14 -2 25 0- cv

Rothstein v. Bal b oa Insurance Co.

UNITED STATES COURTOF APPEAL S FOR THE SE COND CIRCUIT August Term, 2014 (Argued: May 1, 2015 De cided: July 22, 2015)

Docket No. 14-2250- cv

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x LANDON ROTHSTEIN, indiv idual ly and on behalf of all others simil arly situat ed, ROBERT DAVIDSON , IHOR KOBRYN, i ndividual ly and on beh alf of allothers s imi larly situated, JENNIFER DAVIDSON ,

Plaintiffs-Appellees,

- v.- BALBOA INSURANCE C OMPANY, NEWPORT MANAGEMENT CORPORATI ON, MERITPLAN INSURANCE C OMPANY,

Defe ndants-Appellants, GMAC MORTG AGE, LLC, f/k/ a GMAC MORTGAG E CORPORATION, GMAC INSURANCE MARKETING, I NC., d/b/a GMAC AGENCY MARKETI NG, JOHN DO ES 1-20, ALLY FINANCIAL, INC., f/k/ a GMAC, INC., ALLY BANK, f/k/a GMAC BANK, JOHN DOECORPORATION, PRAETORI AN INSURANC E

COMPANY, QBE FIRST INSURANCE AGENC Y, INC., QBE INSURANC E CORPORATION, QBE SPECIALTY INSURANCE C OMPANY,

Defe ndants.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x Before : JACOBS , HALL, and LYNC H, Circuit Judges. Defe ndants Balboa Insurance C ompany, Newport Management Corp oration, and MeritPlan Insurance Company appeal from the or der of the United States District Court for the SouthernDistrict of New York (Nathan, J.), denying in part their moti on to dismi ss. The plaintiffs, borrowe rs who failed to maint ain hazard insurance o n their mortgaged prope rties, claimthat they were overchar ged by their loan ser vicer for lende r-placed insurance sold by the defendan ts. We conclude that the claim s are b arre d by the filed rate doctrine. Revers ed and re manded. ROSS E. MORRISON (Robyn C . Quattrone and Katherine L. Halli day, BuckleySandler LLP, Washington, D.C., JohnC. Englander , Goodwin P rocter LL P, Boston, Massachusetts, Br ian T. Burgess, Goodwin Procter LLP, Washington, D.C ., on the brief), BuckleySandler LLP, New York, New York, for Defe ndants-Appellants.

2MARK A. STRA USS (Thomas W. Elrod, on the brief), Kirby McInern ey LLP, New York, New Yor k, for Plainti ffs-Appellees. Frank G. Burt, Denise A. Fee, W. Glenn Merten, and Br ian P. Perryman, Carlton Fields Jorden Burt, P.A., Washington, D.C ., for Amicus Curiae American Secur ity Insurance C ompany. DENN IS JACOBS, C ircuit Ju dge: Plaintiffs are bor rower s who failed to purchase hazar d insurance on the ir mortgaged proper ties, as required by the ter ms of their loan agreements. The ir loan servicer, GMAC Mortgage LLC (“GMAC”), bought lender-placed insuran ce (“LPI”) from Balboa Insurance Company and Mer itP lan Insurance Company (together, “Balboa”) at rates that were appr oved by r egulators. GMAC then sought reimbursemen t from Plaintiffs at those same rates. Plaintiffs all ege that they wer e fraudulently overbilled because the r ates they were charged did not re flect secre t “rebates ” and “kickbacks” that GMAC

rece ived from Balboa through Balboa’s affili ate, Newpor t Management Corp oration (“Newpor t”). They sued GMAC and various affili ates, Balboa, and Newpor t in the United States District Court for the S outhern D istrict of New York (Nathan, J.), alleging, inter ali a, claim s under the Racketeer Influenced and

3Corr upt Organizations Act (“RI CO”) and the Real Estate Settlement Procedures

Act (“RESPA”). The claim s against alldefendan ts exce pt Balboa and Newpor t

were s ettled. Balboa and Newpor t moved to di smiss under the filed rate doctrine, arguing that Pl ainti ffs could not sue to challenge LPI rates approved b y regulators. The district court denied the motion in relevant part, reaso ning that although Balboa re ceived regulatory approval for the LPI rates it charged to GMAC, that approval did not necessarily extend to the b orrowe rs’ reimbursement to GMAC. Noting a conflict of authority on this issue, the court certified its decisi on for interlocutory appeal. We hold that a clai m chall enging a regulator-approve d rate is subject to the filed rate doctrine whether or not the r ate is passed thr ough an intermediary. The claimis therefor e bar red if it woul d undermine the re gulator’s rate-setting authority or operate to give the suing ratepaye r a pre fere ntialrate. Applying this analysis, we conclude that Pl ainti ffs’ claim s are b arre d and, accordingly, rever se and remand for dismi ssal of the case.

4BACKGROUND

The purchas e of re sidentialproper ty is often financed through a mortgage loan secured b y the subject prop erty. Until repayment of the loan, the lender holds a security interest in the prop erty (i.e., the mortgage) in the unpaid amount. To m iti gate the risk that the mortgaged prope rty wil l be damaged or destroye d befor e the loan is repaid, the lender can require the b orrowe r to maint ain hazard insurance s uffici ent to cover the lender’s inter est. In a typi cal mortgage l oan arr angement, if the borr ower fails to maintain adequate hazard insurance, the lender can p urchase insurance on the borr ower’s behalf and then s eek re imbursement from the bor rower . Such lender -placed insurance, or LPI, can be more ex pensive than or dinary hazard insuranc e and does not ne cessar il y cover the b orrowe r’s intere st in the proper ty. Lender s seldom hold or manage indivi dual m ortgage loans. Such loans are typicallysecuritized through the trans fer of title to a trust that pool s the loans together and issue s secur iti es backe d by the mortgages in the pool (“re sidential mortgage-backed se curities”). The trust also contracts with a l oan ser vicer, such as GMAC, to service the loans ona day-to-day basis. Among other resp onsibili ties, the ser vicer must ensure that bo rrowe rs maintain contractual ly

5required hazard insuran ce and, if neces sary, the s ervicer must purchas e LPI from

an insurer , such as Balboa. Plaintiffs’ residential properties in Texas, N ew Hampshire, and N ew York were f inanced with mortgage loans serviced by GMAC. Plaint iffs each signed a loan agreement re qui ring hazard insuranc e on the mortgaged pr operty and warning that the lender would be e ntitl ed to purchase LPI i f hazard insuranc e was not maintained. Plainti ff Landon Rothstein’s agre ement was typical:

Borrowe r shall keep . . . the Prop erty insured against loss by fire, hazards included wi thin the term “extende d coverage ,” and any other h azards . . . for which Lender requires insurance. . . . If Borrower fails to m aintai n any of the cove rages de scribed above, Le nder may obtain insurance co verage, at Le nder’s option and Borrower ’s expe nse. . . . [S ]uch coverage shall cover Le nder, b ut mi ght or might not protect Borrower , Borrowe r’s equity i n the Prope rty, or the con tents of the Proper ty, against any risk, hazard or liabil ity and m ight provide gre ater or less er cove rage than was p reviously in effect. . . . Second Am. C ompl. ¶ 48 (emphasis omi tted). Plaintiffs fail ed to maintain adequate hazard insurance . Conse quently, GMAC acqui red LPI from Balboa. Before and after the ac qui siti on of LPI, Plaintiffs were advised in writing that they woul d be r equired to reimburse

6GMAC for the cost of LPI. GMAC bought LPI from Balboa at rates app roved b y

state insurance r egulators. See Tex. Ins. Code § 2251.152; N.H. Rev. Stat. 1 § 412:16(XII); N.Y. I ns. Law. § 2314. GMAC then sought re imbursement from Plaintiffs at those same rates. Plaintiffs all ege that the amounts bill ed by GMAC wer e inflated because they did not reflect hidden “reb ates” that GMAC received fr om Balboa through a “kickback scheme.” Se cond Am. Compl. ¶¶ 67-72. The alleged scheme is that GMAC agreed to buy LPI exclusively from Balboa and, in return, Balboa agree d to provide GMAC with l oan tracking services through an affiliate, Newpo rt. The services perfor med by Newpor t--inclu ding the identifi cation of borrowe rs who defaulted on the duty to obtain hazard insurance--offs et GMAC’s expe nses b y relieving GM AC of the ob li gation to do those things itself. Because Balboa provided Newp ort’s ser vices as a quid pro qu o for GMAC’s LPI business, Plaintiffs characterize N ewport’s s ervices as , in effect, a discount on LPI from the filed rates approve d by re gulators. Since GMAC stil l bil led Plaintiffs at the fil ed rates, it retained for itself the en tire bene fit of that di scount.

Those re gulators are the Tex as De partment of Insurance, the New 1 Hampshire Insurance Depar tment, and the New York S tate Depar tment of FinancialSer vices. 7In April 2012, P lai ntiffs fil ed a complaint ag ainst GM AC and affiliated

entiti es, Balboa, and Ne wport, on be half of a putati ve class of mortgage loan borr owers wh o were charged for LPI by GM AC. WhenGMAC fil ed for C hapter 11 bankruptcy a month later, Plai ntiffs withdrew the ir suit as to G MAC and filed claim s in bankruptcy. Plainti ffs and GMAC later re ached a se ttl ement in principle resolving clai ms against G MAC (and cer tain affi li ates) in exchan ge for a $13 mil li on unsecur ed claimin favor of Plai ntiffs and the putative cl ass in the bankruptcy. Only the claim s against Balboa and Newpor t are at issue in this appeal. The relevant complaint--the Second Amende d Complaint fi led in January 2013--alleges substantive and conspiracy claims under RICO base d on pre dicate acts of wire fraud, mail fraud, and extortion, as well as a RESPA clai m. Balboa 2 and Newpor t moved to di smiss, arguing that the clai ms were b arre d by the filed rate doctrine and, more over, inadequately pleaded. The district court granted the motion i n part and den ied it in part. The court: (1) rejecte d the argument that the filed rate doctrine bar red the c lai ms,

Plaintiffs have since filed a Third Amended Complaint not m ateriall y 2 different fr om the Second Amende d Complaint. 8(2) concluded that the RICO claim s were adequately pl eaded, and (3) dismissed

the RESPA claimas inadequately pl eaded. Rothstein v. GMAC Mortg., LLC, No

. 12 Civ. 3412 (AJN), 2013 WL 5437648, at *20 (S.D .N.Y. Sep t. 30, 2013). The court concluded that the fil ed rate doctr ine did not apply because Plai ntiffs were not direct customers of the r ate filer, Balboa. Id. at*6-9. It observed, h owever, that the issue was a close call and that there was no dire ct case law in thi s circuit and conflicting authority elsewhere . Id.; see also Rothstein v. GMAC Mortg., LLC, No. 12 Civ. 3412 (AJN), 2014 WL 1329132, at *2 (S.D .N.Y. Apr. 3, 2014). Balboa and Newpor t’s moti on for interlocutory appeal was gran ted. The 3 principal i ssue on app eal--and the only issue we decide--is whethe r the filed rate doctrine bars Plaintiffs’ clai ms.

DISCUSSION We re view de novo the den ialof a moti on to dismi ss under Rule 12(b)(6). Woods v. Rondout Valley Cent. Sch. D ist. Bd. of Educ., 466 F.3d 232, 235 (2d Cir. 2006).

American Security Insurance C o. filed an ami cus curiae br ief in support of 3 Balboa and Newpor t. 9I

Under the filed rate doctrine, “any ‘filed rate’--that is, one approved b y the governing re gulatory agency--is per se reaso nable and unass ail able in judi cial procee dings brought by r atepayers .” Wegoland Ltd. v. NYNEX Cor p., 27 F.3d 17, 18 (2d Cir. 1994). The doctr ine is grounded on two rationales: first, that courts should not “undermine[] agency r ate-making authority” by upsetting approved rates (the principle of “nonjustici abili ty”); and, second, that liti gation should not become a means fo r cer tain ratepayers to ob tain prefer ential rates (the principle of “nondiscriminati on”). Marcus v. AT&T Cor p., 138 F.3d 46, 58, 61 (2d Cir. 1998); see ge nerally Keogh v. Chi. & Nw. Ry. Co., 260 U.S. 156 (1922). The doctrine re aches b oth feder al and state causes of action and protects rates appr oved by fed eral or state r egulators. Wegoland, 27 F.3d at 20. Its applicati on does n ot “depend on the nature of the cause of action the plai ntiff seeks to bring” or “the culpability of the defen dant’s conduct or the pos sibili ty of inequi table results.” Marcus, 138 F.3d at 58. Whene ver a r atepayer’s claim against a rate filer would i mpli cate either the n onjustici abili ty principle or the nondiscriminati on principle, it i s barr ed. Id. at 59.

10II

It i s undisputed that Balboa’s LPI rates were filed with regulators and that Plaintiffs were b il led at those same rates b y GMAC. We there fore as k whether Plaintiffs’ clai ms would offend either the nonjusticiabil ity princi ple or the nondiscriminati on principle. Marcus, 138 F.3d at 59. We conclude that both principles bar the claims. A The nonjusticiabil ity princi ple arises out of the r ecognition that--unl ike regulators, who “employ their peculiar exper tise to consider the whole picture regar ding the reason ableness of a propos ed rate”--cour ts are “simply il l-suit ed” to decide whether a rate is appropr iate. Wegoland, 27 F.3d at 21. Accordingl y, courts must not “systematical ly second guess the regulators’ decisions and overlay their own re soluti on.” Id. The doctrine “pre vents more than judicial rate-se tti ng; it precludes any judici al acti on which undermines agen cy rate-making authority.” M arcus, 138 F.3d at 61. Thus, a claimmay be barr ed even if it can be char acterized as challenging something other than the rate itself. Id.; see also Fax Telecommunicaci ones Inc. v. AT&T, 138 F.3d 479, 489 (2d Cir. 1998) (rejecting plainti ff’s “attempts to recharac terize its argument in order to

11avoid the harsh inequiti es occasioned by applicati on of the filed rate doctrine”);

Wegoland, 27 F.3d at 21 (“The fact that the remedy sought can be character ized as damages for fr aud does not negate the fact that the court would be determining the reason ableness of rates.” (e mphasis and internal quot ation marks omitt ed)). Plainly, Pl ainti ffs’ claim s would undermine the rate-making authority of the state insurance regulators who appr oved Balboa’s LPI rates. The theor y behind the claims is thatPlaintiffs were ove rbilled when they were charged the fullLPI rates (which were app roved b y regulators), instead of lower r ates net of the value of loan tracking services pr ovided by Newpor t. That theory can 4 succeed on ly i f the arr angement with Newport should have b een tre ated as part and parce l of the LPI t ransaction and reflected in the LPI rates . But, under the nonjustici abili ty principle, i t is squarely for the regulators to say what should or should not be included in a fil ed rate. We goland, 27 F.3d at 21.

Notwithstanding their use of the pejorative “kickback,” Plaintiffs do not 4 appear to ar gue that it w as ill egal for Balboa to rende r ser vices without charge to GMAC. It i s hardly uncommon for insurer s to rende r policyholders free services , such as inspections, appr aisals, and so forth. 12The parallel wi th Wegoland is instructi ve. The Wegoland plaintiffs al leged

that the rate filers bought cer tain products and ser vices from their own subsidiaries at artifici all y inflat ed prices, an d then re li ed on the inflated prices to obtain regulatory approval of higher r ates to consumers . 27 F.3d at 18. As in thi s case, the plaintiffs argued that the filed rate doctrine did not bar their claims because they were attacki ng the fraudulent sche me, not the rates the mselves. Id. at 21. We rejected that ar gument: “‘[A]ny attempt to determine what part of the rate pre viously deemed reasonab le was a result of the fraudulent acts would require deter mining what rate would have bee n deemed r easonab le absent the fraudulent acts, and then finding the difference betweenthe two.’” Id. (q uoting Wegoland, Ltd. v. NYNEX Cor p., 806 F. Supp. 1112, 1121 (S.D .N.Y. 1992)). Plaintiffs’ clai ms in thi s appeal likewi se re st on the pre mise that the rates approved b y regulators wer e too high. After all, i f Balboa was wil li ng to offer a “discount” from the fil ed rates (through the fr ee se rvices it provided via Newpor t), those rates must have beeninflat ed in the first place. But whether insurer-p rovided ser vices should have be en re flected in the calcul ation of LPIis not for us to say; under the nonjusticiabil ity princi ple, the question i s res erve d exclusively to the regulators. Cf. Ark. La. Gas C o. v. Hall, 453 U.S. 571, 578-79

13(1981) (“[T]he award of a r etroactive rate [adjustment] based onspeculation

about what the [regulator] might have done had it been face d with the facts of this case . . . is precisely what the filed rate doctrine forbids.”); Wegoland, 27 F.3d at 21 (“Apart from participating in the political process and filing com plaints with the regulatory agencies, indivi dual ratepayers s impl y have no r ole in attacki ng the re asonablene ss of filed rates. No r is there room for judicial intervention in such a case.”). Indeed, one of the regulators cited in Pl ainti ffs’ complaint --the New Yor k State Dep artment of FinancialSer vices--has already investigated the pr ovision of loan tracking services by LPI insurers , and adopted a re gulati on res tricti ng the practice. N.Y. Co mp. Codes R. & Regs. tit. 11 § 227.0(c) (2015) (“The department’s investigation found that insure rs offe red financial incentives to mortgage servicer s and their affiliat es . . . . In addition, one insurer pr ovided force-p laced insurance on mortgages serviced b y an affili ate of the insurer

. . . . Section 227.6 of this Part prohibits these pr actices.”). Other r egulators may wi sh to foll ow suit, or not. Either way, judicialendors ement of Plai ntiffs’ clai ms would di splace and distort the re gulatory process.

14Thus Plaintiffs’ clai ms invi te judici al meddl ing in i ssues of insurance policy. Because that is forbidden under the principle of nonjustici abili ty, the claim s are b arre d. B Plaintiffs’ clai ms also offend the nondiscr imination principl e, under which challenges to filed rates are b arre d if “all owing indi vidualratepayer s to attack the filed rate would undermine the . . . scheme of uniform rate r egulati on.” Wegoland, 27 F.3d at 19 (internal quotati on marks omitt ed). The nondiscriminati on principle, li ke the pr incipl e of nonjusticiabil ity, appl ies even to claim s that purport to see k relief other than a lower r ate. See Keogh, 260 U.S. at 163. Any damages reco vere d by these Plaintiffs would operate “li ke a reb ate . . . to give [them] a prefer ence” ove r other borr owers wh o were charged for LPI. Keogh, 260 U.S. at 163. While non-suing borrowe rs se rviced by GMAC would be bill ed at the filed LPIrates, Plainti ffs would enjoy the discount that Newport all egedly provided to GMAC. The prob lem i s not obviated simplybecause Plaintiffs have brought their claims on behalf of a putative class. Sun City Taxpayers ’ Ass’n v. C iti zens Utils. Co., 45 F.3d 58, 62 (2d Cir. 1995) (“[T]he filed

15rate doctrine applies whethe r or n ot the plainti ffs are suing for a class.” (internal

quotation marks omi tted)); see also Marcus, 138 F.3d at 61 (“[N ]ondiscrimination

concer ns re main vi able even in the con text of a class action lawsui t.”). Accordingly, Pl ainti ffs’ claim s are b arre d by the filed rate doctrine for the separ ate--and independe ntly suffici ent--re ason that they would result in Plaintiffs paying prefer ential rates for LPI.

III The district court did not u ndertake the usual analysi s under the principles of nonjusticiabi li ty and nondiscrimination. Instead, the court held that the filed rate doctrine doe s not apply at allbecause the doctrine addre sses only “a sim ple A-to-B transaction--in which A, the insurer, appr oved a rate an d charged it to B,” not the “A-to-B-to-C” arr angement at issue her e, in which the insurer b il led the lender and the lender in turn billed the borr ower. Rothstein, 2013 WL 5437648, at *8-9. We re spectfully di sagree . The filed rate doctrine is not lim ited to transactions in which the ratepayer deals directly wi th the rate filer. The doctrine operates notwithstandi ng an intermediary that passes along the rate.

16A

We have app li ed the filed rate doctrine to claims by ratepayers who pay the filed rate through an intermediary. Thus the doctr ine was held to bar claims by “a re tailconsumer of e lectricity” against “a producer of e lectricity.” Simon v. KeySpan Cor p., 694 F.3d 196, 198 (2d Cir. 2012). The de fendant (the r ate filer) sold electricity to a retail sell er, which in turn sold to consumers, including the plainti ff Simon; Simon al leged that the rate filer colluded wi th another pr oducer to manipu late the rate-setting proces s. Id. at 198-99. We held that the clai ms were b arre d because the rates we re de termined through a re gulator-approved auction process, and the regulator found no market manipulat ion. Id. at208. In reaching that res ult, we att ributed no significance to Simon’s purchase of the electricity through an intermediary; it was enough that he sue d the rate filer and sought to chall enge the filed rate. Id. at 204-08; accord Wah Chang v. D uke Energy Trading & Mktg., LLC, 507 F.3d 1222, 1226 (9th Cir. 2007) (“But, argue s [the plainti ff], its acti ons differ fr om others we have considere d because it di d not directly purchase wholesale powe r. Rather, it was a re tailcustomer. That is an

17asthenic [i.e., weak] distincti on at best.”). 5

Nor is ther e some evident re ason why the doctr ine should be lim ited to direct transactions be tween the r atepayer an d the rate filer. The pr incipl es of nonjustici abili ty and nondiscriminat ion have undiminished force even whe n the rate has p assed thr ough an intermediary. As discussed, the n onjustici abili ty principle i s motivat ed by the con cern that “[a]s compared with the expe rtise of re gulating agencies, cour ts do not approach the same level of insti tuti onal competence to ascer tain reasonable rates.” We goland, 27 F.3d at 21. A court i s confro nted with a singl e case, where as a regulator can “cons ider the whole picture” and “make hundr eds if not thousands of discre tionary decisions” about overall industry regulati on. Id. And in many i ndustries (such as the ene rgy industry in Simon and Wah Chang as we ll

Plaintiffs cite a number of cases f or the pr incipl e that a filed rate governs 5 only the transaction “covere d” by the rate . E.g., FTC v. Verity Int’l, Ltd., 443 F.3d 48, 62 (2d Cir. 2006) (“We h old that the filed-rate doctrine does not apply in thi s case be cause the de fendants-appe ll ants point to no tariff that covers the actual service r ender ed to users of their billing system.”); Fla. Mun. Power Agency v. Fla. Power & Light Co., 64 F.3d 614, 616 (11th Cir. 1995) (“If the gravamen of the Agency's claimthat the two services ar e distinct and there is no filed network rate is accurate, thenit i s clear the doctr ine would not confer imm unity.”). Those cases s tand for the unr emarkable prop osition that the approve d rate for o ne product cannot be invoked as to a different (unr egulated) product. Here , there is a single (regulated) product, LPI, that i s routed thro ugh an intermediary. 18as the LPI industry here), the rate-re gulated product necessar il y passes through

intermediaries befor e the rate is paid by the ult imat e consumer. In such industries, it woul d make li ttl e sen se for the doctrine to apply as betwee n the rate filer and the intermediaries, but not when it comes to the ulti mate ratepayers . The nondiscriminati on principle avoids the risk that li tigation over filed rates would become a means o f obtaining prefer ential rates, as “victorious plainti ffs would wind up paying less than non-s uing ratepayers.” We goland, 27 F.3d at 21; see also Keogh, 260 U.S. at 163. That concer n is just as vali d when the ratepayer deals with an int ermediary. Se e Simon, 694 F.3d at 201. B The distincti on betwee n an “A-to-B” transaction and an “A-to-B-to-C” transaction is especially i mmat erial in the LPIcontext be cause LPI travels invariably “A-to-B-t o-C.” The pur pose of LPI is to enforce the borr ower’s contractual obli gation to m aintai n adequate hazard insurance ; the lender ac ts on the bor rower ’s beh alf and in the borrowe r’s place to “force place” a transaction that the borr ower sh ould have entere d. Second Am. C ompl. ¶¶ 46-48 (internal 6

However , the risk calculati on in the hazard insuran ce contex t may di ffer 6 from the calculat ion in the LPIcontext. For this re ason, LPI often costs more than ordinary hazar d insurance. 19quotation marks omi tted). There ar e three participants in the trans action

(insurer, lende r, bor rower ), but the lender is a go-b etween that conne cts the insurer (the party selling i nsurance ) to the borr ower (the p arty actuall y paying for it). Thus LPI i s an A-to-B-to-C tran saction that i mplements a two-party transaction betwee n the insurer and the bor rower . Plaintiffs postulat e that the lender n eed not act as a pas s-through, and could theoreticall y decouple its purchase of LPI from its demand of reimbursement, for example, by char ging the borro wer twice (or half) the filed rate. Howeve r, Plainti ffs do not exp lain how any such action by the lender could result in li abili ty for the insurer , which would (under any such arr angement) still be legally com pelled to charge the filed rate. In any even t, no such facts are all eged he re: accor ding to the Second Amended C omplaint, Plaintiffs were b il led the “full purported price” of LPI at the rates filed by Balboa. Secon d Am. Compl. ¶¶ 69, 110. C The district court int erpr eted Balboa’s insurance filings to suggest that LPI rates wer e approve d for impositi on on lender s, but not on bor rower s: “[T]he lender pays the insurer for all premiumand charge s back only those par ts of the

20premium whi ch are allowed to be char ged to the bor rower .” Rothstein, 2013 WL

5437648, at *8 (quoting Balboa’s New Hampshire filing). Butthe context matters:

This insurance is to cover r eal proper ty when it i s required by the Mortgage Con tract betweenthe lender an d the bor rower . That agreement does not all ow the lender to r equire a borr ower to pay for coverage on items not mortgaged to secure the loan or for cove rage that exc eeds the coverage required in amount or peril by the mortgage contract. This program is designed so that the lender pays the insurer for all premium and charges back only those parts of the premium which are allowed to be charged to the borrower. A. 595 (emphasis added). The wor d “all owed” re fere nces the all owable scope of coverage (which must exclude “it ems not mortgaged to secure the loan” and “coverage that excee ds the cover age required in amount or peril by the mortgage contract”); it does not, as the district court believed, pre vent the lender from passing on the full LPIrates (on allowed cover age) to the bor rower . If anything, the quoted sentence suggests that the Ne w Hampshire re gulators expre ssly contemplated that the approved LPI rates would be “char ged to the bor rower .” Simi larly, there is no question that T exas an d New York insur ance regulators wer e well aware that approved LPI rates would be fully borne b y borr owers. S ee Tex . Dep’t of Ins., C onsumer Alert: Force Placed Coverage , avail able at http://www.tdi.texas.gov/con sumer/doc uments/force placed.pdf (“If

21you cancel or lose these insurance cove rages, your lender will buy an i nsurance

policy--often call ed force d placed coverage --and add the cost to your loan payment .” (emphasis added)); N.Y. C omp. Codes R. & Regs. tit. 11 § 227.0(c) (“In additi on, one insure r provided for ce-placed insurance on mortgages ser viced by an affili ate of the insurer . These pr actices . . . artifici all y inflat ed premiums charged to homeowners .” (emphasis added)). Thus the quint esse ntial ly “A-to-B-to-C” character of LPI transactions was known to the re gulators who approved Balboa’s r ates.

CONCLUSION For the for egoing reason s, we re verse and remand for dismi ssal of the case.

22