556 F.3d 415 (6th Cir. 2009), 08-1173, Egerer v. Woodland Realty, Inc.

Docket Nº:08-1173.
Citation:556 F.3d 415
Party Name:Stephen EGERER, et al., Plaintiffs-Appellants, v. WOODLAND REALTY, INC., et al., Defendants-Appellees.
Case Date:February 12, 2009
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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556 F.3d 415 (6th Cir. 2009)

Stephen EGERER, et al., Plaintiffs-Appellants,


WOODLAND REALTY, INC., et al., Defendants-Appellees.

No. 08-1173.

United States Court of Appeals, Sixth Circuit.

February 12, 2009

Argued: Oct. 29, 2008.

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Michael W. Basil, Clausen Miller, Chicago, Illinois, for Appellants.

Brian J. Masternak, Warner, Norcross & Judd, Grand Rapids, Michigan, for Appellees.


Michael W. Basil, Clausen Miller, Chicago, Illinois, for Appellants.

Brian J. Masternak, Sarah Riley Howard, Warner, Norcross & Judd, Grand Rapids, Michigan, for Appellees.

Before: MARTIN and GILMAN, Circuit Judges; DOWD, Senior District Judge.[*]


DOWD, Senior District Judge.

Plaintiffs Stephen Egerer, Stephanie Egerer, and Kathy Boyink brought this putative class action suit against defendants Woodland Realty, Inc., Woodland Title Agency, LLC, Chicago Title Insurance Company, and Chicago Title of Michigan, Inc., alleging that defendants violated the Real Estate Settlement and Procedures Act of 1974, 12 U.S.C. § 2601, et seq. (" RESPA" ), by paying and receiving unlawful referral fees for title insurance business. The district court granted summary judgment in favor of the defendants and the plaintiffs now appeal. For the reasons set forth below, we affirm the judgment of the district court.


Plaintiffs Stephen and Stephanie Egerer sold their home in Michigan with the assistance of defendant Woodland Realty, Inc. (" Woodland Realty" ). The Woodland Realty agent who sold the Egerers' home, Pat Siler (" Siler" ), was a relative of the Egerers. Defendant Woodland Title

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Agency, LLC (" Woodland Title" ), performed the settlement services to complete the sale, which took place on June 14, 2004. Before Woodland Title completed the transaction, Siler provided the Egerers with an " Affiliated Business Arrangement Disclosure Statement" (" Disclosure" ) (J.A. at 74). The Disclosure, acknowledged and signed by the Egerers on April 4, 2004, stated that: 1) the Egerers were " welcome to shop around" and not required to use Woodland Title for their real estate settlement services; 1 2) Woodland Realty had a business relationship with Woodland Title; and 3) because of that business relationship, Woodland Realty may receive a " financial or other benefit" for referring clients to Woodland Title. The specific nature of that benefit was not contained in the Disclosure, but the actual benefit received by a Woodland Realty agent from Woodland Title was a $15 credit in the form of Woodland Title " Marketing Dollars," which could be used by the agent to offset marketing or promotional expenses (" Marketing Dollars Program" ). In addition, the Disclosure estimated the cost of title insurance to be $330 for a $50,000 title insurance owner policy. The actual cost of title insurance was $350.

Plaintiff Kathy Boyink (" Boyink" ) 2 purchased a home in Michigan that was listed for sale by Woodland Realty. In purchasing her home, Boyink utilized a buyer's agent. Boyink's buyer's agent was Heidi Parsons (" Parsons" ), who was a long-time friend and an agent with Prins Real Estate.3 Boyink followed Parsons's recommendation and engaged defendants for the necessary settlement services, which were completed for the purchase of her home on October 6, 2005. Parsons and Prins Real Estate had no relationship with Woodland Realty, Woodland Title or Chicago Title, and are not defendants in this case.


Plaintiffs' amended complaint contends that Woodland Title's Marketing Dollars Program constitutes an unlawful fee, kickback, or thing of value in violation of RESPA. As a consequence, plaintiffs allege that they paid more for settlement services than they would otherwise have paid. Defendants dispute that the Marketing Dollars Program violates RESPA or increased the cost of title insurance to the plaintiffs.

After plaintiffs filed their amended complaint, defendants moved to dismiss and/or for summary judgment on plaintiffs' RESPA claim and state-law claim.4 Defendants argued that plaintiffs' RESPA claim fails because: 1) the Egerers' claims were filed outside of the statute of limitations;

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2) Boyink was not referred to defendants for settlement services by any of the defendants and therefore cannot maintain a claim against them for violating § 2607(a); and 3) plaintiffs have not adequately alleged an actual " injury in fact" as a result of the Marketing Dollars Program.5

Plaintiffs opposed defendants' motion on the merits and filed their own motion for judgment on the pleadings. Plaintiffs argued they were entitled to judgment on the pleadings because the Marketing Dollars Program is an unlawful referral fee concealed from plaintiffs in violation of RESPA. Because of those fees, plaintiffs contend that they paid more for settlement services. Alternatively, plaintiffs argued that if the district court was not persuaded that judgment should be entered in their favor, the district court should allow plaintiffs additional time to conduct discovery before deciding defendants' motion.

Because the parties' motions presented information and documents outside of the pleadings, the district court analyzed the motions pursuant to Fed.R.Civ.P. 56. Based on this analysis, the district court granted defendants' motion as to plaintiffs' federal RESPA claim, denied plaintiffs' motion for judgment on the pleadings, and remanded plaintiffs' state-law claim. Plaintiffs moved for reconsideration, which was denied by the district court, and plaintiffs filed a timely appeal.


A. Standard of Review

A district court's order granting summary judgment is reviewed de novo . Brannam v. Huntington Mortgage Co., 287 F.3d 601, 603 (6th Cir.2002) (citing Taylor v. Michigan Dept. of Corrections, 69 F.3d 76 (6th Cir.1995); Lake v. Metropolitan Life Ins. Co., 73 F.3d 1372, 1376 (6th Cir.1995)). When reviewing the district court's decision granting summary judgment, we view all evidence in the light most favorable to the non-moving party. Summary judgment is proper when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Kleiber v. Honda of Am. Mfg., 485 F.3d 862, 868 (6th Cir.2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

B. Real Estate Settlement and Procedures Act of 1974, 12 U.S.C. § 2601, et seq.

Count I of plaintiffs' first amended complaint alleges that defendants violated RESPA by " paying or accepting referral fees and other things of value in connection with the referral of real estate settlement services work to Woodland Title for Mr. & Mrs. Egerer [& ] Ms. Boyink." (J.A. at 36-37).

12 U.S.C. § 2607 prohibits kickbacks and unearned fees. In particular, § 2607(a) provides in relevant part:

No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service ... shall be referred to any person.

Under RESPA, the referral of settlement service business is not compensable, except as provided by 12 U.S.C. § 2607(c), which contains a list of fees, salaries, compensation

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and payments that are not prohibited by § 2607(a).6 A " referral" is defined by 24 C.F.R. § 3500.14(f) as follows:

(1) A referral includes any oral or written action directed to a person which has the effect of affirmatively influencing the selection by any person of a provider of a settlement service or business incident to or part of a settlement service when such person will pay for such settlement service or business incident thereto or pay a charge attributable in whole or in part to such settlement service or business.

Claims pursuant to § 2607(a) must be brought within one year from the date the violation occurs in accordance with 12 U.S.C. § 2614, which provides in relevant part:

Any action pursuant to the provisions of section ... 2607... of this title may be brought ... within ... 1 year in the case of a violation of section 2607... from the date of the occurrence of the violation....

C. Egerers' RESPA Claims

1. Plaintiffs are not Entitled to Equitable Tolling of RESPA Statute of Limitations

The plaintiffs, Stephen and Stephanie Egerer, concede that their RESPA claims are outside of the one-year statute of limitations.7 However, they argue that RESPA's statute of limitations is subject to the doctrines of equitable tolling and estoppel, and that they have both alleged and provided evidence sufficient to support the application of these doctrines and are entitled to more discovery to develop additional supporting evidence. Plaintiffs claim that they are entitled to equitable tolling because defendants concealed and misled them regarding the defendants' business relationship, the Marketing Dollars Program, and true cost of title insurance, all of which could not have been reasonably discovered.

The district court recognized that this Court has not yet ruled on the question of whether the RESPA statute of limitations is subject to equitable tolling. However, based on an analysis of Young v. United States, 535 U.S. 43, 122 S.Ct. 1036, 152 L.Ed.2d 79 (2002),8 Jones v. TransOhio Sav. Ass'n, 747 F.2d 1037 (6th Cir.1984),9 and other courts that have held that RESPA's statute of limitations is subject to equitable tolling,10 Judge Enslen concluded that equitable tolling is available to RESPA plaintiffs.

The district court then considered whether equitable tolling was appropriately

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applied in this case to toll the RESPA statute of limitations. After considering the five factors identified by Truitt v. County of Wayne 11 and the doctrine of...

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