On Wednesday, July 11, 2012, Judge Michael Simon of the United States District Court for the District of Oregon issued a ruling that permitted the Plaintiffs’ breach of contract claims to proceed in a nationwide class action alleging that Bank of America (NYSE: BAC) improperly force-placed high-premium flood insurance policies on homeowners across the United States.
In their Complaint, Plaintiffs Ronda and Larry Arnett allege that Bank of America has a practice of force-placing flood insurance coverage above the amounts required by borrowers’ mortgage contracts and by federal law. Bank of America asked the Court to dismiss the case, asserting that its mortgage contracts with borrowers permit it to force-place high premium flood insurance coverage in any amounts that it deems necessary. The Court denied Bank of America’s motion to dismiss and decided that Plaintiffs’ claims alleging breach of contract and conversion of funds should proceed to trial.
“When it comes to flood insurance, Bank of America and other companies in the mortgage servicing industry have engaged in a classic bait-and-switch, in which borrowers are informed of one set of flood insurance requirements at closing and then, later, Bank of America demands additional, unwarranted flood insurance coverage,” said Shanon Carson of Berger & Montague, P.C., one of the lead attorneys for the Plaintiffs. “Through this scheme, Bank of America has harmed tens of thousands of consumers by force-placing excessive and unnecessary flood insurance at extraordinarily high prices. Moreover, each time Bank of America force-places flood insurance policies on its borrowers it receives a kickback from the flood insurance companies with whom Bank of America has an exclusive relationship.”
“All homeowners in the United States with mortgage loans serviced by Bank of America who have been force-placed with flood insurance policies are potentially affected by the Court’s decision in this case,” added Brett Cebulash, another of the Plaintiffs’ attorneys. “By virtue of this decision, they will now have their day in court.”
A similar case, brought on behalf of Bank of America borrowers with home equity lines of credit (“HELOCs”), that also alleges abuses in the force-placement of flood insurance, has been brought by the same group of plaintiffs’ attorneys and is also pending before Judge Simon in the United States District Court for the District of Oregon.
Borrowers who have been subjected to force-placed insurance policies and customers of Bank of America who are potentially affected by this decision can obtain additional information by calling Shanon J. Carson, Esq. at (215) 875-4656 or Patrick F. Madden, Esq. at (215) 875-3035, both of the law firm, Berger & Montague, P.C. Mr. Carson and Mr. Madden can also be contacted by email at scarson@bm.net or pmadden@bm.net.
The Plaintiffs in this case, Arnett, et al. v. Bank of America, N.A., Civil Action No. 11-cv-1372 (D. Or.), are represented by the law firms of Berger & Montague, P.C., Taus Cebulash & Landau LLP, and Stoll Stoll Berne Lokting & Shlachter P.C.
Berger & Montague, P.C., based in Philadelphia, PA, consists of over 60 attorneys who represent plaintiffs in complex and class action litigation. The firm’s Consumer Protection and Insurance and Financial Products & Services Groups have extensive experience in representing homeowners, consumers and borrowers in class action litigation against banks and insurers, and the firm has played lead roles in major cases for over 40 years resulting in recoveries of over $22 billion for their clients and the classes they represent. On the Web: www.bergermontague.com.
Taus, Cebulash & Landau, LLP, based in New York City, specializes in complex consumer and antitrust class action litigation. Brett Cebulash and Kevin Landau, the two TCL partners involved in this matter have 35 years of combined experience in complex litigation and can be reached at (212) 931-0704 or via e-mail at bcebulash@tcllaw.com or klandau@tcllaw.com for more information.
Berger & Montague, P.C. and Taus Cebulash & Landau, LLP are currently pursuing lawsuits against numerous lenders and servicers in the mortgage industry who are alleged to have engaged in practices similar to Bank of America regarding force-placed hazard insurance and force-placed flood insurance, including Wells Fargo, JPMorgan Chase, Citizens Bank, Citibank, GMAC, and others.
