The United States District Court for the Western District of Pennsylvania recently held that a claim that a lender’s captive reinsurance arrangement violated the anti-kickback provisions of the Real Estate Settlement Procedures Act (“RESPA”) was time-barred, and that each new mortgage payment did not constitute a new, separate RESPA violation. See Menichino v. Citibank, N.A., 2017 WL 2455166 (W.D. Pa. June 6, 2017). In the putative class action, plaintiffs closed on home mortgage loans and were required to purchase mortgage insurance. Plaintiffs alleged that the lender selected mortgage insurers who would then reinsure the policies with the lenders, and filed a lawsuit alleging that this agreement violated RESPA’s prohibition against kickbacks. See 12 USC 2607. All of the closings in the case took place in 2007 and 2008, but the lawsuit was not filed until 2012. After multiple motions to dismiss relating to RESPA’s one-year statute of limitations and a stay of the action, plaintiffs filed a motion to lift the stay and file a third amended complaint. This new version of the complaint alleged that each mortgage payment constituted a separate RESPA violation and, accordingly, that claims arising out of payments from the year before plaintiffs filed the complaint were not time-barred.
The Court denied plaintiffs’ motion to amend their complaint, holding that the RESPA claims were futile because they were time-barred. In support of its decision, the Court cited Cunningham v. M & T Bank Corp., 814 F.3d 156 (3d Cir. 2016), as amended (Feb. 24, 2016), in which the Third Circuit denied untimely RESPA claims and held that the alleged RESPA violation at issued occurred as of the date of the closing. Although Cunningham specifically addressed a claim of equitable tolling, the Court held that the “core reasoning underlying that decision” applied here. It further rejected plaintiffs’ argument that the Consumer Financial Protection Bureau’s In re PHH Corp., et al. decision supported its claims, holding that Cunningham was issued eight months after PHH, and the Third Circuit chose not to adopt that reasoning. Finally, the Court acknowledged that it reached a different conclusion than the Eastern District of Pennsylvania did in White v. PNC Fin. Servs. Grp., Inc., 2017 WL 85378 (E.D. Pa. Jan. 10, 2017).