Court Opinion

ID: 9470056
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:56:11.133868+00
Date Added: 2024-06-11T17:41:42.597139
License: Public Domain

POSNER, Circuit Judge,
with whom
CUDAHY, Circuit Judge, joins, dissenting from the denial of rehearing en banc.
The panel’s opinion is not only lucid and well-reasoned;' it reaches an attractive result: it excludes from the federal courts a host of petty cases, involving mortgage escrow accounts, which do not belong in those courts under an optimal allocation of jurisdiction between the state and federal courts. Nevertheless, I disagree with the decision, and believe that the case should be reheard en banc. Although 12 U.S.C. § 2609 is pretty small beer, the panel’s opinion both sets forth an approach potentially of general application to deciding when federal statutes may be enforced by private damage actions and creates a conflict with another circuit. And the case lends itself to en banc treatment, presenting as it does a single issue, purely of law.
Until quite recently, the test for whether a private damages action would lie for violation of a federal statute, if the statute made no explicit provision for such actions, was that stated in Texas & Pac. Ry. v. Rigsby, 241 U.S. 33, 39, 36 S.Ct. 482,484, 60 L.Ed. 874 (1916): “A disregard of the command of the statute is a wrongful act, and where it results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover the damages from the party in default is implied . ... ” Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), began a movement away from this approach that culminated in Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S.Ct. 2479, 2488, 61 L.Ed.2d 82 (1979), which held that “the central inquiry” was “whether Congress intended to create, either expressly or by implication, a private cause of action.”
I accept this formulation as absolutely binding upon me; and I accept that under it a court may not create a private right of action unless it has evidence — -whether based on the language, structure, background, or history of the statute — that Congress, if it had thought about the issue, would have wanted the statute to be privately enforceable. But this approach implies also that a decision involving one statute is unlikely to decide a case involving a different one. The statute in Touche Ross, for example, just required brokers to keep certain records. There was no indication of “a class for whose especial benefit the statute was enacted,” so even under Rigsby it is doubtful whether a private damages suit should have been allowed. But section 10 of RESPA protects mortgagors from being overcharged (“overescrowed”) by their mortgagees. See also the statement of congressional purpose in 12 U.S.C. § 2601(b)(3). Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979), does not decide this case either. The statute in Transamerica created several express remedies, and the issue was whether Congress would have wanted the courts *1092to create still another one. RESPA creates no remedy for violations of section 10. Merrill Lynch, Pierce, Fenner & Smith v. Curran, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982), cannot carry the day for the panel either; for the Court in that case found an implied private right of action. These are the principal decisions that the panel cites in support of its result.
We can get little help from cases under different statutes. Instead we must ask: if the Congress that enacted RESPA had adverted to the question of remedies for violations of section 10, would it have decided that there ought to be a private damage remedy?
Section 10 forbids the- lender to force the borrower to deposit money in escrow above a certain amount. The natural remedy for the violation of such a prohibition is a suit by the borrower to get the excess deposit returned to him. Congress could not have wanted the lender to be able to retain the excess deposit in violation of the statute. True, a private suit is not the only possible remedy. Alternatively, the borrower could complain to an agency with regulatory authority over .the lender, and that was done in this case. However, the panel opinion points out that some borrowers may not be able to get any relief by this route, and this should make us hesitant about concluding that Congress would not have wanted borrowers to have a right to sue in court.
More important, the administrative remedy appears to be inadequate even for those borrowers who can invoke it. In the present case, for example, the agency made the defendant return to the plaintiff the money she had overpaid into the escrow account, but (she alleges, and we must assume for purposes of this appeal) not the interest that the defendant had earned on that money. The return of the interest is not some bagatelle, inessential to the adequacy of the administrative remedy. This is not a personal injury case, where interest accrues only from the date of the judgment, and not from the date of the tort itself. It is a suit based on unjust enrichment — a suit for restitution. The defendant took and kept money to which the plaintiff was entitled by section 10, and any interest that the defendant earned on the money while it was in its possession is recoverable by the plaintiff under the principles of unjust enrichment. See Goff & Jones, The Law of Restitution 479 (2d ed. 1978); cf. Prosser, Handbook of the Law of Torts 627-29 (4th ed. 1971). You may not steal a man’s pregnant cow and after it has given birth return the cow and keep the calf. No more should the defendant in this case be allowed to keep the increase in its wealth from investing the plaintiff’s money. An order to return just the principal is not an adequate remedy. Yet it may be the only remedy that this plaintiff has under the decision today. Whether she has a remedy under state law for violation of a federal law that the federal courts themselves refuse to enforce is mere speculation. Otto v. Specialties, Inc., 386 F.Supp. 1240, 1244-45 (N.D.Miss.1974), implies she does not.
The fact that sections 7 and 8 of RESPA (and the repealed section 6) create express damage remedies does not show that Congress did not want victims of section 10 violations to be able to get their money back through suits in federal court. Sections 7 and 8 create treble damage remedies for offenses that Congress no doubt thought more serious than violations of section 10, and section 6 provided for minimum damages plus reasonable attorney fees. Federal courts cannot provide these extraordinary remedies — treble damages, minimum damages, and attorney fees — without express statutory authority. But there is nothing extraordinary about the remedy sought by the plaintiff in this case. Cf. Deckert v. Independence Shares Corp., 311 U.S. 282, 289, 61 S.Ct. 229, 233, 85 L.Ed. 189 (1940); SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1307-08 (2d Cir.1971). Nor does section 16 of RESPA, by creating jurisdiction to enforce sections 6 through 8, exclude jurisdiction over suits under section 10. The main provision in section 16 is a one-year statute of limitations. It is a natural quid pro quo for the extraordinary types of relief that sections 6 through 8 give prevailing plaintiffs.
*1093It is of course possible that the banking industry managed to get section 10 enacted without teeth; and if it did the panel decision is correct. But there is no indication that it did, and there is contrary evidence in Senator Proxmire’s attack on the bill which became RESPA, a bill he described as “a major defeat for consumers and a stunning victory for the real estate settlement lobby.” S.Rep. No. 866, 93d Cong., 2d Sess. 13 (1974), U.S.Code Cong. & Admin.News, pp. 6546, 6557. Senator Proxmire complained that the bill did not go far enough in dealing with abusive practices in real estate settlements. But he did not complain that section 10 lacked teeth. He would have done so if he had thought that the banking industry had succeeded in defanging the section.
RESPA was enacted in 1974 and amended in 1976, and it is worth remembering that this was a period of hectic enactment of regulatory statutes with scant regard for the burden that private enforcement of those statutes might place on the federal courts. I do not suggest that Congress had Rigsby at its fingertips, and declined to create an explicit damage remedy for section 10 violations because it thought the courts would do so by implication. But I believe that the nature of the right created, a pecuniary right of borrowers, coupled with the absence of express provision of any alternative remedy to damages for the enforcement of that right, supports an inference that Congress, had it thought about the matter, would have wanted suits for restitution of money withheld in violation of section 10 to be maintainable in federal courts.
It is true that Congress did not in RESPA itself confer jurisdiction on the federal courts to enforce section 10. But there was no need for it to do so. Jurisdiction over such suits is conferred by sections 1331 and 1337 of the Judicial Code. It is true that at the time RESPA was passed, section 1331 was limited to suits for $10,000 or more, and a section 10 case would rarely involve such large stakes. Therefore, if this were the only jurisdictional statute available in this case, one could argue that Congress could not have intended section 10 to be enforced by private damage actions in federal court. But section 1337 did not have in 1974 (and does not have today) an amount in controversy requirement that might apply to a suit under section 10. If Congress should be charged with having known of the $10,-000 minimum jurisdictional amount in section 1331, it must also be assumed to have known of the zero minimum in section 1337. There is no doubt that suits to enforce section 10 can be brought under section 1337 as well as under section 1331. RESPA is either a housing or a banking statute; whichever it is, it is an “Act of Congress regulating commerce,” so that section 1337 creates jurisdiction over suits arising under it. See Davis v. Romney, 490 F.2d 1360, 1365-66 (3d Cir.1974); Murphy v. Colonial Fed. Savings & Loan Ass’n, 388 F.2d 609, 615 (2d Cir.1967).
I would reverse the judgment dismissing the complaint.