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The Hartford unit must pay the mortgage broker's $ 1.5 million settlement



A Hartford Financial Services Group Inc. unit must pay a $ 1.5 million mortgage broker's settlement with a housing advocacy group, a federal appeals court ruled Friday in reversing a lower court decision.

In March 2012, the Boston-based Neighborhood Assistance Corporation of America, a nonprofit providing mortgage-related services to primarily low- and middle-income families, filed a lawsuit against San Juan Capistrano, California-based First One Lending Corp., according to First One Lending Corp .; John Vescera v. The Hartford Casualty Insurance Co.

Through its Home Save program and related Save-the-Dream events, NACA helps people obtain payment delays, interest rate cuts and major reductions free of charge, according to legal documents

First One is alleged to have created a system where it was incorrectly presented for homeowners that it was a non-profit organization that provided housing counseling services for free and incorrectly represented that it was affiliated with NACA, according to court documents.

First One charged homeowners $ 1

,450 to $ 1,850 to compile mortgage services documents and then forwarded homeowners to NACA, which provided these services free of charge, according to court documents.

NACA brought an action against First One, which was settled in May 2013 for $ 1.5 million. Hartford refused to defend or replace First One on the grounds that there was no potential for coverage because NACA's complaint "sought uncovered injunction and uninsured disappearance of illegal profits."

First One sued the insurer in the U.S. District Court in Santa Ana. , California, who ruled in Hartford's favor. It was overthrown by a unanimous three-court appeal court in Friday's decision.

"Hartford does not deny that the amount of the NACA settlement was reasonable," nor has it shown "that all or part of the NACA settlement was for uncovered compensation or otherwise excluded claims," ​​it stated.

The settlement settled NACA's claims, which "were covered claims under the insurance provision for" personal and advertising damages ", it said.

The judgment also ruled that Hartford had not" shown that the NACA settlement contained reimbursement for homeowners , which the insurance cover would not have covered. "It noted that homeowners were not parties to NACA's suit.

" It is also undisputed that nothing required NACA to use its settlement to reimburse homeowners even though NACA may have chosen to "That," the panel said.

The verdict confirmed the lower court's dismissal of First One & # 39 ;s bad faith. John Vescera and First One Lending are pleased with Ninth Circuits' decision and look forward to receiving insurance-related benefits. ”

Hartford's lawyers did not respond to a request for comment.

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