Haug v. Bank of America, N.A.
Decision Date | 23 January 2003 |
Docket Number | No. 02-2458.,02-2458. |
Citation | 317 F.3d 832 |
Parties | Amy E. HAUG; Peter V. Haug, individually and as Class Representatives, Plaintiff-Appellees, v. BANK OF AMERICA, N.A, Defendant-Appellant. American Bankers Association; America's Community Bankers; American Escrow Association; American Land Title Association; Real Estate Service Providers Council; The Realty Alliance, Title/Appraisal Vendor Management Association, Amicus on Behalf of Appellant. United States; National Association of Consumer Advocates, Amicus on Behalf of Appellees. |
Court | U.S. Court of Appeals — Eighth Circuit |
Dowd, Jr., Jeffrey S. Russell and K. Lee Marshall, St. Louis, MO), for appellant.
John S. Steward, argued, St. Louis, MO, (Geoffrey S. Meyerkord and Stephen F. Meyerkord), for appellee.
Christine N. Kohl, argued, Washington, DC for Amicus, U.S.
Before McMILLIAN, MURPHY and MELLOY, Circuit Judges.
Bank of America, N.A. ("Defendant"), appeals from the order entered in the United States District Court for the Eastern District of Missouri denying Defendant's motion to dismiss. See Haug v. Bank of America, N.A., No. 4:01-CV-1146 CAS (E.D.Mo. Mar. 29, 2002) ("slip op."). For reversal, Defendant argues that the district court erred in holding that a single service provider violates § 8(b) of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2607(b) ("Section 8(b)"), whenever it receives an unearned fee. Id. at 11. In addition, Defendant argues that the district court erred in relying on a policy statement issued by the Department of Housing and Urban Development ("HUD") Section 8(b) as prohibiting payment or receipt of any portion or percentage of a settlement service fee that is "unearned," regardless of whether the entire charge is retained by a single individual or entity or is split or shared with a third party. Id. For the reasons discussed below, we reverse the order of the district court as it pertains to Section 8(b) of RESPA and remand the case for further proceedings consistent with this opinion.
Jurisdiction in the district court was proper based on 28 U.S.C. § 1331. Defendant timely sought interlocutory review of the district court's order, which was permitted by the district court and granted by this court. Accordingly, this court has jurisdiction over this interlocutory appeal pursuant to 28 U.S.C. § 1292(b).
The facts of this case are not in dispute. On May 11, 2001, Amy E. Haug and Peter V. Haug ("Plaintiffs"), citizens of Missouri, individually and as class representatives, filed an eight-count putative class action complaint against Defendant in the Circuit Court for the City of St. Louis. Plaintiffs alleged that from May 8, 1996, through the date of certification, based on Defendant's nondisclosures, or false and misleading disclosures, they unknowingly paid charges for credit reports or other loan related services for federally related mortgage loans that exceeded Defendant's actual costs for those services. According to Plaintiffs, those charges violated RESPA and the Missouri Merchandising Practices Act (MMPA), Mo.Rev.Stat. § 407.020 et seq.1
More specifically, Plaintiffs allege that they obtained a mortgage loan and, pursuant to a contract with Defendant, paid $50.00 for a credit report, $300.00 for an appraisal, and $25.00 for document delivery services in connection with the loan. Plaintiffs alleged that Defendant purchased the credit report from a third party vendor for less than $15.00, and that Defendant purchased the appraisal and document delivery services from a third party vendor at a cost significantly less than the amount they were charged. Plaintiffs contend that Defendant's overcharges constituted a "split of fees" or "unearned fees" in violation of Section 8(b).
Defendant, a Delaware corporation with its principal place of business in North Carolina, removed the case to federal court pursuant to 28 U.S.C. § 1441(b), on the grounds that the claims against it invoked RESPA. The district court denied Plaintiffs' motion to remand on January 22, 2002.
Defendant then filed a motion to dismiss counts I though III of the complaint for failure to state a claim.2 Relying on Echevarria v. Chicago Title & Trust Co., 256 F.3d 623 (7th Cir.2001) (Echevarria), Defendant argued that the plain language of Section 8(b), entitled "Prohibition against kickbacks and unearned fees," requires that one party must give and another party must receive an unearned portion, split, or percentage of a settlement service fee. Defendant argues that Plaintiffs failed to state a RESPA claim because they did not allege a third party kickback or fee split with respect to the overcharges. On March 29, 2002, the district court denied Defendant's motion to dismiss, citing a 2001 HUD Policy Statement which states that Section 8(b) proscribes all unearned portions or percentages of settlement fees as well as splits, meaning a single settlement service provider violates Section 8(b) whenever it receives an unearned fee. Slip op. at 11 (quoting HUD's 2001 Official Policy Statement, 66 Fed.Reg. 53,052, 53,058) ("HUD Policy Statement"). This interlocutory appeal followed.
The National Association of Consumer Advocates ("Consumer Advocates") and the Department of Justice ("DOJ") on behalf of HUD each filed an amicus brief in support of affirming the district court's decision. The American Bankers Association, joined by several other real estate settlement service businesses,3 filed an amicus brief arguing that the decision of the district court should be reversed.
We review the district court's statutory interpretation de novo. See, e.g., United States v. Milk, 281 F.3d 762, 766 (8th Cir.2002) (citing United States v. McIntosh, 236 F.3d 968, 972 (8th Cir.2001)).
We begin our inquiry into the intended meaning of the statute with the language of the statute itself. Milk, 281 F.3d at 766 (citing McIntosh, 236 F.3d at 972). "Where the language of a statute is `unambiguous, the statute should be enforced as written unless there is clear legislative intent to the contrary.'" Id. at 766 (quoting McIntosh, 236 F.3d at 972). If the intent of the statute is clear, the judicial inquiry ends. United States v. S.A., 129 F.3d 995, 998 (8th Cir.1997) (citing Citicasters v. McCaskill, 89 F.3d 1350, 1354-55 (8th Cir.1996)).
Section 8(b) of RESPA provides:
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.
Plaintiffs read the word "and" in the phrase "no person shall give and no person shall accept" to prohibit any person from giving or accepting an unearned fee. Under this interpretation, giving or accepting an unearned fee can constitute a violation of Section 8(b) because the statute does not require a showing that the person illegally shared a fee with a third party. Plaintiffs maintain that their reading is consistent with RESPA's remedial purpose as a consumer protection statute, enacted to provide consumers with "greater and more timely information on the nature of the costs of the [real estate] settlement process," and to limit the "unnecessarily high settlement charges caused by certain abusive practices." 12 U.S.C. § 2601.
We disagree with Plaintiffs' interpretation and hold that Section 8(b) is an anti-kickback provision that unambiguously requires at least two parties to share a settlement fee in order to violate the statute. Congress intended Section 8(b) Mercado v. Calumet Fed. Savings & Loan Ass'n, 763 F.2d 269, 270-71 (7th Cir.1985) (Mercado) (quoting S.Rep. No. 93-866, 93rd Cong., 2d Sess. (1974), reprinted in 1974 U.S.C.C.A.N. 6551). This reading of the statute is consistent with the decisions of both the Fourth and Seventh Circuits, which have held that the plain language of Section 8(b) requires plaintiffs to plead facts showing that the defendant illegally shared fees with a third party.4 See Boulware v. Crossland Mortgage Corp., 291 F.3d 261, 265 (4th Cir.2002) (Boulware) ( ); Echevarria, 256 F.3d at 626 ( ). We therefore hold that Section 8(b) prohibits only transactions in which the defendant shares a "portion, split, or percentage of any charge" with a third party. See Durr v. Intercounty Title Co., 14 F.3d 1183, 1187 (7th Cir.1994) (Durr) ( )(citing Mercado, 763 F.2d at 270). In this case, all that Plaintiffs allege is that Defendant charged Plaintiffs more for certain services than Defendant paid for them. Such an overcharge, standing alone, does not violate Section 8(b) of RESPA. See Boulware, 291 F.3d at 265 ( )(citing Durr, 14 F.3d at 1187).
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