RESPA Class Action Claim Against Title Insurer Fails
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On October 10, 2008, Judge Ronald B. Leighton of the United States District Court for the Western District of Washington dismissed a four-state class action claim against Chicago Title Insurance Company based upon Section 8(b) of the Real Estate Settlement Practices Act.
The statute prohibits fee splitting for real estate settlement charges except between parties that provide some service to the purchaser/borrower. The plaintiff class representative alleged that Chicago Title was liable for restitution, treble damages and attorney's fees to borrowers in Washington, Oregon, Michigan and Tennessee and claimed that Chicago Title had improperly split excessive title insurance premiums with its title agent.
In an order granting Chicago Title’s motion to dismiss, the court rejected the class action claim, as alleged, because the plaintiff class representative acknowledged that both Chicago Title and its title agent had performed some work. The court rejected plaintiffs' attempt to expand the statute to prohibit excessive charges, noting that other federal courts have previously rejected attempts to use the RESPA as a price control statute.
