Class Action Alleging Mortgage Kickback Captive Reinsurance Survives Dismissal Pending Discovery On Tolling Of Limitations


A court denied dismissal of a putative class action involving claims against Suntrust Bank subsidiaries and a captive reinsurer for an alleged illegal kickback scheme arising out of captive reinsurance covering Suntrust’s lender-placed insurance. The plaintiffs alleged violations of the Real Estate Settlement Procedures Act, unjust enrichment, and unfair trade practices. The defendants attempted to dismiss the case on the basis of the expiration of the statutes of limitations, but the court denied dismissal, finding that it could not “conclusively determine at [that] time that the claims contained with” the complaint could survive due to tolling. The court permitted discovery on that issue, as well as on the issue of whether plaintiffs’ could “pierce the corporate veil” and sue certain Suntrust subsidiaries. The court did dismiss one plaintiff’s unjust enrichment claim against Suntrust due to the existence of an express insurance agreement between those parties. Finally, the court found that a co-obligor on one of the plaintiff’s loans must be joined to the case as an indispensible party in order to avoid the potential for duplicative or inconsistent judgments. Thurmond, et al. v. Suntrust Banks, Inc., et al., Case No. 11-1352 (USDC E.D. Pa. June 26, 2014.

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