COA affirms dismissal of case due to res judicata

Res judicata prevents a title insurance company from taking a “second bite” at the apple, the Indiana Court of Appeals ruled Friday, in a case in which the company appealed dismissal of its second attempt to challenge an action by the Indiana Department of Insurance.

The case began in March 2009 when the Indiana Department of Insurance issued a market conduct examination warrant to the First American Title Insurance Company and hired a third party to conduct the examination.

The examination was completed on Sept. 30, 2010, and sent to FATIC on Oct. 18, with FATIC filing a response by Nov. 10. Indiana code requires the IDOI commissioner to enter an order within 30 days after the end of the submission/rebuttal period either adopting the report as filed or with modifications, rejecting the report, or calling for an investigatory hearing to obtain additional data, information and testimony. However, commissioner Stephen Robertson failed to file an order within the initial deadline, and also failed to do so after his timeframe was extended twice.

The commissioner requested a third extension, but FATIC declined. Regardless, he issued an order on April 15, 2011, ordering an investigatory hearing. FATIC filed for judicial review and declaratory relief with the Marion Superior Court in May, arguing that the order was void because it was not timely. The insurance company did not file a complete agency record, but instead only filed the documents necessary to address the timeliness issue.

IDOI moved to dismiss the complaint because the entire agency record was not filed, but the trial court rejected that argument. However, it also rejected FATIC’s petition, finding that the company had “failed to demonstrate that it was prejudiced by (IDOI’s) failure to act on the Report within thirty days.”

Both parties cross-appealed, and the Indiana Court of Appeals and Indiana Supreme Court both found that IDOI could not argue that FATIC had to exhaust its administrative remedies before taking the case to court because that issue was not raised until appeal. Additionally, both courts found that the commissioner’s order was void.

But the high court also found that because FATIC had not filed the entire agency record, the trial court erred in denying IDOI’s motion to dismiss. The insurance department then filed for a Supreme Court rehearing, challenging the “conflict” between ordering the dismissal of FATIC’s judicial review petition and affirming the appellate court’s timeliness and administrative remedies opinions. The justices agreed to remove language from a footnote in its opinion that said the commissioner’s order was void.

The case was then remanded to the trial court and FATIC argued that an administrative agency’s void action is subject to collateral attack at any time. IDOI filed a motion to dismiss, arguing that the insurance company’s writ of prohibition and action for mandate and request for declaratory relief were barred by res judicata. The trial court dismissed FATIC’s claims “with the Supreme Court’s clear directive,” finding that “where an administrative remedy is available, filing a declaratory judgment action is not a suitable alternative.”

FATIC appealed, arguing that the dismissal was improper because it was not required to exhaust administrative remedies before bringing a declaratory action against a void agency action.

But in a Friday opinion, the Indiana Court of Appeals affirmed the dismissal, writing that “FATIC is merely asserting the same claim that our supreme court previously rejected due to FATIC’s failure to file the entire agency record.”

Further, the appellate court wrote that the central issue of the case is whether Robertson’s opinion was timely, and such an issue “should be resolved in the first instance by the administrative agency.”

“Although its remedy failed due to its failure to file the complete agency record, res judicata prevents FATIC from taking a second bite at the apple by filing the instant action,” the court wrote.

The case is First American Title Insurance Company v. Stephen W. Robertson, Insurance Commissioner of the state of Indiana, in his official capacity, on behalf of the Indiana Department of Insurance, 49A05-1512-PL-2309.