Alert December 15, 2009

Federal Appeals Court Decertifies Putative Class for Alleged Violations of RESPA

The Fifth Circuit recently overturned the certification of a putative statewide Real Estate Settlement Procedures Act class action alleging excessive charges for title insurance. Plaintiffs claimed a title insurer violated a Texas law requiring automatic title insurance discounts on refinances where the prior loan was less than seven years old. Plaintiffs alleged that the insurer’s “over-charge” (by failing to discount) constituted an unearned fee, which was allegedly improperly split with the insurer’s agents in violation of RESPA Sections 8(b) and 8(c). The Fifth Circuit reversed the class certification grant, holding that individual issues predominated over class issues. The Court found that plaintiffs needed to demonstrate that the alleged “overcharge” was not justified by any services performed by the title insurer or its agents for each potential class member, requiring individual proof for each class member, and making class certification inappropriate. The Court upheld the certification of plaintiffs’ secondary equitable state law claims, but ordered the district court to consider whether a supplemental jurisdiction over the state law claims was justified given the decertification of the RESPA class.  Click here for Mims v. Stewart Title Guaranty Company, No. 09-10127 (5th Cir., Dec. 9, 2009).