The Edwards Decision

06-28-2012
Yesterday, the United States Supreme Court (“SCOTUS”) issued its long-awaited decision in the Edwards v. First American Title case.  The Court, in a 9-0 decision, dismissed First American’s appeal as having been improvidently granted. Procedurally, the decision results in the case returning to the U.S. District Court in California where a class action complaint consisting of two separate classes of plaintiffs awaits and now proceeds in earnest against First American.
Substantively, the case permits future individual plaintiffs to sue under RESPA without having to establish that they were damaged or over-charged for their settlement services.  The Ninth Circuit holding in Edwards allows such cases to proceed and mirrors similar rulings in the Sixth and Third Circuits.
NAILTA filed two “friend-of-the-court” briefs — one at the Ninth Circuit Court of Appeals and one at the SCOTUS — on behalf of the respondent, Denise Edwards. In her complaint, Edwards alleged that First American violated RESPA by creating an illegal referral arrangement with its title agent in Cleveland, Ohio.  Edwards did not allege that she was overcharged for her title services.  Rather, she alleged that the title underwriter violated the law that prohibits such arrangements.
The SCOTUS decision essentially leaves the Ninth Circuit holding in place.
NAILTA’s President, Charles Proctor, issued this statement in response to the SCOTUS ruling:
“This decision opens the door to returning the integrity and transparency to the settlement process and the professionalism that independent land title agents bring to that process. This will lead to a quality product for the consumer at a competitive  price without giant entities controlling the market, the product, and the settlement process. We look forward to a return to a level playing field in the market place that benefits all homeowners.”
The SCOTUS ruling is an important victory for independent title agents across the United States.  While SCOTUS did not rule on the merits of First American’s appeal, the decision dealt a serious blow to the shield used by many illegitimate controlled business arrangements to hide their illegal kickbacks from scrutiny.  As much as Edwards is about RESPA and illegal referral arrangements as a consumer issue, the case also impacts fairness and competitive balance in the title industry for its participants.
NAILTA’s mission includes the promotion of competitive balance within the title industry, the preservation of important consumer protection safeguards in the real estate settlement process and protection of the land title industry’s records, standards and professionalism.  When those issues are threatened, NAILTA stands up.