RESPA Kickback Case: Win for Service Providers Based on Standing and Statute of Limitations
On December 7, 2018, the United States District Court for the District of Maryland granted the service providers’ request for summary judgment in a Real Estate Settlement Procedures Act (RESPA) class action lawsuit filed more than 5½ years ago. The Court’s opinion granting the defendants’ motion for summary judgment is found here. The lawsuit, filed March 27, 2013, alleged that multiple defendants, including a real estate brokerage team and a title company, violated RESPA Section 8. The alleged violative actions include using a “sham” Marketing and Services Agreement to engage in a kickback scheme where the real estate brokerage team received unearned fees in exchange for referral of business to the title company. After years of intense motions practice and discovery, the Court held the plaintiffs lacked standing under Article III of the Constitution to bring the RESPA Section 8 claims because there was no injury-in-fact. The Court found that the plaintiffs made no effort to find their own settlement company, did not claim that they were dissatisfied with the title company services provided, and did not claim that the fees paid to the title company were unreasonable or undeserved. The Court also rejected the plaintiffs’ arguments that the statute of limitations should be subject to equitable tolling and ruled that the lawsuit was not filed within the applicable RESPA one-year statute of limitations. The Court explained that equitable tolling required the plaintiffs to establish both that they had been pursuing their rights diligently and that some extraordinary circumstance stood in their way and prevented timely filing of the lawsuit. The Court found that the plaintiffs did not meet either of these required elements and that their claims were time-barred.
On January 2, 2019, Plaintiffs filed a notice of appeal. It may be relevant to this appeal that there was a fully developed record in this case and the Court based its decision on undisputed facts and the plaintiffs’ testimony as to what actions and inactions they took in light of what they knew. This can be distinguished from similar recent RESPA Section 8 decisions by this same Court where equitable tolling arguments also were rejected and motions to dismiss were granted based on pleadings and judicial notice. Five recent motion to dismiss decisions rejecting equitable tolling in RESPA Section 8 claims were consolidated on appeal and were argued at the Court of Appeals for the Fourth Circuit on December 11, 2018 (Case No. 18-1216). The oral argument at the Court of Appeals can be heard here.