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Smith v. Industrial Valley Title Ins. Co.

United States Court of Appeals for the Third Circuit

January 7, 1992, Argued ; February 24, 1992, Filed

No. 91-1555, No. 91-1556, No. 91-1557, No. 91-1558



NYGAARD, Circuit Judge:

In these consolidated class actions removed to the district court from the Court of Common Pleas in Philadelphia County, the district court dismissed the action under Fed. R. Civ. P. 12(b)(6), after denying plaintiffs' motions to remand the matter to the state court. The question is whether the district court had subject matter jurisdiction. Since we conclude it did not, we will vacate its dismissal order and remand the cause to the district court for it to further remand these consolidated class actions to the state court.

Plaintiffs are home sellers who asserted state statutory and common law claims against several title insurance companies who provided services in connection with plaintiffs' home sales. Defendant title insurance companies are "real estate reporting persons" as defined in section 6045(e)(2) of the Internal Revenue Code, 26 U.S.C. § 6045. Section 6045 imposes transactional reporting requirements on brokers generally. Section 6045(e)(1) extends [**3]  these general reporting requirements to real estate transactions and "real estate reporting persons" within the meaning of the statute. Since a title company providing services in a residential real estate settlement is a "real estate reporting person" within the meaning of the statute, see 26 U.S.C. § 6045(e)(2)(A), the title company defendants were obligated to comply with § 6045's information reporting requirements when participating in plaintiffs' home sales. See 26 U.S.C. § 6045(a),(b),(e)(1),(e)(4).

Plaintiffs brought suit in the Pennsylvania court on behalf of themselves and others "who generally can be described as all persons who bought or sold residential real estate and were charged an IRS reporting fee by defendants since November 10, 1988." In essence, the gravamen of plaintiffs' claims is that defendants "separately charged" the homeowners for the information reporting required by § 6045(e)(1), in violation of § 6045(e)(3).

Section 6045(e)(3), which is fundamentally at issue in each of plaintiffs' claims, provides (emphasis added):

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957 F.2d 90 *; 1992 U.S. App. LEXIS 2322 **

ANNE MARIE SMITH, Individually and on Behalf of Persons Similarly Situated, Appellant V. INDUSTRIAL VALLEY TITLE INSURANCE COMPANY; GARY VOLINER and CINDY VOLINER, Husband and Wife, Individually and on Behalf of Persons Similarly Situated, Appellants V. CHICAGO TITLE INSURANCE COMPANY PROFESSIONAL ABSTRACT AND ASSURANCE CORP. MAY FRANKEL, Individually and on Behalf of a Class of Persons Similarly Situated, Appellant V. CONTINENTAL TITLE INSURANCE COMPANY LEGAL ABSTRACT COMPANY; CAROLYN BURNS, as Executrix of the Estate of Juliette L. Echols, Deceased ATTILIO J. CHIARROCCHI, as Chiarrocchi, Deceased MAU THI LE, Individually and on Behalf of Persons Similarly Situated, Appellants V. COMMONWEALTH LAND TITLE INSURANCE COMPANY NORTHWESTERN ABSTRACT COMPANY, INC.

Subsequent History:  Petition for Rehearing In Banc Denied April 2, 1992, Reported at 1992 U.S. App. LEXIS 6485.

Prior History:  [**1]  ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil Action Nos. 90-02132, 90-02175, 90-02971, 90-03856)



Business & Corporate Compliance, Administration, Transactions With Other Persons, Broker Returns, Insurance Law, Insurance Company Operations, Company Representatives, Brokers, Types of Insurance, Property Insurance, Title Insurance, Tax Law, Identification Numbers & Information Returns, General Overview, Civil Procedure, Removal, Specific Cases Removed, Jurisdiction, Subject Matter Jurisdiction, Preliminary Considerations, Elements for Removal, Removability, Jurisdictional Sources, Constitutional Sources, Federal Questions, Postremoval Remands, Diversity of Citizenship, Federal Questions, Substantial Questions, Governments, Legislation, Interpretation