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Richard Kohl v. American Home Shield Corp

August 24, 2011

RICHARD KOHL,
PLAINTIFF,
v.
AMERICAN HOME SHIELD CORP.,
DEFENDANT.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS; SCHEDULING ORDER ON PLAINTIFF'S MOTION FOR CLASS CERTIFICATION

Defendant American Home Shield Corp. ("AHS") moves to dismiss Plaintiff Richard Kohl's class action complaint for failure to state a claim or, alternatively, to transfer this action pursuant to the first-to-file rule. Plaintiff opposes all motions. Having carefully considered the parties' papers, including the supplemental briefing requested by the court, the court record, and the arguments of counsel, the court grants in part and denies in part the motion to dismiss. Plaintiff shall file his motion for class certification, if any, by September 30, 2011, AHS a responsive brief by October 21, 2011, and Plaintiff a reply brief by October 28, 2011. Oral argument on the motion for class certification is calendared for November 7, 2011 at 10:00a.m.

BACKGROUND

On April 6, 2011, AHS removed this action based upon diversity, 28 U.S.C. §1332(d), the Class Action Fairness Act of 2005 ("CAFA"), and federal question jurisdiction. 28 U.S.C. §1331. Plaintiff alleges a single claim for violation of the Unfair Competition Law ("UCL"), Bus. & Prof. Code §17200. The predicate for the UCL claim is the alleged violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §2607(a).

AHS is in the business of servicing, administering, and selling home service contracts, sometimes called a Home Warranty Contract ("HWC") to customers. The HWCs cover "such things as the replacement and repair of electrical, plumbing, and hearing and cooling systems, as well as the breakdown of major home appliances." (Compl, ¶5). A substantial amount of HWCs are purchased by buyers or sellers of residential real estate at the time of a real estate closing. (Compl. ¶6).

The Alleged Scheme

As an incentive to real estate agents and brokers, Plaintiff alleges that "AHS pays a kickback to the brokerage if the agent is able to cause the buyer or seller to purchase a (sic) AHS home warranty. Once the premium for the warranty is collected, AHS pays the real estate agents or brokers a portion of the premium that was paid by the home buyer or seller." (Compl. ¶7). This is allegedly a "standard business practice . . . . known among real estate agents that they will receive a kickback if they cause a purchaser or seller of residential property to purchase a home warranty with AHS." (Compl. ¶87).

On June 14, 2010, Plaintiff purchased a home in Oceanside, California. Plaintiff was represented by real estate agent Mike Dempster of ZipRealty Inc.. The agent "encouraged Plaintiff to purchase a AHS home warrant" for $435. (Compl. ¶11). This cost for the one year HWC was listed among Plaintiff's closing costs. A portion of this charge allegedly "went to his real estate agent in exchange for referring Plaintiff's home warranty business to AHS." (Compl. ¶12).

Plaintiff alleges that the payment of these kickbacks are illegal under RESPA. The single UCL claim is based upon the alleged violation of RESPA.

The Class

Plaintiff seeks to bring this action as a class action defined as: All persons residing in California who have purchased a home warranty from AHS in connection with the sale or purchase of a home financed by a federally related mortgage in the past four years, where any portion of the premium was paid to any real estate agent involved in the transaction, where such payments were conditioned upon the successful completion of the transaction selling the home warranty. (Compl. ¶20). The class period allegedly commences on March 4, 2007, (Notice of Removal, Exh. 2), and continues through the present time.

The Earlier Filed Action

On May 26, 2009, a nationwide class action was commenced against AHS in the United States Court for the Northern District of Alabama, Southern Division, entitled Abney v. American Home Shield Corp., No. 2:09-1018 RDP (the "Abney action"). The certified class in the Abney action is defined as:

All persons in the United States of America who have purchased from the defendant a home warranty in connection with the sale or purchase of a home financed by a federally related mortgage during the applicable statute of limitations period, where any portion of the premium was paid to any real estate agent involved in the transaction, where such payments ...


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