Third Circuit Finds That Each Separate Mortgage Payment That Resulted in a Kickback Constitutes a Separate RESPA Violation for Limitations Purposes, But That Prior Class Action Did Not Toll Limitations Period for New Class Action

The United States Court of Appeals for the Third Circuit recently affirmed the dismissal of a Real Estate Settlement Procedures Act (“RESPA”) kickback claim, holding that a 2011 class action in California did not toll the limitations period for this new class action making the same allegations.  See Blake v. JP Morgan Chase Bank NA, 927 F.3d 701 (3d Cir. 2019).  In the case, the two plaintiffs took out mortgages from the defendant lender in 2005 and 2006.  In 2013, they brought this class action alleging that defendant violated RESPA by referring them to mortgage insurers in exchange for kickbacks.  Specifically, they alleged that the lender referred them to mortgage insurers who used one of the lender’s subsidiaries to provide reinsurance as a disguise of the kickbacks, in violation of 12 U.S.C. § 2607.  Defendant moved to dismiss the action as untimely because RESPA has a one-year statute of limitations that runs “from the date of the occurrence of the violation,” which defendant claimed was when the loans were given in 2005 and 2006.  See 12 U.S.C. § 2614.  Plaintiffs responded with two arguments.  First, they claimed that each monthly payment constituted a separate RESPA violation, because each payment would result in a kickback to defendant’s subsidiary.  However, although they continued making payments after 2005 and 2006, they had not made any payments since 2010—i.e., more than one year before this 2013 action.  Their second argument was that the limitations period was then tolled from 2011 until 2013.  This argument was because in 2011, plaintiffs were part of a putative class who brought a suit against defendant in California based on these same allegations.  The District Court in California dismissed the action as untimely in 2013, and plaintiffs commenced this action while the California appeal was pending.  Plaintiffs argued that their membership in the putative class tolled the limitation period under American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974).  Although the District Court here agreed with their first argument that each payment constituted a separate violation, it disagreed with the second argument and dismissed the action. 

On appeal, the Court affirmed.  First, it agreed with plaintiffs’ argument that each kickback is a separately-accruing violation based on the plain text of RESPA.  “As the text says, the precise conduct that violates the Act is giving or accepting a kickback. The [2005/2006] agreement to make referrals is only an attendant circumstance. . . . a party violates the Act anew each time it takes the discrete act of giving or receiving a kickback under an agreement to make referrals.”  The Court further rejected defendant’s defense that the separate accrual rule would extend the statute of limitations indefinitely:  “If a defendant fears indefinite liability, it need only cease its illegal conduct.”  Second, the Court did not agree with plaintiffs’ argument that their claims were tolled during the pendency of the 2011 California action.  Although American Pipe holds that a timely class action tolls the claims of class members who later bring individual actions, the Supreme Court later clarified that the tolling does not apply to new class actions.  See China Agritech, Inc. v. Resh, 138 S. Ct. 1800 (2018).  Among other issues, if plaintiffs’ argument were accepted, “new class actions would re-toll all class actions, letting class claimants stack their claims forever.”  Accordingly, the Court affirmed the dismissal.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Dylan Goetsch at