Citibank to Pay $110 Million to Settle Insurance Lawsuit
Citibank would refund $110 million to consumers under a settlement filed Wednesday of allegations that the bank required excessive insurance coverage on properties on which it held mortgages.
The settlement, which must be approved by Northern District David Hurd, calls for settlement class members to receive refunds amounting to 12.5 percent of the premiums they paid on the "force-placed" hazard insurance policies, 8 percent of flood insurance premiums and 8 percent of wind insurance premiums.
According to the proposed settlement in Casey v. Citigroup, 5:12-cv-820, those refunds will represent more than 83 percent of the money received by a Citibank affiliate in commissions for coverage that plaintiffs said was unnecessary.
The suit was filed in May 2012 by Gordon Casey of Syracuse and Duane Skinner of Pasadena, Md. Casey said his mandatory premiums for flood insurance jumped from $324 to $1,478 a year between 2009 and 2012 even though the outstanding amount of his mortgage had fallen from $25,000 to $17,000. Hurd refused to dismiss the action and granted class action status (NYLJ, Jan. 4, 2013).
Citibank, which admitted no wrongdoing, argued that insurance and banking laws allow lenders to set the appropriate amount of insurance coverage on mortgaged properties as long as it meets applicable minimum standards established by the U.S. Department of Housing and Urban Development or other agencies.
Christopher Willis of Ballard Spahr in Atlanta and Mitchell Katz of Menter, Rudin & Trivelpiece in Syracuse are representing the Citigroup defendants.
For the plaintiffs, Kai Richter of Nichols Kaster in Minneapolis is leading a team of lawyers from Berger & Montague in Philadelphia, Gilman Law in Bonita Springs, Fla., and Taus, Cebulash & Landau in Manhattan.
Hurd will hold a hearing on the agreement Mar. 14 in Syracuse.