C10-199RAJ, 2011 WL 5299497, at *4 (W.D. Wash. Nov. 4, 2011) (finding that contract established control over documents in non-party's possession because "one agreement, for example, requires the agent to produce any documents . . . at 'any reasonable time upon request from [defendant].') (internal citations omitted). Additionally, control exists if a party has "a right to access the [requested] documents or obtain copies of them." Andrews v. Holloway, 256 F.R.D. 136, 145 n.13 (D.N.J. 2009); see also Rosie v. Romney, 256 F. Supp. 2d 115, 119 (D. Mass. 2003) (determining that control exists because defendant had contractual right to examine and copy information from non-party agencies).

First American's agency contracts contain language plainly indicating that it has control over and access to its agents' closing files. In the course of discovery, the parties produced copies of several agency contracts between First American and its agents. First American agreed the contracts are representative of the "thousands" of agency contracts it may have entered into.*fn2 In the Fidelity Title Abstract Company contract Fidelity is required to:

Maintain and carefully preserve for a period of not less than ten (10) years or any period required by statute or regulation of Territory, whichever period is greater, in a manner and form prescribed or approved by COMPANY, all records, books, books of account, files, documents, correspondence, bank records, title evidence and material of all kinds in any way relating to the activities of AGENT under this Agreement or to the Policies issued by Agent (hereinafter termed "Documentation") and make all Documentation available for inspection and examination by COMPANY at any reasonable time.

Plaintiffs' Sept. 4, 2012, LB, Ex. B at 18, FID0003. The Finiti Title contract contains similar language, requiring that Finiti:

Maintain and carefully preserve all records, books, books of accounts, files, documents, correspondence, bank records, title evidence and material of any kind that relate in any way to the Agency and this agreement or to the Policies issued by Agent (hereinafter termed "Documentation"), and make all Documentation available for inspection and examination by First American at any reasonable time upon request by First American.

Id. at 2, FIN002. Further, the TransContinental Title Insurance Company contract requires TransContinental to:

Permit First American to examine, audit and copy all financial information and records upon reasonable prior notice.

Defendant's Sept. 24, 2012, Fax at 13, FA/Haskins 002191. These contracts clearly require First American's agents to make their documents available to First American upon request. Since First American has the legal right to obtain its agents' documents on demand, this ...


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