MANNERS et al v. FIFTH THIRD BANK et al
Filing
162
MEMORANDUM. Signed by Judge Mark R. Hornak on 7/19/13. (bdb)
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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
CHRISTOPHER MANNERS, et al.,
individually and on behalf of all
others similarly situated,
Plaintiffs,
v.
FIFTH THIRD BANK, et al.,
Defendants.
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Civil Action No. 12-0442
MEMORANDUM
Mark R. Hornak, United States District Judge
This is a putative class action for mortgage services fraud pursuant to the Real Estate
Settlement and Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq.. Plaintiff Christopher
Manners, on behalf of himself and others similarly situated, claims that Defendants Fifth Third
Bank and Fifth Third Mortgage Company (the mortgagee), Fifth Third Mortgage Reinsurance
Company (the captive reinsurer), Radian Guaranty Inc., and Mortgage Guaranty Insurance
Corporation (the primary mortgage insurers, or PMIs) engaged in an unlawful fee-splitting and
kickback arrangement in connection with the Plaintiffs' residential mortgages. The Plaintiffs
also bring a state-law unjust enrichment claim pursuant to 28 U.S.C. § 1367. They request treble
damages, attorneys' fees, and costs. The Defendants have filed Motions to Dismiss (ECF Nos.
82,89) in accordance with Federal Rule of Civil Procedure l2(b)(6),1 arguing that the Plaintiffs'
I The FAC originally named as defendants three primary mortgage insurance companies which were not
alleged to have sold primary mortgage insurance to any of the named Plaintiffs. Accordingly, those defendants
moved for dismissal pursuant to Fed. R. Civ. P. 12(b)(l) on jurisdictional grounds. The Plaintiffs later voluntarily
terminated those defendants from the case (ECF Nos. 131, 132, and 136), thus rendering moot those portions of the
motions to dismiss.
claims are untimely because they were brought outside of RESPA's one-year statute of
limitations. See 12 U.S.C. § 2614.
This lawsuit is very closely related to another on this Court's docket, Menichino, et at v.
Citibank, N.A.. et al., No. 12-cv-0058 (W.D.Pa. filed Jan. 13,2012). The substantive claims and
factual allegations are nearly identical, and many of the same counsel are involved.
For
substantially the same reasons set forth in that Opinion, the reasoning of which the Court
incorporates by reference here, the Plaintiffs' have failed to sufficiently plead how equitably
tolling applies to save their facially untimely claims.
I. DISCUSSION
This action was originally filed on April 5,2012. The Plaintiffs filed their First Amended
Complaint ("FAC" or "Complaint," ECF No. 75) on September 28,2012, and the Defendants
filed separate Motions to Dismiss on November 28, 2012.
As in Menichino, the Plaintiffs
predicate their entitlement to equitable tolling on two grounds: (1) the Defendants' form
mortgage documents and disclosures, which they allege actively misled them by creating the
artifice of a seemingly legitimate business arrangement and made it impossible for them to
uncover the fraud, despite their full and diligent participation in the loan process, and (2) the
Defendants' customer service representatives' stonewalling them when they attempted to learn
more about their mortgages. (F AC at ~~ 151-55.)
For substantially the same reasons discussed in Menichino, the Court finds that the
Plaintiffs have successfully pled that Fifth Third's disclosure could be actively misleading. 2
2 Fifth Third's disclosure more fully states that the mortgagee or subsequent holder of the Plaintiffs' loans
"may, directly or through an affiliated company [] enter into a reinsurance or other risk sharing agreement with the
insurance company that will be providing mortgage insurance covering your loan. Under such an agreement [the
reinsurer] may assume a portion of the risk associated with such mortgage insurance. In exchange for its assumption
2
Fifth Third's disclosure affinnatively states that the mortgagee's reinsurance subsidy would
receive a portion of the Plaintiffs' monthly mortgage payment "[i]n exchange for its assumption
of [reinsurance] risk." (F AC, Ex. 59.) Accepting as true the voluminous allegations regarding
the "pay-to-play" scheme between the mortgagees and PMIs, such a disclosure would be actively
misleading and affinnatively deceptive because no real risk was allegedly transferred between
the parties to the captive reinsurance arrangement.
However, and as was the case in Menichino, the Plaintiffs here have failed to adequately
plead the circumstances under which they became aware of the possible existence of their claims
and why they could not have achieved this awareness during the limitations period and filed suit
in a timely manner. The Complaint here states only that the "Plaintiffs were able to discover the
underlying basis for the claims alleged herein only with the assistance of counseL" (Id. at
~
149.)
Apart from this conclusory allegation about how (and not when) they may have learned that they
had claims, the Complaint says nothing about what prompted the Plaintiffs' discovery or when it
occurred, nor does it aver with any specificity why this was possible only several years after the
limitations period expired.
Absent these facts, and as this Court held in Menichino, a detennination cannot be made
as to whether the Plaintiffs' alleged due diligence was, as a threshold legal matter, reasonable
under the circumstances. The Complaint states that each named Plaintiff made one or two calls
to their mortgagee and PMI, spoke with a customer service representative who could not answer
their questions about captive reinsurance, and then stopped investigating. (FAC at
~~
151-55.)
of such risk, [the reinsurer] may receive a percentage of the mortgage insurance premium paid to obtain the
mortgage insurance covering your loan. The reinsurance of other such risk sharing agreement would not increase the
mortgage insurance premium you payor increase the period for which mortgage insurance is required. If you do not
want the mortgage insurance on your loan to be reinsured or included in the risk sharing agreement in this manner,
59.)
please send a letter to that effect to us at the address listed below." (ECF No. 75,
3
In the case of named Plaintiffs Brent and Rosemary Shank, after the Shanks say they were
informed by a customer service representative at Fifth Third that their mortgage was insured by
Radian Guaranty, Plaintiffs' counsel contacted counsel for Radian to confirm that this was the
case, yet they allege that no reply was ever provided. (FAC at
~
154.) Although there may be
truth in the Plaintiffs' generalized allegation that the average consumer "is neither an insurance
expert nor a reinsurance expert" (FAC
~
160), such expertise is not required to state how and
when the Plaintiffs became aware of the possible existence of their claims and why contacting
only customer service representatives several years after they fully read their closing documents
was reasonable due diligence, and why they could not have done this within the limitations
period. Without these basic facts - all of which, if they existed, were in the Plaintiffs' possession
when they filed the Complaint
the Court cannot determine whether discovery could plausibly
show that their untimely claims should be equitably tolled.
II. CONCLUSION
For the reasons discussed above and as set forth in this Court's opinion in Menichino,
Plaintiffs' RESPA and supplemental unjust enrichment claims will be dismissed without
prejudice. An appropriate order follows.
Mark R. Hornak
United States District Judge
Dated: July 19, 2013
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