Judith Cunningham v. M&T Bank Corp
814 F.3d 156
3rd Cir.2016Background
- Plaintiffs (Cunningham, Deimler, Vanover) obtained residential mortgages from M&T Bank between 2007–2008 and were required to purchase private mortgage insurance (PMI).
- M&T Bank selected the PMI providers; those PMIs reinsured portions of the risk with M&T Mortgage Reinsurance Company, M&T’s captive reinsurer.
- At loan closing plaintiffs received and signed written disclosures explaining captive reinsurance (including opt-out language) and initialed mortgage pages referencing possible reinsurance with an affiliate; none opted out or asked follow-up questions.
- Plaintiffs filed a putative nationwide class action in 2012 alleging RESPA § 2607 violations (illegal kickbacks/fee-splitting) and unjust enrichment based on the captive reinsurance arrangements; the RESPA one-year limitations period runs from loan closing.
- The District Court allowed limited discovery on equitable tolling, later granted summary judgment for M&T, concluding the claims were time-barred and plaintiffs had not exercised the required diligence for fraudulent concealment/equitable tolling.
- Plaintiffs appealed only the RESPA/time-bar issues; the Third Circuit affirms, holding equitable tolling/fraudulent concealment does not apply here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RESPA’s one-year limitations period can be equitably tolled via fraudulent concealment | Plaintiffs: M&T actively misled borrowers and prevented discovery of claims until counsel contacted them in 2011–12 | M&T: Borrowers received clear disclosures at closing and took no investigative steps; thus no due diligence and no tolling | Court: No equitable tolling — plaintiffs had notice at closing and failed to exercise reasonable diligence |
| Whether the discovery rule applies to RESPA accrual | Plaintiffs: Cases recognizing discovery/storm-warnings support tolling or delayed accrual | M&T: RESPA expressly fixes accrual at the date of occurrence (closing), discovery rule is inapplicable | Court: Discovery rule does not apply to RESPA accrual; limitations runs from closing |
| What constitutes reasonable diligence for fraudulent concealment in this context | Plaintiffs: Participation in loan process (and industry litigation) suffices; counsel’s later notice excused earlier inaction | M&T: Reasonable diligence required some investigation after disclosure (e.g., ask insurer, seek counsel, request documents) | Court: Signing and initialing disclosure gave plaintiffs facts; their subsequent inaction shows lack of diligence |
| Preclusive effect of Community Bank II on merits of tolling/diligence | Plaintiffs: Community Bank II suggests loan-process participation can establish diligence | M&T: Community Bank II addressed class-commonality under Rule 23, not entitlement to tolling on the merits | Court: Community Bank II does not entitle plaintiffs to equitable tolling; it concerns class certification, not merits of tolling |
Key Cases Cited
- In re Cmty. Bank of N. Va. Mortgage Lending Practices Litig., 795 F.3d 380 (3d Cir. 2015) (discusses class-commonality and fraudulent concealment in mortgage-lending RESPA litigation)
- Cetel v. Kirwan Fin. Grp., Inc., 460 F.3d 494 (3d Cir. 2006) (sets elements of fraudulent concealment/equitable tolling in this Circuit)
- Hedges v. United States, 404 F.3d 744 (3d Cir. 2005) (equitable tolling is an extraordinary, narrowly applied remedy)
- Wallace v. Kato, 549 U.S. 384 (2007) (equitable tolling is rare; clarifies accrual/tolling principles)
- Order of R.R. Telegraphers v. Ry. Express Agency, 321 U.S. 342 (1944) (explains policy rationale for statutes of limitations)