Virginia Lawyers Weekly

The 4th Circuit says that RESPA, the Real Estate Settlement Procedures Act, does not provide any remedy for plaintiff home buyers’ claim alleging that defendant Ticor Title Insurance Company of Florida, charged them rates higher than the applicable rates Ticor had on file with the Maryland Insurance Commissioner, and split the excessive rates with its local agents.

Because Ticor and its agents performed services in return for the charges they collected, we conclude that plaintiffs’ theory of liability conflicts with RESPA’s statutory text and with our previous recognition that RESPA is not a price-control statute. Thus, the district court properly dismissed plaintiffs’ RESPA claims.

We also conclude that plaintiffs’ state-law claims warranted dismissal, primarily for want of exhaustion, and we therefore affirm the district court’s judgment. While the law is not indifferent to the abuses plaintiffs allege, plaintiffs have chosen the wrong statute and the wrong forum in which to press their case.

Other circuits addressing the scope of Section 8(b) have rejected similar requests to break up charges into multiple pieces based on HUD’s regulations and policy statements. These courts have held that it would vitiate the plain language of Section 8(b) to divide fees into valid and invalid – or, in the language of 24 C.F.R. § 3500.14(g)(2), “reasonable” and “unreasonable” – parts.

These courts have also held, as we have, that RESPA is not a price-control statute. And these circuits have held that Section 8(b) does not prohibit charging “too much” for services actually performed; instead, they have held that an allegation that services were not performed is necessary for liability to attach under Section 8(b).

As to plaintiff’s state-law claims, we agree with the district court that exhaustion was required. Plaintiffs’ claim in this case is dependent on the Insurance Code because that claim will succeed only if plaintiffs show that Ticor violated the Code. Plaintiffs’ claim explicitly depends on the statute that also makes administrative remedies available to plaintiffs. Requiring administrative exhaustion will protect the commissioner’s role under the Insurance Code in exercising his expertise and carrying out his remedial powers. Because plaintiffs have not yet exhausted or even pursued their available administrative remedies, their claim for money had and received was properly dismissed.

Arthur v. Ticor Title Ins. Co. of Florida (Wilkinson, J.) No. 08-1727, June 18, 2009; USDC at Baltimore, Md. (Davis) Philip S. Friedman for appellants; Darryl J. May for appellee. VLW 009-2-112, 13 pp.

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