UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1545
JEANNE BIGGS; CHARLES BIGGS,
Plaintiffs – Appellants,
and
BORROWER NO. 0124854613, Mr. and Mrs. B.,
Plaintiff,
v.
EAGLEWOOD MORTGAGE, LLC; COUNTRYWIDE BANK, N.A.,
Defendants – Appellees,
MARIA ABREU,
Movant,
and
SETTLEMENT SOLUTIONS; AURORA LOAN SERVICES LLC; LEHMAN
MORTGAGE CAPITAL; LEHMAN BROTHERS; KEVIN DECKER; MIKE
SWEENEY; DONALD CROWE; MICHAEL A. PERRY,
Defendants.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Peter J. Messitte, Senior District
Judge. (8:07-cv-02768-PJM)
Submitted: November 2, 2009 Decided: November 30, 2009
Before WILKINSON, NIEMEYER, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Mary E. Goulet, WHITHAM CURTIS CHRISTOFFERSON & COOK, PC,
Reston, Virginia, for Appellants. Charles S. Hirsch, Glenn A.
Cline, BALLARD SPAHR ANDREWS & INGERSOLL, LLP, Baltimore,
Maryland; Richard L. Miller, MONSHOWER MILLER & MAGROGAN, LLP,
Columbia, Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Jeanne and Charles Biggs (“the Biggses”) appeal the
district court’s order granting summary judgment to Appellees
Countrywide Bank FSB and Eaglewood Mortgage, LLC, (collectively
“Appellees”) on the Biggses’ action under the civil RICO
statute, 18 U.S.C. § 1964 (2006). On appeal, the Biggses assert
that the district court erred in applying a reliance element to
their claims of mail fraud; determining the Biggses had prior
knowledge of the possibility of negative amortization; failing
to view the facts in the light most favorable to the Biggses;
and improperly deciding questions of the Biggses’ knowledge and
reliance. We affirm.
We review de novo a district court’s order granting
summary judgment and view the facts in the light most favorable
to the nonmoving party. Bogart v. Chapell, 396 F.3d 548, 555
(4th Cir. 2005). Summary judgment is appropriate when no
genuine issue of material fact exists and the moving party is
entitled to judgment as a matter of law. See Fed. R. Civ. P.
56(c); Bogart, 396 F.3d at 555. Summary judgment will be
granted unless a reasonable jury could return a verdict for the
nonmoving party on the evidence presented. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986).
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I. Reliance
RICO provides a private right of action and treble
damages for “[a]ny person injured in his business or property by
reason of a violation of section 1962” of the RICO’s criminal
component. 18 U.S.C. § 1964(c) (2006). Section 1962 contains
RICO’s criminal prohibitions; pursuant to 18 U.S.C. § 1962(c),
it is
“[U]nlawful for any person employed by or associated
with” an enterprise engaged in or affecting interstate
or foreign commerce “to conduct or participate,
directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering
activity.” The term “racketeering activity” is
defined to include a host of so-called predicate acts,
including “any act which is indictable under . . .
section 1341 (relating to mail fraud).”
Bridge v. Phoenix Bond & Indemnity Co., 128 S. Ct. 2131, 2137-38
(2008) (quoting 18 U.S.C. §§ 1961(1)(B), 1962(c) (2006)). Mail
fraud occurs when an individual, having devised a plot to
defraud, uses the mail in order to further their plot. 18
U.S.C. § 1341 (2006). “The gravamen of the offense is the
scheme to defraud, and any mailing that is incident to an
essential part of the scheme satisfies the mailing element, even
if the mailing itself contains no false information.” Bridge,
128 S. Ct. at 2138. Thus, RICO allows for a private civil
action to any individual injured through a pattern of conduct
constituting mail fraud.
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On appeal, the Biggses assert that the district court
erred in requiring them to prove reliance on Countrywide’s
alleged mail fraud. The Biggses contend this requirement
contravenes the Supreme Court’s recent decision in Bridge. This
court reviews such questions of statutory interpretation de
novo. See United States v. Pierce, 278 F.3d 282, 286 (4th Cir.
2002).
In Bridge, the Supreme Court held that “no showing of
reliance is required to establish that a person has violated
§ 1962(c) by conducting the affairs of an enterprise through a
pattern of racketeering activity consisting of acts of mail
fraud.” Bridge, 128 S. Ct at 2139. Though the Supreme Court
noted that a plaintiff would generally be unable to demonstrate
causation without showing at least some form of reliance, “the
fact that proof of reliance is often used to prove an element of
the plaintiff’s cause of action . . . does not transform
reliance itself into an element of the cause of action.” Id. at
2144.
Though the district court was correct in determining
that the instant situation was somewhat different from the facts
in Bridge, it nevertheless erred by finding that “Bridge did not
eliminate reliance as an element of a RICO claim predicated on
mail fraud.” In so holding, the district court improperly
distinguished Bridge from the instant case by citing to
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footnotes and other dicta in which the Supreme Court expressed
its view that it would be challenging to demonstrate proximate
cause without also proving some kind of reliance. See, e.g.,
Bridge, 128 S. Ct. at 2143 n.6 (“Of course, a misrepresentation
can cause harm only if a recipient of the misrepresentation
relies on it), 2144 (“Of course, none of this is to say that a
RICO plaintiff who alleges injury by reason of a pattern of mail
fraud can prevail without showing that someone relied on the
defendant’s misrepresentations”) (internal quotation marks and
citations omitted). Based on this language, the district court
found that Bridge’s holding was limited to cases of third-party
reliance.
However, contrary to the finding of the district
court, such statements do not restrict Bridge’s holding. Though
Bridge concerned a plaintiff who had been harmed by a third-
party’s reliance on the defendant’s misrepresentations, we do
not read its holding as limited to this particular situation.
The Supreme Court explained that, though common law fraud
required a showing of reliance, “[n]othing on the face of the
relevant statutory provisions imposes such a requirement.”
Bridge, 128 S. Ct. at 2138. Instead, using the mail in
furtherance of a scheme to defraud is a predicate act of
racketeering under RICO, even if there is no reliance on the
misrepresentation. Id. If the defendant has engaged in a
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pattern of such behavior, he will be liable under RICO, without
anyone actually relying on a fraudulent misrepresentation. Id.
Therefore, we agree with the Biggses that Bridge’s holding
eliminates the requirement that a plaintiff prove reliance in
order to prove a violation of RICO predicated on mail fraud.
However, we may affirm a district court’s grant of
summary judgment on any legal basis supported by the record; we
need not rely upon the grounds asserted by the district court.
See Bryant v. Bell Atl. Md., Inc., 288 F.3d 124, 132 (4th Cir.
2002). Therefore, despite this error by the district court, we
affirm the district court’s grant of summary judgment to
Countrywide, as the Biggses failed to prove, or even allege, any
fraudulent behavior on the part of Countrywide or Eaglewood.
The Biggses allege three different purportedly fraudulent
actions on the part of the Defendants:
Existing homeowners were re-financed with payment
option adjustable rate mortgage loans that were at
least one of the following: unsuitable for the
homeowner; less suitable than at least one other
financing approach available to the homeowner; more
costly to the homeowner than at least one other
suitable financing approach available to the homeowner
with the additional cost inuring to the benefit of the
enterprise or a member or members thereof.
In support of these conclusory allegations, the Biggses
repeatedly state that the Defendants failed to tell them that “a
fixed rate mortgage . . . was more suitable for [the Biggses]
than [a] . . . payment option ARM.” Additionally, the Biggses
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contend that the Defendants utilized various agents in order to
“cloak the . . . payment option ARM with seeming legitimacy and
safety,” making various statements to the Biggses about how a
payment option ARM would benefit them.
However, despite these allegations, the Biggses still
fail to demonstrate, or even allege, that they were misled about
any particular loan term. The adjustable rate rider of each
payment option ARM explicitly delineated the schedule for
changes in the interest rate and the monthly payment amount, as
well as the possibility of negative amortization. As noted by
the district court, the Biggses were “active and continuous
shoppers of mortgage financing” and “possessed obvious and
extensive experience with both fixed-rate loans and ARM loans”
as evidenced by the fact that, beginning in 2003, the Biggses
refinanced their mortgage five times in a span of four years.
This familiarity with multiple loan types, combined with the
fact that each loan complained of explicitly put the Biggses on
notice of the possibility of negative amortization, supports our
conclusion that the district court did not err in granting
summary judgment for the Defendants.
II. Other Issues
Next, the Biggses contend that the district court
“wrongly construed the 1997 mortgage as negatively amortizing.”
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In effect, the Biggses argue that this improper construction led
the district court to incorrectly determine that the Biggses
understood the principle of negative amortization. However, as
explained above, the possibility of negative amortization was
explicitly delineated in the adjustable rate rider to each of
the payment option ARMs of which the Biggses now complain.
Therefore, regardless of whether the Biggses’ 1997 mortgage had
the possibility for negative amortization, the Biggses were made
aware of this possibility before entering into each of the ARM
mortgages with Countrywide.
The Biggses also assert that “the district court erred
by [fail]ing to identify reasonable inferences in Homeowner’s
favor.” It appears that the Biggses assign error to the
district court’s conclusion that they were experienced mortgage
shoppers, as well as Countrywide’s alleged mischaracterization
in its pleadings of the 2004 loan as having an interest rate of
4.269 percent for the length of the loan. However, as
previously explained, the fact that the Biggses refinanced their
mortgage five times in a span of four years strongly supports a
finding that the Biggses understood the terms of the mortgages,
and were not innocent “victims” of a fraud scheme.
Additionally, though Countrywide appears to have
mischaracterized the 2004 mortgage as having a lifetime interest
rate of 4.269 in its memorandum in support of its motion to
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dismiss, the Biggses fail to demonstrate how this error in the
pleadings had any bearing whatsoever on whether the Biggses
understood the mortgages into which they entered. * Therefore,
these contentions are without merit.
Finally, the Biggses assert that the district court
erred in improperly deciding questions of “knowledge and
reliance” when considering the Biggses’ claims of fraud and
negligent misrepresentation, incorrectly relying on
“Countrywide’s interpretation of what the undisputed evidence of
record shows.” This contention is also without merit. The
Biggses’ amended complaint is bereft of a single allegation of
purposeful misrepresentation or reliance thereon. Moreover, as
we have described, all the pertinent information regarding the
loans, their adjustable interest rates, and the possibility of
negative amortization was disclosed to the Biggses in the form
of detailed adjustable rate riders. The Biggses initialed each
*
Moreover, any such error is clearly the product of a
clerical error and not evidence of Countrywide’s deceit or own
misunderstanding of its loans. In the pleadings, Countrywide
incorrectly described the loan as having an interest rate of
4.269 percent, when in actuality this was the calculated APR of
the loan appearing in the Truth-in-Lending-Disclosure-Statement
(“TILDS”). The initial interest rate was 1.750 percent,
adjusted monthly. This discrepancy is clearly explained in the
“Definition” section of the TILDS, which states that the
interest rate found in the rider is but one of several charges
included in the APR, which results in an APR higher than the
interest rate shown in the rider.
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page of the adjustable rate rider for the first loan indicating
their review of it, and the Biggses signed the final page of
each of the three riders, each time indicating that they
accepted and agreed to the terms delineated in the rider.
Accordingly, because the Biggses fail to present any evidence,
or even raise any serious possibility, of misrepresentation or
their reliance thereon, we find that the district court
correctly granted summary judgment as to their claims.
Accordingly, we affirm the judgment of the district
court. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
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