Prior to the filing of an amicus brief in the United States Supreme Court concerning the Edwards v. First American Title action, ALTA and the national title insurance underwriters were largely mute on the subject of whether they supported or opposed the growth of controlled business arrangements. Back in the early 1980′s, ALTA was on record as steadfastly opposing any controlled business arrangement. However, over the last thirty years, the industry has seen the steady growth of these anti-competitive business ventures.
On December 30, 2010, ALTA and the national title insurance underwriters, including Stewart Title, Fidelity National and Old Republic Title, joined with RESPRO, the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) to file two separate amicus curiae (friend of the court) briefs before the United States Supreme Court attempting to seek reversal of the U.S. Ninth Circuit Court of Appeals decision in Edwards.
ALTA and its cadre of referral sources, direct operators and other non-title insurance proponents believe that RESPA precludes suits against alleged violators unless the claimed damages stemmed from an overcharge for a particular settlement service. By making this argument, ALTA and the national underwriters believe that the only damage caused by a controlled business arrangement is that which results in an overcharge, not the fundamental conflict of interest inherent in the controlled business arrangement or the fact that many, if not all, CBAs are nothing more than conduits for referral payments and kickbacks. In other words, ALTA and the national underwriters, along with their referral source puppet masters, believe CBAs are always legitimate — sham or not — as long as they do not overcharge the customer.
This is dangerous stuff.
In Edwards, the Ninth Circuit held that RESPA damage provisions give rise to a statutory cause of action regardless of whether there is an overcharge or not. RESPA specifically provides that a person who is charged for a settlement service involved in a violation is entitled to three times the amount of any charge paid. The Ninth Circuit held that the use of the term “any” demonstrates that charges are neither restricted to a particular type of charge, such as an overcharge, nor limited to a specific part of the settlement service.
ALTA and the national title insurance underwriters seek to define the term “any” as found in RESPA as having limitations when RESPA does not include the term “overcharge” anywhere in the statute. Further, ALTA and the national title insurance underwriters have made the argument that the United States Supreme Court should hear this case because it could result in huge losses to the underwriter involved — First American — and by relation, to the other title insurance underwriters who have similar exclusive referral arrangements with their agents.
There is more to this story than the briefs, though. There is also the abundance of silence from ALTA and its national title underwriter supporters on the fact that this dangerous — and telling — brief was filed. ALTA has not published any detail of the amicus filing on any of its member or advocacy updates. ALTA has not informed its membership that it took a position contrary to the position taken by independent title insurance agents in Edwards.
But the code of silence does not stop there.
October Research Corporation, the publisher of RESPA News, the Title Report, the Legal Description, and several other trade publications supported by national title insurance underwriter ad revenue, ran a January 17, 2011 story concerning the filing of the amicus briefs in Edwards, but failed to mention who filed the briefs or identify the amici by name. The article, which appeared on the RESPA News publication, only referred to certain unnamed “associations” who filed briefs.
As a service to our members, independent title insurance agents and their independent settlement colleagues, we are attaching links to the two amicus briefs below. Judge for yourself.
First, the ALTA and national title insurance underwriter amicus brief:
Second, the RESPRO, NAR, MBA amicus brief: