Opinion ID: 2821408
Heading Depth: 5
Heading Rank: 1

Heading: Active Misleading

Text: As PNC points out, “a plaintiff seeking to demonstrate fraudulent concealment of a claim must prove that the defendant took affirmative steps to mislead the plaintiff with respect to the claim.” (Opening Br. at 41.) See Oshiver, 38 F.3d at 1391 n.10 (refusing to apply equitable tolling to the plaintiff’s failure-to-hire claim because the plaintiff did not allege that the defendant affirmatively misled her). PNC also notes that proof of active misleading generally requires a plaintiff to demonstrate “‘efforts by the defendant – above and beyond the wrongdoing upon which the plaintiff’s claim is founded – to prevent the plaintiff from suing in time.’” (Opening Br. at 41-42 (quoting Cada v. Baxter Healthcare Corp., 920 F.2d 446, 451 (7th Cir. 1990)).) PNC contends that, as a result, “‘[f]or a RESPA claim to warrant equitable tolling, mere silence or nondisclosure is not enough to trigger estoppel[;] the adversary must commit some affirmative independent act of concealment upon which the plaintiffs justifiably rely in order to toll the statute.’” (Opening Br. at 42 (brackets in original) (emphasis omitted) (quoting Garczynski v. Countrywide Home Loans, Inc., 656 F. Supp. 2d 505, 516 (E.D. Pa. 2009)).) Similarly, PNC asserts that, in the TILA context, “‘[t]he fraudulent act that forms the basis of a claim for damages under the TILA will not satisfy the factual showing required to invoke the equitable tolling doctrine of fraudulent concealment.’” (Opening Br. at 42 (brackets in original) (quoting Poskin v. TD Banknorth, N.A., 687 F. Supp. 2d 530, 551 (W.D. Pa. 2009)).) Thus, PNC argues, because each putative class member must demonstrate an independent misrepresentation (in addition to the allegedly misleading loan closing documents) that he or she relied 43 upon, more individualized inquiry is necessary to resolve the equitable tolling issue embedded in the Plaintiffs’ RESPA and TILA/HOEPA claims than is permitted under the predominance requirement. The Plaintiffs counter that no independent act of concealment is necessary where the wrong is “selfconcealing.” (Answering Br. at 33.) See Osterneck v. E.T. Barwick Indus., Inc., 825 F.2d 1521, 1535 n.28 (11th Cir. 1987) (stating that where concealment is inherent in the nature of the wrong, all that is necessary to toll the statute of limitations is a plaintiff’s due diligence in seeking to discover the fraud). They also contend that “[n]owhere in any of the seminal Third Circuit equitable tolling decisions is there any mandate that some further act of concealment is necessary to invoke the doctrine where the wrong is self-concealing.” (Answering Br. at 34 n.16 (citing Oshiver, 38 F.3d 1380; Ramadan v. Chase Manhattan Bank, 156 F.3d 499 (3d Cir. 2006); Cetel, 460 F.3d 494). Because the Plaintiffs have advanced a sufficiently credible argument that PNC’s predecessor in interest, CBNV, did commit an affirmative act of concealment, we do not need to decide whether mere silence is enough to allow the case to proceed. The Plaintiffs are able to claim an independent act of concealment with respect to each loan because CBNV allegedly misrepresented material facts in the HUD–1 settlement statements used in closing the loans of every class member, and those misrepresentations arguably support application of equitable tolling. More specifically, the additional act of concealment perpetrated by CBNV was, 44 according to the Plaintiffs, providing a HUD–1 that contained false representations as to the destination of the settlement fees (for the RESPA claims) and a false representation that a title company performed a bona fide title search and title examination (for the TILA/HOEPA claims). See Reiser v. Residential Funding Corp., 420 F. Supp. 2d 940, 947 (S.D. Ill. 2004) (holding that plaintiffs adequately pled equitable tolling as to their RESPA and TILA claims by alleging that defendants had misrepresented and concealed facts relating to fees represented on the HUD–1 statements), rev’d in part on other grounds, 380 F.3d 1027 (7th Cir. 2004). PNC, of course, disagrees that transmission of a HUD– 1 to a class member can constitute an “independent act” of concealment sufficient to invoke the doctrine of equitable tolling as to the RESPA or TILA/HOEPA claims. Its argument is primarily based on Moll v. U.S. Life Title Insurance Company of New York, 700 F. Supp. 1284 (S.D.N.Y. 1988), which rejected the argument that we now accept – that transmission of a misleading HUD–1 constitutes an independent act of concealment. The Moll plaintiffs argued that the HUD–1s “falsely stated that US Life would receive the full premium charged for the title insurance,” when in fact portions of that premium were allegedly “kicked back” to another entity. Id. at 1292-93. But Moll reasoned that the HUD–1s made no representation as to “the ultimate disposition of those charges,” and particularly, that the HUD– 1s did not represent that the defendant “was ‘accepting’ (i.e., retaining for its own account) the premium charged.” Id. at 1291-92 (additional internal quotation marks omitted). Instead, Moll concluded that the HUD–1s simply reported the charges actually assessed to and paid by the plaintiffs, and the forms did so without warranting anything about the validity 45 or ultimate disposition of the disputed charges. Because the amounts listed were accurate – that is, they were the amounts that plaintiffs had actually paid – Moll concluded that transmission of a HUD–1 did not constitute an independent act of concealment because it did not contain any false information. Id. at 1292-93. There is, however, a gap in that logic. Even assuming that a HUD–1 correctly summarizes the fees and charges actually paid by a borrower for settlement services in connection with a federally related mortgage loan, it does not follow that the HUD–1 should be viewed in isolation. Federal regulations associated with that form control the nature and quality of information that is supposed to be included in each HUD–1, and borrowers should be able to rely on that information in fact being of the requisite nature and quality. Of particular relevance here, 24 C.F.R. § 3500.8 provides the following: The settlement agent shall state the actual charges paid by the borrower and seller on the HUD–1, or by the borrower on the HUD–1A. The settlement agent must separately itemize each third party charge paid by the borrower and seller. All origination services performed by or on behalf of the loan originator must be included in the loan originator’s own charge. Administrative and processing services related to title services must be included in the title underwriter’s or title agent’s own charge. The amount stated on the HUD–1 or HUD–1A for any itemized service cannot exceed the amount actually received by the settlement service 46 provider for that itemized service, unless the charge is an average charge in accordance with paragraph (b)(2) of this section.21 HUD–1s that deviate from the requirements of section 3500.8 thus can be materially misleading because transmission of a HUD–1 impliedly warrants compliance with that section’s specific requirements. We therefore conclude that inclusion of misleading information in a HUD–1 can constitute an independent act of concealment. Cf. White v. PNC Fin. Servs. Grp., No. 11-7928, 2014 WL 4063344, at -4 (E.D. Pa. Aug. 18, 2014); Barlee v. First Horizon Nat’l Corp., No. 123045, 2013 WL 706091, at -5 (E.D. Pa. Feb. 27, 2013). Under the facts of this case, a common question as to active misleading predominates over any individualized issues.