Hargis v. Access Capital Funding, LLC
| Decision Date | 05 March 2012 |
| Docket Number | No. 11–1027.,11–1027. |
| Citation | 674 F.3d 783 |
| Parties | Bonnie HARGIS, Appellant, v. ACCESS CAPITAL FUNDING, LLC; Webster Bank, NA, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
Christian Gerhard Montroy, argued and on the brief, St. Louis, MO, for appellant.
Thomas P. Hohenstein, argued and on the brief, St. Louis, MO, for appellee Access Capital Funding, LLC.
Christopher Martin Hohn, argued, Maria G. Zschoche, on the brief, St. Louis, MO, for appellee Webster Bank, NA.
Before WOLLMAN, MELLOY, and COLLOTON, Circuit Judges.
Bonnie Hargis sued Webster Bank and Access Capital Funding (Defendants) in Missouri state court. Hargis, on behalf of a putative class of similarly situated borrowers, alleged that Defendants engaged in the unauthorized practice of law, in violation of Mo.Rev.Stat. § 484.020, when they charged certain fees in the course of refinancing Hargis's mortgage. Defendants removed the suit to federal court under the Class Action Fairness Act (CAFA). 28 U.S.C. § 1332(d). Hargis appeals the district court's 1 denial of her motion to remand to state court, as well as the grant of summary judgment for Defendants. We affirm in part, vacate in part, and remand.
In 2007, Hargis refinanced her home with a loan from Webster Bank (Webster) that was brokered by Access Capital Funding (Access). At the time, Webster did not have a retail operation in Missouri, so without a broker Hargis would have been unable to obtain a loan from Webster. The principal amount of Hargis's loan was $170,672.00. Hargis's loan from Webster was a 30–year fixed interest loan with a 6.75% interest rate insured by the Federal Housing Administration (FHA). Prior to refinancing, Hargis had two mortgages on her home, with a blended, adjustable, 8.125% interest rate. Due to Hargis's low credit score and high debt to income ratio, it was difficult for her to find a new loan.
Hargis brought $2,500.00 cash to the loan closing. The loan and Hargis's cash, totaling $173,172.00, were placed in an escrow account and used to pay off Hargis's two existing mortgages, her 2007 real estate taxes, some credit card debt, and settlement charges for the loan. The Final Settlement Statement (HUD–1) shows that the funds from the escrow account were disbursed as follows:
The settlement charges, in turn, went to pay mortgage and hazard insurance premiums, county real estate taxes, and more credit card debt:
At closing, Webster paid a $5,333.50 yield spread premium to Access. The yield spread premium is Access's compensation for brokering the loan, in other words for bringing Hargis's business to Webster. Hargis did not pay Access for its services. In this case, Access used part of the yield spread premium to pay for other costs associated with Hargis's loan, including the appraisal fee and fees owed to the title company. The two fees central to this case, a $200.00 processing fee to Access and $450.00 administration fee to Webster, were accounted for in the yield spread premium.
Hargis contends that the processing fee and administration fee are charges for preparing mortgage documents and thus constitute the unauthorized practice of law. In Missouri, non-lawyers may “fill in the blanks in standardized Missouri document forms so long as a Missouri attorney created the legal documents and filling in the blanks on the documents was ancillary to the [non-lawyer's] main business.” Hargis v. JLB Corp., 357 S.W.3d 574, 578 (Mo.2011) (citing Hulse v. Criger, 363 Mo. 26, 247 S.W.2d 855, 862 (1952)). Non-lawyers may not, however, “prepare or complete nonstandard or specialized documents” or “charge a separate fee for document preparation, or vary their customary charges ... based upon whether documents are to be prepared in the transaction.” JLB Corp., 357 S.W.3d at 579 (quoting In re First Escrow, 840 S.W.2d 839, 841 (Mo.1992)).
It is undisputed that Access and Webster provided Hargis services that do not constitute the unauthorized practice of law. Access was able to bring Hargis and Webster together for a loan transaction, which allowed Hargis to refinance her home and Webster to gain a customer and profit from the interest charged on Hargis's loan. In the course of doing so, Access performed services, such as obtaining an appraisal of Hargis's home and obtaining a flood certificate, that were required for loan approval. Webster also performed services to secure FHA approval for the loan, including manually underwriting the loan and certifying it. Hargis's complaint does not challenge the compensation for these services; it challenges only the administration and processing fees as fees for the unauthorized practice of law.
Hargis argues that she paid these fees, either directly from the cash she brought to closing or indirectly in the form of a higher interest rate charged to her by Webster. She brought suit in state court on behalf of herself and a class of other borrowers who had been charged such fees. Hargis claimed, in her original complaint, that Defendants engaged in the unauthorized practice of law, violated the Missouri Merchandising and Practices Act (MMPA), Mo.Rev.Stat. § 407.010 et seq. , and were unjustly enriched.
Defendants removed the action to federal court under CAFA. “Under CAFA, federal courts have jurisdiction over class actions in which the amount in controversy exceeds $5,000,000 in the aggregate; there is minimal (as opposed to complete) diversity among the parties, i.e., any class member and any defendant are citizens of different states; and there are at least 100 members in the class.” Westerfeld v. Indep. Processing, LLC, 621 F.3d 819, 822 (8th Cir.2010) (citing 28 U.S.C. § 1332(d)). Hargis argued that her class consisted only of Missouri borrowers and that the amount in controversy did not exceed the $5 million threshold for removal. Defendants countered that Hargis's complaint did not limit her class to Missouri consumers, and thus consideration of consumers nationwide was proper in evaluating the amount in controversy. The district court held that removal under CAFA was proper.
After denying Hargis's motion to remand, the district court asked Hargis to amend her original complaint to clearly define the class Hargis sought to represent.2 D. Ct. Order of Oct. 4, 2010, at 5. Hargis filed her First Amended Class Action Complaint, and Defendants moved for summary judgment. With her response to Defendants' summary judgment motion, Hargis filed a motion for leave to amend and a proposed Second Amended Class Action Complaint. Hargis's proposed complaint dropped her unjust enrichment and negligence claims and added a claim for “Money Had and Received.”
The district court held that Hargis lacked standing because she did not pay, either directly or indirectly, the disputed fees. The district court then granted summary judgment to the Defendants on all counts and denied Hargis's motion for leave to file her Second Amended Complaint.
As a threshold matter, we address whether Hargis's case was properly removed to federal court under CAFA.
We review de novo the denial of a motion to remand to state court under CAFA. Westerfeld, 621 F.3d at 822. “[A] party seeking to remove under CAFA must establish the amount in controversy by a preponderance of the evidence regardless of whether the complaint alleges an amount below the jurisdictional minimum.” Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir.2009). “Under the preponderance standard, ‘[t]he jurisdictional fact ... is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are....’ ” Id. at 959 (quoting Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir.2002)) (alteration in original). A plaintiff may, however, avoid removal by including “a binding stipulation with his petition stating that he would not seek damages greater than the jurisdictional minimum.” Id. at 958 (citing De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir.1995)). Such a filing must be made prior to the defendant's removal of the case. Id.
“It is axiomatic that the court's jurisdiction is measured either at the time the action is commenced or, more pertinent to this case, at the time of removal.” Schubert v. Auto Owners Ins. Co., 649 F.3d 817, 822 (8th Cir.2011) (citing McLain v. Andersen Corp., 567 F.3d 956, 965 (8th Cir.2009)). “Further, jurisdiction is determined at the time of removal, even though subsequent events may remove from the case the facts on which jurisdiction was predicated.” Quinn v. Ocwen Fed. Bank FSB, 470 F.3d 1240, 1248 (8th Cir.2006) (per curiam) (citing Kan. Pub. Employees Ret. Sys. v. Reimer & Koger Assocs., Inc., 77 F.3d 1063, 1067–68 (8th Cir.1996)).
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