The U.S. Court of Appeals for the Ninth Circuit recently held that RESPA provides a plaintiff with a statutory cause of action under its anti-kickback provision, 12 U.S.C. § 2607, even if the plaintiff was not overcharged for settlement services. Accordingly, the Court found that a plaintiff had standing to bring a claim against a title insurance company for violation of RESPA's anti-kickback provision, even though the plaintiff had not alleged an overcharge as a result of the alleged illegal kickback.
Plaintiff filed a complaint against a title insurance company and its publicly traded holding company alleging that the defendants improperly entered into exclusive agency agreements with numerous title insurance agencies, pursuant to which such agencies agreed to sell defendant's title insurance policies in exchange for the purchase of a minority interest in such agencies. Plaintiff alleged that these agency agreements were illegal under the anti-kickback provision of RESPA, 12 U.S.C. § 2607, which prohibits the payment of fees and/or kickbacks in connection with a referral related to a real estate settlement service. Plaintiff further asserted that she was affected by such an exclusive agency agreement in connection with the purchase of her home.
Plaintiff filed a complaint against a title insurance company and its publicly traded holding company alleging that the defendants improperly entered into exclusive agency agreements with numerous title insurance agencies, pursuant to which such agencies agreed to sell defendant's title insurance policies in exchange for the purchase of a minority interest in such agencies. Plaintiff alleged that these agency agreements were illegal under the anti-kickback provision of RESPA, 12 U.S.C. § 2607, which prohibits the payment of fees and/or kickbacks in connection with a referral related to a real estate settlement service. Plaintiff further asserted that she was affected by such an exclusive agency agreement in connection with the purchase of her home.
Defendants moved to dismiss the complaint on the grounds that plaintiff lacked both Article III standing and statutory standing. The district court denied the motion to dismiss and this appeal followed.
The Ninth Circuit affirmed the district court's decision, noting that the only disagreement among the parties was the "injury" requirement for Article III standing. The Court disagreed with the Defendants argument that plaintiff did not suffer a concrete injury because she did not allege that the charge for title insurance was higher than it would have been with the exclusivity agreement. In ultimately holding that RESPA gives rise to a statutory cause of action whether or not an overcharge occurred, the Court first noted that the injury required by Article III can exist solely by virtue of statutes creating legal rights.
The Ninth Circuit affirmed the district court's decision, noting that the only disagreement among the parties was the "injury" requirement for Article III standing. The Court disagreed with the Defendants argument that plaintiff did not suffer a concrete injury because she did not allege that the charge for title insurance was higher than it would have been with the exclusivity agreement. In ultimately holding that RESPA gives rise to a statutory cause of action whether or not an overcharge occurred, the Court first noted that the injury required by Article III can exist solely by virtue of statutes creating legal rights.
The Court then went on to hold that the statutory provisions of RESPA are "clear" that a "person who is charged for a settlement service involved in a violation is entitled to three times the amount of any charge paid" (emphasis in original), and does not limit liability to instances in which a plaintiff is overcharged. The Court also noted that the legislative history of RESPA supported its holding.
Eric Tsai
McGinnis Wutscher Beiramee LLP
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