McCarn v. HSBC USA, Inc.: A Federal Court Dismisses a Plaintiff's Attempt to Apply Antitrust-Conspiracy Principles to a Consumer Financial Protection Statute

On November 13, 2012, the U.S. District Court for the Eastern District of California, in McCarn v. HSBC USA, Inc., 2012 U.S. Dist. LEXIS 162257, issued an important decision rejecting as inadequate a plaintiff’s attempt to apply antitrust-conspiracy principles to a consumer financial protection statute and clarifying the specificity of pleading required to obtain relief from the applicable statute of limitations via the equitable tolling, fraudulent concealment, and delayed discovery doctrines where the plaintiff claims lack of sophistication or expertise sufficient to discover his claims without the assistance of counsel. The Schnader firm represented one of the dismissed defendants in the case.

(“RESPA”), 12 U.S.C. § 2607, prohibits the payment and receipt of kickbacks in exchange for the referral of real estate settlement service business and the splitting of any fee received in exchange for a real estate settlement service with a person or entity that does not provide a service in exchange for that split fee. A real estate settlement service is defined in 12 U.S.C. § 2602 as including “any service provided in connection with a [residential] real estate settlement, including, but not limited to … the origination of a federally related mortgage loan ….” Subsection (d) of Section 8 authorizes a private action by a borrower against alleged participants in an illegal kickback or split fee in connection with the borrower’s federally related mortgage loan, but does not contain any language indicating that such a borrower can sue supposed co-conspirators who did not pay or receive a kickback or split a fee in connection with the borrower’s loan. RESPA contains a one-year statute of limitations for private actions (there is a longer statute of limitations for regulators).

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