The U.S. Eighth Circuit Court of Appeals recently upheld a trial court's summary judgment ruling against a borrower on a claim alleging a violation of the Minnesota Mortgage Originator and Servicer Licensing Act ("MOSLA") due to his failure to prevail on his claims asserted under the federal Real Estate Settlement Procedures Act ("RESPA") upon which the borrower's MOSLA claims were predicated.
A copy of the opinion is available at: Link to Opinion
This matter arose from the borrower's qualified written requests ("QWR") submitted pursuant to RESPA to his loan servicer following the borrower's receipt of a notice of default. The borrower requested information concerning the servicer's default claim and requested a complete copy of the transaction history for the loan including the history prior to the transfer to the current servicer.
As noted by the Eighth Circuit, the servicer failed to provide all the requested information in response to the borrower's QWR, and in particular, the servicer failed to provide the requested transaction history prior to the service transfer.
This is the second appeal to be considered by the Court in this matter. Previously, the matter was before the Court following the trial court's grant of summary judgment in favor of the borrower on both claims under RESPA and MOSLA. In its prior ruling, the Eighth Circuit determined that although the servicer violated RESPA, summary judgment in favor of the borrower was inappropriate because the borrower failed to present evidence of actual damages.
As to damages, the borrower alleged and presented evidence that he had expended $80 to obtain copies of bank records which he supplied to the servicer as part of his multiple QWRs. However, the funds expended by the borrower only concerned records which related to loan transactions after the servicer transfer to the current servicer. And, as noted by the Court, the servicer actually responded and provided that information in its responses, and therefore, the Court determined that the borrower failed to prove damages arising directly from the RESPA violation.
However, the matter was remanded to the trial court for further proceedings as to whether or not the borrower could maintain a claim under MOSLA despite the failure of his RESPA claim.
As you may recall, MOSLA provides that no residential mortgage servicer shall "violate any provision of any ... federal law regulating residential mortgage loans." Minn. Stat. s. 58.13, sub. 1(a)(8). "A borrower injured by a violation of" any federal law regulating mortgage loans "shall have a private right of action" and can recover (1) actual, incidental and consequential damages, (2) statutory damages, (3) punitive damages, if appropriate, and (4) court costs and reasonable attorney's fees. Minn. Stat. s. 58.18, sub. 1.
In the case at hand, the borrower's claim under MOSLA was premised entirely upon the alleged violation of RESPA. And on remand, the trial court granted summary judgment in favor of the servicer determining that because the MOSLA claim is "predicated solely on the RESPA violation" and if there "were no actual damages under RESPA, then there are no actual damages under MOSLA."
The borrower appealed this decision, and argued that he was entitled to statutory remedies under MOSLA simply because the servicer violated RESPA and regardless as to whether or not he was damaged, and that the borrower may sustain an injury as a result of the violation even if he did not sustain any actual damages.
The Eighth Circuit rejected the borrower's arguments.
The Court determined that the more reasonably interpretation of the term "injured by" used in the MOSLA was as an "umbrella term that encompasses several types of damages" and it was not proper to read the statute, as argued by borrower, to mean that "injured by" and damages were two separate terms with "injured by" not requiring any actual injury.
In short, the Eighth Circuit opined that MOSLA required that the borrower's "injury must be something more than court costs and reasonable attorney's fees that are generated in litigation under MOSLA. Otherwise, the statute would permit a borrower to create an injury by filing a lawsuit based on a violation that caused no injury."
The borrower also argued that the $80 cost for the bank records could constitute actual damages. The Court rejected this argument as well because it had already decided this decision in its prior determination that these funds did not pertain to the actual violation of RESPA by the servicer.
Finally, the Eighth Circuit determined that the borrower had waived his claims and arguments that he had been damaged by the servicer's charges to his account for late fees and corporate advances. As noted by the Court, the borrower had conceded that the servicer had credited back these fees in his summary judgment briefing, and thus, the borrower could not attempt to argue otherwise on appeal.
Accordingly, the Eighth Circuit determined that the borrower failed to establish that any question of material fact existed as to whether he was "injured by" the servicer's violation of RESPA, and affirmed the trial court's entry of summary judgment in favor of the servicer on the borrower's claim under MOSLA.
Ralph T. Wutscher
Maurice Wutscher LLP
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