FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT JANUARY 22, 2008 THOMAS K. KAH

N CLERK [ P UB L I S H]

I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 07- 10061

________________________ D . C . D ocketN o. 05 -001 56 -C V -2 J O S H U A K R U P A , C Y N T H I A K R U P A , J O E L E . P R I C E , in d iv id u a lly a n d o n b e h a lf o f a ll s im ila r ly s itu a te d in d iv id u a ls , P la in tif f s - A p p e lla n ts , v ersu s L A N D S A F E , I N C ., C O U N T R Y W I D E H O M E L O A N S , I N C ., D e f e n d a n ts - A p p e lle e s .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e S o u th e rn D is tr ic t o f G e o r g ia

_________________________ ( Jan u ar y 22, 2008)2

B efo re E D M O N D S O N , C h i ef Ju d g e, an d C A RN E S an d F A Y , C i rcu i tJu d g es. C A RN E S , C i rc ui tJudg e: J oe l P r i c e a nd J os hua a nd C y nthi a K rupa , w ho s ue d on be ha l f of a c l a s s of bo rr ow er s, appeal the di stri ctcourt ’ s gra ntof sum m ary j ud gm enton thei r R ea l E s t a t e S e tt l e m e ntP r oc e dur e s A c t , 12 U . S . C . § 2601 e ts e q. , c l a i m s i n f a vorof the d e f e n d a n ts , L a n d s a f

e C r e d it, I n c . a n d C o u n try w id e H o m e L o a n s , I n c .

I. C o u n try w id e is a r e s id e n tia l m o r tg a g e lo a n b r o k e r , a n d L a n d s a f e is a c r e d it rep o rt i n g ag en cy. T h e tw o o f th em are su b si d i ari es o f th e sam e p aren tco m p an y, C o u n try w id e F in a n c ia l C o rp o r a tio n . C ou ntry w i de ob t ai ns al m ostal l of the cr edi tre po rt s i tneeds f or cust om er s f r o m L a n d s a f

e . C o u n try w id e o r d e r s a c r e d it r e p o r t f r o m L a n d s a f

e f o re a c h o f

its c u s to m e r s in th e p r e - q u a lif ic a tio n o rp r e - ap p lic a tio n s ta g e o f th e lo a n p r o c e s s . B e f o r e A u g u s t 2 0 0 2 , L a n d s a f e c h a r g e d C o u n try w id e a $ 2 5 .0 0 f e e f o re a c h c r e d it re po rtthatC ou ntry w i de ordered. C ou ntry w i de pass ed that$2 5. 00 coston t o eac h c us t om e rw ho “ l oc ke d i n” a l oa n w i th i t

— e a c h c us t om e rw ho m a de i tthr ough the appl i c a t i on pr oc e s s a nd a c tua l l y e nde d up us i ng C ountry w i de t o obt a i n a l oa n. T he c os tof the c r e di tr e por ttha tC ountry w i de or de r e d f ora c us t om e rw ho di d note nd up ge tt i ng a l oa n thr ough i tc oul d notbe pa s s e d on butw a s i ns t e a d abs orbe d by3

C ou ntry w i de. I n o r d e rto a v o id h a v in g to ab s o rb th a t c o s t, C o u n try w id e a s k e d L a n d s a f e to c h a n g e its p r ic in g p o lic y to c h a r g e m o r e f o rth e c o s t o f

c r e d it r e p o r ts o n ap p lic a n ts w ho l oc ke d i n l oa ns a nd nothi ng f orthe r e por t s on appl i c a nt s w ho di d not . T he c ha nge w oul d e nabl e C ountry w i de t o pa s s on t o thos e w ho l oc ke d i n l oa ns the e n tir e c o s t o f

a ll th e c r e d it r e p o r ts it r e c e iv e d . L a n d s a f e m a d e th e c h a n g e in its p r ic in g p o lic y in A u g u s t 2 0 0 2 . U nd erthe change, L andsaf e c harged C ou ntry w i de a $35 . 00 fe e f or ea ch c us t om e rc r e di tr e por ti tor de r e d tha tl e d t o the l oc ki ng i n of a l oa n, a nd nothi ng f

or any r eportthatdi d n ot . C ou ntry w i de, i n turn, pass ed on the $3 5. 00 cr edi tre po rt f e e a s pa r tof

the c os tof

the l oa n t o e a c h c us t om e rw ho r e c e i ve d one thr ough the c om pa ny . T he pr i c e poi ntw a s s e ts o tha tthe ne w pr i c i ng pol i c y w oul d be “r e v e n u e - n e u tr a l,” a n d it a c h ie v e d th a t g o a l: L a n d s a f e ’s r e v e n u e s f

r o m th e c r e d it re po rt s i tsol d t o C ou ntry w i de w er e the sa m e a ft erthe new po l i cy w as im p le m e n te d a s th e y h a d b e e n b e f o r e . T he pl a i nt i f

f s , P r i c e a nd the K rupa s , obt a i ne d a hom e m or t ga ge l oa n thr ough C ountry w i de i n 2003 a nd 2004, r e s pe c t i ve l y . A s pa r tof the s c r e e ni ng pr oc e s s f or th e l o a n s , C o u n try wi d e o r d e r e d f r o m L a n d s a f

e a c r e d i tr e p o r to n e a c h o f th e two pl a i nt i f f s . L a nds a f

e c ha r ge d C ountry w i de $35. 00 f ore a c h r e por t , a nd4

C ountry w i de pa s s e d tha tc os ton t o e a c h pl a i nt i f f a s pa r tof

the c l os i ng c os t s . T he pl a i nt i f f s , on be ha l f

of a c l a s s of

borr ow e r s w ho ha d pa i d C ountry w i de ’ s $35. 00 c r e di tr e por tf

e e , s ue d C ountry w i de a nd L a nds a f e unde rR E S P A ’ s a nt i - ki c kba c k, 12 U . S . C . 26 07 (a ), and ant i -m arku p, 12 U . S . C § 2 60 7(b), prov i si on s. T he di stri ct c o u r t g r a n te d s u m m a ry ju d g m e n t a g a in s t th e p la in tif f s o n b o th c la im s . II. T he the ory of

the pl a i nt i f

f s ’ ki c kba c k c l a i m i s tha tthr ough the ne w pr i c i ng po l i cy L andsaf

e i s provi di ng C ou ntry w i de w i th fre e c re di tre po rt s f or cust om er s w ho don’ tl oc k i n l oa ns , ora tl e a s ti ti s pr ovi di ng C ountry w i de w i th a pr i c i ng s tru c tu r e th a t a llo w s it to p a s s a lo n g a ll o f its c r e d it r e p o r t c o s ts to its c u s to m e r s , a s a k ic k b a c k in r e tu rn f o rC o u n try w id e r e f

e rr in g its c r e d it r e p o r tin g b u s in e s s to L a n d s a f e . I n g r a n t i n g s u mma ry j u d g me n tt o Co u n try w i d e a n d La n d s a f e o n th i s c l a i m, th e d istrict co u rt co n clu d ed th at th e r ev ised p ricin g p o li cy d id n o t v io late R E S P A ’s ant i -ki ckback prov i si on because i ti s und i sput ed that : (1) L andsaf e m ade no m ore orl e s s m one y a s a r e s ul t ; a nd ( 2) C ounty w i de pur c ha s e d the s a m e pe r c e nt a ge ( vi r tua l l y a l l ) of

the c r e di tr e por t s i tne e de d f r om L a nds a f

e a s i tha d be f

or e the c h a n g e . W e a g r e e . R E S P A ’ s an t i -k i ck b ack p ro v i si o n p ro v i d es:5

N o pe r s on s ha l l gi ve a nd no pe r s on s ha l l a c c e pta ny f e e , ki c kba c k, or thi ng of va l ue pur s ua ntt o a ny a gr e e m e ntorunde r s t a ndi ng, or a l or othe rw i s e , tha tbus i ne s s i nc i de ntt o ora pa r tof a r e a l e s t a t e s e tt l e m e nt s e r v ic e in v o lv in g a f

e d e r a lly r e la te d m o r tg a g e lo a n s h a ll b e r e f e rr e d to a ny pe r s on. 12 U . S . C . § 2607( a ) . I nt e rpr e t i ng thi s pr ovi s i on, the D e pa r tm e ntof H ous i ng a nd U rb a n D e v e lo p m e n t h a s s a id : “W h e n a th in g o f v a lu e is r e c e iv e d r e p e a te d ly a n d is c onne c t e d i n a ny w a y w i th the vol um e orva l ue of the bus i ne s s r e f

e rr e d, the r e c e i pt of the thi ng of

va l ue i s e vi de nc e tha ti ti s m a de pur s ua ntt o a n a gr e e m e ntor un ders t andi ng for the re fe rr al of bu si ness . ” 24 C . F . R . § 3 50 0. 14 (e ). R E S P A ’s § 2 6 0 7 ( a ) is q u ite s p e c if ic in d e s c r ib in g th e k ic k b a c k th a t it pr ohi bi t s . I tpr ohi bi t s a ki c kba c k f orr e f e rr a l of bus i ne s s . I n thi s c a s e the one r e c e iv in g b u s in e s s is L a n d s a f e a n d th e o n e g iv in g it th a t b u s in e s s is C o u n try w id e . I n or de rf

orthe r e t o ha ve be e n a f orbi dde n ki c kba c k, the r e w oul d ha ve t o ha ve been an agree m entbetw ee n the tw o thatC ou ntry w i de w ou l d g i ve L andsaf e m ore of i t s c r e di tr e por t i ng bus i ne s s tha n i tw a s gi vi ng L a nds a f e be f or e the a gr e e m e nt , or a t le a s t a n a g r e e m e n t th a t it w o u ld n o t g iv e L a n d s a f e a n y le s s o f

th a t b u s in e s s . T h e a g r e e m e n t, a s th e p la in tif f s h a v e p lo tte d it o u t, w a s th a t L a n d s a f e w o u ld c h a n g e its p r ic in g p o lic y s o th a t C o u n try w id e c o u ld p a s s a lo n g to its c u s to m e r s a ll o f th e c o s ts o f

th e c r e d it r e p o r ts it r e c e iv e d , in s te a d o f ju s t p a r t o f

th o s e c o s ts . W e m a y a s s u m e , a s th e p la in tif f s u r g e u s to f

in d , th a t b y a g r e e in g to th e c h a n g e in6

pr i c i ng L a nds a f

e c onve y e d a thi ng of

va l ue t o C ountry w i de

— the thi ng of va l ue C ountry w i de r e c e i ve d be i ng the abi l i ty t o pa s s a l ong t o i t s c us t om e r s the c os t s of a l l of the c r e di tr e por t s i tor de r s i ns t e a d of j us tpa r tof

the m . S t i l l , the r e i s no vi ol at i on of R E S P A ’ s a nt i -ki ck back prov i si on un l es s the agree m ental so prov i ded o rp r o m is e d L a n d s a f

e C o u n try w id e ’s b u s in e s s in r e tu rn . A n d it d id n o t. T he undi s put e d e vi de nc e i s tha tthe vol um e a nd va l ue of the c r e di tr e por t i ng bus i ne s s C ountry w i de r e f e rr e d t o L a nds a f

e ha s notc ha nge d i n a ny w a y s i nc e the m od i fi ca t i on i n p ri ci ng . In thei r s t at em entof un di sput ed fa ct s, the pl ai nt i ff s c o n c e d e d th a t b e f

o r e th e c h a n g e C o u n try w id e s e n t v ir tu a lly a ll o f its c r e d it r e p o r tin g b u s in e s s to L a n d s a f e . A n d th e e v id e n c e is u n d is p u te d th a t it s till d o e s . Th a ti s h a r d l y s u rp r i s i n g s i n c e th e tw o c o mp a n i e s a r e s u b s i d i a r i e s o f th e s a me p a r e n t. T h e p la in tif

f s a ls o c o n c e d e d in th e irs ta te m e n t o f u n d is p u te d f

a c ts th a t: T he change t o the $3 5 fl atfe e bi l l i ng agre em entw as m ea ntt o b e ‘ net ne utr a l ’ t o L a ndS a f

e , m e a ni ng tha t , a s s um i ng the t ot a l num be rof cr edi tre po rt s produ ce d b y L andS af e r em ai ned t he sa m e, L andS af e w oul d r e c e i ve the s a m e t ot a l r e ve nue unde rthe $35 f l a tf e e bi l l i ng a gr e e m e nt( pur s ua ntt o w hi c h L a ndS a f e onl y bi l l e d C ountry w i de f or cr edi tre po rt s a ss oci at ed w i th l oans thatbecom e “ l ocked”) as un der the pri or $2 5 b i l l i ng arra ng em ent(pursuantt o w hi ch L andS af e bi l l ed C ou ntry w i de for e ac h cre di tre po rt , i ncl ud i ng cr edi tre po rt s a ss oci at ed w i th l oans thatnever becom e “ l ocked. ”) S o, L a nds a f

e w a s notr e f

e rr e d a ny m or e bus i ne s s , a nd the t ot a l va l ue of the7

bus i ne s s i tc ont i nue d t o r e c e i ve di d noti nc r e a s e , a s a r e s ul tof i ta gr e e i ng t o c ha nge the pri ce structure f

or cr edi tre po rt s f

urni shed t o C ou ntry w i de. N or i s there a s peck of e vi de nc e tha tthe unde r s t a ndi ng w a s i nt e nde d t o i nc r e a s e the a m ountorva l ue of C o u n tryw i d e’ s b u si n ess th atL an d safe received . A b sen tsu ch an effect, o r atl east abs e nts om e thr e a ttha tthe bus i ne s s be i ng r e f e rr e d w oul d be di s c ont i nue d or di m i ni shed i f the thi ng of val ue w as no tconv ey ed, there ca n b e no v i ol at i on of § 26 07 (a ). III. T he the ory of

the pl a i nt i f

f s ’ §2607( b) a nt i - m a r kup c l a i m i s tha ts om e of the $ 3 5 .0 0 f e e th e y e a c h p a id to C o u n try w id e f o rth e irc r e d it r e p o r ts w a s u n r e la te d to the c os tof

thos e r e por t s , a nd i ns t e a d w a s m e a ntt o s ubs i di z e C ountry w i de f or c r e di tr e por t s f

orc us t om e r s w ho di d notl oc k i n l oa ns . T hi s c os t - s pr e a di ng, the p la in tif f s a r g u e , a m o u n ts to a n ille g a l m a r k u p . I n r e je c tin g th is cl ai m , the di stri ctcourtpo i nt ed ou tthat : (1) a l l of the m on ey C ou ntry w i de charged fr om the cr edi tre po rt s w as pai d o ver t o L andsaf e; and (2) the i ncre as e i n p ri ce w as re l at ed t o servi ce s a ctual l y per form ed for the l ocked i n cust om er s. W e a gree . R E S P A ’ s an t i -m ark u p p ro v i si o n p ro v i d es: N o pe r s on s ha l l gi ve a nd no pe r s on s ha l l a c c e pta ny por t i on, s pl i t , or perc ent age of any c harge m ade or r ec ei ved for the re nd er i ng of a r ea l e s t a t e s e tt l e m e nts e r vi c e i n c onne c t i on w i th a tr a ns a c t i on i nvol vi ng a f e d e r a lly r e la te d m o r tg a g e lo a n o th e rth a n f o rs e r v ic e s a c tu a lly8

pe r f or m e d. 12 U . S . C . § 2607( b) . W e ha ve s a i d tha tthi s pr ovi s i on “ a tt e m pt s t o c l os e a ny l oophol e s ” i n the a nt i - ki c kba c k pr ovi s i on “ by pr ohi bi t i ng a ny pe r s on f r om gi vi ng ora c c e pt i ng a ny pa r tof a f e e unl e s s s e r vi c e s w e r e a c tua l l y pe r f orm e d. ” S os a v. C hase M anhatt an M ort gage C orp. , 34 8 F . 3d 97 9, 98 1 (11 th C i r. 20 03 ). F or there t o be a vi ol a t i on of

thi s a nt i - m a r kup pr ovi s i on, w e s t a t e d i n S os a , “ the pa y m e nt m u s t b e m a d e f

o rs o m e r e a s o n o th e rth a n in e x c h a n g e f o rs e r v ic e s a c tu a lly r e nde r e d. ” I d. a t983. W he r e the f e e i s f ors e r vi c e s a c tua l l y r e nde r e d, the r e i s no § 2607( b) vi ol a t i on. I n S os a the pl a i nt i f

f s c l a i m e d tha tthe m or t ga ge c om pa ny , C ha s e M a nha tt a n, vi ol a t e d the a nt i - m a r kup pr ovi s i on be c a us e “ C ha s e c ha r ge d borr ow e r s $50 f or c o u r ie ro rm e s s e n g e rf

e e s ,” it “p a id o n ly a p o r tio n o f th a t f e e to th ir d - p a r ty c o n tr a c to r s ,” a n d “C h a s e ‘c r e a te d th e m is im p r e s s io n ’ th a t th e f e e s w e r e e n tir e ly p ai d t o th e th i rd p art i es. ” Id . W e affi rm ed th e d i sm i ssal o f th e p l ai n t i ffs’ co m p l ai n tb ecau se th ey d i d n o tal l eg e th at“ th e p o rt i o n o f th e ch arg e th atC h ase ret ai n ed w as accep t ed ‘ o th er th an fo r serv i ces actu al l y p erfo rm ed , ’ i . e. , th atC h ase pe r f or m e d no s e r vi c e s tha tw oul d j us t i f y i t s r e t e nt i on of

a por t i on of

the f e e . ” I d. I n th is c a s e , a s in S o s a , it is u n d is p u te d th a t th e p la in tif f s w e r e p r o v id e d w ith se rvi ce s i n exchang e f

or the $3 5. 00 fe e they pai d t o C ou ntry w i de. A s the di stri ctB e c a us ewehavea ff

ir me d o n o ther groun ds , w edo no t re a c h th ede fendants ’ 1 altern ativ eargument t

hat th ec re dit

repo rt fe efalls wi thin th esc op eof § 2 60 7( c ), whic h is RESP A’s saf

e har bor provision. We do rejec t as utterly unpersua sive the def

endants’ a

rgument that the plaintiffs lac k standingto bringthe claims they have a sserted. 9 courtpo i nt ed ou t , the un di sput ed evi dence i s that : “ P l ai nt i ff s pai d a $3 5 fl atfe e f orc r e di tr e por ts e r vi c e s t o C ountry w i de . T ha ts um w a s i n turn pa i d by C ountry w i de t o L a nds a f e f orthe pr ovi s i on of

c r e di tr e por t s . N o pa r tof the s um w as re t ai ned b y C ou ntry w i de. ” B ec ause the $3 5. 00 thatea ch pl ai nt i ff pai d C ou ntry w i de for the cr edi tre po rt w a s i n turn pa i d ove ri n f ul l by C ountry w i de t o L a nds a f e , the r e w a s no s pl i tt i ng of the fe e nor di d anyon e e nd up w i th any partof the charge “ other than for se rvi ce s a c tu a lly p e r f

o r m e d .” 1 2 U .S .C . § 2 6 0 7 ( b ) . L a n d s a f e p r o v id e d th e c r e d it r e p o r t, a n d it r e c e iv e d th e e n tir e a m o u n t th a t th e p la in tif f s w e r e c h a r g e d f

o rth a t r e p o r t. T h e r e w a s n o f

o rb id d e n m a r k u p . I V. T he di stri ctcourt ’ s gra ntof sum m ary j ud gm entt o the defendant s, L andsaf e an d C o u n tryw i d e, i s A FFI R M ED . 1