Force-Placed Insurance Plaintiff Denied National Class Action Standing

A federal court in Pennsylvania has ruled that an Ohio-homeowner could not bring a national class action lawsuit over force-placed insurance in Pennsylvania.

Plaintiff Xi Chen Lauren brought suit against an Assurant Inc. subsidiary for working with PNC Bank to force homeowners into unwanted and unnecessary homeowners insurance.  Lauren accused PNC Bank and the Assurance subsidiary of colluding to unjustly enrich themselves at the expense of borrowers by receiving “kickback”-style commissions on the insurance that was force-placed on borrowers as well as for force-placing overly expensive policies with unnecessary coverage periods.

Lauren had insurance force-placed on her home in Ohio, but sought to represent other PNC Bank-serviced mortgage holders across the nation who also suffered from unfair force-placed insurance policies issued by Assurant. Assurant is no stranger to force-placed insurance lawsuits.  Earlier this year, the company settled a $300 million class action lawsuit over allegations it unfairly forced Chase Bank borrowers into hazard insurance.

However, in this case, federal judge Terrance McVerry ruled that Lauren lacked constitutional standing to seek class action certification for unjust enrichment claims under the laws of any state other than Ohio (where her own claim originated).  As reported by Law360, Judge McVerry noted that “…it is undisputed she has standing to assert an unjust enrichment claim under Ohio law,” but that a “putative class representative does not have standing to assert unjust enrichment claims from a state in which she was not injured.” The court, however, also noted that the plaintiff may be able to seek redress under a relevant federal law or another state law.

Courts have been divided on this issue of standing, leading Judge Terry to review Supreme Court cases for guidance, particularly the Supreme Court’s ruling In re: Wellbutrin XL Antitrust Litigation which held that when a plaintiff’s injuries lack a causal relationship to the law of a particular state, the plaintiff lacks standing to assert a claim under that state’s law.  Since Lauren was the named plaintiff in the instant case, Judge Terry followed the reasoning of the Wellbutrin case in ruling Lauren’s Ohio-based mortgage insurance claim lacked a causal relationship to Pennsylvania law and, therefore, the plaintiff lacked standing to bring the class action lawsuit in Pennsylvania.

While mortgage lenders commonly require that borrowers maintain adequate homeowners, the practice of lenders “force-placing” a more expensive policy if the homeowners own policy is deemed inadequate or expires has been the subject of litigation across the country. Force-placed insurance is more expensive than what homeowners can purchase on their own, so when a lender unilaterally imposes these policies on a borrower financial hardship may result, potentially leading borrowers into foreclosure.

How Do I Get More Information? 

If you purchased hazard insurance for your home, or believe your mortgage lender forced you to purchase it for your property, contact the attorneys at Audet and Partners, LLP to determine if you are eligible for compensation.  Call us at (800) 965-1461 or fill out the confidential case inquiry form on this web page.

Join a class action. Call us: 800.965.1461