Gardner v. First American Title Insurance

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 01-2071
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Mark Gardner; Danielle Baker, and all *
others similarly situated, *
*
Plaintiffs - Appellants, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
First American Title Insurance *
Company; Universal Title Company; *
Universal Partnerships, *
*
Defendants - Appellees. *
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Submitted: February 11, 2002
Filed: June 21, 2002
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Before McMILLIAN, FAGG, and LOKEN, Circuit Judges.
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LOKEN, Circuit Judge.
The Real Estate Settlement Procedures Act (RESPA) prohibits awarding fees
or kickbacks for the referral of “a real estate settlement service involving a federally
related mortgage loan.” 12 U.S.C. § 2607(a). Persons violating this prohibition are
“liable to the person or persons charged for the settlement service . . . in an amount
equal to three times the amount of any charge paid for such settlement service.”
§ 2607(d)(2). In this putative class action, named plaintiffs Mark Gardner and
Danielle Baker allege that defendants violated RESPA by having sham limited
partnerships pay fees to real estate agents for referring title insurance business to the
partnerships, which in turn passed the business on to the defendant title insurers.
Prior to class certification, the district court granted defendants’ motion to
dismiss the RESPA claims without prejudice. The court concluded that it lacked
subject matter jurisdiction over the RESPA claims because plaintiffs failed to allege
that their mortgage loans were federally related and therefore “failed to allege that
they have standing to bring this action under RESPA.” Although the dismissal was
without prejudice, plaintiffs appealed because the dismissal may have statute of
limitations implications. We review the dismissal of a complaint de novo. See
Springdale Educ. Assoc. v. Springdale Sch. Dist., 133 F.3d 649, 651 (8th Cir. 1998)
(standard of review). Concluding that the complaint adequately alleged plaintiffs’
standing and stated RESPA claims, we reverse.
On appeal, plaintiffs first argue that a complaint need not allege that the
plaintiff was involved in a federally related mortgage loan in order to state a claim
under RESPA. We disagree. As the district court recognized, standing is an
important constitutional and prudential limitation on the Article III jurisdiction of the
federal courts. “A federal court’s jurisdiction . . . can be invoked only when the
plaintiff himself has suffered some threatened or actual injury resulting from the
putatively illegal action.” Warth v. Seldin, 422 U.S. 490, 499 (1975). Rule 8(a)(1)
of the Federal Rules of Civil Procedure provides that a pleading setting forth a claim
for relief must include “a short and plain statement of the grounds upon which the
court’s jurisdiction depends.” Therefore, “[i]t is the responsibility of the complainant
clearly to allege facts demonstrating that he is a proper party to invoke judicial
resolution of the dispute and the exercise of the court’s remedial powers.” Warth,
422 U.S. at 518. In ruling on a motion to dismiss for lack of standing, “both the trial
and reviewing courts must accept as true all material allegations of the complaint, and
must construe the complaint in favor of the complaining party.” Id. at 501.
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Here, plaintiffs’ complaint expressly alleged federal question jurisdiction based
upon claims under RESPA. However, the lengthy allegations describing plaintiffs’
mortgage loan transactions failed to allege that plaintiffs received federally related
mortgage loans. We agree with the district court that these introductory paragraphs
of the complaint, where one would expect to find standing properly alleged, are
inadequate to the task. But buried on page 21 of plaintiffs’ prolix complaint are the
following allegations:
80. Defendants have violated section 8 of RESPA, 12 U.S.C. 2607(a)
and (b) et seq., by paying, receiving, and/or exchanging prohibited
payments and things of value on loan transactions as well as paying,
receiving or exchanging unearned fees, things of value, portions, splits,
or percentages of payments made for the rendering of a settlement
service in connection with a transaction involving a federally related
mortgage loan other than for services actually performed.
* * * * *
82. As described above, such violations occurred in relation to
Plaintiffs’ loan settlement transactions.
(Emphasis added). Although paragraph 82 is hardly a model of clarity, we agree with
plaintiffs that the logical antecedent for the term “such violations” in that paragraph
are the violations described in paragraph 80, that is, transactions “involving a
federally related mortgage loan.” Thus, while plaintiffs did not expressly include
their loans in the class of violations alleged in paragraph 80, they did allege in
paragraph 82 that their loans fell within the class defined in paragraph 80. In our
view, that is a sufficient allegation of RESPA standing.
Defendants argue that plaintiffs failed to plead “facts showing that they had
obtained federally related mortgage loans” because the “such violations” allegations
in paragraph 82 “are bald legal conclusions.” But Rule 8(a) did away with the
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necessity of detailed fact pleading. Though the standing component of jurisdiction
is not satisfied merely by citing the federal statute defendant has allegedly violated,
Rule 8(a)(1) is satisfied if the complaint “say[s] enough about jurisdiction to create
some reasonable likelihood that the court is not about to hear a case that it is not
supposed to have the power to hear.” Hammes v. AAMCO Transmissions, Inc., 33
F.3d 774, 778 (7th Cir. 1994). Read together and construed in favor of plaintiffs,
paragraphs 80 and 82 alleged, however imprecisely, that defendants violated RESPA
in connection with plaintiffs’ federally related mortgage loans. When combined with
the earlier paragraphs describing plaintiffs’ mortgage loan transactions, the
allegations of standing are not “merely conclusionary statements without factual
support.” Stanturf v. Sipes, 335 F.2d 224, 230 (8th Cir. 1964). Thus, the complaint
satisfied Rule 8(a)(1)’s requirement of “a short and plain statement of the grounds
upon which the court’s jurisdiction depends.”
Rule 8(a)(2) also requires “a short and plain statement of the claim showing
that the pleader is entitled to relief.” To comply with this requirement, a claimant
need not “set out in detail the facts upon which he bases his claims,” but must “give
the defendant fair notice of what the plaintiff’s claim is and the grounds upon which
it rests.” Swierkiewicz v. Sorema N.A., 122 S.Ct. 992, 998 (2002), quoting Conley
v. Gibson, 355 U.S. 41, 47 (1957). As defendants concede that the lengthy complaint
gave them fair notice of plaintiffs’ RESPA claims, the complaint satisfied Rule 8(a)
and should not have been dismissed. The judgment of the district court is reversed
and the case is remanded for further proceedings not inconsistent with this opinion.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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