The U.S. Supreme Court has decided it "improvidently granted" a writ of certiorari in First American v. Edwards, and has in essence kicked the case back to the trial court. There was just a one-sentence statement from the justices announcing the move, with no further explanation.
First American was appealing a ruling by the Ninth Circuit Court of Appeals that overturned a district court judge's summary dismissal of a consumer's compliant alleging the title company violated the anti-kickback provision of the Real Estate Settlement Procedures Act even though the consumer allegedly was not overcharged for the services.
Earlier in the current session, the justices did hear arguments in this matter, but it has on occasion made rulings in this manner.
In a statement, First American said, “Though we are disappointed that the United States Supreme Court reversed its initial decision to decide the issue of standing in our case, the court's action will not affect any of the remaining defenses in the Edwards case. Several defenses could either end or substantially narrow this case. We will continue to pursue our defense strategy aggressively in the trial court.”
The American Land Title Association also issued a statement after the ruling. “By dismissing First American Financial Corp. v. Edwards, the U.S. Supreme Court has left the issue to be worked out in the trial court,” said Michelle Korsmo, ALTA’s chief executive officer. “The decision to dismiss leaves the issue of the necessity of injury to bring a class-action suit yet to be resolved.”
In this case, the plaintiff claims there was a Section 8 violation because First American owns a piece of an agency, Tower City, in return for "exclusive" rights to all business originated by the agency.
In the Ninth Circuit decision, the panel said, "These RESPA provisions are clear. A person who is charged for a settlement service involved in a violation is entitled to three times the amount of any charge paid. The use of the term 'any' demonstrates that charges are neither restricted to a particular type of charge, such as an overcharge, nor limited to a specific part of the settlement service. Further, the term 'overcharge' does not exist anywhere within the text of the statute."
This move comes just a month after the court ruled in favor of Quicken Loans in another Section 8 case. In that decision, it said there needs to be at least two parties splitting a fee to be a violation.
Marx Sterbcow, the managing attorney at The Sterbcow Law Group LLC in New Orleans, says the Quicken Loans decision was actually a "precursor" to this one.
"To me it's a big win for the plaintiffs, but it is also a big win for other plaintiff's actions across the U.S.," because it does conform to what the court ruled in the Quicken Loans matter.
In the Edwards case, the court showed it was not ready to gut RESPA and in fact shows there can be a private cause of action brought under RESPA, he said. Quicken Loans established a baseline test to look at, which is possibly why the court punted this case.
At the time of the Quicken Loans decision, other attorneys interviewed by NMN also called it a precursor for this case, but they added that the issues involved in First American were more difficult for the court to decide.
Now, the plaintiffs can possibly establish that they did suffer damages through the arrangement First American had with the agency, Sterbcow said.
He added the Supreme Court move means that the Ninth Circuit appellate decision is the rule for those states, which runs from Montana, Idaho, Nevada and Arizona westward.
