The United States Court of Appeals for the Third Circuit recently affirmed a District Court’s grant of summary judgment dismissing a class action complaint that alleged that a lender’s captive reinsurance arrangement violated the anti-kickback provisions of the Real Estate Settlement Procedures Act (“RESPA”) because the claims were time-barred.  See Cunningham v. M & T Bank Corp., 2016 WL 683372 (3d Cir. Feb. 19, 2016), as amended (Feb. 24, 2016).  In the case, the named plaintiffs’ closed on home mortgage loans with a lender in 2007 and 2008.  The plaintiffs all were required to purchase mortgage insurance because the loan amount exceeded 80% of the property value.  The lender selected mortgage insurers who would then reinsure the policies with the lender’s own reinsurance company.  All plaintiffs received a disclosure at their closing that noted that the lender may enter these captive reinsurance agreements and were given the option to opt out, but none chose to do so.  In 2012, they filed a lawsuit alleging that this agreement violated RESPA’s prohibition against kickbacks.  See 12 USC 2607.  The lender moved to dismiss because the alleged violations occurred on the date of the closing and the plaintiffs were outside RESPA’s one-year statute of limitations.  The District Court denied the motion to allow discovery on whether the claims had been equitably tolled.  After the parties conducted discovery, the lender moved for summary judgment on the statute of limitations issue, and the District Court granted the motion.  On appeal, the Third Circuit affirmed the decision, holding that the plaintiffs had not exercised reasonable diligence in investigating potential claims under RESPA, and they therefore were not entitled to equitable tolling. 

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.