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Force Placed Insurance Defendant Attempts to Toss Lawsuit, Plaintiffs Have None of It

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Minneapolis, MNAs lawsuits go, most defendants will attempt to dismiss a case whether or not a dismissal is even meritorious to begin with. Such is the case with a Lender insurance lawsuit brought by various homeowners against US Bank and American Security Insurance Company (ASIC), a subsidiary of Assurant Inc. The plaintiffs, respectfully, hold that any attempt to dismiss their lawsuit is premature.

The plaintiffs in the Force-placed insurance lawsuit are Mary Jo and Gregory R. Muellner (Muellner et al. v. US Bank, NA et al., Case No. 0:15-cv-00596, in the US District Court for the District of Minnesota). They take exception to the defendant’s claim that the Muellners don’t have standing to bring the case because, in the defendant’s view, the Muellners failed to cite applicable case law. The Muellners counter that any claim to lack of standing made by US Bank and ASIC against the plaintiffs should be properly handled following discovery - and thus, at this juncture in the case, the allegations are unfounded and any petition to dismiss the case is too early in the process.

Lenders insurance is somewhat of an insurance tool available to lenders and mortgage holders for the placement of Force-Place Insurance on properties whereby homeowners have allowed insurance to lapse. Lenders and mortgage holders, understandably, need to protect their investments in the event of an unforeseen and catastrophic loss.

However, many banks and insurance companies have been placing lenders insurance on properties where situations don’t warrant, and/or deploy policies and insurance products that are prohibitively expensive with less coverage than standard policies. Further, banks and insurance companies have either been found or have been accused of entering into kickback schemes at the expense of the homeowner. Various states have been cracking down on such schemes, with various attorneys general lowering the boom on the practice.

In the case of the Muellners, they allege that defendants applied Force-Place Insurance on their property retroactively, charging the plaintiffs for a time period that had already passed - and thus, according to the lawsuit, there is no benefit. They also accuse US Bank and ASIC of placing insurance and coverage limits that exceeded the unpaid balance of the mortgage, or even the cost to replace the property.

In the end, the Muellners had to endure the process of a foreclosure on their home. They claim that ASIC refunded canceled coverage to them, but allege that US Bank never passed the refund on to them.

In moving to dismiss the case, the defendants claimed, “There is no economy to be gained by allowing this case to proceed through expensive, time-consuming, and burdensome class certification discovery and briefing relating to [force-placed insurance] practices in 50 different states - each with materially different programs, filed rates, statutes, and common laws - when the standing issue can and should be addressed now.”

The plaintiffs countered, “A motion to strike class allegations at the pleading stage must meet a high standard to be successful, and defendants’ arguments fail to meet the standard required,” the Muellners said. “Such arguments are not appropriate as a challenge to the sufficiency of the initial pleadings, but rather would be more appropriately brought at the class certification stage.

“Plaintiffs are not claiming to represent a class or subclass of consumers of products that they have not purchased,” the Muellners said. “There was only one product purchased, insurance, and in each case it was purchased by US Bank from ASIC. It is US Bank’s uniform practice of passing the costs of excessive coverage on to its borrowers, and ASIC’s payment of kickbacks and sale of excessive insurance that are at issue.”

The Muellner’s Force-placed insurance lawsuit continues…


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