United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 10-3179

___________

Grant A. Gomez and Lanie L. Gomez, *

on behalf of themselves and all *

others similarly situated, *

*

Appellants, *

* Appeal from the United States

 v. * District Court for the 

* District of Minnesota.

Wells Fargo Bank, N.A. and *

Valuation Information Technologies, *

LLC, doing business as Rels Valuation, *

* 

Appellees. *

___________

Submitted: October 20, 2011

Filed: April 12, 2012

___________

Before RILEY, Chief Judge, SHEPHERD, Circuit Judge, and WEBBER, District 1

Judge. 

___________

RILEY, Chief Judge.

Grant A. Gomez and Lanie L. Gomez (the Gomezes) sought to establish a

nationwide class of thousands of borrowers who allegedly paid inflated appraisal fees

in connection with real estate transactionsfinanced by Wells Fargo Bank, N.A. (Wells

The Honorable E. Richard Webber, United States District Judge for the

1

Eastern District of Missouri, sitting by designation. 
Fargo). The Gomezes appeal the district court’s dismissal of their claims contending 2

the appraisal practices of Wells Fargo and Valuation Information Technology, LLC

d/b/a Rels Valuation (Rels, and collectively, appellees) unjustly enriched Rels and

violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 

§ 1961 etseq.; the Real Estate Settlement Procedures Act of 1974 (RESPA), 12 U.S.C.

§ 2601 et seq.; California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code

§ 17200 etseq.; and Arizona’s anti-racketeering statute, Ariz. Rev. Stat. § 13-2314.04

(AZRAC). We affirm.

I. BACKGROUND

A. Facts3

The Gomezes are a married couple from Scottsdale, Arizona who mortgaged

and refinanced their home through Wells Fargo. Wells Fargo is a national banking

association that provides mortgages through Wells Fargo Home Mortgage. Rels is an

Iowa limited liability company headquartered in Minnesota. Rels, which arranges

real-property appraisals, is a joint venture of Wells Fargo Foothill (WFF), an affiliate

of Wells Fargo, and First American Real Estate Solutions (First American), a

subsidiary of First American Corporation. WFF owns 49.9% of Rels, and First

American owns 50.1%.

In March 2006, the Gomezes purchased a home in Scottsdale, Arizona with a

loan from Wells Fargo and executed a mortgage on the property in Wells Fargo’s

favor. On March 2, 2006, the Gomezes signed a HUD-1 settlement statement

4

The Honorable John R. Tunheim, United States DistrictJudge for the District 2

of Minnesota.

“We recite the facts in the light most favorable to [the Gomezes].” Malone v. 3

Ameren UE, 646 F.3d 512, 514 (8th Cir. 2011).

The United States Department of Housing and Urban Development (HUD) 4

prescribes form HUD-1 to set forth the settlement charges for a residential real estate

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disclosing the Gomezes would incur an appraisal fee of $375, to be paid to Rels as

Wells Fargo directed. 

On March 1, 2007, the Gomezes refinanced the Scottsdale property through

Wells Fargo and executed another mortgage. In connection with that refinancing,

Wells Fargo sent the Gomezes a HUD-1 Good Faith Estimate disclosing Wells Fargo

had a business relationship with Rels and estimating the appraisal fee would be

between $50 and $650. On March 5, 2007, the Gomezessigned the HUD-1 settlement

statement for the refinancing, which indicated the Gomezes would pay Rels an

appraisal fee of $495. 

TheGomezes maintain the settlement statementsthey received were misleading

because they did not disclose Rels would not perform the actual appraisal and that the

actual cost of the appraisal would be much less than the amount charged. The

Gomezes allege Rels paid the actual appraisers no more than $200 and “skimmed the

difference” at closing.

In what they describe as an “Inflated Appraisal Fee Scheme” between Wells

Fargo and Rels, the Gomezes allege “Wells Fargo required [the Gomezes] and [c]lass

members to use Rels Valuation, both to reap the significant profits derived from the

appraisals on Wells Fargo loans and to control the appraisal process and guarantee that

Wells Fargo could close whatever loans it wanted to, irrespective of the actual market

values of the properties on which it was lending.” The Gomezes describe the scheme

as follows. 

Wells Fargo sends a good-faith estimate to a prospective borrower, disclosing

Wells Fargo will require an appraisal from an approved appraiser. Wells Fargo then

specifies Rels, which “contacts independent appraisers to perform the appraisal . . . at

transaction. See 24 C.F.R. § 3500.2(b).

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a very low rate.” Because of Wells Fargo’s dominant market position, Rels demands

appraisers charge “a reduced fee that is far below the market rates the appraiser had

been charging.” Some independent appraisers have informed Wells Fargo and Rels

the rates are “so low that a proper appraisal cannot be performed,” but Wells Fargo

“insists on a vastly reduced rate, sacrificing quality for price.” If the appraiser refuses

to lower its rates, it is removed from Wells Fargo’s list of approved appraisers.

Despite requiring appraisers to charge Rels “far under the prevailing market

rate,” “Rels Valuation does not pass on the reduced appraisal feesto the home buyer.” 

Rather, “Wells Fargo maintain[s] market rates to its borrowers.” “While some Wells

Fargo customers are told of the affiliated relationship between Wells Fargo and Rels

Valuation, none know . . . the appraisal fee set forth on the HUD-1 Settlement

Statement” far exceeds the actual cost of the field appraisal. Neither Rels nor Wells

Fargo discloses Rels’s “markup to the borrower, and Rels Valuation performs no

additional appraisal services beyond merely forwarding the appraisal to Wells Fargo

or the escrow provider for the transaction.”

According to the Gomezes, in exchange for increased referrals, Rels “gives

Wells Fargo visibility into the appraisal process and substantial control over the

outcome ofthe appraisal.” The Gomezes argue Wells Fargo also benefits “through the

profits rolled up to the parent company of Wells Fargo and Rels.” The Gomezes claim

this “scheme” harmed themand the putative class members by causing themto pay too

much for appraisals and often depriving them of the benefit of an accurate appraisal. 

B. Prior Proceedings

On January 30, 2009, the Gomezes filed a class-action complaint against Wells

Fargo and Rels in the United States District Court for the District of Arizona. On

March 17, 2009, the Gomezes amended the complaint. See Fed. R. Civ. P. 15(a)(1). 

On April 20, 2009, with leave of court, the Gomezesfiled a six-count second amended

class-action complaint (complaint). 

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InCount I ofthe complaint, the Gomezes alleged Wells Fargo and Rels engaged

in a pattern of racketeering and conspiracy in violation of RICO, 18 U.S.C. § 1962(c)

and (d). In Count II, they asserted Rels violated Section 8(b) of RESPA, 12 U.S.C.

§ 2607(b), by marking up third-party appraisal fees. In Count III, they alleged Wells

Fargo and Rels violated Section 8(a) of RESPA, 12 U.S.C. § 2607(a) and (c), because

Rels allegedly gave Wells Fargo “control over the appraisal process and results” in

exchange for appraisal referrals. InCount IV, they claimedRels was unjustly enriched

by the alleged markup of appraisal fees. In Count V, they alleged Wells Fargo’s

appraisal practices constituted unfair competition under the UCL. And in Count VI

they asserted appellees engaged in a pattern of unlawful racketeering activity in

violation of AZRAC.

On May 4, 2009, Wells Fargo and Rels individually moved to dismiss all claims

against them pursuant to Fed. R. Civ. P. 12(b)(1), 12(b)(6), and 9(b). The next day,

they jointly moved to transfer the case to the District of Minnesota. On July 2, 2009,

the Arizona district court granted the appellees’ joint motion and transferred the case. 

In September 2009, Rels and Wells Fargo filed renewed motions to dismiss for lack

of subject matter jurisdiction and for failure to state a claim. 

On August 30, 2010, the district court granted, with prejudice, Wells Fargo’s

and Rels’s motions to dismiss for failure to state a claim with respect to Counts I, II,

III, V, and VI. Noting the Gomezes’ allegations admitted Wells Fargo charged 5

Appellees challenged the Gomezes’ standing under Article III of the United

5

States Constitution to raise a RESPA Section 8(a) claim, but the district court decided

the Gomezes had standing “regardless of whether there was an overcharge or whether

the cost of the services was otherwise inflated.” On June 20, 2011, the Supreme

Court of the United States granted certiorari in Edwards v. First Am. Corp., 610 F.3d

514 (9th Cir. 2010), cert. granted in part, ___ U.S. ___, 131 S. Ct. 3022 (2011), to

determine whether a private purchaser of real estate settlement services has Article

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borrowersmarketratesfor appraisals, the district court concluded the Gomezeslacked

statutory standing under RICO, AZRAC, and the UCL because the Gomezes did not

suffer a “concrete financial loss.” The district court dismissed the Gomezes’ RESPA

Section 8(a) claimbecause the Gomezesfailed to show Rels gave Wells Fargo a “thing

of value,” and their RESPA Section 8(b) claim because they did not allege unlawful

fee splitting. Declining to exercise supplemental jurisdiction over the Gomezes’

unjust enrichment claim, the district court dismissed Count IV without prejudice. The

Gomezes appeal. 

II. DISCUSSION

A. Standard of Review

We review the district court’s dismissal of the Gomezes’ complaint de novo,

accepting as true the factual allegations contained in the complaint and granting the

Gomezes the benefit of all reasonable inferences that can be drawn from those

allegations. See Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). “To

survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.

Iqbal, 556 U.S. 662, ___, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Id. 

B. RICO and AZRAC

“Section 1962 of the RICO Act makes it ‘unlawful for any person employed by

or associated with any enterprise engaged in, or the activities of which affect,

III standing in the absence of a “claim that the alleged violation affected the price,

quality, or other characteristics of the settlement services provided.” Because

appellees do not challenge the district court’s ruling and there is no dispute the

Gomezes allege an overcharge, we need not delay disposition of this case. 

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interstate or foreign commerce, to conduct or participate, directly or indirectly, in the

conduct of such enterprise’s affairs through a pattern of racketeering activity.’” Nitro

Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 428 (8th Cir. 2009) (quoting 18 U.S.C.

§ 1962(c)). “Any person injured in his business or property by reason of a violation

of [§ 1962] may sue therefor” in federal court and recover treble damages. 18 U.S.C.

§ 1964(c). Similarly, AZRAC authorizes suit by “[a] person who sustains reasonably

foreseeable injury to his person, business or property by a pattern of racketeering

activity.” Ariz. Rev. Stat. § 13-2314.04(A), (T). 6

“To have standing to make a RICO claim, a party must have 1) sustained an

injury to business or property 2) that was caused by a RICO violation.” Asa-Brandt,

Inc. v. ADM Investor Servs., Inc., 344 F.3d 738, 752 (8th Cir. 2003). “[A] showing

of injury requires proof of concrete financial loss, and not mere injury to a valuable

intangible property interest.” Regions Bank v. J.R. Oil Co., LLC, 387 F.3d 721, 728

(8th Cir. 2004) (quoting Steele v. Hosp. Corp. of Am., 36 F.3d 69, 70 (9th Cir. 1994)

(internal quotation marks omitted)). 

Applying these standards to the Gomezes’ complaint, the district court

determined the Gomezes lacked standing under RICO and AZRAC because “the

alleged RICO violations did not cause the Gomezes to suffer any ‘concrete financial

loss.’” Noting “[t]he complaint concedes that ‘Wells Fargo maintained market rates

The Gomezes do not dispute the district court’s conclusion the Gomezes 6

conceded “that there is no substantive difference between the Arizona [AZRAC] and

federalRICOstanding requirements.” Like the district court, we analyze those claims

together. See Rosier v. First Fin. Capital Corp., 889 P.2d 11, 15 (Ariz. Ct. App.

1994) (interpreting AZRAC consistent with RICO because the Arizona “legislature

patterned [AZRAC] after the federal RICO statute”). 

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to its borrowers,’” the district court determined the Gomezes “would have been in the

same [financial] position in the absence of the alleged RICO violations.”

The Gomezes assert they “adequately allege[d] several grounds that support

their standing under RICO even if [Wells Fargo] ‘maintained market rates to its

borrowers for appraisals.’” We disagree. 

The Gomezes first argue appellees violated RICO “by deceptively convincing

[the Gomezes] that the $495 paid to Rels was the actual cost of the appraisal when the

actual cost was $200 or less” and not passing on the reduced rate or disclosing the

markup to the borrower. According to the Gomezes, their “damages are measured by

the amount by which [the appellees] marked up their appraisal fee, regardless of ‘fair

market value.’”

In support of this theory of RICO liability, the Gomezes rely on Potomac Elec.

Power Co. v. Elec. Motor and Supply, Inc., 262 F.3d 260, 265 (4th Cir. 2001), in

which the Fourth Circuit stated, 

If a party specifically bargains for a service, is told that the service has

been performed, is charged for the service, and does not in fact receive

the service, it is not appropriate for courts to inquire into whether the

service “really” had value as a precondition to finding that injury to

business or property has occurred. See Hellenic Lines, Ltd. v. O’Hearn,

523 F. Supp. 244, 248 (S.D.N.Y. 1981) (stating that RICO injury is

proved where a company demonstrated that “padded” bills resulted in

payment for services not rendered). 

The Gomezes assert they “paid a padded billfor appraisal services and, therefore, have

standing under RICO.” 

The Gomezes’ reliance on Potomac and Hellenic is misplaced. As the district

court noted, neither case is persuasive because the plaintiffs in those cases “alleg[ed]

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that they paid for services they did not receive.” In contrast, the Gomezes admit they

received appraisal services and paid market rates for those services. The Gomezes

simply fail to allege a concrete financial loss as required by RICO and AZRAC. 

The Gomezes next argue their “general allegations about market value are

irrelevant” because “the fair market value of the appraisals at issue is measured by the

actual amounts paid by Rels to the appraisers.” The Gomezes contend they were

harmed when appellees “reset the market to the level that [appellees] paid the

appraisers but charged [the Gomezes] far in excess of that new market rate.”

We decline the Gomezes’ invitation to ignore the factual allegations in the

complaint in favor of a flawed method of determining fair market value belatedly

conceived in an attempt to avoid dismissal. By focusing exclusively on one part of the

appraisal process—the field work—the Gomezes’ suggested method completely

ignores the appraisal management services the Gomezes admit Rels provided. More

importantly, the market rate that matters for determining whether the Gomezes

suffered a concrete financial loss is the market rate charged to borrowers, which the

Gomezes admit did not change as a result of the challenged practices.

 

Finally, the Gomezes contend they suffered a financial loss because “they did

not receive an appraisal worth the apparent market value for a valid, independent

appraisal.” This argument is unpersuasive. The Gomezes fail to articulate any defect

in their appraisals or any direct financial harm they suffered as a result of the

appraisals performed on their property. As Rels points out, the primary purpose of an

appraisal is to protect the lender’s interests by ensuring the value of the collateral is

sufficient to secure the loan. See 12 U.S.C. § 2607(c) (allowing for “a real estate

appraiser chosen by the lender to represent the lender’s interest in a real estate

transaction”). 

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Because the Gomezes did not plausibly allege a concrete financial loss caused

by a RICO violation, the district court did not err in concluding they lacked standing

under RICO and AZRAC. See Brennan v. Chestnut, 973 F.2d 644, 648 (8th Cir.

1992) (“A RICO plaintiff has standing only if injured in his business or property.”). 

C. UCL Claim

The Gomezes allege Wells Fargo’s appraisal process violates the UCL. “The

UCL’s purpose is to protect both consumers and competitors by promoting fair

competition in commercial markets for goods and services.” Kasky v. Nike, Inc., 45

P.3d 243, 249 (Cal. 2002). A plaintiff has standing to enforce the UCL only if the

plaintiff has “suffered injury in fact and has lost money or property as a result of such

unfair competition.” Palmer v. Stassinos, 419 F. Supp. 2d 1151, 1154 (N.D. Cal.

2005) (quoting Cal. Bus. & Prof. Code § 17204) (internal quotation marks omitted). 

The Gomezes claim they have standing to assert their claim Wells Fargo

violated the UCL by charging more than the actual cost of the appraisal regardless of

the appraisal’s market value. In support, the Gomezes rely on McKell v. Wash. Mut.,

Inc., 49 Cal. Rptr. 3d 227, 241 (Cal. Ct. App. 2006), in which the plaintiffs alleged a

lender led its borrowers to believe the lender was charging the borrowers for the cost

of certain third-party mortgage services, “when in reality it [was] charging them

substantially in excess of such costs.” The state appellate court decided the plaintiffs

sufficiently “alleged unfair business practices within the meaning of the UCL,” id.,

and “stated a UCL cause of action for unlawful business practices based on violation

of RESPA,” id. at 252-53. 

McKell failsto support the Gomezes’ argument for two reasons. First, the court

in McKell did not consider the question of standing, and the case has no persuasive

value for that issue. See San Diego Gas & Elec. Co. v. Superior Court, 920 P.2d 669,

699 (Cal. 1996) (explaining “[c]ases are not authority, of course, for issues not raised

and resolved”). 

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Second, unlike the Gomezes, the plaintiffs in McKell alleged the lender

overcharged borrowersfor mortgage services by charging the borrower more for those

services than the lender paid the third-party service provider. See McKell, 49 Cal.

Rptr. 3d at 234. There is no such allegation here. The Gomezes admit Wells Fargo

charged them market rates for appraisal services as disclosed on the settlement

statements. In light of that admission, we agree with the district court that “the

complaint cannot plausibly allege that the Gomezes ‘lost money or property’ as a

result of Wells Fargo’s conduct.” The district court’s dismissal was correct. 

D. RESPA Section 8(a)

The Gomezes contend the “district court erroneously dismissed [the Gomezes’]

claim under Section 8(a) of RESPA, 12 U.S.C. § 2607(a), on the ground that [the

Gomezes] failed to allege that Wells Fargo received a ‘thing of value’ from Rels in

exchange for referring work to it.” Section 8(a) provides:

No person shall give and no person shall accept any fee, kickback, or

thing of value pursuant to any agreement or understanding, oral or

otherwise, that business incident to or a part of a real estate settlement

service involving a federally related mortgage loan shall be referred to

any person.

“[T]he term ‘thing of value’ includes any payment, advance, funds, loan, service, or

other consideration.” 12 U.S.C. § 2602(2). The regulations further define the term

broadly to include

without limitation, monies, things, discounts, salaries, commissions,

fees, duplicate payments of a charge, stock, dividends, distributions of

partnership profits, franchise royalties, credits representing monies that

may be paid at a future date, the opportunity to participate in a

money-making program, retained orincreased earnings,increased equity

in a parent or subsidiary entity, special bank deposits or accounts,

special or unusual banking terms, services of all types at special or free

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rates, sales or rentals at special prices or rates, lease or rental payments

based in whole or in part on the amount of business referred, trips and

payment of another person’s expenses, or reduction in credit against an

existing obligation.

24 C.F.R. § 3500.14(d). 

The Gomezes allege Wells Fargo “violates RESPA’s prohibition on referral

fees because it gets a thing of value—i.e., control of the appraisal process and

outcome” “[a]s a quid pro quo exchange for the referral from Wells Fargo to Rels.” 

Appellees contend the Gomezes’ allegations of “control of the appraisal process and

results” are too different in kind from the kickbacks and fees listed in the statutory

and regulatory definitions to constitute a thing of value. 

The Gomezes’ failure to provide support for their novel definition of the term

“thing of value” suggests it is too broad. But even if we assume control of the

appraisal results could be a thing of value for purposes of a RESPA Section 8(a)

violation, the Gomezes’ vague allegations fail plausibly to allegeRels providedWells

Fargo such improper control. Although the Gomezes’ argument is predicated on Rels

giving Wells Fargo control over the appraisal results, the Gomezes repeatedly

emphasize Rels did not perform the appraisals. Instead, the Gomezes allege Rels

“performed no work and provided no appraisal services toward completion of the

Gomezes’ appraisal.”

The Gomezes fail to explain how Rels abdicated control or improperly

manipulated appraisalsfor Wells Fargo’s benefit in exchange for referrals when, “[i]n

fact, Rels Valuation does not appraise properties and did not appraise the Gomezes’

property. Instead, Rels Valuation hired an appraiser on its approved list” and “merely

forward[ed] the appraisal to Wells Fargo or the escrow provider.” Notwithstanding

the Gomezes’ bald allegations of collusion, the Gomezes do not plausibly allege

either Rels or Wells Fargo made any effort to influence or manipulate improperly the

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results of appraisals performed by admittedly “independent [third-party] appraisers.” 

Nor do the Gomezes articulate any specific benefit Wells Fargo purportedly received

by controlling the results ofthe appraisals performed on their property, much lessthat

Wells Fargo manipulated the appraisals to obtain such an improper benefit to the

detriment of the Gomezes.

Even if Rels actually completed the appraisals, the Gomezes would have to

allege more than the mere fact of a referral and the possibility of improper control to

sustain a claim under Section 8(a). Section 2607(c) allows Wells Fargo to choose a

“real estate appraiser . . . to represent [Wells Fargo’s] interest in a real estate

transaction.” Under the Gomezes’ interpretation of 12 U.S.C. § 2602(2), a plaintiff

could, simply by making vague allegations of improper control, maintain a Section

8(a) claim any time a lender exercises its statutory right to choose an appraiser or

appraisal management company. Such an interpretation is not consistent with

Twombly. See Iqbal, 556 U.S. at ___, 129 S. Ct. at 1949 (“The plausibility standard

. . . asks for more than a sheer possibility that a defendant has acted unlawfully.”). 

E. RESPA Section 8(b)

The Gomezes contend the district court erred in deciding they failed to allege

Rels engaged in fee splitting in violation of Section 8(b) of RESPA, 12 U.S.C.

§ 2607(b). Section 8(b) states: 

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.

In the complaint, the Gomezes allege Rels violated Section 8(b) by “receiving

a portion, split and percentage of a fee for the rendering of a real estate settlement

service other than for services actually performed” “[b]y charging appraisal fees in

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transactionsin which [Rels] ha[s] not performed the appraisal which are far in excess

of the actual cost of the appraisal charged by a third party.” We agree with the

district court that this claim is foreclosed by our decision in Haug v. Bank of Am.,

N.A., 317 F.3d 832 (8th Cir. 2003).

In Haug, we held “Section 8(b) is an anti-kickback provision that

unambiguously requires at least two parties to share a settlement fee in order to

violate the statute.” Id. at 836. As such, the Haugs’ allegation that the bank charged

them “more for certain services than [the lender] paid for them” did not state a claim

because “an overcharge, standing alone, does not violate Section 8(b) of RESPA.” 

Id. The result isthe same here. Broadly construed, the complaint alleges an improper

markup or simple overcharge, not fee splitting. Such allegations do not support a

Section 8(b) claim under our controlling precedent. See Haug, 317 F.3d at 840

7

(holding “the plain language of Section 8(b)requires plaintiffs to plead facts showing

that the defendant illegally shared fees with a third party”). 

The Gomezes’ belated theory of fee splitting also fails. The Gomezes’

allegations of a Section 8(b) violation in Count II focus exclusively on Rels’s receipt

of purportedly excessive appraisal fees. In resisting Rels’s motion to dismiss based

upon our holding in Haug, the Gomezes argued for the first time “the Wells Fargo

entities share in the illegal fees by virtue of their ownership interest in Rels. This

sharing of fees falls within the plain language of [S]ection 8(b).” The only support

The Supreme Court has granted certiorari in Freeman v. Quicken Loans, Inc., 7

626 F.3d 799, 802 (5th Cir. 2010), cert. granted, ___ U.S. ___, 132 S. Ct. (2011), to

determine “[w]hether Section 8(b) of RESPA prohibits a real estate settlement

services provider from charging an unearned fee only if the fee is divided between

two or more parties.” The case should resolve a split between the Eighth, Seventh,

Fourth and now the Fifth Circuits, all of which have held a fee must be divided with

a third party to be actionable, and the Second, Third, and Eleventh Circuits (as well

as HUD) which opine a charge involving only one party may violate Section 8(b). 

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the Gomezes could muster for their alternative theory of liability was one general

allegation in a section of the complaint labeled “Parties” that alleged Rels “is a joint

venture between First AmericanReal Estate Solutions, a subsidiary of First American

Corporation, and Wells Fargo Foothill, a subsidiary of Wells Fargo & Co., the parent

of Wells Fargo Bank.”

Federal Rule of Civil Procedure 8(a)(2), which sets forth the general rules of

pleading, requires “a short and plain statement of the claim showing that the pleader

is entitled to relief.” “Each allegation must be simple, concise, and direct.” Fed. R.

Civ. P. 8(d)(1). This short and plain statement must “provide the defendant with ‘fair

notice of what the plaintiff’s claim is and the grounds upon which it rests.’” Eckert

v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008) (quoting Conley v. Gibson, 355

U.S. 41, 47 (1957)). 

The district court found the complaint did “not allege or even suggest [the

Gomezes’ alternative] theory of fee-splitting.” We agree. “Without some factual

allegation in the complaint, it is hard to see how a claimant could satisfy the

requirement of providing not only ‘fair notice’ of the nature of the claim, but also

‘grounds’ on which the claim rests.” Twombly, 550 U.S. at 556 n.3. Because the

complaint failed to plead sufficient facts to give Rels fair notice of the Gomezes’ fee

splitting theory and did not contain a simple, concise, and direct statement of the

alternative grounds the Gomezes asserted to resist dismissal of their RESPA Section

8(b) claim, the district court did not err in dismissing that claim. 

F. Leave to Amend Complaint

We also reject the Gomezes’ assertion that the district court erred in dismissing

their claims with prejudice rather than sua sponte allowing the Gomezes leave to

amend the complaint a third time. See Fed. R. Civ. P. 15. “A district court does not

abuse its discretion in failing to invite an amended complaint when plaintiff has not

moved to amend and submitted a proposed amended pleading.” Drobnak v. Andersen

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Corp., 561 F.3d 778, 787 (8th Cir. 2009) (quoting Meehan v. United Consumers Club

Franchising Corp., 312 F.3d 909, 913 (8th Cir. 2002) (internal quotation marks

omitted)). 

Despite appellees’ detailed motions for dismissal, the Gomezes chose to stand

on their complaint, confident their allegations were sufficient. The district court did

not abuse its discretion in accepting the Gomezes’ strategic decision not to amend the

complaint. See Mitan v. McNiel, 399 F. App’x 144, 145 (8th Cir. 2010) 

(unpublished per curiam) (explaining the district court “did not abuse its discretion

in denying [the plaintiff’s] post-dismissal motion for leave to amend, because he

chose to stand on his pleadings in the face of the motion to dismiss, which identified

the very deficiency upon which the court dismissed the complaint”).

III. CONCLUSION 

We affirm the district court’s judgment. 

______________________________

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