Court Opinion

ID: 9469515
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:42:36.48243+00
Date Added: 2024-06-11T17:41:25.676792
License: Public Domain

CUDAHY, Circuit Judge,
dissenting, in which SWYGERT, Circuit Judge, joins:1
From all appearances, Gannon may be guilty of accepting bribes or perhaps of *441committing acts of extortion. From all appearances, he should be charged under an appropriate rule or statute. Unfortunately, the plain language of RESPA precludes his being legitimately prosecuted under that statute.
At trial in this case the Government argued that in addition to scienter, it must prove the following elements to establish that Gannon violated Section 2607:
(1) that the defendant accepted a portion of the charges received by him,
(2) that the charges were for the rendering of a real estate settlement service,
(3) that the settlement involved a federally related mortgage loan and
(4) that the portion was other than for settlement services actually performed.
Government’s Trial Memorandum of November 29, 1979, pp. 9-10 and Appellee’s Brief, p. 21. The Government has argued throughout that these elements are requisite, and the majority accepts this position.
But merely to recite these elements is to demonstrate conclusively the irrationality of the Government’s position. On the one hand, the Government recognizes in elements (1) and (2) that it must prove that the money Gannon kept for himself (“accepted”) was part of funds he received for rendering a specific service (a real estate settlement service). But in element (4) the Government indicates it must somehow prove that the money (“portion”) the defendant kept for himself was “other than for settlement services actually performed.” Thus the position of the Government and of the majority here is logically inconsistent and indefensible because the money Gannon accepted must, in reality, either be part of the charges he received for settlement services rendered or be “other than” the charges for settlement services rendered. But these two categories are mutually exclusive; the money cannot be both part of and “other than” such charges.
The majority attempts to evade this very fundamental problem by asserting that the “reasonable value” of Gannon’s services was equal to only the statutory portion “of the ‘charge’ he levied.” At 437, 438. But what the “reasonable value” of the services might have been is, under the circumstances here, wholly irrelevant. The majority’s assertion merely restates the legal conclusion that the charge for Torrens service set by law is by definition “reasonable.” The majority is simply left to argue that the excess payment or “reasonable value” is a payment for some additional unspecified and unidentified “something.” At 437. This analysis is really consistent in economic terms only with the absurd conclusion that the excess over “reasonable value” is a pure gift (presumably generously conferred on Gannon by the banks).2 But the facts of the matter are quite different. For the banks in fact decided that more than the statutory fee had to be paid in order to obtain satisfactory and “prompt” service. Following this decision, the banks paid the additional money and received the satisfactory settlement service for which they made the payment. Reality will allow no other conclusion than that if “the defendant accepted a portion of the charges received by him,” the “portion” accepted was “for settlement services actually performed.” This being the case as a matter of simple economics, it is impossible for the Government to have proved (1) and (2) of its proposed elements of the offense without having conclusively disproved (4).
One may plausibly wonder why the plain language of RESPA is so ill-suited to prosecution of Gannon’s acts when his activities might arguably contribute in some degree to higher-than-necessary real estate settlement costs. The answer is relatively simple. RESPA was drafted having in mind the paradigmatic situation of, for example, the lawyer who refers business to a title company in exchange for payments to him by the company out of funds paid to the *442title company for the performance of actual real estate settlement services. In all the examples contained in the HUD regulations implementing Section 2607, the recipient of the illegal payments does in fact perform a “service” (the additional “something” for which the majority searches here in vain) by way of referring business to, or placing business with, a preferred title company, lawyer or other performer of settlement services.3 The ilegality under RESPA simply consists of giving or accepting payments for, e.g., referral or placement services out of funds paid for real estate settlement services, when the payee actually performs no settlement services. This is the sort of evil (payments for what in fact are referral services out of funds paid for settlement services) to which the statutory requirements of RESPA are fitted — requirements which unfortunately do not fit the present circumstances of payment (albeit improper or illegal) for the very services which are in fact performed.
This analysis fully answers the majority’s contention that Gannon “must have accepted the extra payments for something other than rendering his settlement services.” (At 437). The majority does not suggest what this other “something” is. In fact, it cannot because there is no other “something.” But, in the situations the statute is designed to fit, the other “something” is the referral or placement of business (or similar activity). Gannon is simply not in a position to favor anyone with his (or someone else’s) business.4
This analysis also fully meets the majority’s concern that my construction of the statute would render it “meaningless”. In any situation where payments for referral or placement of business (or similar activity) are made to persons or entities which perform no settlement services out of funds paid for real estate settlement services (and these are the only sorts of situations addressed by the HUD regulations), my analysis would fully support prosecution and conviction. Section 2607 makes eminently good sense and will work well in the context of the evils it was designed to address. It will not, however, fit the present situation, where a gratuity or bribe is being paid to a public official to properly perform his assigned duty and where he is in no position to do any other favor (such as referring business) for the person paying the gratuity or bribe.
In addition to the fundamental problem I have discussed, there is at least one other major difficulty in sustaining this conviction. Under the majority’s approach, it is necessary to find in the first instance that the “gratuities” or “bribes” paid to Gannon were “part of a charge for real estate settlement services.” Certainly, it requires a powerful massaging of the English language to convert payments which are in addition to a published statutory charge into “parts” or “portions” of the charge itself.5 Even if this act of semantic contor*443tion can be successfully performed, one simply arrives at the dead end that the services for which the charge is paid are without question the very same services which are actually performed. And the statutory requirements are thus not met.
I therefore respectfully dissent.

. The panel to which the majority refers as having originally decided this case consisted of Circuit Judges Swygert and Cudahy and Senior District Judge Robert A. Grant of the Northern *441District of Indiana, sitting by designation. The panel decision was unanimous.

. In economic terms, value is equivalent to price and an increment above value is necessarily gratuitous.

. The regulations list the following examples of violations of Section 2607:
(1) A title company pays a portion of the title insurance premium to a person who performs no services for the title company other than placing an application with the title company.
(2) A title company gives a discount or allowance for the prompt payment of a title insurance premium or other charge for a settlement service to a real estate agent, attorney or lender as a rebate for the placement of business with such title company.
(3) An attorney gives a portion of his fees to another attorney, a Lender or a real estate agent who only referred a prospective client to the attorney.
(4) A title company pays a “commission” to a corporation that is wholly owned by one or more Lenders, even though such corporation performs no substantial services on behalf of the title company.
24 C.F.R. § 3500.14(g) (1980).

. The majority also suggests that the basic dilemma to which I advert can be cured by assigning the benefít of Gannon’s satisfactory service to the bank employees (and by implication) not to the bank customers. Even accepting this imaginative but highly dubious analysis as to the beneficiaries of the service, the argument does nothing to address the point that Gannon did in fact receive money “for settlement services” which he “actually performed.”

. The majority suggests that if its interpretation is not followed, the application of Section 2607 in “splitting” or “kickback” situations (in *443contrast to “gratuity” or “bribe” situations) might be frustrated. (See At 439). I think again the majority ignores the virtues of plain language. A “charge” once paid to a title company, for example, is no less a “charge” because part of it is kicked back to a lawyer for referring business. Arguable failure of consideration as to part of the payment does not affect the purpose for which the payment was made.