United States District Court, W.D. Pennsylvania
R. Hornak, United States District Judge
case alleging unlawful practices related to mortgage
insurance is back front and center on the Court's docket
after the named Plaintiffs, individually and on behalf of a
putative class of mortgagors, filed the instant Motion
seeking to lift the now two-year long stay that they
requested and asking for leave to file a Third Amended
Complaint. ECF No. 204.
allege that Defendants Citibank, N.A. and Citimortgage, Inc.,
mortgagees, along with ABN AMRO Mortgage Group, Inc., a
reinsurer, set up a captive reinsurance scheme in which
Defendants charged Plaintiffs monthly insurance premiums for
private mortgage insurance and selected for Plaintiffs
private mortgage insurers who illegally paid kickbacks to
Defendants for non-existent reinsurance services.
Plaintiffs' proposed Third Amended Complaint comes in
four counts: violation of the Racketeer Influenced and
Corrupt Organizations Act (RICO) (Count I), conspiracy to
violate RICO (Count II), violations of the Real Estate
Settlement Procedures Act (RESPA) (Count III), and unjust
enrichment (Count IV). ECF No. 205-1 at 68-82.
say Plaintiffs' proposed RESPA and RICO claims are
time-barred. They urge the Court to deny Plaintiffs leave to
file a Third Amended Complaint and allow the case to proceed.
But if the Court grants leave to amend, Defendants want the
Court to leave the stay in place pending final disposition of
another, similar case brought by Plaintiffs' lawyers on
behalf of other plaintiffs.
reasons that follow, Plaintiffs' Motion for Leave to
Amend will be denied. The Court will set a status conference
regarding the status of the current stay.
party has exhausted its opportunities to amend a pleading as
a matter of course, it may amend a pleading "only with
the opposing party's written consent or the court's
leave. The court should freely grant leave when justice so
requires." Fed.R.Civ.P. 15(a)(2). Although "the
pleading philosophy of the Rules counsels in favor of
liberally permitting amendments to a complaint, " such
decision is left to the "sound discretion of the
district court." CMR D.N. Corp. v. City of
Philadelphia, 703 F.3d 612, 629 (3d Cir. 2013).
"Among the grounds that could justify a denial of leave
to amend are undue delay, bad faith, dilatory motive,
prejudice, and futility." Shane v. Fauver, 213
F.3d 113, 115 (3d Cir. 2000).
Plaintiffs' Proposed Amendment to The RESPA Claim is
means that the complaint, as amended, would fail to state a
claim upon which relief could be granted. In assessing
'futility, ' the District Court applies the same
standard of legal sufficiency as applies under Rule
12(b)(6)." Id. at 115 (citations omitted).
Amendment of the complaint is futile where the claim as
amended would not survive a motion to dismiss because it is
time-barred. Jablonski v. Pan Am. World Airways,
Inc., 863 F.2d 289, 292 (3d Cir. 1988). In the context
of a statute-of-limitations argument, dismissal is proper
"where the complaint facially shows noncompliance with
the limitations period and the affirmative defense clearly
appears on the face of the pleading." Oshiver v.
Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384
n.l (3d Cir. 1994); see also Robinson v. Johnson,
313 F.3d 128, 135-36 (3d Cir. 2002). A facially-untimely
pleading thus can be dismissed as time-barred if, for
example, plaintiffs fail to "plead the applicability of
the [tolling] doctrine" or if "it is plain on the
face of the complaint that the limitations period cannot be
tolled." Menichino v. Citibank, N.A., No.
12-cv-58, 2013 WL 3802451, at *6-7 (W.D. Pa. July 19, 2013)
(collecting Third Circuit cases).
first seek leave to amend their RESPA claim. Each of the
named Plaintiffs obtained their loans between 2005 and 2007,
but they did not file their RESPA claim in this case until
January 13, 2012. ECF No. 1; ECF No. 205-1 at 11-14.
Defendants therefore say that Plaintiffs' proposed
amendment to the RESPA claim is futile because it is facially
untimely under RESPA's one-year statute of
limitations. ECF No. 214 at 12-14.
agree that RESPA's one-year limitations period applies,
and they have previously acknowledged that unless such
limitations period is tolled, the named Plaintiffs'
claims fall outside of it. But Plaintiffs say that their proposed
amendment to the RESPA claim is an attempt to remedy the
statute-of-limitations issue by limiting the alleged RESPA
violations for which they seek relief to those that occurred
within one year of the filing of this lawsuit. See
ECF No. 205 at 4; ECF No. 205-1 at 47 ¶ 163(b).
the context for Plaintiffs' request. The Court dismissed
the RESPA claim in Plaintiffs' First Amended Complaint
because it was facially untimely under RESPA's
limitations period and Plaintiffs had not pled enough facts
to save their claims under any recognized tolling doctrine.
ECF No. 124 at 2. Specifically, the Court concluded that
there were insufficient facts to determine what led
Plaintiffs to discover their RESPA claims, when such
discovery occurred, and whether Plaintiffs exercised due
diligence to attempt to discover such claims. Id. at
Court also rejected Plaintiffs' "continuing
violations" theory. Under that theory, each remittance
of a monthly mortgage payment constituted a continuing
violation of RESPA that reset the accrual date for their
RESPA claim. Id. at 22. In rejecting
Plaintiffs' "continuing violations" theory, the
Court explained that:
RESPA's statute of limitations speaks only of "a
single triggering violation, not multiple violations."
Snow, 332 F.3d at 359 (citing section 2614).
Similarly, in "creating the private right of action for
kickbacks and fee-splitting" in section 2607,
"Congress also spoke of a single 'violation,
'" thus implying that the statutory regime envisions
a kickback scheme with ongoing payments as comprising a
"single integrated transaction." Id. In
this sense, the closing of the mortgage and continuous
premium payments are more properly conceived of as "a
single violation followed by continuing consequences, "
where the closing of the mortgage is the single actionable
violation and the recurring payments towards the mortgage
balance are the continuing ill effects. Id.
(citing United Air Lines, Inc. v. Evans, 431 U.S.
553, 558 (1977)); see also In re Smith, 737 F.2d
1549, 1552 (11th Cir. 1984) (in action involving TILA's
one-year statute of limitations, "[nondisclosure is not
a continuing violation for purposes of the statute of
Id. at 23.
then filed a Second Amended Complaint, which added some meat
to the bones. ECF No. 126. They pled facts making it
plausible that Defendants' fraudulent concealment of
information prevented them from bringing their claim earlier,
that they were not on inquiry notice of the possible
existence of their RESPA claims, and that their lack of due
diligence during the limitations period was reasonable under
the circumstances. Specifically, Plaintiffs set forth some of
the language of the loan documentation, the date that each
Plaintiff received a notice of investigation from counsel,
the date that each Plaintiff consented to counsel's
representation, the dates that each Plaintiff contacted their
mortgagee and private mortgage insurer to learn whether their
mortgage had been reinsured, and what Plaintiffs were told
(or, in some cases, not told) by their mortgagee and private
mortgage insurers' representatives in response. ECF No.
126 at ¶¶ 126-27, 138-84. Taken together, the facts
alleged were ...