WBK Secures Victory in RESPA Reinsurance Suit

On January 19, 2018, the U.S. District Court for the Western District of Pennsylvania dismissed a putative class action against Citibank, N.A., CitiMortgage, Inc., and other entities in connection with arrangements for the reinsurance of private mortgage insurance obtained by borrowers in taking out residential mortgage loans as early as 2005.  U.S. District Court Judge Mark Hornak found that plaintiffs’ RESPA claim—premised on allegations that defendants received kickbacks in connection with referrals of settlement services—was time-barred and that their common law unjust enrichment claim was barred by the filed-rate doctrine and state statutes of limitations.

Relying on factually analogous authority from the Third Circuit Court of Appeals, the district court granted defendants’ motion for judgment on the pleadings, rejecting plaintiffs’ request to equitably toll the one-year statute of limitations applicable to their RESPA claim.  In ruling on the motion, the Judge emphasized that the homeowner plaintiffs had been made aware of the subject reinsurance arrangements through disclosures they received at the time of their respective loan closings.  Yet, the homeowners “did not elect to opt out, did not ask questions of the challenged scheme at or prior to closing, and did not investigate their mortgage” until they were solicited by counsel—long after RESPA’s one-year statute of limitations had run its course.

The district court concluded that plaintiffs were in possession of all of the facts relevant to their RESPA claim at the time of closing, and that their failure to exercise any due diligence during the limitations period barred the application of equitable tolling under a theory of fraudulent concealment.  Rejecting plaintiffs’ request for discovery to support their equitable tolling allegations, the Judge retorted, “there are no answers to be had from discovery because there are no questions to ask.”

The district court similarly dismissed plaintiffs’ unjust enrichment claim, finding, as a threshold matter, that it no longer had subject matter jurisdiction over the state common law claim in light of its dismissal of the federal claim, and that the state claim was otherwise barred by applicable statutes of limitations and the filed-rate doctrine.

The case is Menichino, et al. v. Citibank, N.A., et al., No. 2:12-cv-00058 (W.D. Pa.), and the opinion is available here.