MENICHINO et al v. CITIBANK, N.A. et al

Filing 231

OPINION. Signed by Judge Mark R. Hornak on 6/6/17. (bdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

LINDA MENICHINO, et al.,
Plaintiffs,

v.
CITIBANK, N.A., et al.,
Defendants.

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2: 12-cv-00058
Judge Mark R. Hornak

OPINION
Mark R. Hornak, United States District Judge

This 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.
Plaintiffs 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.

Defendants 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 plaintiffa. 1
For the 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.

I. LEGAL STANDARD
Once a party has exhausted its opportunities to amend a pleading as a matter o:f course, it
may amend a pleading "only with the opposing party's written consent or the court's leave. The
court should fredy 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, artd futility."

Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000).

II. ANALYSIS
A. Plaintiffs' Proposed Amendment to The RESP A Claim is Futile
'"Futility' 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 sufficienc:y 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
That case is Weiss v. Bank of America Corp., No. 15-cv-62, 2016 WL 6879566 (W.D. Pa. Nov. 22, 2016), on
appeal, Weiss v. Bank ofAmerica Corp., No. 16-4386 (3d Cir.).
1

2

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, NA., No. 12cv-58, 2013 WL 3802451, at *6-7 (W.D. Pa. July 19, 2013) (collecting Third Circuit cases).
Plaintiffs first seek leave to amend their RESP A claim. Each of the named Plaintiffs
obtained their loans between 2005 and 2007, but they did not file their RESP A claim in this case
until January 13, 2012. ECF No. l; 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. 2 ECF No. 214 at 12-14.
Plaintiffs 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 outsi.de of it. 3 But Plaintiffs say that their proposed amendment to the RESP A claim is
an attempt to remedy the statute-of-limitations issue by limiting the alleged RESP A violations

2 RESPA's statute of limitations provides that "[a]ny action pursuant to the provisions of section 2605, 2607, or
2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction ...
within ... 1 year in the case of a violation of section 2607 or 2608 of this title from the date of the occurrence of the
violation." 12 U.S.C. § 2614 (emphasis added).

3 See, e.g., ECF No. 64 at 42 ~ 117 ("For Plaintiffs and other members of the Classes whose claims accrued prior to
one year preceding the commencement of this action, equitable tolling is available under RESPA and should
apply."); ECF No. 111 at 21 ("Although claims arising under Section 8 of RESP A are subject to a one-year statute
of limitations ... principles of equitable tolling prevented the one-year statute of limitations applicabk to Plaintiffs'
RESPA claims from expiring before Plaintiffs commenced this litigation.").

3

for which they

s~:ek

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).
Here is 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 RESP A claims, when such discovery occurred,
and whether Plaitntiffs exercised due diligence to attempt to discover such claims. Id. at 18-21.
The Court also rejected Plaintiffs' "continuing violations" theory. Under that theory, each
remittance of a monthly mortgage payment constituted a continuing violation of RESP A that
reset the accrual date for their RESPA claim. 4 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
~mvisions a kickback scheme with ongoing payments as
comprising a "single integrated transaction." Id. In this sense, the
dosing 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
/\.ir 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, "[n]ondisclosure is not a
1~ontinuing violation for purposes of the statute of limitations.").

Id. at 23.
4

As to Plaintiffs' previous "continuing violations" theory, the Court's July 19, 2013 decision is the law of the case.
ECF No. 124. But because Plaintiffs' new theory is at least arguably distinct, the Court believes that it is appropriate
to address it on its own merits.

4

Plaintiffs 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 RESP A 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 iii! 126-27, 138-84. Taken together, the facts alleged were sufficient to
show that Plaintiffs might be entitled to equitable tolling of RESPA's one-year statute of
limitations. In hght of this more-detailed pleading, the Court concluded that Plaintiffs' RESP A
claim cleared the motion-to-dismiss hurdle. 5 ECF No. 149 at 2, 6-7.
But then came our Court of Appeals' precedential opinion in Cunningham v. /vf&T Bank
Corp., 814 F .3cl 156 (3d Cir. 2016), a nearly identical case brought by these Plaintiffs' lawyers
on behalf of other plaintiffs. As they did in this case, Plaintiffs' lawyers argued in Cunningham
that the plaintiffs there were entitled to equitable tolling of RESP A's statute of limitations due to
the defendants' fraudulent concealment of information. Id. at 160-61. The Third Circuit-with
the benefit of seeing the evidence that adduced through discovery on the issue of equitable
tolling-disagreed. See id. at 161-64. It concluded that where mortgagors received a disclosure

5

As to this statute-of-limitations issue, the Court would ordinarily consider its February 5, 2014 decision to be the
law of the case. ECF No. 149 at 1-2. But Plaintiffs have now expressly disavowed their equitable tolling argument,
which formed the basis of that decision. See ECF No. 205 at 5, 12.

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explaining affiliate reinsurance in plain language, signed and dated the disclosure, decided not to
opt out of reinsurance with an affiliate of the mortgagees, initialed a document disclosing the
possibility of captive reinsurance, and took no steps after the closing of their loans to investigate
whether such captive reinsurance programs violations of state or federal law, they were not
entitled to equitable tolling of RESPA's statute of limitations. Id This is so because: "[a]t the
closing, Plaintiffs were made aware that the mortgage insurance on their home might be
reinsured with an affiliate of [the mortgagor] and, at that moment, they had all the facts
necessary to develop their claims under RESP A. Yet they failed to take any steps to investigate
during the approximately four-year period between the time of the closing and the time that they
were approached by counsel. This inaction was not reasonable diligence." Id. at 162.
Plaintiffs appear to have sensed a sea change post-Cunningham because they want to
adjust their sails. Despite the Court's earlier conclusion that Plaintiffs had alleged facts sufficient
to show their possible entitlement to equitable tolling, Plaintiffs now-in seeking to file a Third
Amended Complaint-completely disavow their reliance on equitable tolling. ECF No. 205 at 5,
12. Perhaps Plaintiffs' lawyers, having just litigated Cunningham, believe that if discovery
proceeds on the equitable tolling issue, substantially similar evidence will appear here, refuting
their argument that RESPA's statute of limitations should be tolled due to fraudulent
concealment. Whatever the reason, Plaintiffs now argue that their RESP A claim is timely under
an entirely diffi;:rent theory. See ECF No. 217 at 5-6.
Plaintiffs' new theory goes like this. Instead of each monthly mortgage insurance
payment constituting a continuing violation of RESP A, they now contend that each monthly
mortgage insurance payment constitutes a new, independent violation of RESP A. Id Thus,
according to Plaintiffs, they can maintain a RESP A action with respect to those mortgage

6

insurance payments made within one year of the date of the filing of their original Complaint,
ECF No. 205-1 at 182, because each of those payments constitutes a new violation of RESP A
with its own one-year statute of limitations. ECF No. 217 at 5-6.
The Court concludes that Third Circuit precedent precludes the application of Plaintiffs'
theory. The Third Circuit in Cunningham recently reaffirmed that RESP A's statute of limitations
"runs from the date of the occurrence of the violation ... which begins at the closing of the
loan." Cunningham, 814 F.3d at 160 (citing with approval In re Cmty. Bank of N Virginia, 622
F.3d 275, 281, 303 (3d Cir. 2010) ("RESPA's one-year statute of limitations ... begins to run
'from the date of the occurrence of the violation,' i.e., the date the loan closed .... As noted, a
claim for damages ... under RESP A ... is subject to a one-year limitations period that begins to
run from the date the loan closed.") (citations omitted)).
In the face of claims very similar to those here, the Cunningham court concluded that
plaintiffs who closed their loans in 2007 and 2008 and filed suit alleging violations of RESP A in
2012 brought their suit "several years after the statute of limitations had expired." 814 F.3d at
160-61. Rather than looking to the dates of the plaintiffs' mortgage insurance premium payments
for the purposes calculating RESP A's statute of limitations, the Cunningham court looked to the
dates of the plaintiffs' loan closings. See id. It then turned to the doctrine of equitable tolling to
determine whether the plaintiffs' claims were timely despite being raised after the expiration
RESP A's one-year statute of limitations. See id.
Plaintiffs here cannot avoid the logic of Cunningham by rebranding, after five years, a
reinsurance scheme they believes violates RESP A as a series of new, independent violations that
occurred when they made their private mortgage insurance payments each and every monthparticularly where, as they allege in their proposed Third Amended Complaint, (1) they

7

prospectively agreed on the date of the loan closing to pay for private mortgage insurance over
the life of the loan, (2) the loan documentation itself contained language informing them that
such mortgage iinsurance may be part of a captive reinsurance arrangement, (3) the loan
documentation explained how such captive reinsurance arrangement was supposed to work, and
(4) the amount of their mortgage insurance premium and/or the captive reinsurer to be paid was
set on the date of loan closing. See ECF No. 205-1 at 11-14, 43-44, 54. If Defendants' captive
reinsurance scheme violated RESP A as Plaintiffs claim, the gravamen of that violation occurred
when Plaintiffs closed their loans, see Snow v. First American Title Ins. Co., 332 F.3cl 356, 359
(5th Cir. 2003), and the Plaintiffs' subsequent monthly payments were the continuing
consequences of that violation. See, e.g., United Air Lines, Inc. v. Evans, 431 U.S. 553, 558
(1977).
In sum, although the Third Circuit's decision in Cunningham dealt primarily with the
application of equitable tolling, Plaintiffs' new theory does not run counter to applying the core
reasoning underlying that decision in this case. Accepting the allegations in their proposed Third
Amended Complaint as true, the Plaintiffs were "made aware that the mortgage insurance on
their home might be reinsured with an affiliate of [Defendants] and, at that moment, they had all
the facts necessary to develop their claims under RESP A. Yet they failed to take any steps to
investigate during the approximately four-year period between the time of the closing and the
time that they were approached by counsel." 6•7 Cunningham, 814 F.3d at 162; see also ECF No.
205-1 at 11-14, 43-44, 54, 56-66; ECF No. 205 at 5, 12.

More specifically in this case, Plaintiffs have disavowed their reliance on any doctrine of equitable tolling under
which such investigative steps might have relevance. ECF No. 205 at 5, 12.

6

Plaintiffs' new theory also does not run counter to applying the core reasoning underlying this Court's earlier
Opinion rejecting the application of the continuing violations doctrine. See ECF No. 124 at 23 ("RESPA's statute of
limitations speaks only of a single triggering violation, not multiple violations. 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
7

8

In a last

c~ffort

to save their RESP A claim, Plaintiffs argue that Cunningham and In re

Cmty. Bank of N Virginia are inapposite because Plaintiffs' new theory has been endorsed by

Richard Cordray,, the Director of the Consumer Financial Protection Bureau (CFPB). To support
their position, Plaintiffs rely upon a 2015 CFPB administrative decision signed by Director
Cordray involving captive reinsurance arrangements, In re PHH Corp., et al., No. 2014-CFPB0002 (docketed at ECF No. 205-12). In that administrative decision, Director Cordray
distinguished between a theory of liability based upon continuing violations of RESP A and a
theory of liability for new violations of RESPA with each payment. ECF No. 205-12 at 23, 2728.
With respect to what Plaintiffs previously called their "continuing violations" theory,
Director Cordray stated that that theory should not allow plaintiffs to use each new mortgage
payment in a captive reinsurance arrangement to bring within the statute of limitations every
earlier payment since the signing of the mortgage. Id. at 27-28. In so concluding, Director
Cordray directly cited to this Court's earlier decision in this case: "(T]he plain language of
RESP A does not envision ... a cumulated series of events as giving rise to a cause of action." Id.
at 28.
With respect to the theory on which Plaintiffs now attempt to rely, Director Cordray
concluded that a mortgagee "violate[s] RESP A every time it accept[s] a reinsurance payment"
under a captive reinsurance scheme. Id. at 23-27. Director Cordray reasoned that a new violation
of RESP A occurs, and thus a new statute of limitations runs, whenever plaintiff makes a
that the statutory regime envisions a kickback scheme with ongoing payments as comprising a single integrated
transaction. 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.")
(citations and quotations omitted). The Third Circuit has clarified that "[a] continuing violation is occasioned by
continual unlawful acts, not continual ill effects from the original violation," and in any case, it "is not a substitute
for a plaintiffs awareness of and duty to assert his/her rights in a timely fashion." Bennett v. Susquehanna Cty.
Children & Youth Servs., 592 F. App'x 81, 85 (3d Cir. 2014).

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payment subject to a captive reinsurance scheme. Id. In other words, the statute of limitations
begins to run at closing if a plaintiff pays for the entirety of a service at the closing, but in a
captive reinsurance case, a new statute of limitations for each payment begins to run at the time
of each payment-typically each month-because each payment constitutes a new violation of
RESPA. Id. at 23-27.
Given that Director Cordray's interpretation of RESPA's statute of limitations in In re
PHH appears to be at odds with settled Circuit precedent as expressed in Cunningham and In re
Cmty. Bank of N. Virginia, one question is what weight or deference, if any, should the Court

give Director Cordray's interpretation?
The Supreme Court has suggested that an agency's statutory interpretation made within
the context of a formal adjudication is entitled to Chevron 8 deference, making it "binding in the
courts unless procedurally defective, arbitrary or capricious in substance ... manifestly contrary
to the statute," unconstitutional, or outside the bounds of its jurisdiction. 9 US. v. Mead Corp.,
533 U.S. 218, 227-31 n.6 (2001). Even if it were not entitled to Chevron deference, Director
Cordray's statutory interpretation might be entitled to Skidmore 10 deference, making it
persuasive authority the weight of which is typically determined by looking to the agency's care,
consistency, fonnality, and relative expertness in administering its own statute. Id. at 228.

8

Chevron, U.S.A., Inc. v. Nat. Res. Def Council, Inc., 467 U.S. 837 (1984)

See also Christensen v. Harris Cty., 529 U.S. 576, 587 (2000) (suggesting, but not deciding, that formal
adjudications are entitled to Chevron deference); 33 Fed. Prac. & Proc. Judicial Review § 8341 (1st ed.) ("Two
recent Supreme Court opinions, Mead and Christensen, ... suggest that statutory interpretation undertaken in the
course of formal adjudication must be given the stiffer Chevron deference.").

9

10

Skidmore v. Swijt & Co., 323 U.S. 134 (1944)

10

Not so here. The Third Circuit's decision in Cunningham post-dates Director Cordray's
statutory interpretation in In re PHH Corp. by eight months. 11 Although the Third Circuit did not
reference In re PHH Corp. in its Cunningham opinion, this Court will not stray from that Circuit
precedent based on an assumption that the Third Circuit (or counsel, particularly Plaintiffs'
counsel) overlooked Director Cordray's interpretation ofRESPA's statute of limitations. Such an
assumption is unwarranted given the eight-month interval between the relevant decisions and the
fact that counse!l for the plaintiffs in Cunningham-the very same attorneys who represent
Plaintiffs in this case--cited to Director Cordray's In re PHH decision in their briefing to the
panel in that case, see No. 15-1412, Appellants Br. at 7, 20 (3d Cir. July 23, 2015), and cited to
the In re PHH decision again in their Petition for Rehearing or Rehearing En Banc, which was
denied by a majority of the active judges of the Third Circuit. See id., Appellants Pet. for Reh'g
at 19 n. 7 (March 18, 2016); Order Den. Pet. Reh'g (April 1, 2016).
To be sure, the Third Circuit did not explicitly resolve the question of whether Director
Cordray's statutory interpretation is entitled to controlling, or even persuasive, weight. But in the
face of and well after Director Cordray's decision In re PHH, our Court of Appeals reaffirmed
that RESP A's statute of limitations "runs from the date of the occurrence of the violation . . .
which begins at the closing of the loan," and it reaffirmed as much without engaging in any
discussion of when the Cunningham plaintiffs' most recent mortgage insurance premiums were
paid. See Cunningham, 814 F .3d at 160-62 (citing with approval In re Cmty. Bank of N. Virginia,
622 F.3d at 281, 303) ("RESP A's one-year statute of limitations ... begins to run 'from the date
of the occurrence of the violation,' i.e., the date the loan closed .... As noted, a claim for

11

The Cunningham opinion was filed on February 19, 2016, and amended on February 26, 2016. 814 F.3d at 156.
The Jn re PHH decision is dated June 4, 2015. ECF No. 205-12 at 39.

11

damages ... under RESPA ... is subject to a one-year limitations period that begins to run from
the date the loan closed.") (citations omitted)).
In deciding that Plaintiffs' RESPA claim is time-barred (absent equitable tolling, which
now appears to be out of this case), the Court notes that it reaches a different conclusion
regarding the interpretation RESPA's statutory limitations period than did the court in White v.

PNC Fin. Servs. Grp., Inc., No. 11-cv-7928, 2017 WL 85378 (E.D. Pa. Jan. 10, 2017) and Blake
v. JPMorgan Chase Bank, NA., No. 13-cv-6433, 2017 WL 1508995 (E.D. Pa. Apr. 26, 2017).
The Court does not do so lightly. It nonetheless reads Third Circuit precedent in Cunningham
and In re Cmty. Bank of N Virginia differently, and concludes that at least on the facts alleged in
this case, such a reading is in accord with the weight of federal authority concerning statutory
limitations periods generally and RESPA's statute of limitations in particular. 12 Of note, no

In doing so, this Court has canvassed a wide swath of decisional law bearing on this issue, and notwithstanding
the analysis in White and Blake, it concludes that in the context of this case and as to this particular argument,
Cunningham's general conclusion is fully applicable and does not result in a decisional outlier in this case if it is
applied according to its terms. See, e.g., Reiter v. Cooper, 507 U.S. 258, 267 (1993) ("While it is theoretically
possible for a statute to create a cause of action that accrues at one time for the purpose of calculating when the
statute of limitations begins to run, but at another time for the purpose of bringing suit, we will not infer such an odd
result in the absence of any such indication in the statute."); Clark v. Iowa City, 87 U.S. 583, 589 (1874) ("All
statutes of limitations begin to run when the right of action is complete."); Clemmons v. Mortgage Electronic
Registration Systems, Inc., No. 13-3204, 2014 WL 12013437, at *4 (10th Cir. 2014) (courts "generally interpret
[RESPA's statute of limitations] to mean the date of the relevant closing."); Merritt v. Countrywide Fin. Corp., 759
F.3d 1023, 1036 1040 (9th Cir. 2014) (letting stand the district court's conclusion that RESPA's statute of
limitations begins to run from the date of the loan's closing and turning to the issue of equitable tolling); Derbabian
v. Bank of Am., NA., 587 F. App'x 949, 955 (6th Cir. 2014) (concluding under the limitations period of an
analogous statute, the Truth in Lending Act, which contains the same "date of the occurrence of the violation"
language as RESPA, that such limitations period begins to run when a mortgagor enters into a loan agreement);
Khadher v. PNC Bank, N.A., 577 F. App'x 470, 479 (6th Cir. 2014) (same); Velardo v. Fremont Inv. & Loan, 298 F.
App'x 890, 892 (I Ith Cir. 2008) (same); Snow, 332 F.3d at 359 ("The phrase 'the date of the occurrence of the
violation' [from th~: statutory text of RESPA] refers to the closing ... because that is when the agents earned the
allegedly prohibited 'thing of value.' ... Congress spoke of a single triggering violation, not multiple violations ....
Had Congress wanted the various steps in a single transaction to trigger the statute of limitations multiple times, it
would have spoken of multiple 'violations.' ... [T]his use of the term "violation" refers to the single integrated
transaction, regardl1~ss how many steps it has .... Congress directed RESPA toward the closing."); MacNamara v.
Hess, 67 F. App'x 139, 143 (3d Cir. 2003) ("the proper focus for accrual purposes is on the time of the alleged
unlawful acts, 'not upon the time at which the consequences of the acts became most painful."') (quoting Delaware
State College v. Ricks, 449 U.S. 250, 258, (1980)); Perez v. Jpmorgan Chase Bank, N.A., No. 14-cv-2279, 2016 WL
816752, at *4 (D.N.J. Feb. 29, 2016) (Under RESPA, "[t]he 'date of the occurrence' refers to the date of the loan's
closing."); Vehec v. Asset Acceptance, LLC, No. 15-cv-1035, 2016 WL 4995066, at *3 (W.D. Pa. Aug. 8, 2016) ("In
order to pursue this 'continuing violations theory,' Plaintiffs must be able to demonstrate that each withdrawal was
12

12

Court of Appeals has held that each monthly mortgage insurance payment constitutes a new and
independent violation of RESP A or that RESP A's statutory limitations period is otherwise tied to
the date of the most recent monthly mortgage insurance payment(s), particularly in a case such as
this one, where (1) a plaintiff prospectively agreed on the date of the loan closing to pay for
private mortgage insurance over the life of the loan, (2) the loan documentation itself contained
language infonning the borrower that such mortgage insurance may be part of a captive
reinsurance arrangement, (3) the loan documentation explained how such captive reinsurance

part of a 'persistent and ongoing pattern, not continuing consequences of an original violation.' The theory is most
frequently applied in civil rights cases and employment suits involving allegations of discrimination and hostile
work environment where repetition and continuity of conduct are part and parcel of the claim itself. Courts generally
have been hesitant to expand it to other claims. This may be particularly true where the statute of limitations speaks
only of 'a single triggering violation, not multiple violations."') (citing Menichino, 2013 WL 3802451, at *6-7)
(collecting cases); Taylor v. Wells Fargo Bank, NA., 85 F. Supp. 3d 63, 77 (D.D.C. 2015) ("Courts have held that
the 'date of the occurrence' language in [RESPA] refers to the date of the closing.") (collecting cases); Strong v.
Countrywide Home Loans, Inc., No. 15-cv-1536, 2015 WL 7185464, at *2 (D. Or. Nov. 13, 2015) ("Like TILA,
RESPA violations generally occur at the time of consummation of the transaction."); Joseph v. Am. 's Wholesale
Lenders, No. 13-cv-2479, 2014 WL 12540445, at *5 (S.D. Tex. Oct. 17, 2014) ("The [RESPA] limitations period
starts from the date of closing, regardless of how many violations took place thereafter."); Gorbaty v. Wells Fargo
Bank, NA., No. 10-,~v-3291, 2014 WL 4742509, at *10 (E.D.N.Y. Sept. 23, 2014) ("RESPA's one-year statute of
limitations[] runs from the date of the alleged violation-i. e., the payment of the illicit referral or unearned fees at
closing."); Baker v. LNV Corp., No. l l-cv-14086, 2013 WL 3868078, at *5 (E.D. Mich. July 25, 2013) ("By the
terms of [RESPA], the limitations period runs from the date of the 'occurrence,' not the date the violation is
discovered, and the date of the occurrence is the date on which the loan documents are executed."); Collier v. Ocwen
Loan Servicing, LLC, No. 12-cv-2937, 2013 WL 3715699, at *4 (N.D. Ohio July 15, 2013) ("A RESPA violation
occurs when the loan closing takes place."); Carter v. Bank of Am., NA., 888 F. Supp. 2d l, 25 (D.D.C. 2012) ("'a
cause of action under§ 2607 accrues on the date of the closing,' and the statute of limitations is one year."); Alley v.
Aurora Loan Servs. LLC, No. 10-cv-02163, 2011 WL 3799035, at *14 (D. Colo. July 21, 2011) ("[T]he date of the
occurrence of the violation refers to the closing."); Melancon v. Countrywide Bank, No. 10-cv-1723, 2011 WL
692051, at *6 (E.D. La. Feb. 18, 2011) (calculating RESPA statute of limitations from the date that "the fee was
assessed and clearly disclosed" to the plaintiffs); Palmer v. Homecomings Fin. LLC, 677 F. Supp. 2d 233, 237
(D.D.C. 2010) ("A c:ause of action under § 2607 accrues on the date of the closing."); Hennington v. Bank of Am.,
No. 10-cv-1350, 2010 WL 5860296, at *5 (N.D. Ga. Dec. 21, 2010) ("The violation occurs, and the one year begins
to run, when the loan closing documents are executed."); Dusich v. Seeley, No. 10-cv-1239, 2010 WL 4384249, at
*4 (M.D. Pa. Oct. 29, 2010) ("RESPA's statute of limitations ... requires suits under RESPA to be asserted within
one year of the date of the closing."); Engel v. First Am. Title Ins. Co., No. 09-cv-5140, 2010 WL 3819372, at *3
(W.D. Wash. Sept. 30, 2010) ("'The date of the occurrence' [under RESPA] is interpreted to refer to the closing.");
Merritt v. Countrywide Fin. Corp., No. 09-cv-01179, 2009 WL 10656726, at *4 (N.D. Cal. Oct. 28, 2009)
("Plaintiffs' claims under Sections 8 and 9 of RESPA relating to kickbacks, title insurance, and other allegedly
wrongfully charged fees, are barred by the one-year statute of limitations because Plaintiffs filed suit nearly three
years after closing on their loan."), rev 'din part, vacated in part on other grounds, 759 F.3d 1023 (9th Cir. 2014),
and aff'd in part, vacated in part on other grounds, 583 F. App'x 662 (9th Cir. 2014); Kamara v. Columbia Home
Loans, LLC, 654 F. Supp. 2d 259, 265 (E.D. Pa. 2009) ("The Court agrees ... that the [RESPA] statute of
limitations in this case began to run on the date of the closing, December 6, 2006."); Mullinax v. Radian Guar. Inc.,
199 F. Supp. 2d 311, 324-25 (M.D.N.C. 2002) (concluding that a violation of RESP A occurs at loan's closing, not
with each subsequent monthly private mortgage insurance premium payment).

13

arrangement was supposed to work, and (4) the amount of their mortgage insurance premium
and/or the

captiv1~

reinsurer to be paid was set on the date of the loan closing. See ECF No. 205-1

at 11-14, 43-44, 54.
The Court will therefore deny Plaintiffs' request to amend their RESP A claim based on
their new theory. Such an amendment would be futile even if the proposed RESP A claim related
back to the time: of the filing of the original pleading because it is time-barred and because
Plaintiffs have now expressly disavowed their reliance on any equitable tolling doctrine. 13
B. Plaintiffs Unduly Delayed in Filing The Proposed RICO Claims

Plaintiffs also seek leave to amend to add two new RICO claims. A court may deny leave
to amend when the party seeking amendment has engaged in undue delay, exercised bad faith, or
used dilatory tactics, or when amendment would cause prejudice to the opposing party. See
Shane, 213 F.3d at 115. "Delay alone will not constitute grounds for denial." Bjorgung v.
Whitetail Resort, LP, 550 F.3d 263, 266 (3d Cir. 2008) (citations omitted). But "[d]elay becomes

'undue,' and thereby creates grounds for the district court to refuse leave, when it places an
unwarranted burden on the court or when the plaintiff has had previous opportunities to amend."

Id. The question of whether delay is undue focuses "on the movant's reasons for not amending
sooner," id., as well as considerations of judicial economy and finality. USX Corp. v. Barnhart,
395 F.3d 161, 168 (3d Cir. 2004).
The Comt concludes that Plaintiffs have unduly delayed in bringing their RICO claims.
Plaintiffs obtained their loans between 2005 and 2007, admit they were put on notice of the
possibility of their claims in 2011 or 2012, see ECF No. 205-1 at 56-66, filed this lawsuit in
January of 2012, and yet did not file their RICO claims or seek leave to file their RICO claims

13 The Court need not address Defendants' argument that the rule oflenity has bearing on the interpretation or
application of RESP A's statute of limitations.

14

until September of 2016. See ECF Nos. 1, 204-05; see also White v. PNC Fin. Servs. Grp., Inc.,
No. 11-cv-7928, 2017 WL 85378, at *12-13 (E.D. Pa. Jan. 10, 2017) (denying plaintiffs leave to
amend to add RICO claims because of their undue delay in a case nearly identical to this one in
terms of its substance, timeline, and procedural posture); Blake v. JP Morgan Chase Bank, N.A.,
No. 13-cv-6433, 2017 WL 1508995, at *10-11 (E.D. Pa. Apr. 26, 2017) (denying plaintiffs leave
to amend to add RICO claims in another similar case after a three-year delay).
As in White, this case has been on the Court's docket for over five years. As in White,
Plaintiffs have had three earlier chances to bring RICO claims: (1) the original Complaint in
January of 2012:, (2) the First Amended Complaint in December of 2012, and (3) the Second
Amended Complaint in August of 2013. See ECF Nos. 1, 64, 126. And as in White, Plaintiffs
have pointed to no recent change in law and/or no recently-discovered fact(s) that might explain
their delay. 2017 WL 85378, at *12-13; see also Blake, 2017 WL 1508995, at *11 (Plaintiffs
"have provided no reason explaining why they now assert brand new RICO claims more than
four years after being contacted by counsel.").
Plaintiffa say the age of this case is not indicative of delay because the Court has granted
three stays for a total of about forty months. Although the stays were lengthy, each stay was
ordered at the request of Plaintiffs, see ECF Nos. 43, 165, 196, one of the stays was granted
despite the fact that it was opposed, see ECF No. 169, the stays were not lifted until Plaintiffs
either requested or consented to reopening the case, ECF Nos. 52, 178, Plaintiffs have actively
litigated for a total of over two years in this case's five-plus year history, and this Court has
already issued two lengthy opinions at the motion to dismiss stage. ECF Nos. 124, 149.
Tellingly, Plaintiffs offer no explanation or justification for their delay in asserting the RICO
claims or for not seeking to add them earlier, ECF Nos. 205, 217, beyond in essence implicitly

15

asserting that they really don't have to provide one. That is not the law in this Circuit. See

Cureton v. Nat'l Collegiate Athletic Ass 'n, 252 F.3d 267, 273 (3d Cir. 2001) (noting that the
focus is on the movant's reasons for not amending sooner).
In sum, the Court has-until this point-given Plaintiffs wide latitude to litigate at their
own pace. The Court will not, however, allow Plaintiffs to inject entirely new RICO claims into
this now-five-year-old case, especially considering that Plaintiffs acknowledgement in their
papers that they either did become aware or could have become aware of such claims when they
engaged counsel five or more years ago. See ECF No. 205 at 7, 10; ECF No. 205-1 at 56-66.
The Court will therefore deny Plaintiffs' request to amend to add RICO claims. 14

III. CONCLUSION
For the reasons set forth above, Plaintiffs' Motion for Leave to Amend (ECF No. 204) is
denied. A status conference will be set by further Order of the Court. Among other things, the
parties shall be prepared to discuss (1) the status of Plaintiffs' RESPA claim as pled in their
Second Amende:d Complaint; and (2) any cases pending before the Third Circuit that may have
bearing on the resolution of issues remaining in this case; and (3) whether the current stay should
remain in place.

-

Mark R. Hornak
United States District Judge
Dated: June 6, 2017
cc: All counsel ofrecord

14

The Court need not address Defendants' argument that the filed rate doctrine precludes Plaintiffs' RICO claims.

16