United States District Court for the District of Maryland Grants Defendant’s Motion to Dismiss For Class Action Kickback Scheme Based On Statute Of Limitations

The United States District Court for the District of Maryland recently held that Plaintiffs’ purported class action claim alleging a kickback scheme against Bank of America, N.A. (“BOA”) was barred by the statute of limitations because Plaintiffs did not meet the requirements for equitable tolling.  See Dobbins v. Bank of Am., N.A., 2018 WL 620456 (D.Md. Jan. 30, 2018).  The case has an extended procedural history.  In the first related action styled Fangman v. Genuine Title, Genuine Title, LLC (“Genuine Title”) was accused of being involved in a kickback scheme along with other named defendants, including BOA.  There, the court held that equitable tolling may be available for the plaintiffs under the Real Estate Settlement Procedures Act (“RESPA”), which offers a one-year statute of limitations, because the facts underlying the claim had been sufficiently concealed from the Fangman plaintiffs despite their due diligence.  Subsequently, highly-publicized enforcement actions arising out of essentially the same kickback scheme were brought by the Consumer Financial Protection Bureau (the “CFPB”) and Maryland Attorney General on January 22, 2015, against Wells Fargo Bank, N.A. and J.P. Morgan Chase Bank, N.A., and on April 29, 2015 directly against Genuine Title.  On May 1, 2015, the CFPB and the Maryland AG announced a settlement with Genuine Title.  In the settlement, which contemplated related litigation by affected consumers, the financial institutions were not required to issue formal notices to the public.  

In the case at bar, Plaintiffs filed a class action complaint against BOA on February 23, 2017. Plaintiffs alleged that they closed on their mortgage loan from BOA on December 23, 2010, and that BOA and Genuine Title engaged in a kickback scheme in violation of RESPA.  Plaintiffs sought to represent all individuals in the United States who were borrowers on a federally related mortgage loan originated or brokered by BOA for which Genuine Title provided a settlement service.  BOA filed a Motion to Dismiss based in part on RESPA’s one-year statute of limitations.  

As an initial matter, the Court held that it may consider materials not integral to the complaint, namely the court filings from the Fangman suit and the subsequent enforcement actions.  Next, the Court held that RESPA’s one-year statute of limitations would bar this lawsuit, which was filed more than six years after Plaintiffs closed on their loan and a year and a half after Plaintiffs’ counsel processed Genuine Title’s data in connection with the prior actions relating to Genuine Title.  The Court held that, to exercise its powers of equitable tolling, a plaintiff must establish both that he has been pursuing his rights diligently and that some extraordinary circumstance stood in his way and prevented timely filing.  The Court found Plaintiffs did not meet the due diligence and extraordinary circumstances elements.  Plaintiffs’ counsel had access to sufficient information to uncover the scheme, including access to Genuine Title’s buyers’ names, addresses, telephone numbers, property addresses, settlement dates, lender and in some cases mortgage broker information.  Moreover, even assuming that BOA’s non-disclosure of its relationship with Genuine Title constituted fraudulent concealment, Plaintiffs’ counsel had access to this information more than a year before it filed this action because it filed a related suit against BOA in January 2015 and processed the extensive data within the same year.  “[T]his Court cannot ignore the role Plaintiffs’ counsel has played in determining the timing of this action—and the other pending cases related to the Genuine Title kickback scheme.”

The Court further held public information indicated both BOA and Genuine Title were potentially involved in an illegal kickback scheme.  The Fangman court’s holding, in which the defendant’s concealment efforts contributed to unique circumstances warranting equitable tolling, as well as the subsequent publicity from that action, made the circumstances here not unique.  “Plaintiffs’ claim for equitable tolling is not ‘unique’ let alone ‘extraordinary’ when the underlying claims and concealment efforts are nearly identical and when the prior Genuine Title litigation and subsequent media coverage rendered critical information discoverable.”  Accordingly, BOA’s Motion to Dismiss was granted because Plaintiffs’ claim was barred by the statute of limitations and not equitably tolled. 

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com or Dylan Goetsch at dgoetsch@riker.com.