case3:12-cv-02506-lb document26 filed07/23/12 page1 … · northern district of california stephen...
TRANSCRIPT
![Page 1: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/1.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
CLASS ACTION COMPLAINT
Matthew C. Helland, CA State Bar No. 250451 [email protected] NICHOLS KASTER, LLP One Embarcadero Center, Suite 720 San Francisco, CA 94111 Telephone: (415) 277-7235 Facsimile: (415) 277-7238 Rebekah L. Bailey, CA State Bar No. 258551 E. Michelle Drake, MN Bar No. 0387366* Kai H. Richter, MN Bar No. 0296545* Sarah W. Steenhoek, MN Bar No. 0390258* *(appearing pro hac vice) NICHOLS KASTER, PLLP 4600 IDS Center 80 South 8th Street Minneapolis, MN 55402 Telephone: (612) 256-3200 Facsimile: (612) 215-6870 Attorneys for Plaintiff and the Putative Classes
IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
Stephen Ellsworth, as an individual and as a representative of the classes and on behalf of the general public,
Plaintiff,
vs.
U.S. Bank, N.A. and American Security Insurance Company,
Defendants.
FIRST AMENDED CLASS ACTION COMPLAINT FOR DAMAGES, RESTITUTION AND INJUNCTIVE RELIEF
(1) Breach of Contract
(2) Breach of the Covenant of Good Faith and Fair Dealing
(3) Unjust Enrichment/Restitution
(4) Violation of California’s Unfair Competition Law (Business and Professional Code § 17200 et seq.)
DEMAND FOR JURY TRIAL
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 of 22
![Page 2: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/2.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-2- CLASS ACTION COMPLAINT
Plaintiff Stephen Ellsworth (“Plaintiff”), on behalf of himself and the putative classes set
forth below, and in the public interest, brings the following First Amended Complaint against
Defendants U.S. Bank, N.A. (“U.S. Bank”) and American Security Insurance Company
(“ASIC”):
PRELIMINARY STATEMENT
1. Plaintiff and the putative class members have mortgages1 secured by residential
property, and were charged for lender-placed (also known as “force-placed”) flood insurance by
U.S. Bank.
2. Although lenders generally have the right to force-place flood insurance where the
property securing the loan falls in a Special Flood Hazard Area (“SFHA”) and is not insured by
the borrower, U.S. Bank abused that right by (1) purchasing backdated policies, (2) charging
borrowers for expired or partially expired coverage, and (3) arranging for kickbacks,
commissions, or other compensation for itself and/or its affiliates in connection with force-placed
flood insurance coverage.
3. ASIC actively participated in this scheme by issuing backdated lender-placed
flood insurance policies for U.S. Bank and by paying kickbacks, commissions, or other
compensation to U.S. Bank in return for the business.
4. Defendants engaged in this conduct in bad faith, knowing that their actions were
not authorized by borrowers’ mortgage contracts or the National Flood Insurance Act, and were
inconsistent with applicable law.
5. Based on this conduct, Plaintiff asserts claims against U.S. Bank for breach of
contract (Count One) and breach of the covenant of good faith and fair dealing (Count Two). In
addition, Plaintiff asserts claims against both Defendants for unjust enrichment/restitution
(Counts Three and Four) and violation of California’s Unfair Competition Law (“UCL”),
Business and Professional Code § 17200 et. seq. (Counts Five and Six).
1 As used herein, the term “mortgages” included deeds of trust and other security instruments.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page2 of 22
![Page 3: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/3.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-3- CLASS ACTION COMPLAINT
6. Plaintiff and the putative classes seek injunctive relief, corresponding declaratory
relief, monetary relief, and other appropriate relief for Defendants’ unlawful conduct, as
described herein.
THE PARTIES
7. Individual and representative Plaintiff Stephen Ellsworth resides in Napa,
California. Plaintiff is a member of each of the Putative Classes as defined below.2
8. Defendant U.S. Bank, N.A. is a national banking association headquartered in
Cincinnati, Ohio. U.S. Bank does business in California and throughout the United States. U.S.
Bank Home Mortgage is a division of U.S. Bank.
9. Defendant American Security Insurance Company (“ASIC”) is a Delaware
corporation with its principal place of business in Atlanta, Georgia. ASIC is a subsidiary of
Assurant, Inc. that does business in California and throughout the United States.
JURISDICTION AND VENUE
10. This Court has original jurisdiction under the Class Action Fairness Act
(“CAFA”), 28 U.S.C. § 1332(d)(2). Plaintiff is a citizen of the State of California, and
Defendants are citizens of different states. The amount in controversy in this action exceeds
$5,000,000.00, and there are more than 100 members of the Putative Classes.
11. Venue is proper in the United States District Court, Northern District of California,
pursuant to 28 U.S.C. § 1391. Plaintiff resides in this District, Defendants regularly conduct
business in this District, and Plaintiff’s property is located in this District.
INTRADISTRICT ASSIGNMENT
12. Pursuant to L.R. 3-2(c) and (d), this action is properly assigned to the San
Francisco Division of the Northern District of California because a substantial portion of the
events giving rise to the dispute occurred in Napa, California.
2 The term “Putative Classes” refers to both the proposed classes and subclasses.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page3 of 22
![Page 4: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/4.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-4- CLASS ACTION COMPLAINT
FACTUAL ALLEGATIONS
Origination of Plaintiff’s Mortgage Loan
13. On or about July 2, 2007, Plaintiff obtained a mortgage loan from U.S. Bank in
the amount of $393,892, secured by a deed of trust on his homestead. See Exhibit 1.
14. U.S. Bank is the lender-in-interest to Plaintiff’s mortgage loan, and it services the
loan through its U.S. Bank Home Mortgage division.
Flood Insurance Requirements for Plaintiff’s Property
15. Under the National Flood Insurance Act (“NFIA” or “Act”), lenders are required
to ensure that any improved property in a Special Flood Hazard Area (“SFHA”) that secures a
loan or line of credit is covered by flood insurance in an amount at least equal to the outstanding
principal balance of the loan or the maximum limit of coverage made available under the Act
($250,000), whichever is less. 42 U.S.C. § 4012a(b)(1).
16. In the event that the required amount of insurance is not maintained, the NFIA
authorizes lenders to purchase flood insurance for the borrower in the required amount. See 42
U.S.C. § 4012a(e)(1)-(2). However, the Act does not authorize lenders to purchase backdated
insurance coverage for periods of time that already have expired, nor does it authorize lenders to
enrich themselves by accepting kickbacks or commissions in connection with force-placed
policies.
17. Similarly, Plaintiff’s deed of trust allows U.S. Bank to force-place flood insurance
coverage if Plaintiff fails to maintain the required amount of coverage (see Exhibit 1, p. 6, ¶ 5),
but only authorizes U.S. Bank to “do and pay for whatever is reasonable and appropriate” to
protect its interest in the property. Id., p.7, ¶ 9.
U.S. Bank Force-Places Backdated Coverage and Improperly Takes a Commission for Itself
18. On or about June 9, 2010, nearly three years after Plaintiff originated his loan, U.S.
Bank sent Plaintiff a “Notice of Temporary Flood Insurance Placed by Lender Due to
Cancellation, Expiration, or Missing Policy Information” (“First Notice”), claiming that
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page4 of 22
![Page 5: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/5.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-5- CLASS ACTION COMPLAINT
Plaintiff’s property was located in a SFHA and that he was required to purchase flood insurance.3
See Exhibit 2.
19. The First Notice informed Plaintiff that U.S. Bank already had purchased a forty-
five day flood insurance binder for his property through American Security Insurance Company
(“ASIC”). The effective date of this binder was July 3, 2009 -- almost an entire year before the
notice was sent.
20. The First Notice also stated that “[a]t the end of the forty-five day binder period,
this temporary coverage will convert to a full year policy and the annual premium will be added
to your escrow account.” Additionally, the First Notice stated that “[i]n many instances, the
insurance we purchase for you may be more expensive than you are able to obtain on your own.”
21. On or about August 18, 2010, U.S. Bank sent Plaintiff a second “Notice of Flood
Insurance Placed by Lender Due to Cancellation, Expiration, or Missing Policy Information”
(“Second Notice”). See Exhibit 3. In the Second Notice, U.S. Bank informed Plaintiff that it had
purchased a “full year flood insurance policy” from ASIC. The premium cost for this policy was
$2,250. See Exhibit 4.
22. This force-placed flood insurance coverage was backdated more than a year to
reflect an effective policy period of July 3, 2009 through July 3, 2010, despite the fact that there
was no damage to the property or claims arising out of the property during that period. Id. As a
result, the coverage was expired on the date it was purchased and entirely worthless to Plaintiff.
23. Although not disclosed in either letter, U.S. Bank and/or its affiliates received a
kickback or commission from ASIC on this lender-placed coverage, consistent with ASIC’s
standard business practice. See infra at pgs. 6-8, ¶¶ 27-34. U.S. Bank did not subtract this
commission from the premium cost, which was passed along in full to Plaintiff.
3 U.S. Bank initially did not require Plaintiff to carry flood insurance when he entered into his mortgage, but subsequently claimed that such coverage was required. Plaintiff has since obtained a letter of map amendment from the Federal Emergency Management Agency (“FEMA”) establishing that Plaintiff’s home is not in a SFHA.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page5 of 22
![Page 6: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/6.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-6- CLASS ACTION COMPLAINT
24. The premiums for this force-placed flood insurance coverage were paid by
Plaintiff in full. Plaintiff was never reimbursed for this backdated insurance coverage, and never
made a claim on the backdated policy. This insurance coverage provided no benefit to him, and
he did not want or request this coverage.
25. Plaintiff subsequently purchased a flood insurance policy though State Farm in
2010 to avoid further charges for force-placed flood insurance. See Exhibit 5. Like the policy
U.S. Bank force-placed on Plaintiff, this policy provided $250,000 in flood insurance coverage.
However, this policy only cost $276. Therefore, the lender-placed policy cost approximately
nine times as much as the policy Plaintiff was able to obtain on his own through a third party
insurer.
26. On or about April 9, 2012, Plaintiff sent a letter to U.S. Bank, notifying U.S. Bank
that he believed it had acted in an unfair manner in breach of his deed of trust. See Exhibit 6.
Plaintiff did not receive a response from U.S. Bank.
Kickbacks Are Commonly Paid by ASIC to U.S. Bank and Other Mortgage Lenders
27. The practice of force-placing insurance is a very lucrative business for U.S. Bank
and other mortgage lenders.4 Commonly, the lender selects the insurance provider in accordance
with a pre-arranged agreement whereby the insurance provider pays a percentage of the premiums
back to the lender as an inducement to do business with the insurance provider. Under these
commission arrangements, the provider of the force-placed insurance policy pays a commission
either directly to the mortgage lender or to a subsidiary who poses as an insurance “agent.”
28. Although U.S. Bank has tried to keep its own commission arrangement with ASIC
secret, it is well-known that ASIC pays millions of dollars in commissions each year to lenders
that force-place coverage through ASIC.
29. The commissions that ASIC pays to its lender-clients are the subject of numerous
court opinions. See, e.g., McNeary-Calloway v. JP Morgan Chase Bank, N.A., No. C-11-03058
JCS, 2012 WL 1029502, at *23 (N.D. Cal. Mar. 26, 2012); Hofstetter v. Chase Home Fin. LLC,
4 As used herein, the term “lender” refers generically to both mortgage lenders and servicers.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page6 of 22
![Page 7: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/7.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-7- CLASS ACTION COMPLAINT
No. 10-1313, 2011 WL 1225900 (N.D. Cal. Mar. 31, 2011); Gipson v. Fleet Mortgage Group,
232 F. Supp. 2d 691, 705-06 (S.D. Miss. 2002).
30. These commission arrangements also are the subject of publicly-filed deposition
testimony. For example, in the Hofstetter case, Chase’s representative testified that it is “a
standard industry-wide practice” for a mortgage lender to be paid a commission by the insurance
provider in connection with lender-placed flood insurance. See Exhibit 7 at 67:5-14.5 Like U.S.
Bank, Chase procures its force-placed flood insurance coverage through ASIC. Id. at 68:16-
69:14.
31. In addition, the commission arrangements between major banks and insurance
firms -- including ASIC’s parent company, Assurant -- have been reported in American Banker
magazine. See Exhibit 8.6
32. Moreover, the commissions paid by ASIC to its lender-clients are also the subject
of public regulatory filings. For example, ASIC reported to the California Department of
Insurance that it paid more than $1.8 million dollars in commissions and brokerage expenses in
connection with its flood insurance program in 2010. See Exhibit 9.
33. While significant, this figure represents only a sliver of the total amount of
commissions paid by ASIC nationwide on all force-placed policies (flood, hazard, and wind).
According to a recent article published by American Banker, “a cursory review of force-placed
insurers’ financials suggests that the business brings servicers hundreds of millions of dollars
each year.” See Exhibit 10.
34. In return for the millions of dollars in commissions that are kicked back to U.S.
Bank and other mortgage lenders/servicers, ASIC and its parent company, Assurant, reap billions
5 Shortly after the deposition testimony in Hofstetter became public (in March 2011), Chase entered into a multi-million dollar settlement (in July 2011), under which it agreed to disgorge 100% of the commissions that it received on force-placed flood insurance for eligible class members, and permanently refrain from accepting commissions in connection with force-placed flood insurance for HELOC borrowers. Following notice to the class members, that settlement received final approval from this court (Alsup, J.) on November 14, 2011. 6 After publication, this article received the Society of American Business Editors and Writers award for “best investigative” writing for publications with a circulation of below 25,000.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page7 of 22
![Page 8: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/8.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-8- CLASS ACTION COMPLAINT
of dollars in premiums. For example, in 2010 alone, Assurant collected approximately $2.7
billion in premiums through its specialty insurance division, which is primarily devoted to force-
placed insurance. See Exhibit 10.
The Kickback Arrangements Are Unjust
35. The kickback arrangements between ASIC and its lender-clients (including U.S.
Bank) are unquestionably unjust.
36. Numerous courts have condemned this type of self-dealing in connection with
force-placed insurance. See, e.g., McNeary-Calloway, 2012 WL 1029502, at *23-29; Montanez
v. HSBC Mortg. Corp. (USA), No. 2:11-CV-4074-JD, --- F. Supp. 2d ---, 2012 WL 2899371, at
*6 (E.D. Pa. July 17, 2012); Williams, 2011 WL 4901346, at * 2, 4; Abels v. JPMorgan Chase
Bank, N.A., 678 F. Supp. 2d 1273, 1278–79 (S.D. Fla. 2009); Gipson, 232 F. Supp. 2d. at 707;
Stevens v. Citigroup, Inc., No. CIV.A 00-3815, 2000 WL 1848593, at *1, 3 (E.D. Pa. Dec. 15,
2000).
37. Moreover, the practice of accepting commissions in connection with force-placed
flood insurance is inconsistent with the NFIA, which only allows lenders and servicers to “charge
the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan in
purchasing the insurance.” 42 U.S.C. § 4012(e)(2); see also 12 C.F.R. § 22.3.
38. On March 14, 2012, Fannie Mae issued a Servicing Guide Announcement
(“SGA”) pertaining to lender-paced insurance. See Exhibit 11. In the SGA, Fannie Mae clarified
its requirements relating to reasonable reimbursable expenses for lender-placed insurance, and
stated that “reimbursement of lender-placed insurance premiums must exclude any lender-placed
insurance commission earned on that policy by the servicer or any related entity[.]” Id. at 4
(emphasis in original).7
39. Earlier that same month, on March 6, 2012, Fannie Mae issued a Request for
Proposal (“RFP”) relating to lender-placed insurance. See Exhibit 13.8 In the RFP, Fannie Mae
7 The U.S. Department of Housing and Urban Development has promulgated similar guidance in its Lender Manual. See Exhibit 12. 8 The RFP was labeled “Confidential” by Fannie Mae, but subsequently was published in
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page8 of 22
![Page 9: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/9.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-9- CLASS ACTION COMPLAINT
stated that it had conducted an “extensive internal review” of the lender-placed insurance process,
and found that the process “can be improved through unit price reductions and fee transparency to
the benefit of both the taxpayers and homeowners.” Id. at 2. In particular, Fannie Mae made the
following observations:
“Lender Placed Insurers often pay commissions/fees to Servicers for placing business with them. The cost of such commissions/fees is recovered in part or in whole by the Lender Placed Insurer from the premiums[.]”
“The existing system may encourage Servicers to purchase Lender Placed Insurance from Providers that pay high commissions/fees to the Servicers and provide tracking, rather than those that offer the best pricing and terms . . . . Thus, the Lender Placed Insurers and Servicers have little incentive to hold premium costs down.”
“[M]uch of the current lender placed insurance cost borne by Fannie Mae
results from an incentive arrangement between Lender Placed Insurers and Servicers that disadvantages Fannie Mae and the homeowner.”
Id. Accordingly, Fannie Mae stated that it sought to “[r]estructure the business model to align
Servicer incentives with the best interest of Fannie Mae and homeowners.” Id. at 3. Among
other things, Fannie Mae sought to “[e]liminate the ability of Servicers to pass on the cost of
commissions/fees to Fannie Mae” and to “[s]eparate the commissions and fees for Insurance
Tracking Services from the fees for Lender Placed Insurance to ensure transparency and
accountability.” Id. at 2.
40. That same month, on March 14, 2012, the California Department of Insurance
(“CA-DOI”) announced that it had contacted the ten largest lender-placed insurers in California
(including ASIC), and asked them to reduce their rates. See Exhibits 14 and 15. In its
announcement, the California Insurance Commissioner expressed concern about “questionable
financial integration between mortgage lenders and insurers providing ‘forced-placed’ mortgage
insurance.” See Exhibit 14. In addition, the Commissioner noted a “lack of arm’s length
American Banker magazine. See Jeff Horwitz, Fannie Mae Seeks to Break up Force-Placed Market, Document Shows, AMERICAN BANKER, May 24, 2012, available at http://www.americanbanker.com/issues/177_101/fannie-rfp-gse-contracting-document-1049630-1.html.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page9 of 22
![Page 10: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/10.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-10- CLASS ACTION COMPLAINT
transactions between lenders and insurers and, in some cases, a financial relationship between the
lender and the insurer” that results in higher premiums and prejudices homeowners.
41. Two months later, the New York Department of Financial Services (“NYDFS”)
held an extraordinary three-day public hearing in May 2012 regarding the force-placed insurance
practices of several mortgage lenders, servicers, and insurance companies. See
http://www.dfs.ny.gov/insurance/hearing/fp_052012_schedule.htm. On the opening day of the
hearings, NYDFS Superintendent Benjamin Lawsky issued a statement, announcing that “our
initial inquiry into the operation of the force placed insurance market has raised a number of
serious concerns and red flags.” See Exhibit 16 at 2. Among other things, Superintendent
Lawsky noted that:
there . . . appears to be a web of tight relationships between the banks, their subsidiaries and insurers that have the potential to undermine normal market incentives and may contribute to other problematic practices. In some cases this takes the form of large commissions being paid by insurers to the banks for what appears to be very little work.
Id. Superintendent Lawsky further stated that “[t]his perverse incentive, if it exists, would appear
to harm both homeowners and investors while enriching the banks and the insurance companies.”
Id. at 3. Following these hearings, the NYDFS also asked lender-placed insurance companies in
New York (including ASIC) to submit new rate filings.
42. These concerns are by no means limited to regulators in New York and California.
In fact, the National Association of Insurance Commissioners (“NAIC”) recently expressed
similar “regulatory concern”:
A key regulatory concern with the growing use of lender-placed insurance is “reverse competition,” where the lender chooses the coverage provider and amounts, yet the consumer is obligated to pay the cost of coverage. Reverse competition is a market condition that tends to drive up prices to the consumers, as the lender is not motivated to select the lowest price for coverage since the cost is born by the borrower. Normally competitive forces tend to drive down costs for consumers. However, in this case, the lender is motivated to select coverage from an insurer looking out for the lender’s interest rather than the borrower.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page10 of 22
![Page 11: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/11.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-11- CLASS ACTION COMPLAINT
Exhibit 17. As a result, the NAIC announced that it will hold its own public hearing relating to
force-placed insurance on August 9, 2012. Id.
Backdating Insurance Policies Is Also Unjust
43. The practice of backdating insurance also has been condemned by the NAIC.
According to the NAIC, insurance is “prospective in nature” and policies “should not be back-
dated to collect premiums for a time period that has already passed.” See Exhibit 8 at 2. In fact,
the Ohio Department of Insurance has specifically warned that “there’s no such thing as
retroactive flood insurance.” See Exhibit 18.
44. Retroactively placing flood insurance policies also is inconsistent with the advance
notice requirements of the NFIA. See 42 U.S.C. § 4012a(e). As the Office of the Comptroller of
the Currency (“OCC”) has stated:
The ability to impose the costs of force placed flood insurance on a borrower commences 45 days after notification to the borrower of a lack of insurance or of inadequate insurance coverage. Therefore, lenders may not charge borrowers for coverage during the 45-day notice period.
Flood Insurance Questions & Answers, 74 Fed. Reg. at 35,934.9
45. Accordingly, this court and other courts also have upheld claims that backdating
force-placed insurance policies is unfair and/or unlawful. See, e.g., Montanez, 2012 WL
2899371, at *6; McNeary-Calloway, 2012 WL 1029502, at *23-29; Williams v. Wells Fargo
Bank, N.A., No. 11-21233 CIV, 2011 WL 4901346, at *2, 4 (S.D. Fla. Oct. 14, 2011); Am.
Bankers Ins. Co. v. Wells, 819 So.2d 1196 (Miss. 2001).
9 The OCC recently proposed alternative language which would allow lenders to charge borrowers for flood insurance coverage during the 45-day notice period, if the borrower has given the lender “express authority” to do so. See Loans in Areas Having Special Flood Hazards; Interagency Questions & Answers Regarding Flood Insurance, 76 Fed. Reg. 64,175, 64,180-81 (Oct. 17, 2011). However, there is no question that charging a borrower for coverage (or increased coverage) that is “effective” before the 45-day notice period even begins is inappropriate.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page11 of 22
![Page 12: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/12.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-12- CLASS ACTION COMPLAINT
CLASS ACTION ALLEGATIONS
46. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal
Rules of Civil Procedure.
47. Plaintiff asserts his claims in Counts 1-4 on behalf of a proposed Nationwide
Lender-Placed Class, defined as follows:
Proposed Nationwide Lender-Placed Class: All persons who have or had a loan or line
of credit with U.S. Bank secured by their residential property in the United States, and
who were charged for lender-placed flood insurance by U.S. Bank within the applicable
limitations period.
48. To the extent that Plaintiff’s claims in Counts 1-4 are based on allegations of
improper backdating, Plaintiff asserts these claims on behalf of a proposed Nationwide Backdated
Sub-Class, defined as follows:
Proposed Nationwide Backdated Sub-Class: All persons in the Proposed Nationwide
Lender-Placed Class who were charged for backdated lender-placed flood insurance by
U.S. Bank within the applicable limitations period.
49. Plaintiff asserts his claims in Counts 5-6 on behalf of a proposed California
Lender-Placed Class, defined as follows :
Proposed California Lender-Placed Class: All persons who have or had a loan or line
of credit with U.S. Bank secured by their residential property in the State of California,
and who were charged for lender-placed flood insurance by U.S. Bank on or after May 16,
2008.
50. To the extent that Plaintiff’s claims in Counts 5-6 are based on allegations of
improper backdating, Plaintiff asserts these claims on behalf of a proposed California Backdated
Sub-Class, defined as follows:
Proposed California Backdated Sub-Class: All persons who have or had a loan or line
of credit with U.S. Bank secured by their residential property in the State of California,
and who were charged for backdated lender-placed flood insurance by U.S. Bank on or
after May 16, 2008.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page12 of 22
![Page 13: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/13.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-13- CLASS ACTION COMPLAINT
51. Numerosity: The Putative Classes are so numerous that joinder of all class
members is impracticable. Thousands of U.S. Bank’s customers satisfy the definition of the
Putative Classes.
52. Typicality: Plaintiff’s claims are typical of the members of the Putative
Classes. Among other things: (1) Plaintiff’s loan documents are typical of those of other Putative
Class members; (2) the form letters that Plaintiff received are typical of those received by other
Putative Class members; (3) U.S. Bank treated Plaintiff consistent with other Putative Class
members in accordance with U.S. Bank’s uniform policies and practices; (4) it was typical for
U.S. Bank and/or its affiliates to receive kickbacks or commissions in connection with lender-
placed flood insurance; (5) it was typical for U.S. Bank to backdate lender-placed flood insurance
policies; and (6) it was typical for U.S. Bank to force-place flood insurance through ASIC and
engage in the foregoing manipulation of the force-placed insurance process with the assistance of
ASIC.
53. Adequacy: Plaintiff will fairly and adequately protect the interests of the
Putative Classes, and has retained counsel experienced in complex class action litigation,
including flood insurance litigation. See Hofstetter, 2011 WL 1225900, at *9 (finding counsel of
record to be adequate and appointing counsel as class counsel in class action lawsuit asserting
similar claims).
54. Commonality: Common questions of law and fact exist as to all members of the
Putative Classes and predominate over any questions solely affecting individual members of the
Putative Classes, including but not limited to:
a) whether U.S. Bank’s conduct as described herein violates the terms of its
mortgage contracts;
b) whether U.S. Bank owes its customers a duty of good faith and fair dealing,
and if so, whether U.S. Bank breached this duty by, inter alia, (1) accepting
kickbacks or commissions in connection with force-placed insurance, and (2)
purchasing backdated flood insurance coverage for periods of time that already
had elapsed;
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page13 of 22
![Page 14: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/14.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-14- CLASS ACTION COMPLAINT
c) whether U.S. Bank was unjustly enriched by its conduct;
d) whether ASIC was unjustly enriched by its conduct;
e) whether U.S. Bank’s conduct as described herein is unfair and violates the
UCL;
f) whether ASIC’s conduct as described herein is unfair and violates the UCL;
g) the appropriateness and proper form of any declaratory or injunctive relief;
h) the appropriateness and proper measure of restitution; and
i) the appropriateness and proper measure of damages and other monetary relief.
55. This case is maintainable as a class action under Fed. R. Civ. P. 23(b)(2) because
Defendants have acted or refused to act on grounds that apply generally to the Putative Classes,
so that final injunctive relief or corresponding declaratory relief is appropriate respecting the
Classes as a whole.
56. Class certification is also appropriate under Fed. R. Civ. P. 23(b)(3) because
questions of law and fact common to the Putative Classes predominate over any questions
affecting only individual members of the Putative Classes, and because a class action is superior
to other available methods for the fair and efficient adjudication of this litigation. Defendants’
conduct as described in this Complaint stems from common and uniform policies and practices,
resulting in unnecessary flood insurance premiums and related charges that are readily calculable
from Defendants’ records and other class-wide evidence. Members of the Putative Classes do not
have an interest in pursuing separate individual actions against Defendants, as the amount of each
class member’s individual claims is relatively small compared to the expense and burden of
individual prosecution. Class certification also will obviate the need for unduly duplicative
litigation that might result in inconsistent judgments concerning Defendants’ practices.
Moreover, management of this action as a class action will not present any likely difficulties. In
the interests of justice and judicial efficiency, it would be desirable to concentrate the litigation of
all Putative Class members’ claims in a single forum.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page14 of 22
![Page 15: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/15.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-15- CLASS ACTION COMPLAINT
57. Plaintiff intends to send notice to all members of the Putative Classes to the extent
required by Rule 23. The names and addresses of the Putative Class members are available from
Defendants’ records.
FIRST CLAIM FOR RELIEF
BREACH OF CONTRACT
(Asserted Against U.S. Bank on behalf of the Nationwide Class and Nationwide Sub-Class)
58. Plaintiff alleges and incorporates by reference the allegations in the preceding
paragraphs.
59. U.S. Bank is the lender-in-interest to Plaintiff’s deed of trust and is bound by the
terms of his deed of trust.
60. Plaintiff’s deed of trust limits the lender’s discretion to force-place insurance and
charge the borrower for force-placed insurance. Pursuant to Paragraph 9 of the deed of trust, U.S.
Bank may only “do and pay for whatever is reasonable and appropriate to protect Lender’s
Interest in the Property and rights under [the] Security Instrument[.]” See Exhibit 1, p. 7, ¶ 9.
61. This language does not allow U.S. Bank to purchase backdated flood insurance, or
to arrange for kickbacks, commissions, or other compensation for U.S. Bank and/or its affiliates.
Purchasing backdated insurance and steering a portion of the premiums to the lender (or the
lender’s affiliate) as commissions are neither appropriate nor necessary to protect the Lender’s
legitimate interests or rights.
62. Nor are such actions otherwise authorized by the deed of trust. This court has
interpreted a similar form mortgage contract, and has recognized that: Nothing in the contract necessarily authorizes charges regardless of amount and regardless of whether Defendants receive a portion of the premiums. Nor does anything in the contract authorize backdating [force-placed insurance] policies to cover periods of time where no loss occurred.
McNeary-Calloway, 2012 WL 1029502, at *23. Moreover, Fannie Mae has recognized that it is
improper for a lender to seek reimbursement of commission expenses that are built in to the cost
of lender-placed policies.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page15 of 22
![Page 16: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/16.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-16- CLASS ACTION COMPLAINT
63. Plaintiff’s deed of trust is a uniform Fannie Mae/Freddie Mac security instrument,
and is typical of the mortgages of other Nationwide Class/Sub-Class members.
64. U.S. Bank breached the mortgage contracts of Plaintiff and other Nationwide
Class/Sub-Class members by charging borrowers for backdated policies and by accepting
commissions in connection with force-placed insurance.
65. These breaches were willful and not the result of mistake or inadvertence. U.S.
Bank systematically and pervasively force-placed backdated policies and accepted commissions
in connection with force-placed insurance.
66. As a direct result of this unlawful conduct, Plaintiff and the Nationwide Class/Sub-
Class have been injured, and have suffered actual damages and monetary losses, in the form of
increased insurance premiums, interest payments, and/or other charges.
67. Plaintiff and the Nationwide Class/Sub-Class are entitled to recover their damages
and other appropriate relief for the foregoing contractual breaches.
SECOND CLAIM FOR RELIEF
BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
(Asserted Against U.S. Bank on behalf of the Nationwide Class and Nationwide Sub-Class)
68. Plaintiff alleges and incorporates by reference the allegations in the preceding
paragraphs.
69. U.S. Bank owed Plaintiff and the Nationwide Class/Sub-Class members a duty of
good faith and fair dealing, by virtue of U.S. Bank’s contractual relationship with them.
70. U.S. Bank breached this duty and abused any discretion it may have had by,
among other things (1) purchasing backdated flood insurance coverage at borrowers’ expense;
and (2) arranging for kickbacks, commissions, or other compensation for itself and/or its affiliates
in connection with lender-placed flood insurance. See McNeary-Calloway, 2012 WL 1029502, at
*25.
71. U.S. Bank willfully engaged in the foregoing conduct in bad faith, for the purpose
of (1) gaining unwarranted contractual and legal advantages; and (2) unfairly and unconscionably
maximizing revenue from Plaintiff and other Nationwide Class/Sub-Class members. These
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page16 of 22
![Page 17: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/17.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-17- CLASS ACTION COMPLAINT
practices were not authorized by the mortgage contract, were not within U.S. Bank’s discretion
under the contract, and were outside the reasonable expectations of Plaintiff and the class
members.
72. The foregoing conduct was willful and not the result of mistake or inadvertence.
As set forth above, U.S. Bank systematically and pervasively force-placed backdated policies and
accepted commissions in connection with force-placed insurance.
73. As a direct result of U.S. Bank’s breaches of the implied covenant of good faith
and fair dealing, Plaintiff and other Nationwide Class/Sub-Class members have been injured, and
have suffered actual damages and monetary losses, in the form of increased insurance premiums,
interest payments, and/or other charges.
74. Plaintiff and the Nationwide Class/Sub-Class are entitled to recover their damages
and other appropriate relief for the foregoing breaches of the implied covenant of good faith and
fair dealing.
THIRD CLAIM FOR RELIEF
UNJUST ENRICHMENT/RESTITUTION
(Asserted Against U.S. Bank on behalf of the Nationwide Class and Nationwide Sub-Class)
75. Plaintiff alleges and incorporates by reference the allegations in the preceding
paragraphs.
76. U.S. Bank has been unjustly enriched as a result of the conduct described in this
Complaint and other inequitable conduct.
77. U.S. Bank received a benefit from Plaintiff and other Nationwide Class/Sub-Class
members in the form of payment for force-placed flood insurance, and U.S. Bank and/or its
affiliates retained a portion of these payments as commissions or other compensation.
78. Retention of these payments by U.S. Bank would be unjust and inequitable. U.S.
Bank abused any discretion it had by retaining at least a portion of the premium payments as
kickbacks, commissions or other compensation, and by charging borrowers for backdated flood
insurance.
79. The kickbacks, commissions or other compensation that U.S. Bank and/or its
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page17 of 22
![Page 18: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/18.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-18- CLASS ACTION COMPLAINT
affiliates received in connection with force-placed flood insurance were not legitimately earned,
and came at the ultimate expense of Plaintiff and other members of the Nationwide Class/Sub-
Class.
80. U.S. Bank is guilty of malice, oppression, and/or fraud through its willful and
conscious disregard for the rights of Plaintiff and other members of the Nationwide Class/Sub-
Class, through its manipulation of the force-placed insurance process, and through its intentional
concealment of the kickbacks that it received. U.S. Bank’s willful and conscious disregard for
the rights of Plaintiff and the Nationwide Class/Sub-Class created an unjust hardship for Plaintiff
and other class members.
81. As a result of U.S. Bank’s unjust enrichment, Plaintiff and the Nationwide
Class/Sub-Class seek restitution and disgorgement of all kickbacks, commissions, or other
compensation that U.S. Bank received in connection with lender-placed flood insurance.
Additionally, Plaintiff and the Nationwide Class/Sub-Class are entitled to exemplary damages in
connection with this cause of action.
FOURTH CLAIM FOR RELIEF
UNJUST ENRICHMENT/RESTITUTION/DISGORGEMENT
(Asserted Against ASIC on behalf of the Nationwide Class and Nationwide Sub-Class)
82. Plaintiff alleges and incorporates by reference the allegations in the preceding
paragraphs.
83. By scheming with U.S. Bank to manipulate the force-placed insurance process,
ASIC received improper benefits that it otherwise would not have secured, including (1) non-
competitive premiums that ASIC would not have secured absent a kickback to U.S. Bank to do
business with ASIC; and (2) premiums for backdated insurance policies.
84. Retention of these benefits by ASIC would be unjust and inequitable because (1)
ASIC secured these handsome premium payments through improper means by offering U.S.
Bank kickbacks in connection with force-placed insurance coverage; (2) backdated insurance
coverage provides no appreciable value to borrowers where it already is known that the borrower
suffered no loss during the backdated period; and (3) to the extent there was a lapse in coverage,
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page18 of 22
![Page 19: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/19.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-19- CLASS ACTION COMPLAINT
ASIC was responsible for tracking borrowers’ insurance coverage so as to prevent a lapse, and
should have taken steps in advance to avoid any purported “need” to backdate coverage.
85. ASIC is guilty of malice, oppression, and/or fraud through its willful and
conscious disregard for the rights of Plaintiff and other members Nationwide Class/Sub-Class and
through its manipulation of the force-placed insurance process as described in this Complaint.
ASIC’s willful and conscious disregard for the rights of Plaintiff and the Nationwide Class/Sub-
Class created an unjust hardship for Plaintiff and other class members.
86. As a result of ASIC’s unjust enrichment, Plaintiff and the Nationwide Class/Sub-
Class seek restitution and disgorgement of all ill-gotten gains that ASIC received in connection
with lender-placed flood insurance as a result of its manipulation of the force-placed insurance
process. Additionally, Plaintiff and the Nationwide Class/Sub-Class are entitled to exemplary
damages in connection with this cause of action.
FIFTH CLAIM FOR RELIEF
CALIFORNIA UNFAIR COMPETITION LAW
California Business & Professional Code § 17200 et seq.
(Asserted Against U.S. Bank on behalf of the California Class and California Sub-Class)
87. Plaintiff alleges and incorporates by reference the allegations in the preceding
paragraphs.
88. The UCL prohibits, among other things, any unfair business act or practice.
89. U.S. Bank engaged in unfair business practices in violation of the UCL by, among
other things:
a. Manipulating the force-placed insurance process;
b. Arranging for kickbacks, commissions, or other compensation for itself and/or
its affiliates in connection with lender-placed flood insurance;
c. Purchasing backdated flood insurance coverage at borrowers’ expense.
These business practices are inconsistent with the statutory and regulatory authority cited above.
90. U.S. Bank systematically engaged in these unfair business practices to the
detriment of Plaintiff and other California Class/Sub-Class members.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page19 of 22
![Page 20: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/20.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-20- CLASS ACTION COMPLAINT
91. The harm caused by these business practices as outlined above vastly outweighs
any legitimate utility they possibly could have.
92. Plaintiff and other members of the California Class/Sub-Class have been injured
and have suffered a monetary loss as a result of U.S. Bank’s violations of the UCL.
93. Plaintiff and other members of the California Class/Sub-Class are entitled to
restitution and injunctive relief for U.S. Bank’s violations of the UCL.
94. As a result of U.S. Bank’s violations of the UCL, Plaintiff and other members of
the California Class/Sub-Class also are entitled to a recovery of attorney’s fees and costs to be
paid by U.S. Bank, as provided by Code of Civil Procedure section 1021.5 and other applicable
law.
SIXTH CLAIM FOR RELIEF
CALIFORNIA UNFAIR COMPETITION LAW
California Business & Professional Code § 17200 et seq.
(Asserted Against ASIC on behalf of the California Class and California Sub-Class)
95. Plaintiff alleges and incorporates by reference the allegations in the preceding
paragraphs.
96. The UCL prohibits, among other things, any unfair business act or practice.
97. ASIC engaged in unfair business practices in violation of the UCL by, among
other things:
a. Manipulating the force-placed insurance process;
b. Offering U.S. Bank and other lenders kickbacks in connection with force-
placed insurance coverage in order to gain their business and secure non-
competitive premiums for lender-placed insurance; and
c. Receiving and retaining premiums for backdated insurance.
These business practices are inconsistent with the statutory and regulatory authority cited above.
98. ASIC systematically engaged in these unfair business practices to the detriment of
Plaintiff and other California Class/Sub-Class members.
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page20 of 22
![Page 21: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/21.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-21- CLASS ACTION COMPLAINT
99. The harm caused by these business practices as outlined above vastly outweighs
any legitimate utility they possibly could have.
100. Plaintiff and other members of the California Class/Sub-Class have been injured
and have suffered a monetary loss as a result of ASIC’s violations of the UCL.
101. Plaintiff and other members of the California Class/Sub-Class are entitled to
restitution and injunctive relief for ASIC’s violations of the UCL.
102. As a result of ASIC’s violations of the UCL, Plaintiff and other members of the
California Class/Sub-Class also are entitled to a recovery of attorney’s fees and costs to be paid
by ASIC, as provided by Code of Civil Procedure section 1021.5 and other applicable law.
PRAYER FOR RELIEF
103. WHEREFORE, Plaintiff, on behalf of himself and the Putative Classes, prays for
relief as follows:
a) Determining that this action may proceed as a class action under Rules 23(b)
(2) and (3) of the Federal Rules of Civil Procedure;
b) Designating Plaintiff as class representative for the Putative Classes;
c) Designating Plaintiff’s counsel as counsel for the Putative Classes;
d) Issuing proper notice to the Putative Classes at Defendants’ expense;
e) Declaring that U.S. Bank breached its contracts with Plaintiff and the Putative
Class members;
f) Declaring that U.S. Bank breached its duty of good faith and fair dealing to
Plaintiff and the Putative Class members;
g) Declaring that Defendants were unjustly enriched by the conduct described in
this Complaint;
h) Declaring that Defendants’ actions as described above violate the UCL;
i) Declaring that Defendants acted willfully in deliberate or reckless disregard of
applicable law and the rights of Plaintiff and the Putative Classes;
j) Awarding appropriate equitable relief, including but not limited to an
injunction requiring U.S. Bank to reverse all unlawful, unfair, or otherwise
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page21 of 22
![Page 22: Case3:12-cv-02506-LB Document26 Filed07/23/12 Page1 … · NORTHERN DISTRICT OF CALIFORNIA Stephen Ellsworth, as an individual and as a representative of the classes and on behalf](https://reader031.vdocuments.net/reader031/viewer/2022022601/5b4772297f8b9a40638beb0b/html5/thumbnails/22.jpg)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-22- CLASS ACTION COMPLAINT
improper charges for flood insurance coverage, prohibiting U.S. Bank and its
affiliates from earning commissions or other compensation on force-placed
flood insurance policies, prohibiting ASIC from paying such commissions to
U.S. Bank, prohibiting U.S. Bank from purchasing backdated flood insurance
coverage, and ordering U.S. Bank to cease and desist from engaging in further
unlawful conduct in the future;
k) Awarding restitution as provided by the UCL;
l) Awarding actual damages and interest;
m) Awarding punitive or exemplary damages in connection with Plaintiff’s unjust
enrichment claims;
n) Awarding reasonable attorneys’ fees and costs and expenses to the extent
permitted by law; and
o) Granting other and further relief, in law or equity, as this Court may deem
appropriate and just.
DEMAND FOR JURY TRIAL
104. Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff and the
Putative Classes demand a trial by jury.
Dated: July 23, 2012 NICHOLS KASTER, PLLP
By: s/ Kai H. Richter Kai H. Richter
(admitted pro hac vice)
Attorney for Plaintiff and the Putative Classes
Case3:12-cv-02506-LB Document26 Filed07/23/12 Page22 of 22