Keen v. Helson

Decision Date18 July 2019
Docket NumberNo. 18-6035,18-6035
Parties Tara L. KEEN, Plaintiff/Counter-Defendant-Appellant, v. Robert C. HELSON, Defendant/Counter-Plaintiff-Appellee, Ocwen Loan Servicing, LLC, Defendant-Appellee, Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A., as successor to J.P. Morgan Chase Bank, N.A., as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass Through Certificates Series 2005-RP3, Third-Party Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

ON BRIEF: Kerry Dietz, David Tarpley, David Kozlowski, LEGAL AID SOCIETY OF MIDDLE TENNESSEE & THE CUMBERLANDS, Nashville, Tennessee, for Appellant. Edmund S. Sauer, Brian R. Epling, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville, Tennessee, for Appellee Ocwen Loan Servicing.

Before: GUY, THAPAR, and NALBANDIAN, Circuit Judges.

THAPAR, Circuit Judge.

To sue someone, you must have a cause of action. And you only have a cause of action under a federal statute if the statute's text provides you one. The Real Estate Settlement Procedures Act (RESPA) creates a cause of action but says that only "borrower[s]" can use it. 12 U.S.C. § 2605(f). A "borrower" is someone who is personally obligated on a loan—i.e., someone who is actually borrowing money. Tara Keen does not fit that description, so she does not have a cause of action under RESPA. Instead, she will have to vindicate her rights in state court under state law.


This case turns on the difference between loans and mortgages. So we need to start by explaining what they are.

When you buy a house, you usually need a loan and a mortgage. The loan is a contract between you and the lender. The lender gives you money now so you can afford the house, and, in return, you agree that you will pay back that amount (plus interest) on a set schedule. Obduskey v. McCarthy & Holthus LLP , ––– U.S. ––––, 139 S. Ct. 1029, 1033–34, 203 L.Ed.2d 390 (2019). If you fail to pay on time, the lender can sue you to get back what you owe. But litigation can be time-consuming and expensive. So most lenders want extra assurance that you will pay the loan back. That is where the mortgage comes in. Under a mortgage, you give the lender a legal interest in the house such that, if you do not pay back the loan on schedule, the lender can foreclose. Id. ; see also Restatement (Third) of Property: Mortgages § 1.1 (Am. Law Inst. 1997). By foreclosing, the lender can take possession of your house—either for themselves or to sell it to someone else in order to satisfy the unpaid debt you owe. Black's Law Dictionary (11th ed. 2019) (defining "foreclosure").

Put simply, a loan obligates you to pay the lender back, while a mortgage gives the lender the ability to take your house if you fail to meet that obligation. Thus, although most people get both a loan and a mortgage when they buy a house, the two are separate agreements setting forth different rights and obligations.

Tara and Nathan Keen, like most of us, got a loan and took out a mortgage when they bought their house. Both of them signed the mortgage. But only Nathan signed the loan.1 So only Nathan got money from the lender, and only Nathan promised to pay it back. That is not a minor technicality. Rather, this fact had legal and practical impact. For example, if Nathan defaulted on the loan, and the foreclosure sale of the house was not enough to satisfy the debt, then the lender could only go after Nathan 's personal assets, not Keen's. Nathan was the one on the hook. Indeed, the mortgage made this abundantly clear. It said that anyone "who co-signs this [mortgage] but does not execute the [loan]"—i.e., Keen—"is not personally obligated to pay the sums secured by this [mortgage]." R. 34-2, Pg. ID 455.

The pair later divorced, and Nathan gave Keen full title to the house. He died shortly afterwards. Although Keen was not legally obligated to make payments on the loan after Nathan died, she made payments anyway so she could keep the house. But she later ran into financial trouble and fell behind on those payments. Hoping to prevent foreclosure, Keen contacted the loan servicer, Ocwen Loan Servicing, LLC. She had a number of discussions with Ocwen representatives and submitted several applications for different forms of relief. Ultimately, those attempts failed. Ocwen proceeded with the foreclosure, and Keen's house was sold to a third-party buyer—Robert Helson.

Soon after foreclosure, Keen sued both Ocwen and Helson under federal and state law. Her only claims relevant to this appeal alleged that Ocwen violated the Real Estate Settlement Procedures Act (RESPA). See 12 U.S.C. § 2601 et seq . RESPA requires that loan servicers, like Ocwen, take certain steps when a borrower asks for options to avoid foreclosure. Id. § 2605 ; see also 12 C.F.R. §§ 1024.31, 1024.41. Keen alleged that Ocwen failed to properly review her requests before it foreclosed on her house.

The district court dismissed Keen's RESPA claims. RESPA's cause of action extends only to "borrower[s]." 12 U.S.C. § 2605(f) ("Whoever fails to comply with any provision of this section shall be liable to the borrower ...."). And the district court concluded that Keen was not a "borrower" because she was never personally obligated under the loan agreement. Keen appealed, and we review de novo. Sistrunk v. City of Strongsville , 99 F.3d 194, 197 (6th Cir. 1996).


The only issue on appeal is whether Keen has a cause of action under RESPA. Although courts have called this question "statutory standing" or "prudential standing," those phrases are misnomers. Lexmark Int'l, Inc. v. Static Control Components, Inc. , 572 U.S. 118, 125–28 & n.4, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). To sue in federal court, a plaintiff must have standing. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (citing U.S. Const. art. III, § 2). If the plaintiff lacks standing, then the court lacks jurisdiction. In contrast, the absence of a cause of action is a merits issue that does not implicate the court's constitutional power to decide the case. Lexmark , 572 U.S. at 128 n.4, 134 S.Ct. 1377 ; see also In re Capital Contracting Co. , 924 F.3d 890, 893, 895 (6th Cir. 2019). Determining whether the plaintiff has a cause of action is a "straightforward question of statutory interpretation." Lexmark , 572 U.S. at 129, 134 S.Ct. 1377. We ask "whether [the plaintiff] falls within the class of plaintiffs whom Congress has authorized to sue," and we answer that question using the "traditional tools" of statutory interpretation. Id. at 127–28, 134 S.Ct. 1377.

RESPA only authorizes "borrower[s]" to sue. 12 U.S.C. § 2605(f). And we cannot extend RESPA's cause of action any broader than Congress did. Causes of action "to enforce federal law must be created by Congress[,]" not courts, "no matter how desirable th[ey] might be as a policy matter, or how compatible with the statute." Alexander v. Sandoval , 532 U.S. 275, 286–87, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001) ; see also Lexmark , 572 U.S. at 128, 134 S.Ct. 1377. So we start with the text and ask whether Keen is a "borrower." If Keen is not a "borrower," then she does not have a cause of action.


RESPA does not define "borrower," so we give the term its ordinary meaning. See Taniguchi v. Kan Pac. Saipan, Ltd. , 566 U.S. 560, 566, 132 S.Ct. 1997, 182 L.Ed.2d 903 (2012). And the distinction between loans and mortgages is key to interpreting that ordinary meaning. To briefly recap: under a loan, the lender gives you money now, and you promise to pay it back later. A mortgage is a separate document that provides extra assurance to the lender that you will pay them back—if you do not, the lender can take your house. Intuitively, then, a "borrower" is someone who has borrowed money from a lender and promised to pay it back. That means only people who are personally obligated under a loan—those who signed or assumed it—can be "borrower[s]" under RESPA. Conversely, signing a mortgage , or owning a home subject to one, does not make you a "borrower." As shown below, dictionaries and the statutory context both bear out this intuitive meaning.

When interpreting the words of a statute, contemporaneous dictionaries are the best place to start. Here, that means dictionaries from around 1974, when Congress originally enacted RESPA and used the term "borrower," and 1990, when Congress enacted § 2605 and continued to use the term. Pub. L. No. 93-533, 88 Stat. 1724, 1726 (1974); Cranston-Gonzalez National Affordable Housing Act, Pub. L. No. 101-625, 104 Stat. 4079, 4409 (1990). These dictionaries all show that a "borrower" is someone personally obligated under a loan. Indeed, the American Heritage definition of "borrow" specifically tied the term to loans: "[t]o obtain or receive (something) on loan with the promise or understanding of returning it or its equivalent." American Heritage Dictionary of the English Language 220 (3d ed. 1992) (emphasis added). And in a dictionary published in 1971, Merriam-Webster defined the intransitive form of "borrow" as "to receive, appropriate, or derive something (as by way of a loan) from another." Webster's Third New International Dictionary 256 (3d ed. 1971). Other dictionaries do not use the word "loan" but convey the same idea. In a 1977 volume, Merriam-Webster defined "borrow" as "to receive with the implied or expressed intention of returning the same or an equivalent." Merriam Webster's New Collegiate Dictionary 129 (1st ed. 1977). In a later edition published in 1994, it restated that definition and included the alternative "to borrow (money) with the intention of returning the same plus interest." Merriam Webster's Collegiate Dictionary 133 (10th ed. 1994); see also Webster's New World Dictionary of American English 162 (3d ed. 1988) (defining "borrow" as "to take or receive (something) with the understanding that one will return it or an equivalent"); ...

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