From the August, 2002 issue of of The Title Insurance Law Newsletter
The Eighth Circuit has reversed the Minnesota district court's dismissal of a complaint alleging that two related title insurers violated RESPA by setting up sham limited partnerships pay fees to real estate agents for referring title insurance business to the partnerships, which in turn passed the business on to the title insurers.
The trial court had dismissed the complaint because the plaintiffs failed to allege that their loans were "federally related." Section 12 U.S.C. ยง 2607(a) prohibits kickbacks for the referral of "a real estate settlement service involving a federally related mortgage loan." The federal district court ruled that it did not have jurisdiction because the plaintiffs had failed to assert this basic predicate of RESPA liability.
The plaintiffs appealed. The Eighth Circuit agreed that an allegation of "federally related" loans is essential to federal jurisdiction. However, it teased the allegation out of paragraphs 80 and 82 of plaintiffs' "prolix complaint," and reversed the dismissal. No class has been certified in this widely-watched case.
Gardner v. First American Title Ins. Co., ___ F.3d ___, 2002 WL 1343970 (8th Cir.(Minn.).
