Freeman v. Quicken Loans, Inc.

• Decision Date: 24 May 2012
• Docket Number: No. 10–1042.,10–1042.
• Citation: 132 S.Ct. 2034,566 U.S. 624,182 L.Ed.2d 955
• Parties: Tammy Foret FREEMAN et al., Petitioners v. QUICKEN LOANS, INC.
• Court: U.S. Supreme Court

566 U.S. 624

132 S.Ct. 2034

182 L.Ed.2d 955

Tammy Foret FREEMAN et al., Petitioners

v.QUICKEN LOANS, INC.

No. 10–1042.

Supreme Court of the United States

Argued Feb. 21, 2012.

Decided May 24, 2012.

Kevin K. Russell, Bethesda, MD, for Petitioners.

Ann O'Connell for the United States as amicus curiae, by special leave of the Court, supporting the Petitioners.

Thomas M. Hefferon, Washington, DC, for Respondent.

Patrick W. Pendley, Stanley P. Baudin, Christopher L. Coffin, Nicholas R. Rockforte, Pendley, Baudin & Coffin, LLP, Plaquemine, LA, Andre P. LaPlace, Baton Rouge, LA, Pamela S. Karlan, Jeffrey L. Fisher, Stanford, CA, Kevin K. Russell, Counsel of Record, Thomas C. Goldstein, Amy Howe, Goldstein & Russell, P.C., Washington, DC, for Petitioners.

Kevin P. Martin, Goodwin Procter LLP, Boston, Michael H. Rubin, Eric J. Simonson, McGlinchey Stafford PLLC, Baton Rouge, LA, Thomas M. Hefferon, Counsel of Record, William F. Sheehan, Matthew S. Sheldon, Goodwin Procter LLP, Washington, DC, Jeffrey B. Morganroth, Morganroth & Morganroth, PLLC, Birmingham, MI, for Respondent.

Justice SCALIA delivered the opinion of the Court.

A provision of the Real Estate Settlement Procedures Act (RESPA), codified at 12 U.S.C. § 2607(b), prohibits giving and accepting "any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service ... other than for services actually performed." We consider whether, to establish a violation of § 2607(b),¹ a plaintiff must demonstrate that a charge was divided beTWEEN TWO OR more persons.

I

Enacted in 1974, RESPA regulates the market for real estate "settlement services," a term defined by statute to include "any service provided in connection with a real estate settlement," such as "title searches, ... title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, ... services rendered by a real estate agent or broker, the origination of a federally related mortgage loan ^{[2 ]}..., and the handling of the processing, and closing or settlement." § 2602(3). Among RESPA's consumer-protection provisions is § 2607, which directly furthers Congress's stated goal of "eliminat[ing] ... kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services," § 2601(b)(2). Section 2607(a) provides:

"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 involving a federally related mortgage loan shall be referred to any person."

The neighboring provision, subsection (b), adds the following:

"No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed."

These substantive provisions are enforceable through, inter alia, actions for damages brought by consumers of settlement services against "[a]ny person or persons who violate the prohibitions or limitations" of § 2607, with recovery set at an amount equal to three times the charge paid by the plaintiff for the settlement service at issue. § 2607(d)(2).

Petitioners in this case are three married couples who obtained mortgage loans from respondent Quicken Loans, Inc. In 2008, they filed separate actions in Louisiana state court, alleging, as pertinent here, that respondent had violated § 2607(b) by charging them fees for which no services were provided. In particular, the Freemans and the Bennetts allege that they were charged loan discount fees of $980 and $1,100, respectively, but that respondent did not give them lower interest rates in return. The Smiths' allegations focus on a $575 loan "processing fee" and a "loan origination" fee of more than $5,100.³

Respondent removed petitioners' lawsuits to federal court, where the cases were consolidated. Respondent thereafter moved for summary judgment on the ground that petitioners' claims are not cognizable under § 2607(b) because the allegedly unearned fees were not split with another party. The District Court agreed; and because petitioners did not allege any splitting of fees it granted summary judgment in favor of respondent.

A divided panel of the United States Court of Appeals for the Fifth Circuit affirmed. 626 F.3d 799 (2010). We granted certiorari. 565 U.S. ––––, 132 S.Ct. 397, 181 L.Ed.2d 254 (2011).

II

The question in this case pertains to the scope of § 2607(b), which as we have said 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 rendering of a real estate settlement service ... other than for services actually performed." The dispute between the parties boils down to whether this provision prohibits the collection of an unearned charge by a single settlement-service provider—what we might call an undivided unearned fee—or whether it covers only transactions in which a provider shares a part of a settlement-service charge with one or more other persons who did nothing to earn that part.

Petitioners' argument that the former interpretation should prevail finds support in a 2001 policy statement issued by the Department of Housing and Urban Development (HUD), the agency that was until recently authorized by Congress to "prescribe such rules and regulations" and "to make such interpretations" as "may be necessary to achieve the purposes of [RESPA]," § 2617(a).⁴ That policy statement says that § 2607(b)"prohibit[s] any person from giving or accepting any unearned fees, i.e., charges or payments for real estate settlement services other than for goods or facilities provided or services performed." 66 Fed.Reg. 53057 (2001). It "specifically interprets [ § 2607(b) ] as not being limited to situations where at least two persons split or share an unearned fee." Ibid. More broadly, the policy statement construes § 2607(b) as authority for regulation of the charges paid by consumers for the provision of settlements. It says that "a settlement service provider may not mark-up the cost of another provider's services without providing additional settlement services; such payment must be for services that are actual, necessary and distinct."

Id., at 53059. Moreover, in addition to facing liability when it collects a fee that is entirely unearned, a provider may also "be liable under [ § 2607 (b) ] when it charges a fee that exceeds the reasonable value of goods, facilities, or services provided," ibid., on the theory that the excess over reasonable value constitutes a "portion" of the charge "other than for services actually performed," § 2607(b).

The last mentioned point, however, is manifestly inconsistent with the statute HUD purported to construe. When Congress enacted RESPA in 1974, it included a directive that HUD make a report to Congress within five years regarding the need for further legislation in the area. See § 2612(a) (1976 ed.). Among the topics required to be included in the report were "recommendations on whether Federal regulation of the charges for real estate settlement services in federally related mortgage transactions is necessary and desirable," and, if so, recommendations with regard to what reforms should be adopted. § 2612(b)(2). The directive for recommendations regarding the desirability of price regulation would make no sense if Congress had already resolved the issue —if § 2607(b) already carried with it authority for HUD to proscribe the collection of unreasonably high fees for settlement services, i.e., to engage in price regulation.

No doubt recognizing as much, petitioners do not fully adopt HUD's construction of § 2607(b). Noting that even those Courts of Appeals which have found § 2607(b) not to be limited to fee-splitting situations have held that the statute does not reach unreasonably high fees, see Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49, 56 (C.A.2 2004) ; Santiago v. GMAC Mortgage Group, Inc., 417 F.3d 384, 387 (C.A.3 2005) ; Friedman v. Market Street Mortgage Corp., 520 F.3d 1289, 1297 (C.A.11 2008), petitioners acknowledge that the statute does not cover overcharges. They nonetheless embrace HUD's construction of § 2607(b) insofar as it holds that a provider violates the statute by retaining a fee after providing no services at all in return. In short, petitioners contend that, by allegedly charging each of them an unearned fee, respondent "accept[ed]" a "portion, split, or percentage" of a settlement, service charge (i.e., 100 percent of the charge) "other than for services actually performed." § 2607(b) (2006 ed.).

The parties vigorously dispute whether the position set forth in HUD's 2001 policy statement should be accorded deference under the framework announced by this Court in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). We need not resolve that dispute—or address whether, if Chevron deference would otherwise apply, it is eliminated by the policy statement's palpable overreach with regard to price controls. For we conclude that even the more limited position espoused by the policy statement and urged by petitioners "goes beyond the meaning that the statute can bear," MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218, 229, 114 S.Ct. 2223, 129 L.Ed.2d 182 (1994). In our view, § 2607(b) unambiguously covers only a settlement-service provider's splitting of a fee with one or more other persons; it cannot be understood to reach a single provider's retention of an unearned fee.⁵

By providing that no person "shall give" or "shall accept" a "portion, split, or percentage" of a "charge" that has been "made or received," "other than for...