Heimmermann v. First Union Mortg. Corp., 99-14066.

• Decision Date: 18 September 2002
• Docket Number: No. 99-14066.,99-14066.
• Citation: 305 F.3d 1257
• Parties: Daniel HEIMMERMANN, individually and on behalf of themselves and class described, Emily Heimmermann, individually and on behalf of themselves and a class described, Plaintiffs-Appellees, v. FIRST UNION MORTGAGE CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1257

305 F.3d 1257

Daniel HEIMMERMANN, individually and on behalf of themselves and class described, Emily Heimmermann, individually and on behalf of themselves and a class described, Plaintiffs-Appellees, v. FIRST UNION MORTGAGE CORPORATION, Defendant-Appellant.

No. 99-14066.

United States Court of Appeals, Eleventh Circuit.

September 18, 2002.

Harlan F. Winn, III, Burr & Forman, Birmingham, AL, Russell J. Pope, Pope & Hughes, Towson, MD, for Defendant-Appellant.

Earl Price Underwood, Jr., Anniston, AL, C. Neal Pope, Teresa Pike Tomlinson, Pope, McGlamry, Kilpatrick & Morrison, LLP, Columbus, GA, David R. Donaldson Tammy McClendon Stokes, Donaldson, Guin & Slate, L.L.C., Birmingham, AL, Richard H. Gill, Copeland, Franco, Screws & Gill, Montgomery, AL, for Plaintiffs-Appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before EDMONDSON, Chief Judge, and COX and GIBSON^*, Circuit Judges.

EDMONDSON, Chief Judge:

First Union Mortgage Corporation appeals the district court's grant of class certification to a class of plaintiffs seeking damages for First Union's alleged violation of Section 8 of the Real Estate Settlement Procedures Act (RESPA). See 12 U.S.C. § 2601, et. seq. We accepted jurisdiction over this appeal. See Fed. R.Civ.P. 23(f). We review a district court's certification of a class for abuse of discretion. See Sikes v. Teleline, Inc., 281 F.3d 1350, 1359 (11th Cir.2002). For a district court to apply the wrong legal standard is an abuse of discretion. See id. We vacate the grant of class certification.

BACKGROUND

This case is one of several dealing with RESPA's effect on the legality of the payment of Yield Spread Premiums (YSP) by mortgage lenders to mortgage brokers. For a detailed discussion of YSP's and their role in the real estate mortgage market, see Culpepper v. Inland Mortgage Corp., 132 F.3d 692, 694 (11th Cir.1998) (Culpepper I) and Culpepper v. Irwin Mortgage Corp., 253 F.3d 1324, 1326 (11th Cir.2001) (Culpepper III).¹ A YSP is a payment made by a lender to a broker in exchange for that broker's delivering a mortgage that is above the "par rate" being offered by the lender. Briefly stated, the payment is typically a certain percentage of the total amount of the loan; the exact percentage is determined by the extent to which the actual interest rate exceeds the par rate. These YSP's potentially violate Section 8(a) of RESPA, which prohibits the payment of kickback fees and referrals in association with mortgage lending.

In Culpepper III — argued the same day as this case — we concluded that class certification in a case alleging a violation of RESPA was appropriate where the payment of a YSP was based solely upon the amount by which the loan rate exceeded the par rate and where the payment of the YSP was not tied to specific services provided by the broker. Because whether this standard was satisfied could be determined on a class-wide basis, we concluded that the district court in Culpepper III did not err by granting class certification. See Culpepper III, 253 F.3d at 1332.

Shortly after our Culpepper III ruling, the Department of Housing and Urban Development issued a Statement of Policy (the 2001 SOP),² purportedly clarifying a Statement of Policy issued in 1999 (the 1999 SOP).³ Our ruling in Culpepper III had relied heavily on the 1999 SOP. According to First Union, the 2001 SOP is at odds with the outcome of Culpepper III and compels a different result in this case.

DISCUSSION

Before we address the substance of the 2001 SOP, we must determine its applicability to this case. Although the 2001 SOP raises some concerns about the retroactive application of agency interpretations, about the deference given to policy statements, and about the ability of an agency interpretation to overrule prior circuit precedent, we ultimately conclude that nothing prevents the application of the 2001 SOP to this case.

I. Retroactive Application of the 2001 SOP

The 2001 SOP was promulgated after the transactions that gave rise to this litigation and after the district court's ruling on the issue of class certification. But because we accept that both the 2001 SOP and the statement it interprets, the 1999 SOP, are clarifications of existing law⁴ and not new rules or regulations, no problem with the retroactive application of the statements exists. See Piamba Cortes v. American Airlines, Inc., 177 F.3d 1272, 1283 (11th Cir.1999) ("[C]oncerns about retroactive application are not implicated when an amendment that takes effect after the initiation of a lawsuit is deemed to clarify relevant law rather than effect a substantive change in the law"); Pope v. Shalala, 998 F.2d 473, 483 (7th Cir.1993), overruled on other grounds, Johnson v. Apfel, 189 F.3d 561 (7th Cir.1999) ("A rule simply clarifying an unsettled or confusing area of the law ... does not change the law, but restates what the law according to the agency is and has always been: `It is no more retroactive in its operation than is a judicial determination construing and applying a statute to a case in hand.'") (quoting Manhattan General Equip. Co. v. Commissioner, 297 U.S. 129, 56 S.Ct. 397, 400, 80 L.Ed. 528 (1936)); see also Farmers Telephone Co. v. FCC, 184 F.3d 1241, 1250 (10th Cir.1999); Orr v. Hawk, 156 F.3d 651, 654 (6th Cir.1998); Cowen v. Bank United of Texas, 70 F.3d 937, 943 (7th Cir.1995).

While not dispositive, an agency's determination that a new statement is a clarification of existing law, rather than an entirely new rule, is generally given much weight. See Pope, 998 F.2d at 483. We will defer to an agency's statement that a new rule is a clarification of the law, instead of a new rule altogether, unless "the prior interpretation ... is patently inconsistent with the later one." Id. Another significant indicator that a statement only clarifies existing law is when the law supposedly being clarified is ambiguous. See Piamba Cortes, 177 F.3d at 1283-84.

We accept that the 2001 SOP created no new rule, but instead only clarified the interpretation of RESPA found in the 1999 SOP. The 2001 SOP itself states that it is merely clarifying the 1999 SOP; and nowhere in the 2001 SOP does HUD claim to be changing the law. And, we do not consider the 2001 SOP to be "patently inconsistent" with RESPA or with the 1999 SOP. In Culpepper III we wrote that the 1999 SOP was "ambiguous" and subject to different interpretations. Culpepper III, 253 F.3d at 1327. Based upon these considerations, we conclude that the 2001 SOP is a clarification of existing law and that no retroactivity problems prevent its application to this case.

II. Chevron Deference

An additional preliminary question is what deference, if any, should be given to the 2001 SOP.

No deference is to be given to an agency interpretation that is at odds with the plain meaning of the statute being interpreted. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). But RESPA does not, by its plain language, speak to the standard for determining whether the payment of a YSP violates the Act. Section 8(a) of RESPA simply prohibits kickbacks and referral fees, see 12 U.S.C. § 2607; Section 8(c) allows payment "for services actually performed in the making of a loan." The question of how to determine when a YSP is an illegal kickback and when it is a legally permissible payment for services actually performed is not specifically addressed in RESPA. Our ruling in Culpepper III did not purport to rely squarely upon the plain language of Section 8 of RESPA, but rather upon an interpretation of RESPA's language and of the "ambiguous" 1999 SOP. See Culpepper III, 253 F.3d at 1329-1330. The plain language of RESPA does not prevent us from giving deference to the 2001 SOP.⁵

A question also exists about whether the 2001 SOP is the kind of agency statement to which the courts should give broad deference. In United States v. Mead Corp., 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), the Supreme Court wrote that "administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." Id. at 2171. RESPA contains an express delegation of congressional authority: the statute authorizes the Secretary of HUD "to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of this chapter." 12 U.S.C. § 2617(a) (emphasis added). HUD regulations identify a "statement of policy" as a document that embodies such a "rule, regulation, or interpretation" under RESPA's delegation of authority. See 24 C.F.R. § 3500.4(a)(1)(ii).⁶

Because the power to issue interpretations is expressly delegated in RESPA, the 2001 SOP carries the full force of law. As a result, we give deference to the 2001 SOP. The precedents are not to the contrary. In Mead and Christensen v. Harris County, 529 U.S. 576, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000), the Supreme Court concluded that certain kinds of agency pronouncements were not due broad Chevron deference. See United States v. Mead Corp., 121 S.Ct. at 2173-74 (concluding that Customs Service ruling letter was not entitled to Chevron deference); Christensen, 120 S.Ct. at 1662-63 (concluding that Department of Labor opinion letter was not entitled to Chevron deference). But, neither of the agency interpretations at issue in Mead and Christensen involved an agency acting pursuant to a statutory delegation of interpretive power. In this case, on the other hand, a congressional delegation of authority giving HUD's Statement of Policy the force of law does exist. And, the interpretation we...