UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

JUSTIN PASS, )

)

Plaintiff, )

)

v. ) 11-cv-814 (RCL)

)

CAPITAL CITY REAL ESTATE LLC, et al., )

)

Defendants. )

)

MEMORANDUM OPINION

Before the Court are five motions to dismiss plaintiff Justin Pass’s complaint. Dkt. Nos. 

12, 14, 19, 30, 34. Upon considering the motions, oppositions, and replies, the Court GRANTS 

all motions to dismiss.

I. Introduction

In February 2011, plaintiff entered negotiations to purchase a unit in the Mintwood 

Condominium development with various defendants. Compl. ¶ 25. The parties dispute a 

number of issues, including whether the plaintiff and seller defendants entered a binding sales 

contract. Defs.’ Mem. Supp. Mot. Dismiss [12-1] 8; Pl.’ Mem. Opp’n Mot. Dismiss [17-1] 11. 

For the purposes of this decision, this Court assumes that the parties entered a sales contract (the 

“Template Contract”) containing the following provision:

(i) CHOICE OF SETTLEMENT AGENT. THE PURCHASER HAS A RIGHT 

TO SELECT ANY SETTLEMENT AGENT TO HANDLE THE CLOSING OF 

THIS TRANSACTION. THE SETTLEMENT AGENT'S ROLE IN CLOSING 

YOUR TRANSACTION INVOLVES THE COORDINATION OF NUMEROUS

ADMINISTRATIVE AND CLERICAL FUNCTIONS RELATING TO THE

COLLECTION OF DOCUMENTS AND THE COLLECTION AND 

DISBURSEMENT OF FUNDS REQUIRED TO CARRY OUT THE TERMS OF 

THE CONTRACT BETWEEN THE PARTIES. IF PART OF THE PURCHASE 
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PRICE IS FINANCED, YOUR LENDER WILL INSTRUCT THE 

SETTLEMENT AGENT AS TO THE SIGNING AND RECORDING OF LOAN 

DOCUMENTS AND THE DISBURSEMENT OF LOAN PROCEEDS.

(ii) Settlement Costs and Expenses . . . .

If Purchaser uses Seller’s Designated Settlement Company of Counselor’s Title to

conduct the Settlement, Seller shall pay the District of Columbia Transfer Tax

(currently 1.1% to 1.45%). If Purchaser shall use another attorney, title company 

or settlement agent to conduct the Settlement, Purchaser shall be responsible for 

the payment of the District of Columbia Transfer Tax.

Compl. ¶ 30. Plaintiff asserts that this contract provision violates the Real Estate Settlement 

Procedures Act, 12 U.S.C. § 2601 et seq. (“RESPA”). Compl. ¶¶ 79–100. Plaintiff’s pleads ten 

additional counts asserting various D.C. statutory and common law claims. Compl. ¶¶ 101–175.

II. Standard of Review

A motion to dismiss is appropriate when a complaint fails “to state a claim upon which 

relief can be granted.” Fed. R. Civ. P. 12(b)(6). To overcome this hurdle, a complaint must 

contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in 

order to give the defendant fair notice of what the . . . claim is and the grounds upon which it 

rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). The 

Court must “accept as true all of the factual allegations contained in the complaint,” Atherton v. 

District of Columbia, 567 F.3d 672, 681 (D.C. Cir. 2009), and grant a plaintiff “the benefit of all 

inferences that can be derived from the facts alleged,” Kowal v. MCI Commc'ns Corp., 16 F.3d 

1271, 1276 (D.C. Cir. 1994). However, the Court may not “accept inferences drawn by plaintiffs 

if such inferences are unsupported by the facts set out in the complaint.” Id. In other words, 

“only a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft 

v. Iqbal, 129 S. Ct. 1937, 1950 (2009); see also Atherton, 567 F.3d at 681 (holding that a 
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complaint must plead “factual content that allows the court to draw the reasonable inference that 

the defendant is liable for the misconduct alleged”).

III. Analysis

Plaintiff’s first Count alleges that defendants have violated the Real Estate Settlement 

Procedures Act of 1974, specifically 12 U.S.C § 2608. Compl. ¶ 80; Pub. L. No. 93-533, § 9(A), 

88 Stat. 1724, codified in 12 U.S.C. § 2608. Section 2608 provides that “[n]o seller of property . 

. . shall require directly or indirectly, as a condition to selling the property, that title insurance 

covering the property be purchased by the buyer from any particular title company.” The socalled “required-use” provision of § 2608 has been defined in Department of Housing and Urban 

Development Regulation X:

Required use means a situation in which a person must use a particular provider of a 

settlement service in order to have access to some distinct service or property, and the 

person will pay for the settlement service of the particular provider or will pay a charge 

attributable, in whole or in part, to the settlement service. However, the offering of a 

package (or combination of settlement services) or the offering of discounts or rebates to 

consumers for the purchase of multiple settlement services does not constitute a required 

use. Any package or discount must be optional to the purchaser. The discount must be a 

true discount below the prices that are otherwise generally available, and must not be 

made up by higher costs elsewhere in the settlement process.

24 C.F.R. § 3500.2.1

In this case, the Template Contract provides that plaintiff, as buyer, has “a right to select 

any settlement agent to handle the closing of this transaction.” Compl. ¶ 30. It also provides that 

the seller pay the District of Columbia Transfer Tax if plaintiff selects Counselor’s Title LLC as 

the settlement agent. Id. Otherwise, the Template Contract requires that the plaintiff pay the 

Transfer Tax. Id.

 1 The “provision of . . . title insurance policies” qualifies as a settlement service under Regulation X. 24 C.F.R. § 

3500.2(4).
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Plaintiff argues that the Transfer Tax provision creates a “de facto . . . ‘requiring’ the use 

of [title insurance] services,” while conceding that the contract contains no explicit requirement 

to purchase title insurance from Counselor’s Title. Pl. Opp’n [17] 7. Plaintiff relies on the fact 

that the Template Contract obliges plaintiff to pay the District of Columbia Recordation Tax. 

Plaintiff alleges that the “custom and practice” in the District of Columbia is for the buyer and 

seller to evenly split the Recordation Tax and the Transfer Tax. Compl. ¶ 87. Plaintiff contends 

that “here, the normal [tax] arrangement is only available if a buyer will use the seller’s title 

agent.” Pl. Opp’n [17] 7–8. Accordingly, plaintiff argues that he must pay an approximately 

$4,015 “penalty”—the amount of the D.C. Transfer Tax—in order to choose his own title 

insurance company. Compl. ¶ 89.

This type of “economic coercion” argument has been rejected by other courts. See

Hopkins v. Horizon Mgmt. Servs., Inc., 515 F. Supp. 2d 649, 657–58 (D.S.C. 2007) (“the fact 

that a lender’s requirements might limit the Plaintiff’s choice of title insurance company is 

irrelevant to the question of whether the seller required the Plaintiff to use any particular title 

insurance company.”), aff’d 302 F. App’x. 137, 140–141 (4th Cir. 2008). “The offering of a 

package” or “discounts” is perfectly acceptable under Regulation X § 3500.2. Not surprisingly, 

plaintiff can cite no case where his novel theory of liability has been accepted by the courts. If 

plaintiff was unhappy with the Template Contract’s tax provisions, plaintiff was free to negotiate 

a lower sales price or a different tax arrangement. Nothing in the Template Contract prohibited 

Plaintiff from purchasing title insurance from the company of his choice and, in fact, plaintiff 

had engaged Worldwide Land Transfer to conduct settlement and title insurance services. 

Compl. Ex. 2. Therefore, plaintiff has insufficiently plead a violation of RESPA § 2608 and 

Count I is hereby DISMISSED WITH PREJUDICE.
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IV. Conclusion

This Court has discretion to decline to exercise supplemental jurisdiction over plaintiff’s 

remaining District of Columbia statutory and common law claims because this Court has 

dismissed the claim over which it had original jurisdiction—plaintiff’s RESPA claim. 28 U.S.C. 

§ 1367(c)(3) This case is well before trial and no significant discovery has taken place. 

Anderson v. Holder, 647 F.3d 1165 (2011) (citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 

343, 350 n.7 (1988) (“[I]n the usual case in which all federal-law claims are eliminated before 

trial, the balance of factors to be considered . . . will point toward declining to exercise 

jurisdiction over the remaining state-law claims.”)). Therefore, remaining Counts in the 

plaintiff’s complaint are hereby DISMISSED WITHOUT PREJUDICE.

A separate Order consistent with these findings shall be entered this date.

SO ORDERED.

Signed by Royce C. Lamberth, Chief Judge, on February 1, 2012.