Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-1_03-cv-01186/USCOURTS-arwd-1_03-cv-01186-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1331(a) Fed. Question: Real Property

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

EL DORADO DIVISION

FLORA MOSELEY SMITH PLAINTIFF

VS. Case No. 03-CV-1186

 

CHASE MANHATTAN MORTGAGE 

CORPORATION DEFENDANT

MEMORANDUM OPINION

This putative class-action lawsuit involves Plaintiff Flora Moseley Smith’s allegations

that Defendant Chase Manhattan Mortgage Corporation (“Chase”) breached her mortgage

agreement and violated certain provisions of the Real Estate Settlement Procedure Act, 12 U.S.C.

§ 2601, et seq. (RESPA) when it charged her a five-dollar ($5.00) fax fee in connection with the 

refinance of her home mortgage. Before the Court is Chase’s motion for summary judgment. 

(Doc. 34). Smith has filed a response. (Doc. 37). On January 30, 2006, the Court held a hearing

relative to the motion for summary judgment. Appearing on behalf of Smith and the putative

class was attorneys Eric Roberson and Donald Jones of Dallas, Texas. Appearing on behalf of

Chase was attorneys Danielle Szukala of Chicago, Illinois, and Matthew Shepherd of El Dorado

Arkansas. At the conclusion of the hearing the Court took the motion for summary judgment

under advisement and directed the parties to submit any supplemental briefs to the Court. The

parties have submitted their supplemental briefs. (Doc. 65)(Doc. 66). The Court finds this

motion ripe for consideration. 

After Chase filed its motion for summary judgment, Smith filed a motion for class

certification, under seal. (Doc. 43). By Order dated November 11, 2005, the Court agreed to

decide the motion for summary judgment first and then, if necessary, decide the issue of class

certification. (Doc. 59). 

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I. Background

The following facts are not disputed by Smith (or disputed and the dispute is noted) and

set the background for this lawsuit. Smith lived in a home located at 1600 Calion Road, in El

Dorado, Arkansas. On May 26, 1994, Smith entered into a Federal Housing Administration

(FHA) note and mortgage for this home with Source One Mortgage Services Corporation. 

Sometime after this loan was originated, Chase became the loan’s servicer. It is unclear whether

Chase also purchased the loan. In May 2003, Smith sought to refinance her loan through First

Financial Bank, in El Dorado. Smith spoke with Julie Schumacher, a loan officer at First

Financial Bank, regarding the loan’s refinance. In turn, First Financial Bank contacted Joseph

Nixon at Union Abstract Company to prepare the title work with the loan’s refinance and

conduct the loan’s closing. In connection with the loan closing, Nixon gathered all information

and paperwork necessary to complete the loan closing, prepared a Housing and Urban

Development (HUD)-1 Settlement Statement, obtained the payoff letters on any existing liens,

and prepared the necessary title work.

During the loan closing, Nixon contacted Chase by telephone to request Smith’s payoff

statement. It is unclear and disputed whether Nixon spoke with a live agent or utilized a

computerized-voice interface system to request the payoff statement. In order to obtain the

payoff statement, Nixon needed Smith’s telephone and social security numbers. During this

telephone call, Nixon requested that Chase send him the payoff statement by facsimile. Chase

then faxed Nixon Smith’s payoff statement. Chase also sent the payoff statement to Smith at her

residence by U.S. Mail. 

It is Nixon’s practice to request that lenders and loan servicer send payoff statements by

facsimile, because he wants to obtain the payoff statements on an expedited basis. Nixon was

aware that he was incurring a fee on Smith’s behalf when he requested the payoff statement to be

sent by facsimile, and Nixon was aware that Chase charged a fax fee. 

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The payoff statement provides:

TOTAL AMOUNT SECURED BY THE MORTGAGE 6/01/2003 $56,787.64

FACSIMILE FEE $ 5.00

TOTAL AMOUNT OWED INCLUDING SERVICE FEES $56,792.64

Neither Smith nor Nixon disputed or protested the five-dollar ($5.00) facsimile fee during or

after the loan closing. Nixon used the payoff statement to prepare the HUD-1 Settlement

Statement and submitted it to First Financial Bank for approval. Nixon placed the total amount

owed including service fees (the $56,792.64) on line 104 of the HUD-1 Settlement Statement. 

At Smith’s closing, Nixon went over each document that Smith was to sign with her, including

the HUD-1 Settlement Statement. During the loan’s refinance, Nixon and Smith also spoke two

or three times on the telephone. 

Chase claims that the release of the mortgage is not contingent upon the payment of a

facsimile fee and it will release a mortgage when it does not receive enough money to pay the

service fees listed on the payoff statement. Smith disputes this assertion with Nixon’s deposition

testimony that he didn’t believe the loan would be released unless the facsimile fee was paid. 

Chase has moved for summary judgment in its favor on the entirety of Smith’s claims. 

Guided by the following standard of review, the Court will consider each of Chase’s contentions

in turn.

II. Discussion

The standard of review for a motion for summary judgment is familiar and established. 

The Federal Rules of Civil Procedure provide that when a party moves for summary judgment:

The judgment sought shall be rendered forthwith if the pleadings, depositions,

answers to interrogatories, and admissions on file show that there is no

genuine issue as to material fact and that the moving party is entitled to 

judgment as a matter of law. 

Fed. R. Civ. P. 56(c); Krenik v. County of Le Sueur, 47 F.3d 953 (8th Cir. 1995). 

The Supreme Court has issued the following guidelines to help determine whether this

standard has been satisfied:

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The inquiry performed is the threshold inquiry of determining whether there is

a need for trial . . . whether, in other words, there are genuine factual 

issues that properly can be resolved only by a finder of fact because they may

reasonably be resolved in favor of either party.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). See also Agristor Leasing v. Farrow,

826 F.2d 372 (8th Cir. 1987); Niagra of Wisconsin Paper Corp. v. Paper Indus. UnionManagement Pension Fund, 800 F.2d 742, 746 (8th Cir. 1986). 

The burden of proof is on the moving party to set forth the basis of its motion. Donovan

v. Harrah’s Maryland Heights Corp., 289 F.3d 527, 529 (8th Cir. 2002), citing Celotex Corp v.

Catrett, 477 U.S. 317, 323 (1986). The Court must view all facts and inferences in the light most

favorable to the nonmoving party. Id., citing Matsushia Elec. Indus. Co. v. Zenith Radio, 475

U.S. 574, 587 (1986). The Eight Circuit Court of Appeals, in Scheer Const. Co. v. Greater

Huron Development Corp., 700 F.2d 463, 465 (8th Cir. 1983), quoting Burst v. Adolph Coors

Co., 650 F.2d 930, 932 (8th Cir. 1981), in a case involving the entry of summary judgment,

stated:

[w]hen a motion for summary judgment is made and supported by affidavits, the

party opposing the motion may not rest on the allegations in his pleadings but

must resist the motion by setting forth specific facts that raise a genuine issue

of fact for trial. 

 Where the party moving for summary judgment does not bear the burden of proof at trial, 

the party must demonstrate that there is an absence of evidence to support the non-moving party’s

case. Buck v. F.D.I.C., 75 F.3d 1285, 1289 (8th Cir. 1996), citing and quoting Celotex Corp. v.

Catrett, 477 U.S. 317, 325 (1986). If the moving party satisfies this requirement, the burden shifts

to the nonmovant who must set forth specific facts showing that there is a genuine issue for trial. 

Id., citing and quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

To establish a genuine issue of fact sufficient to warrant trial, the nonmoving party “must

do more than simply show that there is some metaphysical doubt as to the material facts.”

Matsushita Elec. Indus. Co., 475 U.S. at 586. Instead, the nonmoving party bears the burden of

setting forth specific facts showing there is a genuine issue for trial. Anderson, 477 U.S. at 248. 

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Guided by this standard of review, the Court considers Chase’s summary judgment arguments.

A. The Voluntary Payment Doctrine

Chase argues because Nixon, a person who Chase argues was Smith’s agent, knowingly

incurred the five-dollar ($5.00) fax fee when he requested Chase send a payoff statement for

Smith’s account to him by facsimile on an expedited basis, the voluntary payment doctrine bars

all of Smith’s claims. First, we must consider whether Nixon was Smith’s agent and, if so,

whether he had the authority to incur the fax fee. 

Under Arkansas law, an agency relationship is created as a result of the conduct of two

parties manifesting that one of them is willing for the other to act for him subject to his control,

and that the other consents to so act. Evans v. White, 682 S.W.2d 733, 734 (Ark. 1985). A

delegation of authority pursuant to an agency relationship carries with it the power to do all those

things that are necessary, proper, usual and reasonable to be done in order to effectuate the

purpose for which it was created. Foundation Telecommunications, Inc. v. Moe Studio, Inc., 16

S.W.3d 531, 536 (Ark. 2000). No genuine issue remains as to whether Nixon was Smith’s

closing agent and whether or not he had the authority to incur the fee in order to effectuate the

closing of Smith’s refinance. Further, the Court is unsure that Smith could recover on any of her

claims if we were to hold otherwise.

Because Nixon was Smith’s agent and because he incurred the fee within his agency

power, the question the Court must address is whether or not the voluntary payment doctrine bars

Smith’s state-law breach of contract claims. The Court is convinced that it does and no

reasonable jury could find otherwise.

Under Arkansas law, when a person knowingly and voluntarily makes a payment of

money, that person cannot later recover the payment even if the demand for payment was not

legally enforceable. Vandiver v. Banks, 962 S.W.2d 349, 352-353 (Ark. 1998). The undisputed

facts show that Nixon was aware of the fax fee, aware of the amount of the fax fee, paid it, and

did not protest it. Smith argues that genuine issues exist as to whether or not the defense of

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duress to the voluntary payment doctrine applies. Nixon testified in his deposition that he

believed the loan would not have been released if he had not paid the fax fee, but it is unclear

whether this is based on his personal knowledge or speculation. Further, the undisputed facts

demonstrate that the payoff statement could have been mailed to Nixon for free, and the payoff

statement was mailed to Smith, at no charge to her. With respect to Smith’s defense of duress,

the Court finds the reasoning of the Alabama Supreme Court in Stone v. Mellon Mortgage, 771

So.2d 451 (Ala. 2002) persuasive. Stone, like this lawsuit, involved a challenge to a facsimile

fee charged in connection with the provision of a payoff statement during a mortgage refinancing. 

The Court found that the voluntary payment doctrine defeated the plaintiffs’ claims for monies

had and received and unjust enrichment. The Court rejected the plaintiffs’ defenses to the

voluntary payment doctrine of duress and mistake of fact. The Court held:

Although evidence of duress or mistake can limit the application ofthe voluntarypayment doctrine, we find no such evidence in this case. First [the closing agent]

requested the faxed information a month before the closing. For all that appears,

the [plaintiffs] had a reasonable alternative; they could have gotten the payoff

statement by mail, free of charge. But even if the urgency of the situation had

required the use of the facsimile transmission rather than the regular mail

service–and the record does not suggest that it did–the [plaintiffs] failure to

challenge the payment until nearly three years after the duress had been lifted,

destroys any reasonable factual basis for a finding of duress.

Stone , 771 So.2d at 457. Because the voluntary payment doctrine bars Smith’s breach of

contract claims, the Court will not consider their underlying merit. The Court will assume for

purposes of this opinion that the voluntary payment doctrine has no application to Smith’s

federal law claims, and turn to these allegations.

B. RESPA, 12 U.S.C. § 2605.

RESPA, 12 U.S.C. § 2605(e), requires a loan servicer (like Chase) to provide certain

information to a lender upon a “qualified written request.” In this case, Smith’s agent Nixon

requested a payoff statement from Chase. Chase sent Nixon the payoff statement by facsimile

and charged five dollars ($5.00). Although this section does not explicitly prohibit charging fees

for providing this information, Smith argues that Chase is prohibited from charging for

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something that it is legally required to provide. 

The Court will assume that Nixon’s telephone request for the payoff statement is a

qualified written request. Nevertheless, Chase is entitled to summary judgment for two reasons. 

First, the fax fee could only be reasonably construed as just that–a fax fee. Nixon could have

received the same payoff information for free on a non-expedited basis though the U.S. Mail. 

Second, nothing in § 2605(e) prohibits Chase from charging a fee for providing a payoff

statement. The second ground for this opinion is similar to this Court’s conclusion in Eddie and

Susan Watt v. GMAC Mortgage Corp., where we held:

RESPA does not prohibit the imposing of fees by a lender for information in

response to a request under 12 U.S.C. § 2605(e). In their complaint, the Watts

allege just that–that GMAC charged them for a payoff statement in response

to their qualified written request under § 2605(e). Therefore, the fees charged

by GMAC were not in violation of RESPA. These facts in the complaint

cannot, as a matter of law, state a claim for relief under RESPA. Therefore,

GMAC’s Motion to dismiss as to the Watts’ § 2605(e) claims should be

granted. 

Eddie and Susan Watt v. GMAC Mortgage Corp., No. 03-1179, slip. op. (W.D.

Ark. August 1, 2005).

Chase is entitled to summary judgment on Smith’s § 2605(e) RESPA claim.

C. RESPA 12 U.S.C. § 2610.

Smith’s final claim is brought pursuant to 12 U.S.C. § 2610 of RESPA. This section

explicitly prohibits the charging of fees (unlike 12 U.S.C. § 2605(e)) by a loan servicer in

connection with the preparation of a HUD-1 Settlement Statement. The undisputed facts in this

lawsuit show that Nixon used the payoff statement to prepare the HUD-1 Settlement Statement:

Nixon placed the total amount owed including service fees (the $56,792.64) on line 104 of the

HUD-1 Settlement Statement. Chase’s only part in preparing the settlement statement was

sending Nixon the payoff statement. The Court finds it a logical stretch to see how Chase

violated this section by simply charging a fee for providing information (on an expedited basis by

facsimile) that another party used to prepare a HUD-1 Settlement. Chase is entitled to summary

judgment on Smith’s RESPA claims.

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III. Conclusion

For the foregoing reasons, the Court finds the Motion for Summary Judgment should be

and hereby is granted, and Smith’s lawsuit is hereby dismissed with prejudice. A Judgment of

even date, consistent with this Memorandum Opinion will issue. All other pending motions are

hereby denied as moot.

IT IS SO ORDERED this 16th day of February, 2006.

 /s/ Harry F. Barnes 

Hon. Harry F. Barnes

U.S. District Judge

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