Durr v. Intercounty Title Co. of Illinois
| Decision Date | 16 February 1994 |
| Docket Number | Nos. 93-1570,93-2433,s. 93-1570 |
| Citation | 14 F.3d 1183 |
| Parties | Keith DURR, Plaintiff-Appellant, v. INTERCOUNTY TITLE COMPANY OF ILLINOIS, an Illinois corporation, Defendant-Appellee. Appeal of D. Alan HARRIS, Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
D. Alan Harris (argued), Marcella Ruble, Daniel A. Kazlauski, Harris & Ruble, Chicago, IL, Jess E. Forrest, Harwood Heights, IL, for plaintiff-appellant.
Michael H. King (argued), James M. Amrein, Ross & Hardies, Chicago, IL, for Intercounty Title Co. of Illinois.
D. Alan Harris, pro se.
Daniel A. Kazlauski, Harris & Ruble, Chicago, IL, for D. Alan Harris.
Before POSNER, Chief Judge, MANION, Circuit Judge, and GRANT, District Judge. *
Attorney Alan Harris filed suit against Intercounty Title Company of Illinois, a title recording company, for overcharging Keith Durr $8.00 for the recording of a deed and mortgage. Durr purported to represent a class of consumers who also were allegedly overcharged, and who claimed damages three times the amount each class member paid Intercounty. The district court dismissed the complaint, and imposed Rule 11 sanctions for the attorney's unsubstantiated assertion that a class existed, and for the grossly inflated damage claim. 826 F.Supp. 259. The district court noted that the complaint, though cloaked "in the knightly mantle of consumer protection" was actually an attempt to turn a "petty dispute into a big-ticket lawsuit." Durr appeals the district court's dismissal of the lawsuit. Attorney Harris appeals the district court's imposition of sanctions. We affirm the dismissal and sanctions.
On August 21, 1992, Keith Durr purchased a house in Indian Park, Illinois, using a federally related mortgage loan. He enlisted Intercounty Title Company to perform a number of services associated with the purchase. Among other services it provided, Intercounty filed the deed and mortgage with the Cook County Recorder of Deeds, which charged $23.00 to record the deed, and $31.50 to record the mortgage. When Intercounty billed Durr, it charged $25.00 and $37.00 respectively as reimbursement for the fees it paid to Cook County, with the proviso that "we have included a $1.50 service and handling fee in the charges for any instruments recorded." Therefore, Intercounty overcharged Durr, at most, approximately $8.00. 1 Intercounty also billed Durr for other services it provided, including $62.00 for recording fees, $155.00 for closing fees, and $170.00 for title insurance.
The attorney who represented Durr in the closing on the house discovered the discrepancy between the amount Cook County charged to record the deed and mortgage, and the amount Intercounty charged Durr to reimburse this cost. That attorney never contacted Intercounty about this discrepancy. Instead, he contacted attorney D. Alan Harris, who filed a class action lawsuit against Intercounty. In the initial complaint, Harris alleged that Intercounty violated the Real Estate Settlement Procedures Act of 1974 (RESPA), 12 U.S.C. Sec. 2607(b), by overcharging real estate sellers and buyers in "transactions involving federally related mortgage loans." The complaint identified only one specific overcharge--Intercounty's charge to Durr of $25.00 and $37.00 instead of the actual $23.00 and $31.50 for Cook County's title and mortgage recording fees. Harris alleged, nevertheless, that Intercounty overcharged other real estate sellers and buyers; Harris filed the complaint as a class action on behalf of all of them. In his prayer for relief, Harris requested not only the $8.00 which Intercounty overcharged Durr, but also full recovery of the fees Intercounty regularly charged, including $62.00 for Durr's recording fees, $155.00 for his closing fees, and $170.00 for his title insurance. Harris then asked the court to treble the entire damage amount.
Intercounty responded to the complaint by writing a letter to the district court explaining that the $8.00 overcharge was due in part to oversight, and in part to copying costs and mailing costs. By its calculations, Intercounty actually overcharged Durr only $4.50. Intercounty also informed the court that Durr never as much as made a phone call to clear up the discrepancy. The district court sua sponte issued a memorandum order, which criticized the complaint's excessive damage claim, and apparent lack of factual support for the existence of other injured plaintiffs. The court expressed these concerns as follows:
At the outset some points ought to be made about Durr's own claim. Even if Durr's allegations are to be accepted (as this Court is bound to do in evaluating his complaint), Durr's damages for the violation would appear to be three times the $8.00 overcharge or $24.00, rather than three times what Intercounty charged for all its settlement services as prayed for in Durr's complaint (Durr was charged $62 for the recording fees referred to earlier, plus $155 for closing fees (which he does not challenge as a RESPA violation), and plus $170 for title insurance (also a non-challenged item)).
* * * * * *
So much then for Durr's own apparently overblown individual claim. As for any effort to springboard that individual claim into a class action (something that this Court is obligated to address early under Rule 23(c)(1)), there is nothing to suggest that the complained-of overcharge is part of a regular pattern of activity engaged in by Intercounty. Instead complaint p 3 simply refers to "all other persons who have been improperly overcharged for settlement services by the defendant in connection with transactions involving a 'federally related mortgage loan.' " Durr's lawyers have proffered nothing to indicate that such a conclusory allegation--something that if sought to be introduced in the course of litigation would be subject to be stricken as "assuming facts not in evidence"--is the product of the prefiling inquiry that counsel are mandated to undertake by Rule 11.
The court ordered Harris to respond to these issues within ten days.
Although warned of the frivolity of his damage request, and the apparent lack of foundation supporting the existence of his professed class, Harris persisted in his attack. Within the ten-day deadline imposed by the court, Harris filed a nine-page memorandum attempting to elucidate his legal theories. He also filed an amended complaint which boldly reasserted the errors of the first complaint; Harris maintained the identical damage request, and sought recovery for the same phantom class of injured plaintiffs. The court then sua sponte issued a second memorandum, again identifying the defects in the pleading. Harris also ignored this warning.
Having fired two warning shots, the district court proceeded to consider the complaint as it would any other, under the strictures of the applicable law and the Federal Rules of Civil Procedure. Intercounty filed a motion to dismiss the amended complaint, and a motion to strike the prayer for relief. The court responded by dismissing the complaint, concluding that even if its allegations were accepted as true, the complaint did not state a claim under RESPA. This ruling, of course, had the effect of striking the prayer for relief. But the court chose to consider Intercounty's motion to strike the prayer for relief in the context of Rule 11, Fed.R.Civ.P. The court reiterated its criticism of the excessive damage claim, and the lack of foundation for the existence of the class of injured plaintiffs. The court initiated the Rule 11 proceedings as follows:
There is no question but that the dollar signs here were in Harris' eyes, and they obviously blinded him to the plain meaning of the law. Accordingly the complaint's prayer for relief must be stricken. And Harris' greed and obduracy must have their price. Unless Harris can offer up some better showing of the objective good faith that is demanded by Fed.R.Civ.P. ("Rule") 11 than he has done up to now, he will be subject to an "appropriate sanction" as mandated by that rule.
The parties filed memoranda regarding Rule 11. Intercounty created a side issue in the Rule 11 proceedings by stating in its memorandum that "Mr. Harris has made somewhat of a career of being a legal gadfly, and shows a marked propensity for persisting with meritless claims." Intercounty proceeded to recount an instance where another court sanctioned Harris for pursuing a meritless claim. Harris responded immediately to these accusations by filing a motion to strike Intercounty's statements because they were inaccurate. The court then held a hearing to resolve the Rule 11 question. The court granted Harris' motion to strike, finding Intercounty's accusations about Harris' reputation to be inappropriate. The court then proceeded to impose $8,000 in Rule 11 sanctions against Harris, plus taxable costs. Durr appeals the dismissal of his RESPA claim, and Harris appeals the imposition of Rule 11 sanctions.
The theory of recovery which Harris presents in the complaint begins with the Real Estate Settlement Procedures Act--RESPA. To understand Harris' theory, and its ultimate impropriety, it is necessary to first discuss that statute. At its core, "RESPA is an anti-kickback statute." Mercado v. Calumet Fed. Sav. & Loan Ass'n, 763 F.2d 269, 270-71 (7th Cir.1985). Its purpose is to "prohibit all kickback and referral fee arrangements whereby any payment is made or 'thing of value' furnished for the referral of real estate settlement business." Id. (quoting Senate Report). In line with this broad purpose, the specific RESPA section which Harris relied upon in framing the complaint, 12 U.S.C. Sec. 2607(b), provides that "[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the...
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