Moll v. US Life Title Ins. Co. of New York

• Decision Date: 05 December 1988
• Docket Number: 86 Civ. 4271 (PKL).,No. 85 Civ. 6866 (PKL),85 Civ. 6866 (PKL)
• Citation: 700 F. Supp. 1284
• Parties: Jeryl MOLL, on behalf of herself and all others similarly situated, Plaintiff, v. U.S. LIFE TITLE INSURANCE COMPANY OF NEW YORK, Defendant. Albert ELSER, Robin D. Harlow, Jolene K. Harlow and Brian McGuire on behalf of themselves and all others similarly situated, Plaintiffs, v. TITLE USA, INC. f/k/a U.S. Life Title Insurance Company of New York, Defendant.
• Court: U.S. District Court — Southern District of New York

700 F. Supp. 1284

Jeryl MOLL, on behalf of herself and all others similarly situated, Plaintiff, v. U.S. LIFE TITLE INSURANCE COMPANY OF NEW YORK, Defendant.

Albert ELSER, Robin D. Harlow, Jolene K. Harlow and Brian McGuire on behalf of themselves and all others similarly situated, Plaintiffs, v. TITLE USA, INC. f/k/a U.S. Life Title Insurance Company of New York, Defendant.

Nos. 85 Civ. 6866 (PKL), 86 Civ. 4271 (PKL).

United States District Court, S.D. New York.

December 5, 1988.

Paul K. Rooney, New York City, for plaintiffs.

Rogers & Wells, New York City, James N. Benedict, of counsel, for defendant.

ORDER AND OPINION

LEISURE, District Judge:

This matter is before the Court on defendant's motion to dismiss plaintiffs' consolidated amended complaint ("the consolidated complaint") for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6). For the background to this action, see Moll v. U.S. Title Insurance Co., 654 F.Supp. 1012 (S.D.N.Y.1987) (hereinafter "Moll I"). In that opinion, this Court dismissed plaintiffs' earlier complaints seeking damages pursuant to the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq., the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1964, § 6409 of the New York Insurance Law, and common law. The Court granted plaintiffs leave to replead their complaints to the extent consistent with that opinion,¹ but having found that the RESPA claims were time barred by the one-year limitation provision of that statute, denied plaintiffs leave to replead those claims. Subsequently, the Court denied plaintiffs' motion for an interlocutory appeal on the RESPA claims. Moll v. U.S. Life, (1987 WL 10026) (S.D.N.Y. April 21, 1987).

Plaintiffs filed a consolidated complaint on April 16, 1987, again seeking damages pursuant to RICO and common law, as well as N.Y.Gen.Bus.Law § 349 (McKinney 1988). Despite this Court's ruling in Moll I, the complaint also included a RESPA claim, plaintiffs urging the Court to reject its prior ruling. Defendant moved to dismiss the consolidated complaint and to strike the RESPA claim. Pending the decision of the Second Circuit in Beauford v. Helmsley, reh'g en banc argued (June 13, 1988), the Court reserved judgment on plaintiffs' RICO claims, and requested the parties to submit supplemental briefs for reconsideration of its decision that the time period for bringing a RESPA claim had lapsed. Moll v. U.S. Life, (unpublished order) (S.D.N.Y. July 19, 1988). After reviewing these briefs, the Court dismisses plaintiffs' most recent RESPA claim with prejudice.

I. RECONSIDERATION

As a threshold matter, defendant has argued that plaintiffs have not presented a proper basis for reconsideration of the RESPA issue. Defendant relies on the well established principle that, under the "law of the case" doctrine, a court usually adheres to its prior rulings in a case unless it has overlooked "`matters or controlling decisions' which, had they been considered, might reasonably have altered the result reached by the court." United States v. International Business Machines Corp., 79 F.R.D. 412, 414 (S.D.N.Y.1978) (citing the Court's earlier memorandum in the same case). However, as Judge Learned Hand wrote in Higgins v. California Prune & Apricot Grower, Inc., 3 F.2d 896, 898 (2d Cir.1924), "the `law of the case' does not rigidly bind a court to its former decisions, but is addressed only to its good sense." Similarly, in Messenger v. Anderson, 225 U.S. 436, 32 S.Ct. 739, 56 L.Ed. 1152 (1912), the Supreme Court declared:

In the absence of statute the phrase, law of the case, as applied to the effect of previous orders on the later action of the court rendering them in the same case, merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power.

Id. at 444, 32 S.Ct. at 740.

Reconsideration is justified where the Court is strongly convinced that a prior ruling was erroneous. As stated in Moore, 1B Federal Practice ¶ 0.4041, at 407:

Since a lower federal court cannot by its law of the case bind a higher court having appellate jurisdiction over it, the only sensible thing for a lower federal court ... to do is to set itself right instead of inviting reversal above, when convinced that its law of the case is substantially erroneous.

See Brunswick Corp. v. Sheridan, 582 F.2d 175, 177 (2d Cir.1978) (citing above passage).

Although the Court is not required by law to reconsider its prior decision concerning the RESPA statute of limitation issue, it is certainly free to do so if it feels that reconsideration is necessary to avoid injustice. It should come as no surprise to defendant that the Court deems the interests of justice best served by such reconsideration here.

II. STATUTE OF LIMITATIONS OF RESPA

RESPA provides that "any action pursuant to its provisions ... may be brought in the United States district court or in any other court of competent jurisdiction, ... within one year from the date of the occurrence of the violation ..." 12 U.S. C. § 2614 (1982 & Supp.1986). In Moll I, this Court held that plaintiffs' RESPA claims were time barred since they been filed more than one year after the alleged violation of the statute occurred. Moll I, supra, at 1019-20. Plaintiffs had argued that their claims should have been allowed under either the doctrine of equitable tolling or the doctrine of equitable estoppel. The Court, however, adjudging the one-year RESPA time limitation as a jurisdictional prerequisite not subject to tolling, rejected this argument. Having reviewed the relevant case law, the Court finds that its earlier ruling was improper.

The Court's decision to dismiss the RESPA claims was based exclusively on Hardin v. City Title & Escrow Co., 797 F.2d 1037 (D.C.Cir.1986), which held that "because the time limitation contained in § 2614 is an integral part of the same sentence that creates federal and state court jurisdiction, it is reasonable to conclude that Congress intended thereby to create a jurisdictional time limitation." Id. at 1039. The District of Columbia Circuit reasoned that, by entitling the section, "JURISDICTION OF COURTS," Pub.L. No. 93-533, § 16, 88 Stat. 1725, 1731 (1974), Congress indicated its intent to create an inflexible jurisdictional bar, rather than an ordinary statute of limitations. The Hardin court supported this conclusion by noting that

section 2614 is identical in all material respects to 15 U.S.C. § 1640(e), the time limitation applicable to the Truth in Lending Act "TILA", 15 U.S.C. § 1601, et seq. ... a time limitation which has also been held to be jurisdictional. Rust v. Quality Car Corral, Inc., 614 F.2d 1118, 1119 (6th Cir.1980).

Id. at 1039 (footnote omitted). Comparison with TILA is instructive since, as the Fifth Circuit has observed, "the purposes underlying the Real Estate Settlement Procedures Act are very similar to those of the Truth in Lending Act." Vega v. First Federal Sav. & Loan Ass'n of Detroit, 622 F.2d 918, 923 (6th Cir.1980).

However, the District of Columbia Circuit, as well as this Court in its previous opinion in Moll I, failed to note that the Sixth Circuit itself has significantly limited Rust. As the court explained in Jones v. TransOhio Sav. Ass'n, 747 F.2d 1037 (6th Cir.1984), Rust did not establish that the TILA time limitation was exempt from tolling. Rather, it addressed a very narrow procedural question — namely, whether Fed. R.Civ.P. 6(a), which excludes the actual date of the act or event giving rise to a cause of action from the computation of the limitation period for that action, should be read into § 1640(e) of TILA. Id. at 1043. In fact, the Sixth Circuit in Jones expressly held that the TILA time limit "is subject to equitable tolling." Id.²

The D.C. district court opinion affirmed by Hardin had not in fact rejected the reasoning of the Jones opinion, since the D.C. court found that the plaintiffs had not stated adequate grounds for tolling the limitation period. Hardin, 797 F.2d at 1039. However, the District of Columbia Circuit affirmed the lower court's decision on alternative grounds, holding that the doctrines of equitable tolling and equitable estoppel are inapplicable in cases involving RESPA. As already noted, however, the District of Columbia Circuit bolstered its decision by reference to Rust, a case which does not truly support the District of Columbia Circuit's holding. Plaintiffs in the present case, like the plaintiffs in Jones, have alleged fraudulent conduct by the defendant which might provide a basis for equitable tolling, were that doctrine applicable to the RESPA time limitation. The Court must therefore decide whether, in light of Jones, it should still follow Hardin in finding the RESPA statute of limitations to be exempt from tolling and estoppel.

As a general rule, the doctrine of equitable tolling is read into every federal statute of limitations. Holmberg v. Armbrecht, 327 U.S. 392, 397, 66 S.Ct. 582, 585, 90 L.Ed. 743 (1946). The Second Circuit has declared that this "policy is so strong that it is applicable unless Congress expressly provides to the contrary in clear and unambiguous language." Atlantic City Electric Co. v. General Electric Co., 312 F.2d 236, 241 (2d Cir.1962), cert. denied, 373 U.S. 909, 83 S.Ct. 1298, 10 L.Ed. 2d 411 (1963). As evidenced by the Sixth Circuit's interpretation of TILA's similarly-worded provision, the time limitation in RESPA does not reflect a clear and unambiguous intention that the policy of Holmberg be disregarded. Had Congress intended that equitable tolling not apply to RESPA, it certainly could have said so explicitly.

In addition, the Second Circuit has held that if "a statute is remedial in nature, its terms must be construed in liberal fashion if the underlying Congressional purpose is to be effectuated." N.C. Freed Co., Inc. v. Bd. of Governors of Fed. Res....