In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 02-2801

GREGORY & MARGARET WEIZEORICK, INDIVIDUALLY

AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,

Plaintiffs-Appellants,

v.

ABN AMRO MORTGAGE GROUP, INCORPORATED,

A DELAWARE CORPORATION,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 01 C 0713—William J. Hibbler, Judge.

____________

ARGUED JANUARY 15, 2003—DECIDED JULY 24, 2003

____________

Before MANION, KANNE, and DIANE P. WOOD, Circuit

Judges.

MANION, Circuit Judge.

I.

On February 1, 2001, Gregory and Margaret Weizeorick

filed suit alleging that ABN AMRO Mortgage Group Inc.

violated the Real Estate Settlement Procedures Act, 12
2 No. 02-2801

U.S.C. § 2601, et seq., and state law provisions, by illegally

splitting a fee with the closing agency without performing

any services. The district court determined that no fee

split had occurred as a matter of law and dismissed their

federal allegations for failure to state a claim pursuant to

Federal Rule of Civil Procedure 12(b)(6). The Weizeoricks

appeal, and because they successfully pleaded a claim for

relief, we reverse.

II.

On July 24, 2000, Gregory and Margaret Weizeorick

closed on the sale of their home in Chicago, Illinois. In

connection with the closing and the repayment of their

mortgage, ABN AMRO Mortgage Group (“AAMG”), as

holder of the mortgage, provided the Weizeoricks and

the closing company with a “Payoff Statement” on July 18,

2000. The Payoff Statement included a charge of $10.00

for a “Recording Discharge/Release of Lien Fee.” The

Weizeoricks paid this fee at the closing of the sale of their

home as part of the payoff of their mortgage loan. Also

at closing, the Weizeoricks were charged a “Release Fee”

of $25.60 by the closing company, Attorneys’ Title Guaranty

Fund, Inc, as part of the “settlement charges” owed as

the seller of the home. The Weizeoricks paid that fee as well.

On February 1, 2001, the Weizeoricks filed a class action lawsuit alleging that AAMG’s practice of collecting

$10.00 for “recording” services from borrowers at the

closing on the sale of their homes violates the Real Estate

Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601,

et seq., as well as state law. Specifically the Weizeoricks

invoked Section 8(b) of RESPA, or 12 U.S.C. § 2607(b), which

prohibits the receipt of a portion of a fee paid for real estate

services without actually performing the service. Id. The
No. 02-2801 3

Weizeoricks alleged that AAMG violated RESPA and

Illinois state law by receiving $10.00 of the $35.60 fee for

recording the discharge of their lien, even though AAMG

did not record the release of the mortgage. According to

the Weizeoricks’ allegations, the title company, not AAMG,

recorded the discharge/release of their mortgage.

AAMG subsequently moved to dismiss the Weizeoricks’

entire complaint for failure to state a claim under Fed. R.

Civ. P. 12(b)(6). The Weizeoricks withdrew their motion

for class certification, likely because of the unique and

somewhat complex series of transactions that occurred

between the closing company and the title company. They

instead proceeded as individual plaintiffs. On November

16, 2001, the district court, relying on Echevarria v. Chicago

Title and Trust Co., 256 F.3d 623 (7th Cir. 2001), dismissed

the Weizeoricks’ RESPA claim with prejudice, finding that

the Weizeoricks had failed to allege that AAMG had

illegally split fees with the closing agent. The district

court determined that because the title company and AAMG

had each independently charged the Weizeoricks a standard fee for the recording service, there was no split of an

unearned fee to a third party, as required by the statute. The

Weizeoricks then moved to reconsider the dismissal of

the RESPA claim and AAMG contemporaneously moved

under 28 U.S.C. § 1367(c)(3) to dismiss the Weizeoricks’ state

law claims. The district court denied the Weizeoricks’

motion, granted AAMG’s motion, and dismissed the

Weizeoricks’ case in its entirety.

III.

On appeal, the Weizeoricks contend that the district

court erred in dismissing their claim against AAMG because

their allegations were sufficient to state a claim under
4 No. 02-2801

1 The Weizeoricks only appeal that part of the district court’s

November 16, 2001 order and opinion granting AAMG’s Fed. R.

Civ. P. 12(b)(6) motion to dismiss the Weizeoricks’ federal law

claim, which arose under RESPA, and that part of the district

court’ s June 25, 2002 order denying the Weizeoricks’ motion

to reconsider the dismissal of the RESPA claim. The June 25,

2002 order also granted, pursuant to 28 U.S.C. § 1367(c)(3),

AAMG’s motion to dismiss the remainder of the Weizeoricks’

claims, all of which arose under state law. The Weizeoricks

have not appealed the dismissal of their state law claims.

§ 2607(b) of RESPA.1 They contend that the district court

impermissibly interpreted § 2607(b) by requiring a plaintiff to allege that the defendant arranged for a third party

to receive unearned fees in order to show a violation

of the statute. The district court erred in this conclusion,

they argue, because § 2607(b) of RESPA only prohibits a

person from accepting an unearned portion of a charge

for settlement services and does not require an allegation

of whether or not the defendant had control of the settlement fee overcharge.

This court reviews de novo the district court’s grant of

AAMG’s motion to dismiss pursuant to Fed. R. Civ. P.

12(b)(6). See International Mktg., Ltd. v. Archer-DanielsMidland Co., 192 F.3d 724, 729 (7th Cir. 1999). Dismissal is

proper “only if it is clear that no relief could be granted

under any set of facts that could be proved consistent with

the allegations.” Hishon v. King & Spaulding, 467 U.S. 69, 73

(1984).

To determine if dismissal was appropriate in this case we

turn to the statutory basis for the Weizeoricks’ suit. Section

8(b) of the RESPA provides:

Splitting charges. No person shall give and no person

shall accept any portion, split, or percentage of any
No. 02-2801 5

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).

The initial question then is whether Section 8(b) prohibits a party to a real estate transaction from simply

accepting an unearned fee, or does it require that the

unearned amount be part of a split or percentage of a

charge. This court has explained that Section 8(b), entitled “Prohibition against kickbacks and unearned fees,” is

an anti-kickback measure that prohibits real estate settlement overcharges when a “portion” or “percentage” of the

charge is kicked back to or “split” with a third party who

performs no service.

The statutory language describes a situation in which A

charges B (the borrower) a fee of some sort, collects

it, and then either splits it with C or gives C a portion

or percentage (other than 50 percent—the situation

that the statutory term “split” most naturally describes)

of it. A might be a lawyer, and C a closing agent . . ., and

A might charge a legal fee to B and kick back a share

of it to C for recommending to the borrower that he

use A’s services. That would be a form of commercial

bribery and is the target of section 8(b).

Kzralic v. Republic Title Co., 314 F.3d 875, 881 (7th Cir. 2002).

Our case law has consistently held that Section 8(b) is

not violated unless the defendant splits a fee with a third

party. Kzralic, 314 F.3d at 881; Echevarria v. Chicago Title &

Trust Co., 256 F.3d 623, 627 (7th Cir. 2001); Mercado v.

Calumet Fed. Sav. & Loan Ass’n, 763 F.2d 269, 270 (7th Cir.

1985). We have stressed that “under RESPA’s express

terms,” the broad protection of the statute “extends only
6 No. 02-2801

2 We also do not defer, as the Weizeoricks would have us, to

the Department of Housing and Urban Development’s (HUD)

policy statement on this provision. See Real Estate Settlement

Procedures Act Statement of Policy 2001-1, 66 Fed.Reg. 53052, 53057

(continued...)

over transactions where the defendant gave or received

any portion, split, or percentage of any charge to a third

party.” Durr v. Intercounty Title Co., 14 F.3d 1183, 1187 (7th

Cir. 1994) (internal quotation omitted). For example, in

Echevarria, we affirmed dismissal under Fed. R. Civ. P.

12(b)(6) when the plaintiffs failed to plead facts tending

to show the third-party involvement required for a Section 8(b) claim. Echevarria, 256 F.3d at 626. There, the

plaintiffs alleged that the Chicago Title and Trust Co. had

overcharged them for the recording service, and then split

this amount with the Cook County Recorder by paying the

recorder its fee and pocketing the overage. Id. at 625.

We held that Section 8(b) did not apply because the title

company both collected and retained fees from the plaintiffs in the same capacity. Id. We noted that if we subjected a settlement service provider to RESPA liability

for keeping an overcharge without requiring an allegation

that the unearned fee was shared with a third party, “we

would radically, and wrongly, expand the class of cases

to which RESPA applies.” Echevarria, 256 F.3d at 627.

Therefore, insofar as the Weizeoricks argue that liability

attaches to AAMG under Section 8(b) simply for accepting an overcharge as part of a real estate settlement transaction, they are incorrect. A well-pleaded complaint based

upon a violation of Section 8(b) must allege that the defendant shared an unearned fee with a third party to the

real estate transaction. Echevarria,256 F.3d at 627. See also,

Boulware v. Crossland Mortgage Corp., 291 F.3d 261, 265 (4th

Cir. 2002).2
No. 02-2801 7

2 (...continued)

(Oct. 18, 2001). We have previously declined to defer to HUD’s

interpretation of Section 8(b), since the statute is clear on its

face and HUD’s statement was adopted without any formal rulemaking procedures. Kzralic, 314 F.3d at 881.

In response, the Weizeoricks argue that even if they

cannot succeed by merely challenging AAMG’s receipt of

an unearned fee, they have nonetheless alleged a fee

split consistent with the statute. In support of this position the Weizeoricks direct our attention to a similar Section 8(b) case where a district court denied a motion to

dismiss where the plaintiffs alleged a similarly atypical feesplit. See Christakos v. Intercounty Title Co., 196 F.R.D. 496

(N.D. Ill. 2000). In Christakos, the title company, Intercounty Title, was responsible for handling the paperwork

associated with refinancing a home loan. Id. at 499-500. The

bank holding the initial mortgage agreed to file the paperwork to release the mortgage, but Intercounty Title twice

charged the plaintiff to have the mortgage released, once

by the bank and once by Intercounty. Id. at 500. However,

only the bank actually prepared and filed the release. The

court found that the plaintiffs successfully alleged a split

in violation of Section 8(b) because Intercounty shared

the fee with a third party, the bank. See id. at 503. Specifically the court found that the two recording fee payments “were made from the same pool of funds from the

loan proceeds over which [the title company], as settlement agent, had control” and from which it directed payments to be made. Christakos, 196 F.R.D. at 503. Christakos

is not in conflict with Echevarria, in that the plaintiff alleged that the defendant in Christakos shared an unearned

fee with a third party involved in the real estate transaction.

Intercounty Title did not merely accept an unearned fee,
8 No. 02-2801

3 Fed. R. Civ. P. 10(c) provides “[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for

all purposes.” See also Rosenblum v. Travelbyus.com Ltd., 299 F.

657, 660 (7th Cir. 2002).

4 The actual figure supplied to the title company by AAMG

was $92,447.92, but with a provision that the amount would be

adjusted by a per diem interest rate of $17.60. If we add two

days of per diem interest added to the total supplied in the

(continued...)

but instead accepted fees for a single service, and split

that fee with a third party, who then performed the service.

Against this backdrop we review the Weiezoricks’ complaint. Significantly, the Weizeoricks allege that AAMG

violated RESPA because they received a $10.00 fee to record the release of the Weizeoricks’ mortgage, even though

the release was recorded by the closing company, and

the closing company received a separate fee for its services. For purposes of this 12(b)(6) determination, we

need to examine the “Payoff Statement” and the “Settlement Statement” referenced in the Weizeoricks’ complaint.3

This will bring into focus the exact nature of the alleged

transaction between the Weizeoricks, the closing company

and AAMG. According to the Settlement Statement, the

Weizeoricks’ return from the sale of their house was subject

to several different reductions upon closing. First, the

Weizeoricks were charged a “RELEASE FEE” of $25.60

as part of their $8063.00 in settlement charges. This group

of charges was accepted by the closing company and

was listed on the “Settlement Statement” as “Settlement

charges to the seller.” In addition, they were charged

$92,483.12 as a “Payoff of first mortgage loan.” This figure

was supplied to the closing company by AAMG through a

“Payoff Statement.”4

 Included in this figure was a “Record
No. 02-2801 9

4 (...continued)

payoff statement, or $35.20, we arrive at the settlement statement’s figure of $92,483.12.

ing discharge/release of Lien Fee” of $10.00 as well as “Fax

Fees” of $15.00. Thus, the Weizeoricks allege they were

charged a total of $35.60, $10.00 paid to AAMG and $25.60

paid to the closing company, for the single service of

recording the release of the lien on their title.

If we draw all reasonable inferences from these allegations in the Weizeoricks’ favor, Scott v. O’Grady, 975 F.2d

366, 368 (7th Cir. 1992), the Weizeoricks have successfully

alleged a split of fees in violation of RESPA section 8(b).

Unlike Echevarria, there are three parties to this real estate

transaction: the Weizeoricks, AAMG and the closing

company. We can reasonably infer from the complaint

and attached documents that the closing company made

the payment of the $10.00 for the recording of the release

to AAMG from the pool of funds involved in the transaction. According to the documents, the closing company

also made a payment to the Weizeoricks that represented

their return on the sale of their house, less the closing

company’s recording fee. AAMG, therefore, allegedly received a $10.00 split of the recording fee from the closing company, even though they did not record the release.

As AAMG notes, this case does differ slightly from

Christakos. AAMG, the named defendant here, is the

entity that received the unearned payment for allegedly

performing no service. In Christakos, it was the closing

company that had control over the funds and paid out

the fee split. However, this is a distinction without a

difference because the statute does not place liability on

only the entity who pays out the alleged kickback, but

instead places liability on both the giver and receiver of
10 No. 02-2801

5 “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 . . . .” 12 U.S.C.

§ 2607(b). In addition to civil penalties, RESPA also establishes criminal sanctions for violations, including up to one

year in prison. These penalties provide that both the giver and

the acceptor of the unearned fees are jointly and severally liable. See 12 U.S.C. § 2607(d)(1)-(2).

an unearned kickback.5 Therefore, the defendant in a

Section 8(b) cause of action need not be the party who

had control over the split fees, as long as a fee split is

alleged. Nor does the statute require that the plaintiff

allege that all of the parties involved in the fee splitting

have knowledge of their participation in, or a conspiracy

to join in, an illegal arrangement. Christakos, 196 F.R.D. at

503. The Weizeoricks’ allegation could be interpreted in a

way that AAMG is itself the third party involved in the fee

split, because AAMG accepted an allegedly unearned

portion of a recording fee from the title company, who

also kept part of the charged fee and actually performed

the service of recording the release. If this angle is pursued, the district court will need to sort out any facts that

would substantiate such an interpretation.

Pursuant to Section 8(b), the Weizeoricks must also allege the fee was collected “other than for services actually

performed.” 12 U.S.C. § 2607(b). Because the Weizeroicks

allege that the title company, and not AAMG, recorded

the release of the lien, the $10.00 fee collected by AAMG

may have been unearned and therefore their complaint

satisfies the statutory requirement. However, on appeal,

the Weizeoricks conceded that AAMG prepared and

delivered the lien release to the title company. It is possible that AAMG’s $10.00 fee was incurred for the prepara-
No. 02-2801 11

tion or delivery of the release. It is also possible that AAMG

charged for that service elsewhere in the “Payoff Statement,” for example as a “Fax Fee.” Moreover it is not

entirely clear, based on the settlement statement, that the

Weizeoricks themselves paid for the entirety of the recording fees. The buyer of the house was also charged

$71.00 in recording fees, according to the settlement statement, a charge which may have also included the release fee. Every real estate closing is a unique series of

fees, payments and other monetary transactions between

at least one lender, a buyer, a seller and a closing company which raises numerous individualized questions just

like these. However, those and any related questions are

better answered through discovery, because if we confine

our review to the complaint, the Weizeoricks have successfully alleged that a third party to their real estate

transaction accepted a portion of a fee that was unearned

in violation of 12 U.S.C. § 2607(b).

IV.

In conclusion we find that the district court erred in

denying the Weizeoricks’ RESPA claim based on the court’s

conclusion that the Weizeoricks failed to plead that

AAMG controlled the settlement process and knew that

the title company was recording the release of mortgage.

Neither is an element of a claim under 12 U.S.C. § 2607(b).

The dismissal of the Weizeoricks’ RESPA claim with

prejudice is therefore REVERSED and REMANDED for further proceedings.
12 No. 02-2801

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—7-24-03