The opinion of the court was delivered by: RICHARD ARCARA, District Judge
This case was referred to Magistrate Judge Hugh B. Scott pursuant to
28 U.S.C. § 636(b)(1). On May 20, 2002, the defendant filed a motion
to dismiss the complaint. On March 21, 2003, Magistrate Judge Scott
issued a Report and Recommendation ("Report") recommending that
defendant's motion to dismiss be denied. The defendant filed timely
objections to the Report, and the plaintiff filed a response thereto.
Oral argument on the objections was held on January 22, 2004.
Plaintiff filed this action on March 20, 2002, on behalf of himself and
others similarly situated, alleging that the defendant, First Union
National Bank ("Bank"), violated the Real Estate Settlement Practices Act of 1974
("RESPA"), 12 U.S.C. § 2601 et seq. Specifically, the
plaintiff alleges that he entered into a mortgage with the Bank and in
connection with that mortgage, the Bank charged him a courier fee of
$15.00. The courier fee was paid by the plaintiff to a settlement agent,
Independent Title Agency, LLC ("ITA"), who forwarded that money to the
Bank. The $15.00 charge was disclosed on the HUD-1 settlement statement.
The plaintiff alleges that the Bank employed an independent courier
service to perform the delivery, and that the courier service actually
charged the Bank less than $15.00 to perform that service. The plaintiff
alleges that the Bank violated RESPA when it overcharged him for the
courier service and retained the balance of the overcharge for itself.
The Bank moved to dismiss arguing that, even if all of the allegations
in the complaint are assumed to be true,*fn1 the plaintiff has failed to
state a cause of action under RESPA. DISCUSSION
Pursuant to 28 U.S.C. § 636(b)(1), this Court must make a
de novo determination of those portions of the Report
to which objections have been made. Upon de novo review, and
after reviewing the submissions and hearing argument from the parties,
the Court finds that defendant's motion to dismiss should be granted.
Accordingly, the Court declines to adopt the Magistrate Judge's Report.
A motion to dismiss under Rule 12(b)(6) should be granted only if it
appears "beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief." Lyons v.
Legal Aid Society, 68 F.3d 1512, 1514 (2d Cir. 1995) (quoting
Conlev v. Gibson, 355 U.S. 41, 45-46 (1957)). In evaluating
such a motion, this Court must "accept as true all the factual
allegations in the complaint," Newman & Schwarz v. Asplundh Tree
Expert Co., 102 F.3d 660, 662 (2d Cir. 1996) (citations omitted),
and must "view the complaint in the light most favorable to the
non-moving party." Id. The Court must also "limit itself to
facts stated in the complaint . . ." Id.
B. Plaintiff's RESPA Claim
Congress enacted RESPA to protect home buyers from "unnecessarily high
settlement charges caused by certain abusive practices." 12 U.S.C. § 2601(a). Among other things, Congress intended to
eliminate "kickbacks or referral fees that tend to increase unnecessarily
the costs of certain settlement services." 12 U.S.C. § 2601(b)(2).
The statute applies to "federally related" mortgage loans, such as the
mortgage involved in this case.
Section 8(b) of RESPA, 12 U.S.C. § 2607(b), prohibits "fee
splitting" in connection with mortgage loans. It 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.
12 U.S.C. § 2607(b). Plaintiff alleges that the Bank violated
§ 8(b) when it charged him $15.00 for courier fees, which was more
than the actual cost of the courier service to the Bank. By charging more
than the actual cost of the courier service, plaintiff claims that the
Bank accepted a portion of a charge other than for services that it
actually performed, in violation of RESPA.
The Second Circuit has not yet addressed the issue of whether a simple
overcharge by a mortgagor, as is alleged in the complaint, violates §
8(b) of RESPA. However, the Fourth, Seventh and Eighth Circuits have
addressed that issue and have concluded that it does not. See
Haug v. Bank of America, 317 F.3d 832 (8th Cir. 2003);
Boulware v. Crossland Mortgage Corp., 291 F.3d 261 (4th Cir.
2002); Echevarria v. Chicago Title & Trust Co.,
256 F.3d 623 (7th Cir. 2001): Durr v. Intercounty Title Co., of III 14 F.3d 1183
(7th Cir. 1994). cert. denied. 513 U.S. 811 (1994).
In Durr, the Seventh Circuit held that the defendant title
company did not violate § 8(b) when it overcharged the plaintiff
$8.00 for mortgage and deed recording services. The court reasoned that
because the title company had simply kept the $8.00 overcharge for
itself, and had not split it with any third party, there was no violation
of RESPA because "RESPA requires at least two parties to ...