Hargis v. JLB Corp.

• Decision Date: 20 December 2011
• Docket Number: No. SC 91639.,SC 91639.
• Citation: 357 S.W.3d 574
• Parties: Bonnie HARGIS, Appellant, v. JLB CORPORATION d/b/a Golden Oak Lending, Respondent.
• Court: Missouri Supreme Court

357 S.W.3d 574

Bonnie HARGIS, Appellant,

v.JLB CORPORATION d/b/a Golden Oak Lending, Respondent.

No. SC 91639.

Supreme Court of Missouri, En Banc.

Dec. 20, 2011.

Christian G. Montroy, Montroy Law Offices LLC, Ronnie L. White, James P. Holloran, Holloran, White Schwartz & Gaertner LLP, St. Louis, for Hargis.

E. Robert Schulz, Ronald J. Eisenberg, Schultz & Associates LLP, Chesterfield, for JLB.

LAURA DENVIR STITH, Judge.

Bonnie Hargis appeals the circuit court's grant of summary judgment to JLB Corporation on her claims that (1) JLB engaged in the unauthorized practice of law by procuring, preparing and assisting in the drawing of legal documents as it negotiated with lenders to obtain mortgages for its clients and that (2) JLB was unjustly enriched by charging her for document preparation services it did not provide. So far as the record shows, JLB assisted Ms. Hargis only in preparing financial documents, which does not constitute the practice of law. The record does not show that JLB procured or assisted in the drawing of Ms. Hargis' note, deed of trust or other legal documents. Rather, these documents were drawn and filled in by third parties that are not shown to have been controlled by or acting as an agent of JLB. These third parties are not parties to this suit, and whether their conduct constitutes the unauthorized practice of law is not before the Court. Accordingly, this Court affirms the grant of summary judgment to JLB as to Counts I and II relating to the unauthorized practice of law.

The trial court erred in granting JLB summary judgment on Count III, which alleges unjust enrichment (money had and received). The viability of that count does not depend on a finding that JLB engaged in the unauthorized practice of law, and JLB's summary judgment motion failed to negate any element of Ms. Hargis' unjust enrichment claim. The judgment is affirmed in part and reversed in part, and the case is remanded.

I. FACTUAL AND PROCEDURAL BACKGROUND

JLB is a Missouri corporation that provides mortgage brokering services. Its main business is matching borrowers who need a mortgage with lenders willing to finance them. To successfully match a borrower with a lender, JLB first must provide the potential lender with financial information about the borrower, including information about credit history, prior mortgages, and current and past employment. JLB then assists the borrower in preparing a loan application and other financial disclosure forms.

Once a lender approves a loan, a note and a mortgage or deed of trust must be prepared. The summary judgment record does not show that JLB plays a role in drawing, filling out or procuring these documents. Rather, so far as the summary judgment record shows, JLB gathers information necessary to prepare these documents and provides that information to title companies, investors and/or a California company called Document Systems Inc. According to the record adduced below, these third parties then prepare the note and a mortgage or deed of trust and send them to JLB, which then completes its “middleman” role in the refinancing process by transferring these documents to the borrower.¹

In January 2009, Ms. Hargis entered into an agreement with JLB to refinance her home in Barnhart, Missouri. JLB's vice president, Mr. John Paci, testified at his deposition that JLB provided a number of services to obtain refinancing for Ms. Hargis, including matching her with a sponsoring lender, U.S. Bank N.A.; preparing her loan application and other financial disclosure documents; gathering information necessary for title companies, investors and/or Document Systems to prepare her note and deed of trust; ² and transferring those documents to Ms. Hargis after their completion. JLB charged Ms. Hargis the following fees: (1) a $1,890.50 loan origination fee; (2) a $1,923.58 loan discount; (3) a $900 broker fee; (4) a $550 underwriting fee; (5) a $208 administrative fee; and (6) an $899 processing fee.

JLB says it charged the processing and administrative fees for helping Ms. Hargis prepare her loan application and disclosure documents, gathering information needed to complete the note and deed of trust, and transferring these documents to Ms. Hargis. JLB says it played no role in drawing the note or deed of trust, which were prepared by title companies, investors and/or Document Systems, and did not charge for their preparation.

Ms. Hargis disagrees. In February 2009, she filed a three-count petition against JLB in St. Louis County circuit court. Count I alleges that JLB engaged in the unauthorized practice of law in violation of section 484.010 ³ in charging her a fee for preparing, procuring and assisting in the drawing of legal documents and in preparing her loan application and other financial disclosures as it negotiated with a lender to obtain refinancing for her. In Count II, Ms. Hargis asserts that engaging in the unauthorized practice of law in this manner was a deceptive and unfair practice that violated the Missouri Merchandising Practices Act. § 407.010 et. seq. In Count III, Ms. Hargis alleges that JLB was unjustly enriched because it charged her various fees for services it did not provide.

In August 2009, JLB filed a motion for summary judgment in which it asserted that: (1) it did not procure or assist in the drawing of legal documents, that it simply engaged in negotiations with a lender and acted as a middleman in connecting Ms. Hargis to the lender; (2) that acting as a middleman between a borrower and a lender is not the unauthorized practice of law; and (3) that it did not charge Ms. Hargis for the provision of legal services. After an opportunity for discovery by Ms. Hargis and following briefing by both parties, on March 8, 2010, the trial court granted JLB summary judgment on all three counts. Ms. Hargis appealed to the Missouri court of appeals. After opinion by that court, this Court granted transfer. Mo. Const. art. V, § 10.

II. STANDARD OF REVIEW

“The standard of review of appeals from summary judgment is essentially de novo.” State ex rel. Koster v. Olive, 282 S.W.3d 842, 846 (Mo. banc 2009). This Court “will review the record in the light most favorable to the party against whom judgment was entered.” Id. “Summary judgment shall be entered if ‘there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.’ ” Id., quoting Rule 74.04(c)(6). “A ‘genuine issue’ is a dispute that is real, not merely argumentative, imaginary or frivolous.” ITT Commercial Fin. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 382 (Mo. banc 1993).

III. JLB DID NOT ENGAGE IN THE UNAUTHORIZED PRACTICE OF LAWA. Law Governing the Unauthorized Practice of Law

The practice of law in Missouri, as in other states, long has been restricted solely to licensed attorneys so as to “protect the public from being advised or represented in legal matters by incompetent or unreliable persons.” Hulse v. Criger, 363 Mo. 26, 247 S.W.2d 855, 857–58 (1952). Since 1915,⁴ the Missouri legislature has had statutes defining the “practice of law” and providing penalties for its unauthorized practice. See In re Mid–America Living Trust Associates, Inc., 927 S.W.2d 855, 859 (Mo. banc 1996).

Because the judiciary is the “sole arbiter of what constitutes the practice of law,” Hulse, 247 S.W.2d at 857–58, such statutes merely act in aid of this Court's regulation of the practice of law and cannot “supersede or detract from, the power of the judiciary to define and control the practice of law.” Id. Nonetheless, this Court has used these statutory definitions of the “practice of law” as a reference point for determining the scope of the practice of law. See, e.g., id.; Eisel v. Midwest BankCentre, 230 S.W.3d 335, 338 (Mo. banc 2007).

Section 484.010.1 defines the “practice of law” as:

the appearance as an advocate in a representative capacity or the drawing of papers, pleadings or documents or the performance of any act in such capacity in connection with proceedings pending or prospective before any court of record, commissioner, referee or any body, board, committee or commission constituted by law or having authority to settle controversies.

Id. Section 484.010.2 defines the “law business” as:

the advising or counseling for a valuable consideration of any person, firm, association, or corporation as to any secular law or the drawing or the procuring of or assisting in the drawing for a valuable consideration of any paper, document or instrument affecting or relating to secular rights or the doing of any act for a valuable consideration in a representative capacity, obtaining or tending to obtain or securing or tending to secure for any person, firm, association or corporation any property or property rights whatsoever.

Id. Beginning with its decision in Hulse in 1952, this Court repeatedly has utilized these statutory definitions to assist it in determining what constitutes the unauthorized practice of law in regard to real estate transactions. 247 S.W.2d at 856–57.

In Hulse, real estate brokers obtained standardized form documents, including notes and deeds of trust, and then filled in blanks on these documents based on the specific information provided by their clients. Id. Hulse held that although notes and deeds of trust are legal documents, mortgage brokers are not engaging in the unauthorized practice of law if they merely fill in 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 broker's main business. Id. at 862.

By contrast, the broker would be engaging in the unauthorized practice of law if it charged a separate fee or increased its customary charges for helping fill in the blanks, if it gave advice as to the legal effect of the documents or if the documents were not drawn by a Missouri attorney. Id.

This Court...