A federal judge has trimmed a class action lawsuit accusing an Assurant Inc. subsidiary of working with PNC Bank NA to make mortgage holders pay for unwanted force-placed insurance, ruling that national certification is impossible because the plaintiff has not suffered injuries that can be redressed by federal laws.
Plaintiff Xi Chen Lauren sought to represent a nationwide class of mortgage holders who owned a property with a mortgage serviced by PNC Bank and later insured by American Security Insurance Co. While many contracts allow for lenders to sign mortgage holders up for “forced-placed” insurance in case the homeowner’s own policy runs out, Lauren alleges that the premiums American Security Insurance charged were excessively high as a result of an alleged collusion between the insurer and PNC Bank.
This is not the first time that American Security Insurance or Assurant have been accused of imposing improper force-placed insurance on mortgage holders. The companies agreed to a $300 million class action settlement over allegations they colluded with Chase Bank to force the hazard insurance on mortgage holders.
In a Jan. 14 decision, however, Judge Terrence F. McVerry wrote that he was unpersuaded that a class representative who could allege damages based on a state statute violation, in this case Ohio, could seek certification on a national level. He reviewed a Supreme Court decision regarding the consolidated litigation In re Wellbutrin XL Antitrust Litigation, and noted that there had to be some connection in place.
Going further, the cited Supreme Court decision elaborated that “A named plaintiff whose injuries have no causal relation to, or cannot be redressed by, the legal basis for a claim does not have standing to assert that claim. For example, a plaintiff whose injuries have no causal relation to Pennsylvania, or for whom the laws of Pennsylvania cannot provide redress, has no standing to assert a claim under Pennsylvania law, although it may have standing under the law of another state.”
If there had been a relevant federal statute on which Lauren had based their claim for injuries, McVerry may have decided differently. However, while the judge was comfortable with certifying a class of Ohio consumers who were allegedly subject to forced-placed insurance, the idea of a national class was impossible due to lack of jurisdiction.
Moreover, the decisions cited by the judge noted that the standing of relative Class Members can be ruled on after certification, but not the named plaintiff.
Lauren is represented by class action attorneys Stephen J. O’Brien of Stephen J. O’Brien & Associates, Edward W. Ciolko, Peter A. Muhic, Tyler S. Graden, Shannon O. Braden and Samantha E. Jones of Kessler Topaz Meltzer & Check LLP and Brad Seidel and Christopher Johnson of Nix Patterson & Roach LLP.
The PNC Mortgage Insurance Class Action Lawsuit is Xi Chen Lauren, et al. v. PNC Bank NA, et al., Case No. 13-cv-00762, in the U.S. District Court, Western District of Pennsylvania.
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