Bloomberg News

First American Gets U.S. Supreme Court Hearing in Kickback Suit

June 20, 2011

June 20 (Bloomberg) -- The U.S. Supreme Court agreed to consider halting a suit that accuses First American Financial Corp. of operating an illegal title-insurance kickback scheme and seeks hundreds of millions of dollars on behalf of homebuyers.

The justices today granted an appeal by First American, the second-largest U.S. title insurer, which is seeking to block the suit in a federal court in California.

The suit centers on First American’s ownership stake in thousands of title agencies across the country. The company is accused of acquiring those interests in exchange for promises that the agencies would refer customers to a First American unit that sells title insurance.

First American argued in its appeal that consumers can’t sue under the 1974 U.S. Real Estate Settlement Procedures Act, which bars kickbacks, unless they claim they paid higher fees as a result. A federal appeals court in San Francisco rejected that contention, letting the suit proceed.

The Supreme Court will hear the case in its next term beginning in October.

First American is based in Santa Ana, California.

The case is First American Financial v. Edwards, 10-708.

--Editors: Jim Rubin, Bob Drummond.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.


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