Source: https://www.sefinanciallitigation.com/author/aisrael/
Timestamp: 2019-03-20 14:00:01
Document Index: 437692914

Matched Legal Cases: ['§ 2607', '§ 2607', '§ 2607', '§ 2607', '§ 2607', '§ 2607', '§ 2607']

Adam Israel | Southeast Financial Litigation Monitor | Financial Services Lawyers | Balch & Bingham LLP
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Adam is an attorney in Balch & Bingham’s Birmingham office. Adam’s practice primarily centers on financial services litigation, general commercial litigation, and appellate litigation in both federal and state court. Adam has represented lenders in a variety of contexts, including suits regarding real estate title disputes, card processing disputes, promissory note disputes, and securities-related disputes.
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CAFA’s “Local Controversy” Exception Does Not Apply When Federal Court Has Independent Basis for Subject Matter Jurisdiction
By Steven C. Corhern, Adam Israel & Gregory C. Cook on April 3, 2017
Last month, the Eleventh Circuit rejected a plaintiff’s bid to keep her class action in state court even though CAFA’s local controversy exception would have required a remand. In Blevins v. Aksut, No. 16-11585, — F.3d —, (11th Cir. Mar. 1, 2017), the Court held that the “local controversy” exception to CAFA jurisdiction does not apply when the federal court has an independent basis for subject matter jurisdiction.
Elizabeth Blevins, on behalf of herself and a putative class, sued Seydi Aksut, M.D. and several affiliated persons and entities, alleging that they operated an unlawful scheme to defraud them. Dr. Aksut would allegedly falsely tell patients that they required heart surgery and would perform these unnecessary surgeries. The defendants would then bill patients for the procedures. After learning about the practice, Blevins filed suit in an Alabama state court, asserting that Dr. Aksut and his co-defendants violated the Racketeer Influenced and Corrupt Organizations Act. The defendants removed the case to federal court and moved to dismiss.
Blevins filed a motion to remand, contending that CAFA’s local-controversy provision prohibited the trial court from exercising jurisdiction. The local controversy exception directs federal courts to decline to exercise CAFA jurisdiction when certain criteria are met, including when two-thirds or more of the proposed class members are citizens of the state where the action was filed, the defendant is a citizen of the same state, and the principal injuries occurred in the same state.
The trial court denied Blevins’s motion to remand, and she appealed to the Eleventh Circuit, which affirmed. The Court explained that CAFA was one way to get class actions into federal court, not the exclusive way to do so. As such, the “local controversy” exception does not apply when a federal court has an independent basis for jurisdiction. In this case, the plaintiff asserted claims under a federal statute—RICO—which gave the district court federal question jurisdiction. The removal was proper on that basis. Interestingly, after affirming the denial of the motion to remand, the Eleventh Circuit reversed the district court’s dismissal of the lawsuit, holding that payments made to a medical provider are compensable injuries under RICO.
Blevins is a reminder that CAFA is not the only basis for removing a class action to federal court. Class actions could also be removed when they assert a claim under federal law, independently meet the requirements for diversity jurisdiction, the case relates to a bankruptcy proceeding, or there is some other independent basis for federal jurisdiction. Accordingly, when considering whether to remove, Defendants should remember to consider all possible bases for federal subject matter jurisdiction.
Continue Reading Citing Spokeo, Eleventh Circuit Rejects Class Action Over Late Mortgage Satisfaction Recordation, Holding Plaintiff Had Not Alleged Concrete Injury-In-Fact Due to Statutory Violation
By Adam Israel & Gregory C. Cook on August 3, 2016
Eleventh Circuit Affirms Dismissal of RESPA Class Action Holding That (1) Mortgage Service Provider’s Procurement of Closing Attorney Is More Than “Nominal” Service and (2) RESPA Does Not Prevent Mortgage Service Provider From Marking Up Price of a Third-Party Service
By John Naramore & Adam Israel on May 14, 2015
The Eleventh Circuit recently affirmed the dismissal of a putative class action relating to the settlement charges a mortgage service provider is allowed to collect under the Real Estate Settlement Procedures Act (“RESPA”). In Clements v. LSI Title Agency, Inc., No. 14-11636, the Court held: (1) that a mortgage service provider does not perform only “nominal” services when it procures a closing attorney; and (2) that a mortgage service provider does not violate RESPA by marking up the price of a third-party service.
When Patricia Clements refinanced her mortgage, the bank hired LSI Title Agency to provide refinancing services. Because Georgia law requires all closing services to be performed by a licensed attorney, LSI contracted with the Law Offices of William E. Fair III, LLC. The law office arranged for an independent closing attorney to provide the requested services.
Clements later filed a putative class action in state court against LSI, the Law Offices of William E. Fair III, LLC, and Fair, individually. The defendants removed to federal court, where Clements filed an amended complaint. Clements alleged two violations of RESPA. First, she claimed that the defendants and the closing attorney split a $300 settlement fee in violation of RESPA because the defendants provided no actual services related to the closing of the loan. Second, Clements argued that LSI violated RESPA by charging an $85 markup for “government recording charges.” The defendants moved to dismiss, arguing that Clements lacked standing, and, in the alternative, that Clements had failed to state a claim upon which relief could be granted. The trial court agreed, finding that Clements lacked standing because she received a credit for the exact amount of her closing costs, which included the $300 settlement fee and the marked-up recording charges. The trial court dismissed the amended complaint, and Clements appealed.
The Eleventh Circuit affirmed in part and reversed in part. At the outset, the Court determined that the trial court erred when it dismissed Clements’s complaint for lack of standing. Clements alleged that had she not been charged the $300 settlement fee and the $85 government recording markup, she would have received an additional $385 at closing. The Court found that even though Clements had received a credit for an amount equal to that $385, that fact did not necessarily refute her claim that she would have otherwise received that amount in addition to the credit she received. Accordingly, the Court found that Clements had alleged an actual injury sufficient to give her standing to pursue her claims.
Nevertheless, the Court held that Clements did not state a viable claim under RESPA. According to RESPA, “[n]o 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 . . . other than for services actually performed.” 12 U.S.C. § 2607(b). The Court held that § 2607(b) required Clements to plead that “no services were rendered in exchange for a settlement fee.” According to the Eleventh Circuit, each of Clements’s attempts fell short.
First, Clements alleged that the defendants violated RESPA when they split the $300 settlement fee, because they provided only “nominal” services. According to Clements, the services were nominal because LSI provided services that only licensed attorneys can provide, and Fair and his law office only provided the service of finding a closing attorney to perform closing services. The Court held that the fact that Georgia law made it illegal for LSI to provide settlement services did not mean that the settlement services it actually provided were nominal, i.e., “existing in name only.” The Court further held that Fair and his law office earned their portion of the settlement fee because “arranging for a third party contractor to perform a service is itself a service.” Therefore, LSI, Fair, and his law office “actually performed” “services” for their “portion[s], split[s], or percentage[s]” of the settlement fee. See 12 U.S.C. § 2607(b).
Second, Clements claimed that LSI violated RESPA by imposing an $85 markup on “government recording charges,” because, Clements argued, a markup of a charge to a consumer violates RESPA when the mortgage service provider “accepts” an unearned portion of that charge. See 12 U.S.C. § 2607(b). Joining the majority of courts of appeals to have addressed the issue, the Court decided that markups are not a violation of RESPA. The Court looked to the U.S. Supreme Court’s recent decision in Freeman v. Quicken Loans, Inc., 132 S. Ct. 2034 (2012), where the Court analyzed the language of § 2607(b) and determined that the terms “give” and “accept” in § 2607(b) refer to the exchange between a service provider and a third party, not the exchange between the consumer and the service provider. In other words, the Court held, when a service provider marks up a fee, the provider “give[s]” a “portion, split, or percentage” to a third party, and the third party “accept[s]” that “portion, split, or percentage,” and that exchange does not violate RESPA when the third party has “actually performed” a service. See § 2607(b). Accordingly, the Court determined that LSI had neither “give[n] . . . [nor] accept[ed] any portion, split, or percentage of any charge . . . other than for services actually performed.”
By Adam Israel & Gregory C. Cook on January 15, 2015