Howland v. First American Title Insurance
2012 U.S. App. LEXIS 4567
| 7th Cir. | 2012Background
- RESPA Section 8 prohibits kickbacks and fee-splitting in settlement services; HUD guidance clarifies core title services and safe harbors.
- First American Title Insurance Company uses attorney title agents to conduct title examinations and determine insurability; agents sometimes perform non-core services.
- Until 2005, First American provided agents with a search package and a summary sheet; agents could alter or add to the summary after examination.
- Plaintiff Sharbaugh (later Howland) sued alleging kickbacks and improper fee sharing; class certification was denied for lack of predominance.
- Howland sought to redefine the class and later pursued individual claims; settlement occurred on her individual claim while appealing denial of class certification.
- Seventh Circuit analyzes whether RESPA Section 8 claims can be certified given the need for transaction-specific inquiries into services performed and compensation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are RESPA Section 8 kickback claims suitable for class treatment under Rule 23(b)(3)? | Howland asserts common RESPA questions predominate. | First American contends individual inquiries are necessary per transaction. | No; predominance requires transaction-specific analysis, so class certification is improper. |
| Does a pro forma search summary sheet establish class-wide liability under RESPA? | If the sheet is a pro forma commitment, all payments violate RESPA. | Sheet is title evidence; issues require individual evaluation of services per transaction. | Even assuming pro forma status, an individual inquiry is required; cannot certify class. |
| Does HUD's guidance create a per se RESPA violation for paying full contract rates to title agents who may not perform all core services? | Full contract rate paid to agents not performing all core services violates RESPA per se. | HUD guidance does not establish a per se rule; requires analysis of services vs. compensation per transaction. | No per se rule; must show fee not reasonably related to services; class-wide resolution not feasible. |
Key Cases Cited
- Heimmermann v. First Union Mortg. Co., 305 F.3d 1257 (11th Cir.2002) (yield-spread/fee-splitting RESPA class-action implications)
- O'Sullivan v. Countrywide Home Loans, 319 F.3d 732 (5th Cir.2003) (transaction-specific inquiry required for RESPA liability)
- Busby v. JRHBW Realty, Inc., 513 F.3d 1314 (11th Cir.2008) (exception to anti-class-action trend when no services are performed)
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) (Rule 23(a) commonality and predominance standards; deference to district court discretion)
- Culpepper v. Irwin Mortg. Corp., 253 F.3d 1324 (11th Cir.2001) (class certification denied where liability requires individualized inquiry)