Quinn Emanuel recently obtained a dismissal for its client United Guaranty Residential Insurance Company in a case in federal court in the Eastern District of California.
Plaintiff brought a putative class action against United Guaranty, a mortgage insurer, along with other mortgage insurers and the lender HSBC, contending that captive reinsurance—purchasing mortgage reinsurance from the same bank that issued the underlying loan—violated the anti-kickback prohibition of the Real Estate Settlement Procedures Act of 1974 (“RESPA”). While United Guaranty disputed all of Plaintiff’s theories of liability, the firm brought a motion to dismiss on the basis that RESPA’s one-year statute of limitations had expired, because Plaintiff’s loan closed in November 2006, and the lawsuit was filed on March 12, 2012, more than five years later.
United Guaranty sought dismissal because, among other reasons, Plaintiff showed no diligence at all in the five-year period between when his loan closed and when he retained counsel. In an attempt to explain his lack of diligence, Plaintiff asserted that diligence would have been futile because defendants had fraudulently concealed his claims, and that the failure to disclose the specifics of the alleged “scheme” meant that the statute of limitations should have been tolled. Plaintiff further asserted that since his claims were not discoverable without the aid of an attorney, they had to be tolled until he retained counsel.
The Court (O’Neill, J) rejected Plaintiff’s theories, noting that Plaintiff had alleged no diligence over the course of five years other than a single phone call in 2012. The Court also rejected Plaintiff’s claim that the need for counsel to understand a claim necessitates tolling, because the result would be “any plaintiff who requires the assistance of counsel to discover the existence of a claim, including plaintiffs who conduct virtually no diligence, would be automatically entitled to equitable tolling of the statute of limitations for an indefinite period of time until that plaintiff retains counsel.” The court also rejected Plaintiff’s claim of fraudulent concealment, finding it had not been plead with particularity.
Plaintiff did not appeal the court’s decision, and despite being granted leave to amend, instead voluntarily dismissed his claims. Plaintiff’s counsel has asserted nearly identical claims in multiple other class actions, and this decision is significant as it is the first to fully resolve the motions to dismiss.