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Hawkins v. Fidelity National Title Insurance Co.

United States District Court, D. South Carolina, Greenville Division

May 17, 2016

WENDELL L. HAWKINS, PA, Plaintiff,
v.
FIDELITY NATIONAL TITLE INSURANCE COMPANY, Defendant. FIDELITY NATIONAL TITLE INSURANCE COMPANY, Plaintiff,
v.
WENDELL L. HAWKINS, PA, Defendant.

          MEMORANDUM OPINION AND ORDER DISMISSING FIDELITY NATIONAL INSURANCE COMPANY’S PETITION WITHOUT PREJUDICE

         I. INTRODUCTION

         Underlying the arguments in these actions is Fidelity National Title Insurance Company’s (FNTIC)’s professional negligence claim against Wendell L. Hawkins, PA (Hawkins). Each of the separately filed cases involves a dispute over the propriety of whether arbitration compelled by this Court is the proper manner in which to settle the matter.

         Pending before the Court is FNTIC’s Petition for an Order Compelling Arbitration and Hawkins’s Motion to Stay and/or Dismiss FNTIC’s Petition for an Order Compelling Arbitration. Having carefully considered the petition, the motion, the responses, the supplemental briefing, the record in each of the cases, and the applicable law, it is the judgment of the Court that FNTIC’s Petition for an Order Compelling Arbitration will be dismissed without prejudice and Hawkins’s Motion to Stay and/or Dismiss FNTIC’s Petition for an Order Compelling Arbitration will be rendered moot.

         II. FACTUAL AND PROCEDURAL HISTORY

         Hawkins, an attorney licensed in the State of South Carolina, entered into a Title Insurance Agency Agreement with Lawyers Title Insurance Company (LTIC) on or about June 1, 2001. Civil Action No. 6:16-0455-MGL (Hawkins I), ECF No. 1-1. As is applicable here, the Agreement set forth the following:

Unless prohibited by applicable law or regulation, either [LTIC] or [Hawkins] may demand arbitration pursuant to the Arbitration Rules of the American Arbitration Association. Arbitrable matters may include any controversy or claim between [LTIC] and [Hawkins] arising out of or relating to [the agreement between [LTIC and Hawkins]. Arbitration pursuant to th[e] Agreement shall be under the rules in effect on the date the demand for arbitration is made. Judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

Id. at 5. FNTIC is LTIC’s successor in interest. Hawkins I, ECF No. 8 at 1.

         The facts of the underlying dispute are set out in the “American Arbitration Association Online Filing Acknowledgement, ” which states, in relevant part, that

[FNTIC] seeks indemnification for a claim it paid under the provisions of Title Insurance Policy Number G910045489 (“Policy”) that it issued through its agent, [Hawkins]. [Hawkins] conducted a loan closing for Mary-Frances Liggett (“Mortgagor”) involving a mortgage given to Greenpointe Mortgage Funding, Inc. (“Insured”) for which real property served as collateral (“Property”). The Mortgagor, as a Member of Jasmine Place, LLC (“LLC”) had previously conveyed the Property, which at the time was titled in the name of the LLC, to herself. [Hawkins] conducted a title search and failed to recognize that the Property was not properly vested in the name of the Mortgagor. Thereafter, as the result of a foreclosure action brought by Federal National Mortgage Association (“FNMA”), as successor in interest to the Insured, the LLC fought the foreclosure claiming, among other defenses, that the transfer of the Property to Mortgagor was invalid because the LLC required all members to sign the deed to the Mortgagor and not just one Member. [FNTIC] retained counsel and negotiated settlement and paid a Claim under the provisions of the Policy in the amount of $65, 000 and incurred expenses in the amount of $9, 821.93 as a result of the foreclosure action. Claim Amount $74, 821.93

Hawkins I, ECF No. 1-2 at 4.

         The procedural history is this case is somewhat unusual. FNTIC filed its Petition for an Order Compelling Arbitration on February 17, 2016. Civil Action No. 6:16-0531-MGL (Hawkins II), ECF. No. 1. On the same date, Hawkins opened a new case in which he filed his Motion to Stay Arbitration, and/or to Dismiss FNTIC’s Petition for an Order Compelling Arbitration on the same date. Hawkins I, ECF No. 1. On March 10, 2016, Hawkins filed his response in opposition to FNTIC’s Petition for an Order Compelling Arbitration, Hawkins II, ECF No. 6, and FNTIC responded in opposition to Hawkins’s Motion to Stay and/or Dismiss on March 18, 2016, Hawkins I, ECF No. 8. The Court subsequently asked for supplemental briefing on several issues, which the parties filed, along with their responses in opposition to the other parties’ briefs.

         III. STANDARD OF REVIEW

         The Federal Arbitration Act (FAA) provides a federal district court with the authority to enforce an arbitration agreement by compelling parties to arbitrate their dispute. 9 U.S.C. § 4 (“A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28 . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.”). States are vested with the same authority. See Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 (1983). Section 2 of the FAA applies to any “contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract, ” and it provides that the written agreements to arbitrate contained in such contracts “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The United States Supreme Court has also noted a strong federal policy favoring arbitration. See Moses H. Cone, 460 U.S. at 24-25.

         The Fourth Circuit Court of Appeals recognized the FAA’s strong federal policy favoring arbitration agreements in Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th Cir. 2002), where the court stated, “A district court . . . has no choice but to grant a motion to compel arbitration where a valid arbitration agreement exists and the issues in a case fall within its purview.” Id. at 500 (citing United States v. Bankers Ins. Co., 245 F.3d 315, 319 (4th Cir. 2001)). The court further stated: “In the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate ‘(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision [that] purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.’” Id. at 500-01 (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991)). Because “arbitration constitutes a more efficient dispute resolution process than litigation . . . ‘due regard must be given to the federal policy favoring ...


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