New Mexico’s suspended Insurance Superintendent Eric Serna, under investigation over a bank contract, is named in a lawsuit that alleges title insurance firms sought to persuade him to raise rates by donating to a nonprofit foundation he helped found.
The lawsuit, filed in state district court, said the title insurance industry gave $21,750 in 2003 and $26,200 in 2004 to Con Alma Health Foundation.
Although tax documents filed by Con Alma do not list specific donors, the lawsuit said the 2003 donation lists the address of LandAmerica Albuquerque Title Co., a subsidiary of LandAmerica Financial Group Inc., parent company of three companies named as defendants.
“A primary purpose of these contributions was to influence defendant Serna, in his capacity as superintendent of insurance, to set unreasonably high rates for title insurance, and to restrain competition as to the price and terms of title insurance in New Mexico,” the lawsuit alleges.
Serna said he follows state law in setting rates, and called the allegations concerning Con Alma contributions “laughable.”
“That’s ridiculous,” he said. “We have a transparent process.”
Serna resigned earlier this month as president of Con Alma’s board after questions arose about a possible conflict of interest between his dual roles on the board and as insurance superintendent.
Charles and Barbara Murphy of Cedar Crest and Haydock Miller Jr. of Santa Fe sued on behalf of themselves and thousands of New Mexicans who bought title insurance. Such insurance guarantees that homeowners are not financially liable if there’s a problem with the property’s title.
The trio alleges they were forced to pay “excessive and unreasonable prices”for title insurance to refinance their mortgages.
They also allege the defendants engaged in price fixing by not allowing companies to compete for business. The insurance superintendent sets uniform title insurance rates each year, which the lawsuit contends violates the state Constitution.
Defendants include the 10 largest title insurance companies in New Mexico, Serna, the state Public Regulation Commission and its Insurance Division.
Last month, former state Rep. Max Coll and his wife, Catherine Joyce-Coll, sued First American Title Co., the PRC, the Insurance Division and Serna, contending state law allows title insurance firms to charge excessive prices.
The attorney general’s office has been investigating a contract Serna signed with a Santa Fe bank.
Con Alma received more than $124,000 from Century Bank, which has had a contract since 2003 to hold insurance company deposits required of firms doing business in the state.
The contract was amended in 2005 to allow a higher fee than state regulations permit. The fee was decreased once it was discovered to be too high.
Serna has denied doing anything illegal or improper.
He was placed on paid leave early this month, and last week the PRC extended that for an additional 30 days pending the investigation, which is being done at the PRC’s request.
Commissioners, meanwhile, said the PRC is hiring its own investigators to prepare for possible personnel action. Serna said he was not told about a second investigation, but said he “welcomed any and all investigations, just so they don’t last forever.”
Commissioner David King said he has asked Serna to consider retiring.
The attorney general also has requested documents from Con Alma, including lists of donations and donors since 2003. An attorney general’s spokeswoman said that request is separate from the investigation into the bank contract.
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