Gardner v. First American Title Ins. Co., 01-2071.

• Decision Date: 21 June 2002
• Docket Number: No. 01-2071.,01-2071.
• Citation: 294 F.3d 991
• Parties: Mark GARDNER; Danielle Baker, and all others similarly situated, Plaintiffs-Appellants, v. FIRST AMERICAN TITLE INSURANCE COMPANY; Universal Title Company; Universal Partnerships, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

294 F.3d 991

Mark GARDNER; Danielle Baker, and all others similarly situated, Plaintiffs-Appellants, v. FIRST AMERICAN TITLE INSURANCE COMPANY; Universal Title Company; Universal Partnerships, Defendants-Appellees.

No. 01-2071.

United States Court of Appeals, Eighth Circuit.

Submitted: February 11, 2002.

Filed: June 21, 2002.

Barry G. Reed, argued, Minneapolis, MN (J. Gordon Rudd, Jr., Hart L. Robinovitch, on the brief), for appellant.

Douglas W. King, argued, St. Louis, MO (Charles A. Newman, Cristian M. Stevens, on the brief), for appellee.

Before McMILLIAN, FAGG, and LOKEN, Circuit Judges.

LOKEN, Circuit Judge.

The Real Estate Settlement Procedures Act (RESPA) prohibits awarding fees or kickbacks for the referral of "a real estate settlement service involving a federally related mortgage loan." 12 U.S.C. § 2607(a). Persons violating this prohibition are "liable to the person or persons charged for the settlement service ... in an amount equal to three times the amount of any charge paid for such settlement service." § 2607(d)(2). In this putative class action, named plaintiffs Mark Gardner and Danielle Baker allege that defendants violated RESPA by having sham limited partnerships pay fees to real estate agents for referring title insurance business to the partnerships, which in turn passed the business on to the defendant title insurers.

Prior to class certification, the district court granted defendants' motion to dismiss the RESPA claims without prejudice. The court concluded that it lacked subject matter jurisdiction over the RESPA claims because plaintiffs failed to allege that their mortgage loans were federally related and therefore "failed to allege that they have standing to bring this action under RESPA." Although the dismissal was without prejudice, plaintiffs appealed because the dismissal may have statute of limitations implications. We review the dismissal of a complaint de novo. See Springdale Educ. Assoc. v. Springdale Sch. Dist., 133 F.3d 649, 651 (8th Cir.1998) (standard of review). Concluding that the complaint adequately alleged plaintiffs' standing and stated RESPA claims, we reverse.

On appeal, plaintiffs first argue that a complaint need not allege that the plaintiff was involved in a federally related mortgage loan in order to state a claim under RESPA. We disagree. As the district court recognized, standing is an important constitutional and prudential limitation on the Article III jurisdiction of the federal courts. "A federal court's jurisdiction... can be invoked only when the plaintiff himself has suffered some threatened or actual injury resulting from the putatively illegal action." Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Rule 8(a)(1) of the Federal Rules of Civil Procedure provides that a pleading setting forth a claim for relief must include "a short and plain statement of the grounds upon which the court's jurisdiction depends." Therefore, "[i]t is the responsibility of the complainant clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial powers." Warth, 422 U.S. at 518, 95 S.Ct. 2197. In ruling on a motion to dismiss for lack of standing, "both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Id. at 501, 95 S.Ct. 2197.

Here, plaintiffs' complaint expressly alleged federal question jurisdiction based upon claims under RESPA. However, the lengthy allegations describing plaintiffs' mortgage loan transactions failed to allege that plaintiffs received federally related mortgage loans. We agree with the district court that these introductory paragraphs of the complaint, where one would expect to find standing properly alleged, are inadequate to the task. But buried on page 21 of plaintiffs' prolix complaint are the following allegations:

80. Defendants have violated section 8 of RESPA, 12 U.S.C. § 2607(a) and (b) et seq., by paying, receiving, and/or exchanging prohibited payments and things of value on loan transactions as well as paying, receiving or exchanging unearned fees, things of value, portions, splits, or percentages of payments made for the rendering of a settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.

* * * * * *

82. As described above, such violations occurred in relation to Plaintiffs' loan settlement transactions.

(Emphasis added). Although paragraph 82 is hardly a model of clarity, we agree with plaintiffs that the logical antecedent for the term "such violations" in that paragraph are the violations described in paragraph 80, that is, transactions "involving a federally related mortgage loan." Thus, while p...