An insurance company providing force-placed insurance argued in a recent case that a complaint against it should be dismissed "in its entirety". The insurer was sued for its part in an alleged scheme to inflate lender force-placed insurance premiums paid by borrowers. The allegedly illegal inflation was caused by kickbacks and the insurance company defended on the ground that the mortgagee-lender disclosed the kickbacks. So, the insurance company filed its motion to dismiss the entire complaint for failure to state any claim upon which relief could be granted.
A U.S. District Judge granted the force-placed insurance company's motion. Focused on what the Judge called "the meat of the allegations," the Court held that the "'substance'" of the "'transaction'" was disclosed, so there is no claim. Further, kickbacks do not cause "'divided loyalties'" and so they cannot be illegal. See Circeo-Loudon v. Green Tree Servicing, LLC, 2014 WL 4219587 (S.D. Fla. August 25, 2014).
Greed is good, said the fictional Gordon Gecko. Kickbacks are good, too, and as a matter of law if this is the law.
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