PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THOMAS A. ARTHUR, JR.; JENNIFER
WHITEHEAD, Individually and on
behalf of two classes of consumers
similarly situated,
Plaintiffs-Appellants,
No. 08-1727
v.
TICOR TITLE INSURANCE COMPANY
OF FLORIDA,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(1:07-cv-01737-AMD)
Argued: May 12, 2009
Decided: June 18, 2009
Before WILKINSON and KING, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed by published opinion. Judge Wilkinson wrote the
opinion, in which Judge King and Senior Judge Hamilton
joined.
2 ARTHUR v. TICOR TITLE INSURANCE
COUNSEL
ARGUED: Philip Scott Friedman, FRIEDMAN LAW
OFFICES, PLLC, Washington, D.C., for Appellants. Darryl J.
May, BALLARD, SPAHR, ANDREWS & INGERSOLL,
LLP, Philadelphia, Pennsylvania, for Appellee. ON BRIEF:
Martin E. Wolf, Richard S. Gordon, Benjamin H. Carney,
QUINN, GORDON & WOLF, CHTD., Baltimore, Maryland,
for Appellants. Robert A. Scott, Lisa M. Welsh, BALLARD,
SPAHR, ANDREWS & INGERSOLL, LLP, Baltimore,
Maryland, for Appellee.
OPINION
WILKINSON, Circuit Judge:
Plaintiffs are homeowners in Maryland who purchased title
insurance from Ticor Title Insurance Company of Florida
when they refinanced their mortgages. They allege that Ticor
charged them rates that were higher than the applicable rates
Ticor had on file with the Maryland Insurance Commissioner.
And plaintiffs claim that Ticor, by splitting these excessive
charges with its local agents, violated Section 8 of the Real
Estate Settlement Procedures Act ("RESPA"), 12 U.S.C.
§ 2607.
Because Ticor and its agents performed services in return
for the charges that 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, see Boulware v. Crossland Mortgage Corp.,
291 F.3d 261, 265 (4th Cir. 2002). Thus, the district court
properly dismissed plaintiffs’ RESPA claims. We also con-
clude that plaintiffs’ state-law claims warranted dismissal, pri-
marily for want of exhaustion, and we therefore affirm the
district court’s judgment. While the law is not indifferent to
ARTHUR v. TICOR TITLE INSURANCE 3
the abuses plaintiffs allege, plaintiffs have chosen the wrong
statute and the wrong forum in which to press their case.
I.
Ticor is a Florida corporation that sells title insurance in
Maryland. Pursuant to the Maryland Insurance Code, Ticor
has filed the rates that Ticor charges for title insurance with
the Maryland Insurance Commissioner, and the Commis-
sioner has approved those rates. See Md. Code Ann., Ins.
§§ 11-403, 11-404. In particular, Ticor has three filed,
approved rates: (1) its "Original Issue Rate"; (2) its "Reissue
Rate"; and (3) its "Extended Coverage Rate." Ticor’s reissue
rate is 40% less than its original issue rate, and its extended
coverage rate is 20% more than its original issue rate—which
means that the extended coverage rate is double the reissue
rate. The Insurance Code requires Ticor to adhere to these
rates when it sells title insurance in Maryland. See id. §§ 11-
407, 27-216(b).
The plaintiffs in this case, Thomas Arthur and Jennifer
Whitehead, claim that Ticor did not follow these filed rates
when it sold title insurance policies to plaintiffs and others in
Maryland. In particular, Arthur and Whitehead allege that
Ticor charged the wrong rate when plaintiffs purchased title
insurance policies in connection with refinancing the mort-
gages on their homes. Plaintiffs claim that when a title insur-
ance policy already exists on a piece of property, as was the
case when plaintiffs refinanced, Ticor must charge the reissue
rate. But when plaintiffs refinanced their mortgages and pur-
chased title insurance for the benefit of their lenders, Ticor
charged plaintiffs the extended coverage rate. Plaintiffs there-
fore claim that Ticor charged them double the lawful rate.
Plaintiffs also claim that Ticor charged these excessive
rates with the assistance of local title insurance companies
that acted as Ticor’s agents in Maryland and that received
commissions from Ticor. Specifically, plaintiffs allege that
4 ARTHUR v. TICOR TITLE INSURANCE
Ticor’s agents performed "closing and settlement services"
when plaintiffs refinanced their mortgages. Plaintiffs allege
that the services performed by the agents included conducting
title searches and issuing the title insurance policies on behalf
of Ticor. And when Ticor allegedly charged plaintiffs an
excessive rate for their title insurance policies, plaintiffs claim
that Ticor split the excessive fees with its agents.
Based on these allegations, plaintiffs filed a class action
complaint against Ticor in district court. Plaintiffs sought
damages under four legal theories. First, plaintiffs stated a
claim for money had and received under Maryland common
law. Second, plaintiffs claimed that Ticor had violated Section
8 of the federal Real Estate Settlement Procedures Act
("RESPA"), 12 U.S.C. § 2607. Third, plaintiffs brought a
claim for negligent misrepresentation under Maryland law.
Finally, plaintiffs filed a count of civil conspiracy, also under
Maryland law. Plaintiffs asserted that the district court had
both federal question and diversity jurisdiction over this
action.
Ticor moved to dismiss before any issues of class certifica-
tion were reached, and the district court granted the motion
for all four of plaintiffs’ claims. Only the first three counts are
at issue in this appeal. On plaintiffs’ claim for money had and
received, the district court dismissed because plaintiffs had
failed to exhaust the administrative remedies that were avail-
able to them under the Maryland Insurance Code—which
authorized the Insurance Commissioner to order, among other
things, restitution for a violation of the Insurance Code. See
Md. Code Ann., Ins. § 4-113(d)(2). With respect to RESPA,
the district court held that plaintiffs had failed to state a valid
claim because Ticor and its agents had performed services in
connection with plaintiffs’ purchase of title insurance, and
because RESPA did not prohibit charging excessive fees for
those services. Finally, the district court dismissed plaintiffs’
negligent misrepresentation count because plaintiffs had not
alleged a false statement by Ticor.
ARTHUR v. TICOR TITLE INSURANCE 5
Plaintiffs now appeal the district court’s dismissal of their
claims under RESPA, for money had and received, and for
negligent misrepresentation. Our review is de novo.
II.
A.
We begin with plaintiffs’ claims under RESPA. Section
8(b) of RESPA provides: "No 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 in connection with a transaction involving a federally
related mortgage loan other than for services actually per-
formed." 12 U.S.C. § 2607(b). As an initial matter, plaintiffs
concede that Ticor and its agents did perform services in con-
nection with plaintiffs’ purchases of title insurance. Indeed,
plaintiffs’ complaint specifically states that Ticor provided
"settlement services" and issued plaintiffs’ title insurance pol-
icies. The complaint also declares that Ticor’s agents pro-
vided "closing and settlement services," including title
searches and the issuance of the policies on Ticor’s behalf.
Despite the fact that Ticor and its agents performed services,
plaintiffs claim that Ticor can still be liable under Section 8(b)
because the company charged rates for title insurance that
were too high under Maryland law and because it gave a por-
tion of the excessive charges to its agents.
Plaintiffs’ claim cannot be squared with the plain language
of the statute. Section 8(b) prohibits giving and accepting a
portion of a charge "other than for services actually per-
formed." Thus, the text of the statute makes clear that it bars
splitting a charge with a party that has not actually performed
services. The statute does not prohibit, as plaintiffs would
have it, charging what plaintiffs claim is too much for ser-
vices that have been performed, or splitting a fee with a party
that has performed services. Indeed, to accommodate plain-
tiffs’ theory of liability, we would have to delete the words
6 ARTHUR v. TICOR TITLE INSURANCE
"other than" from the statute and add a new provision that
bars giving and accepting "excessive fees" for services actu-
ally performed.
In Boulware v. Crossland Mortgage Corp., 291 F.3d 261
(4th Cir. 2002), we held that Section 8(b) did not prohibit a
mortgage company from imposing a "unilateral overcharge"
on a consumer for obtaining the consumer’s credit report. Id.
at 264-265. We based that holding in large part on our recog-
nition that Section 8(b) of RESPA "is not a broad price-
control provision." Id. at 265. Rather than prohibiting alleged
overpricing, we held in Boulware that Section 8(b) prohibits
certain classes of arrangements in which fees are split with or
kicked back to a third party. See id. We noted that "Congress
‘directed § 8 against a particular kind of abuse that it believed
interfered with the operation of free markets—the splitting
and kicking back of fees to parties who did nothing in return
for the portions they received.’" Id. at 268 (quoting Mercado
v. Calumet Fed. Sav. & Loan Ass’n, 763 F.2d 269, 271 (7th
Cir. 1985)); see also id. at 266 ("[Section 8(b)] prohibits
‘splitting fees with anyone for anything other than services
actually performed.’" (quoting Willis v. Quality Mortgage
USA, Inc., 5 F. Supp. 2d 1306, 1308 (M.D. Ala. 1998))).1
It is difficult to reconcile this interpretation of Section 8(b)
with the theory of liability proposed by plaintiffs. Plaintiffs
argue that Ticor violated RESPA by charging too much for
title insurance, even though both Ticor and its agents per-
formed services. But holding Ticor liable because it charged
rates that were in plaintiffs’ view too high would require us
1
Plaintiffs argue that Boulware actually supports their RESPA claim.
But in rejecting liability for a unilateral overcharge in that case, Boulware
never suggested that there might be liability where a party gives or accepts
a fee in exchange for services actually performed. See id. at 265 n.3 (in
order for liability to attach, any fee split "must be one ‘other than for ser-
vices actually performed.’"). Here, both Ticor and its agents performed
services, so there is no liability for charging what plaintiffs allege is too
much for those services under Section 8(b) or under Boulware.
ARTHUR v. TICOR TITLE INSURANCE 7
to treat RESPA as a price-control statute—a result that we
rejected in Boulware. In effect, plaintiffs would require fed-
eral courts to engage in problematic efforts to set the value of
insurance services, but plaintiffs point to nothing in RESPA
that would suitably aid us in such a task. In order to avoid just
this sort of inquiry, Congress directed Section 8 at the particu-
lar situation in which fees are split with parties who perform
no services in return. That is not the situation we have here.
Our understanding of Section 8(b), both here and in Boul-
ware, is further buttressed by Section 8(c) of RESPA. In fact,
Section 8(c) is explicit in providing that there is no liability
in the specific circumstances of this case. Section 8(c) states
that "[n]othing in this section [Section 8 of RESPA] shall be
construed as prohibiting (1) the payment of a fee . . . (B) by
a title company to its duly appointed agent for services actu-
ally performed in the issuance of a policy of title insurance."
12 U.S.C. § 2607(c). That is exactly the situation we have
before us. Plaintiffs’ own complaint alleges that Ticor paid a
fee to its agents for services actually performed in issuing title
insurance. In this circumstance, Section 8(c) makes clear that
Ticor did not violate Section 8 of RESPA by paying its agents
for their services. Thus, Section 8(c) underscores what is evi-
dent from Boulware and from the text of Section 8(b) itself:
plaintiffs have not stated a valid Section 8(b) claim.
B.
Plaintiffs respond with an ingenious argument. They say
that we should divide the amount that Ticor charged plaintiffs
for title insurance into two parts: the portion of the charge that
plaintiffs say was valid under the Maryland Insurance Code,
and the portion of the charge that plaintiffs say was invalid.
Plaintiffs argue that the invalid part of the charge was not "for
services actually performed" and that Ticor therefore violated
Section 8(b) when it split this invalid charge with its agents.
To support this argument, plaintiffs rely on a regulation pro-
mulgated under RESPA by the Department of Housing and
8 ARTHUR v. TICOR TITLE INSURANCE
Urban Development. That regulation provides: "If the pay-
ment of a thing of value bears no reasonable relationship to
the market value of the goods or services provided, then the
excess is not for services or goods actually performed or pro-
vided." 24 C.F.R. § 3500.14(g)(2).
Plaintiffs’ argument is unpersuasive because it seeks to nul-
lify the plain language of Sections 8(b) and 8(c). Section 8(b)
prohibits giving and accepting a fee where the fee is not "for"
services performed, and Section 8(c) provides that there is no
liability when a title insurance company pays its agent "for"
services performed. 12 U.S.C. § 2607(b), (c). Regardless of
the size of the fee that Ticor charged plaintiffs and passed on
to its agents, the fee was still "for" the services that Ticor and
its agents performed. See Hazewood v. Found. Fin. Group,
LLC, 551 F.3d 1223, 1226 (11th Cir. 2008); Kruse v. Wells
Fargo Home Mortgage, Inc., 383 F.3d 49, 56 (2d Cir. 2004).
The statutory language does not authorize a court to divide
charges into valid and invalid parts and to decide that the
invalid part is not for services performed. See Kruse, 383 F.3d
at 56. Indeed, we rejected in Boulware a similar attempt, also
relying on regulations and policy statements issued by HUD,
to impose liability beyond the plain scope of Section 8(b). See
291 F.3d at 266-67 (citing 24 C.F.R. § 3500.14(c); Real
Estate Settlement Procedures Act Statement of Policy 2001-1,
66 Fed. Reg. 53,052, 53,057-59 (Oct. 18, 2001)). Here, as in
Boulware, "the text of the statute controls." Id. at 267.
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. See Friedman v. Market St. Mortgage
Corp., 520 F.3d 1289, 1297 (11th Cir. 2008); Santiago v.
GMAC Mortgage Group, Inc., 417 F.3d 384, 386-87 (3d Cir.
2005); Kruse, 383 F.3d at 55-57 & n.4. These courts have also
ARTHUR v. TICOR TITLE INSURANCE 9
held, as we have, that RESPA is not a price-control statute.
See Friedman, 520 F.3d at 1296; Santiago, 417 F.3d at 387
n.3; Kruse, 383 F.3d at 56-57; see also Haug v. Bank of Am.,
N.A., 317 F.3d 832, 837-38 (8th Cir. 2003); Krzalic v. Repub-
lic Title Co., 314 F.3d 875, 880 (7th Cir. 2002). And these cir-
cuits 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). See
Friedman, 520 F.3d at 1296-98; Santiago, 417 F.3d at 387-
89; Kruse, 383 F.3d at 56, 62.
In fact, the Eleventh Circuit recently decided a case just
like this one—and held that there was no liability. In Haze-
wood v. Foundation Financial Group, LLC, 551 F.3d 1223
(11th Cir. 2008), the plaintiff claimed, as here, that the defen-
dant had violated Section 8(b) by charging rates for title insur-
ance that exceeded the rates filed with the state insurance
commissioner and by splitting the charges with the defen-
dant’s agents. Id. at 1224-25. And the plaintiff argued that,
even though the defendant and its agents had performed ser-
vices, the invalid part of each charge for title insurance had
not been for services actually performed. Id. at 1226. The
Eleventh Circuit rejected the plaintiff’s claim, holding that
"for a settlement fee to be actionable, no services must be ren-
dered in exchange for it." Id. The court reiterated that Section
8(b) is not a price-control provision and "does not provide a
cause of action for excessive fees," and it held that the plain-
tiff could not divide up a fee into earned and unearned por-
tions under the statute. Id. at 1225-27. The Eleventh Circuit
concluded: "The notion that Congress intended RESPA § 8(b)
to implicitly create a federal remedy for overcharges under
state insurance laws . . . is simply too much to swallow." Id.
at 1226.
We agree with the Eleventh Circuit—this sort of claim goes
too far. Indeed, in arguing that we should divide Ticor’s fees
into valid and invalid parts based on state law, plaintiffs are
10 ARTHUR v. TICOR TITLE INSURANCE
merely seeking to circumvent the recognition of this court and
many others that RESPA is not a price-control provision.
Applying plaintiffs’ view, any charge that is too high would
violate Section 8(b) because part of that charge would not be
for services performed. It makes no difference to our analysis
that plaintiffs claim that Ticor’s charges are excessive as a
matter of state insurance law. Regardless of the reason a
charge may be too high, if we interpreted RESPA to prohibit
charging too much for services actually performed, then the
statute would be nothing more than a prohibition on inflated
prices.
We therefore say again what we have said before: Section
8(b) of RESPA is "not a broad price-control provision." Boul-
ware, 291 F.3d at 265. RESPA carries significant liability in
the form of criminal penalties and treble damages. See 12
U.S.C. § 2607(d). Congress chose not to impose these
weighty penalties on parties that split a fee for services per-
formed based on the allegation that the amount charged to the
consumer was too high. We will not extend RESPA’s penal-
ties beyond the scope of the statutory language to create lia-
bility for improper pricing. We therefore conclude that the
district court properly dismissed plaintiffs’ RESPA claims.2
III.
We turn next to plaintiffs’ claim for money had and
received. In Maryland, a cause of action for money had and
received "lies whenever the defendant has obtained posses-
2
Plaintiffs state in conclusory fashion that Ticor also violated Section
8(a) of RESPA, which prohibits kickbacks in exchange for business refer-
rals. See 12 U.S.C. § 2607(a). At no point have plaintiffs explained why
Ticor’s commissions to its agents should be regarded as referral fees in the
circumstance in which the agents have indisputably performed settlement
services. Because Section 8(c) makes clear that Ticor has not violated any
of the provisions of Section 8 in this circumstance, see id. § 2607(c)
("Nothing in this section shall be construed as prohibiting . . . ."), plain-
tiffs’ Section 8(a) claim fails as well.
ARTHUR v. TICOR TITLE INSURANCE 11
sion of money which, in equity and good conscience, he ought
not to be allowed to retain." Benson v. State, 887 A.2d 525,
547 (Md. 2005) (quoting State ex rel. Employment Sec. Bd. v.
Rucker, 126 A.2d 846, 849 (Md. 1956)). The district court did
not reach the merits of plaintiffs’ claim for money had and
received. Instead, the court dismissed the claim because plain-
tiffs had failed to exhaust the administrative remedies that
were available under the Maryland Insurance Code.
We agree with the district court that exhaustion was
required. Under Maryland law, when the statutory text creat-
ing an administrative remedy is not dispositive, there is "a
presumption that the administrative remedy is intended to be
primary, and that a claimant cannot maintain the alternative
judicial action without first invoking and exhausting the
administrative remedy." Zappone v. Liberty Life Ins. Co., 706
A.2d 1060, 1069 (Md. 1998) (citing additional cases). More-
over, where a judicial remedy is "wholly or partially depen-
dent upon the statutory scheme which also contains the
administrative remedy, or upon the expertise of the adminis-
trative agency," Maryland courts have "usually held" that
exhaustion is required. Zappone, 706 A.2d at 1070 (citing
cases); see Muhl v. Magan, 545 A.2d 1321, 1322, 1330-31
(Md. 1988); see also Fosler v. Panoramic Design, Ltd., 829
A.2d 271, 280-82 (Md. 2003); Bell Atl. of Md., Inc. v. Inter-
com Sys. Corp., 782 A.2d 791, 806-807 (Md. 2001).
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. If the Insurance Code did not
require Ticor to adhere to its filed rates, plaintiffs would have
no right to recover from Ticor for charging an excessive fee.
Indeed, plaintiffs have suggested no reason other than a viola-
tion of the Insurance Code that Ticor would be liable to them
under a claim for money had and received. Zappone, on
which plaintiffs rely to argue that exhaustion was not
required, did not address a claim for exceeding filed insurance
rates, but instead claims for fraud and negligence that were
12 ARTHUR v. TICOR TITLE INSURANCE
"wholly independent" of the Insurance Code. 706 A.2d at
1071. Plaintiffs’ claim, by contrast, explicitly depends on the
statute that also makes administrative remedies available to
plaintiffs.
Moreover, plaintiffs’ claim for money had and received
implicates the expertise of the Maryland Insurance Commis-
sioner in multiple ways. First, the Commissioner’s expertise
may be important in deciding whether Ticor actually violated
the Insurance Code—which Ticor does not concede. The
Commissioner would be in a better position than a federal
court to determine, for example, whether plaintiffs are cor-
rectly interpreting the rate structure that Ticor filed with the
Commissioner. See Md. Code Ann., Ins. § 11-403. In addi-
tion, plaintiffs argue that Ticor violated the Insurance Code’s
prohibition on "willfully" charging excessive rates, id. § 27-
216(b)(1)(i), so the Insurance Commissioner’s experience in
this area likely will be useful in determining whether Ticor
had the necessary intent to violate the Code.
Second, the Commissioner’s expertise also will be impor-
tant in determining the proper remedy for any violation by
Ticor. Plaintiffs’ claim for money had and received is equiva-
lent to an action for restitution, so plaintiffs’ claim implicates
the authority of the Commissioner to require restitution for a
violation of the Insurance Code. See Md. Code Ann., Ins. § 4-
113(d)(2). It therefore makes sense for the Insurance Com-
missioner to exercise his expertise in the first instance in
determining whether full restitution to plaintiffs is warranted.
Furthermore, the Insurance Code grants the Commissioner the
authority to impose a wide variety of other remedial mea-
sures, such as cease and desist orders, revocation of certifi-
cates of authority to sell insurance, and monetary penalties.
See id. §§ 4-113, 4-114, 27-103. The Maryland legislature
surely intended for the Commissioner to exercise his expertise
in choosing among these remedies for a violation of the Code.
ARTHUR v. TICOR TITLE INSURANCE 13
In sum, plaintiffs’ claim for money had and received is not
only dependent on the Insurance Code, but plaintiffs will be
able to seek the same remedy before the Commissioner that
they seek here. And 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.3
The judgment of the district court is therefore
AFFIRMED.
3
We also affirm the district court’s dismissal of plaintiffs’ claim for
negligent misrepresentation. A necessary element of that claim is the alle-
gation of a false statement. Lloyd v. Gen. Motors Corp., 916 A.2d 257,
273 (Md. 2007). Plaintiffs’ complaint alleged only that each HUD-1 form
that Ticor gave to plaintiffs contained a false statement because the charge
listed on each form for title insurance was unlawfully high. But as the dis-
trict court correctly held, plaintiffs "admit that the dollar amount listed on
the HUD-1 statement under title insurance was the amount charged and
collected by Ticor," so plaintiffs "do not [validly] assert that Ticor made
any false statements."