Opinion ID: 2821408
Heading Depth: 5
Heading Rank: 2

Heading: Reasonable Due Diligence

Text: To qualify for equitable tolling, however, the Plaintiffs must show not only an act of concealment, but reasonable diligence on their own part as well. “To demonstrate 21 This version of section 3500.8 was promulgated in November 2008. See Real Estate Settlement Procedures Act (RESPA): Rule To Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs, 73 Fed. Reg. 68204, 68241 (November 17, 2008). But it was removed in June 2014, see Removal of Regulations Transferred to the Consumer Financial Protection Bureau, 79 Fed. Reg. 34224, 34225 (June 16, 2014). It now appears at 12 C.F.R. § 1024.8(b)(1). Relevant for our purposes, a prior version of section 3500.8 that was in effect in 1998 imposed substantially identical reporting requirements for HUD–1s. 47 reasonable diligence, a plaintiff must establish that he pursued the cause of his injury with those qualities of attention, knowledge, intelligence and judgment which society requires of its members for the protection of their own interests and the interests of others.” Mest v. Cabot Corp., 449 F.3d 502, 511 (3d Cir. 2006) (brackets and internal quotation marks omitted). Relying on Riddle v. Bank of America Corp., No. 12- 1740, 2013 WL 6061363 (E.D. Pa. Nov. 18, 2013) aff’d, 588 F. App’x 127 (3d Cir. 2014), PNC argues that the reasonable diligence component of the equitable tolling inquiry is not susceptible to common proof but, instead, that each class member will need to be queried about his individual knowledge and attempts to discover his claims before the limitations period expired. Addressing the merits of equitable tolling and not the issue of certification in the putative class action, Riddle analyzed in detail evidence regarding each named plaintiff’s diligence before concluding that plaintiffs could not pursue equitable tolling of the limitations period on their RESPA claim. Id. at -4, -7. We do not dispute that reasonable diligence is generally a fact-specific inquiry. But when a wrongful scheme is perpetrated through the use of common documentation, such as the documents employed to memorialize each putative class member’s mortgage loan, full participation in the loan process is alone sufficient to establish the due diligence element. Cf. Cunningham v. M & T Bank Corp., No. 1:12-cv-1238, 2013 WL 5876337, at  (M.D. Pa. Oct. 30, 2013) (finding that allegations that the putative class fully participated in all aspects of the mortgage loan transactions and reviewed all relevant documents, but were nonetheless unable to discover the RESPA violation, were 48 sufficient to satisfy the reasonable diligence requirement for equitable tolling at the pleading stage). The rationale for holding that participation in the mortgage loan process can establish the “due diligence” element of equitable tolling was explained in Bradford v. WR Starkey Mortgage, LLP, No. 2:06-CV-86, 2008 WL 4501957 (N.D. Ga. Feb. 22, 2008), in which the court stated, “Plaintiff had no reason to suspect that defendant, or any other lender, might be improperly marking-up settlement charges, and the due diligence requirement does not demand that plaintiff inquire about the various fees at issue.” Id. at . Bradford specifically rejected the same argument made here by PNC, saying that, “[h]aving flouted the regulation, defendant cannot now try to penalize plaintiff for trusting the validity of the settlement costs delineated on his HUD–1 Statement.” Id. at  n.6. We agree with that conclusion. Due diligence does not mean that borrowers must presume their bank is lying or dissembling and therefore that further investigation is needed. Reading the blizzard of paper that sweeps before them is ample diligence in itself. In short, a borrower ought to be able to rely on the documents provided by a financial institution. Indeed, RESPA and TILA/HOEPA were passed, in large part, because Congress recognized that the average borrower is incapable of detecting many unfair lending practices, including fraud. “[W]hile the law of fraud does not endorse a ‘hear no evil, see no evil approach,’ neither does it require that an aggrieved party have proceeded from the outset as though he were dealing with thieves.” Jones v. Childers, 18 F.3d 899, 907 (11th Cir. 1994) (additional quotation marks omitted). “A plaintiff … cannot be expected 49 to exercise diligence unless there is some reason to awaken inquiry and direct diligence in the channel in which it would be successful. This is what is meant by reasonable diligence.” Sheet Metal Workers, Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1282 (3d Cir. 1991) (internal quotation marks omitted). The Complaint here does not allege any facts disclosed on the face of the HUD–1s or that were otherwise provided to the Plaintiffs that should have awakened inquiry and demanded some further diligence. We conclude, therefore, that the Plaintiffs’ allegation that the class fully participated in all aspects of the mortgage loan transactions by “reviewing their loan documentation” is sufficient to satisfy the reasonable diligence requirement for equitable tolling in this case. (App. at 307, ¶ 409.) Cf. White, 2014 WL 4063344, at -6. In addition, proving that class members did, in fact, fully participate in the loan process in that fashion does not cause the issue of equitable tolling to predominate over issues common to the whole class. We do not address whether the class members are actually entitled to equitable tolling on the merits. Equitable tolling “is extended only sparingly” and under “sufficiently inequitable circumstances.” Glover v. FDIC, 698 F.3d 139, 151 (3d Cir. 2012) (internal quotation marks omitted). The Plaintiffs may ultimately be unable to demonstrate that they are factually entitled to its benefits. We only conclude here that the common issues of fact and law predominate over individual ones such that the issue is suitable for class-wide treatment on the merits. 50