United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 11, 1998 Decided March 26, 1999
No. 97-7211
Lillie May DeBerry,
Appellant
v.
First Government Mortgage and Investors Corporation,
Appellee
Appeal from the United States District Court
for the District of Columbia
(No. 96cv00708)
Mark L. Hessel argued the cause for appellant. With him
on the briefs was Mark L. Leemon.
Nathan I. Finkelstein argued the cause for appellee. With
him on the brief was Laurie B. Horvitz.
Before: Wald, Tatel and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Wald.
Wald, Circuit Judge: Lillie May DeBerry appeals the
order and judgment of the district court granting summary
judgment to First Government Mortgage and Investors Cor-
poration ("First Government"). Ms. DeBerry brought an
action alleging that First Government had violated the Dis-
trict of Columbia Consumer Protection Procedures Act
("CPPA"), D.C. Code s 28-3904(r), by financing and refinanc-
ing her home with four mortgage loans containing unconscio-
nable terms or provisions.1 The district court granted sum-
mary judgment to First Government based solely on its
finding that D.C. Code s 28-3904(r) did not apply to real
estate mortgage finance transactions. Ms. DeBerry contests
this finding, arguing that D.C. Code s 28-3904(r) does in fact
apply to these transactions. Although neither of the parties
requested certification of this issue of statutory interpretation
to the District of Columbia Court of Appeals, see D.C. Code
s 11-723, because of its importance to local commerce and
because there is no decision by the highest court in the
District of Columbia precisely on point, we have decided to
certify it to that court. Ms. DeBerry also challenges the
district court's dismissal--as barred by the statute of limita-
tions--of two of her claims based on loans made in 1991 and
1992. We agree that such dismissal was improper and rein-
state these two claims contingent on a positive response by
the District of Columbia Court of Appeals to the question
certified here. Ms. DeBerry also challenges the grant of
summary judgment to First Government with respect to her
claim for common law infliction of emotional distress. Again,
we agree with Ms. DeBerry that this grant was improper and
accordingly reinstate the claim. Lastly, Ms. DeBerry argues
that the district court improperly denied as moot her motion
for attorneys' fees ordered by a magistrate judge to compen-
sate Ms. DeBerry for the necessity of filing a motion to
compel discovery. We agree that the district court erred in
__________
1 The district court had jurisdiction over this diversity action
based on 28 U.S.C. s 1332. Ms. DeBerry is a citizen of the District
of Columbia; First Government is a Virginia corporation with its
principal place of business in Maryland; and the amount in contro-
versy exceeds $75,000.
failing to rule on the question of attorneys' fees before
disposing of the case and accordingly remand for further
consideration.
I. Background
Ms. DeBerry inherited her home in 1981. In April of 1991,
she borrowed $10,000 from First Government, secured by a
deed of trust on her home. In August of 1992, First Govern-
ment refinanced the debt on Ms. DeBerry's home, loaning her
$16,500. On April 13, 1995, Ms. DeBerry again refinanced
her home by borrowing $21,000 from First Government. On
April 27, 1995, Ms. DeBerry borrowed $27,500 from another
lender, Bankers First Mortgage Company, Inc. ("Bankers
First").2 On May 31, 1995, Ms. DeBerry entered into still
another loan transaction with Bankers First for $39,000. In
December of 1995, First Government made a final loan to Ms.
DeBerry for $45,000.
On April 15, 1996, Ms. DeBerry filed this action against
First Government.3 Ms. DeBerry alleged that in financing
the four loans, First Government had violated the Consumer
Protection Procedures Act, D.C. Code ss 28-3901 to -3909.
Specifically, Ms. DeBerry alleged a violation of D.C. Code
s 28-3904(r)(1) and s 28-3904(r)(5). D.C. Code s 28-3904
is entitled "Unlawful trade practices." D.C. Code
s 28-3904(r)(1) and s 28-3904(r)(5) provide that it is a viola-
tion of the chapter to
(r) make or enforce unconscionable terms or provisions
of sales or leases; in applying this subsection, consider-
ation shall be given to the following, and other factors:
(1) knowledge by the person at the time credit sales
are consummated that there was no reasonable proba-
__________
2 Bankers First was also a defendant below, but was dismissed
from the suit pursuant to a settlement agreement.
3 Ms. DeBerry also sued six other defendants. Five of these
defendants were dismissed from the suit pursuant to settlement
agreements; one was dismissed on substantive grounds.
bility of payment in full of the obligation by the
consumer;
...
(5) that the person has knowingly taken advantage of
the inability of the consumer reasonably to protect his
interests by reasons of age, physical or mental infirmi-
ties, ignorance, illiteracy, or inability to understand the
language of the agreement....
Ms. DeBerry claims that for each of these loans, she was
charged a large percentage of the amount borrowed in points
and other fees. For example, with respect to the 1991 loan,
Ms. DeBerry claims that she was charged $2,540 to borrow
$10,000. Ms. DeBerry alleges that the loans made by First
Government were unconscionable in that they constituted a
pattern and practice of reverse redlining which she defines as
"a predatory lending practice of making high cost loans to
unsophisticated homeowners who have little money but do
have substantial equity in their homes." Appellant's Br. at 3.
On July 1, 1996, First Government filed a motion to dis-
miss. After hearing arguments on the motion, the district
court dismissed Ms. DeBerry's claims relating to the loans
made by First Government in 1991 and 1992 because the
loans were made more than three years before she filed her
complaint and, hence, were barred by the relevant statute of
limitations. The court declined to dismiss the rest of the
case.
On July 9, 1997, the court assigned discovery matters to a
magistrate judge. On July 31, 1997, Ms. DeBerry filed a
motion to compel discovery and to grant sanctions. After a
hearing on September 5, 1997, the magistrate judge issued an
order directing First Government to respond to certain dis-
covery requests and to pay attorneys' fees and expenses
associated with Ms. DeBerry's motion to compel. On Sep-
tember 23, 1997, First Government filed objections to the
magistrate's order. Ms. DeBerry opposed the objections and
subsequently filed a motion to set attorneys' fees.
On October 29, 1997, the district court held a hearing on a
summary judgment motion filed by First Government. The
court thereafter issued an order granting summary judgment
to First Government with respect to Ms. DeBerry's claim
under the CPPA and dismissing all other pending motions as
moot. The court also granted summary judgment to First
Government with respect to Ms. DeBerry's claim for common
law infliction of emotional distress, finding that the claim was
dependent on the CPPA claims.
The district court's decision to grant summary judgment
with respect to Ms. DeBerry's CPPA claims was based solely
on its finding that the CPPA did not apply to real estate
mortgage finance transactions, which in turn relied heavily on
a decision by the District of Columbia Court of Appeals,
Owens v. Curtis, 432 A.2d 737 (D.C. 1981), where the court
held that the CPPA did not apply to the sale of real estate.
The district court found that Owens controlled this case and
reasoned that if the CPPA did not apply to the sale of real
estate, a fortiori it did not apply to real estate mortgage
finance transactions. In granting summary judgment, the
district court made clear that the sole and exclusive basis for
its ruling was that the CPPA did not apply and that otherwise
there were a number of disputed facts deserving of a trial.4
II. Discussion
A.Applicability of D.C. Code s 28-3904(r)
The issue of whether D.C. Code s 28-3904(r) applies to
mortgage finance transactions has not been the subject of a
ruling by the District of Columbia Court of Appeals, to whom
we would ordinarily look for guidance on its construction.
See Schleier v. Kaiser Found. Health Plan of the Mid-
Atlantic States, Inc., 876 F.2d 174, 180 (D.C. Cir. 1989) (per
curiam). That court has, however, applied without comment
__________
4 Because the district court specifically found that the case would
be deserving of trial if the CPPA did in fact apply to mortgage
finance transactions, we do not address First Government's efforts
on appeal to argue the merits of Ms. DeBerry's claims.
another subsection of D.C. Code s 28-3904, (e), to a mort-
gage finance transaction and in the same case rejected a
claim under D.C. Code s 28-3904(r) on the sole ground that
the facts in the case did not support the claim (or, in other
words, not because D.C. Code s 28-3904(r) did not apply).
See Osbourne v. Capital City Mortgage Corp., 667 A.2d 1321,
1330 & 1331 n.13 (D.C. 1995). However, First Government
argues that while real estate mortgage finance transactions
may be covered under D.C. Code s 28-3904(e), which pro-
vides that it is an unlawful trade practice to "misrepresent as
to a material fact which has a tendency to mislead," they are
not covered under D.C. Code s 28-3904(r), which provides
that it is an unlawful trade practice to "make or enforce
unconscionable terms or provisions of sales or leases...."
First Government makes this argument on the basis of the
"sales or leases" language which appears in D.C. Code
s 28-3904(r). Specifically, First Government argues that one
cannot sell or lease a mortgage finance and, accordingly, that
such transactions are not contemplated under D.C. Code
s 28-3904(r).
To assess the quality of this argument, we look to the text
and structure of the CPPA as a whole. The CPPA is, as the
District of Columbia Court of Appeals has noted, "to say the
least, an ambitious piece of legislation which seeks to prohibit
a long list of 'unlawful trade practices.' " Howard v. Riggs
National Bank, 432 A.2d 701, 708 (D.C. 1981). Two sections
of the CPPA, in particular, are relevant to our inquiry. The
first is entitled "Definitions and purposes." D.C. Code
s 28-3901. This section indicates that it applies to the entire
CPPA, see D.C. Code s 28-3901(a), and provides, inter alia,
the following. A "trade practice" is defined as "any act which
does or would create, alter, repair, furnish, make available,
provide information about, or, directly or indirectly, solicit or
offer for or effectuate a sale, lease or transfer, of consumer
goods or services." D.C. Code s 28-3901(a)(6). "Goods and
services" is defined as "any and all parts of the economic
output of society, at any stage or related or necessary point in
the economic process, and includes consumer credit, franchis-
es, business opportunities, real estate transactions, and con-
sumer services of all types." D.C. Code s 28-3901(a)(7).
The second section relevant to our inquiry is entitled
"Unlawful trade practices." D.C. Code s 28-3904. Under
this section are listed a number of occurrences that constitute
unlawful trade practices. For example, it is an unlawful
trade practice to represent that goods are original or new if
in fact they are used, see D.C. Code s 28-3904(c); to falsely
state the reasons for offering or supplying goods or services
at sale or discount prices, see D.C. Code s 28-3904(l ); to
harass or threaten a consumer with any act other than legal
process, see D.C. Code s 28-3904(m); to misrepresent the
authority of a salesman, representative or agent to negotiate
the final terms of a transaction, see D.C. Code s 28-3904(v);
and so forth. As mentioned above, two other unlawful trade
practices listed under D.C. Code s 28-3904 are to misrepre-
sent as to a material fact which has a tendency to mislead, see
D.C. Code s 28-3904(e), and to make or enforce unconsciona-
ble terms or provisions of sales or leases, see D.C. Code
s 28-3904(r). First Government would have us draw a dis-
tinction between the unlawful trade practice listed in D.C.
Code s 28-3904(e), which the District of Columbia Court of
Appeals has applied to a real estate mortgage transaction,
and the unlawful trade practice listed in D.C. Code
s 28-3904(r), as to which it has not yet ruled regarding real
estate mortgage transactions, solely because of the "sales or
leases" language that appears in D.C. Code s 28-3904(r).
Of course, the reason given by the district court for con-
cluding that D.C. Code s 28-3904(r) did not apply to real
estate mortgage finance transactions was that the local courts
had construed D.C. Code s 28-3904 as not applying to sale of
real estate and that a fortiori it did not apply to mortgage
finance transactions. However, the district court was mistak-
en as to the state of local law with respect to real estate. In
Owens v. Curtis, 432 A.2d 737, 739 (D.C. 1981), the court held
that the CPPA did not apply to the sale of real estate. In
response to this decision, the Council of the District of
Columbia ("D.C. Council") amended the definitional section of
the CPPA explicitly to include "real estate transactions" as an
example of a "good or service." See Report of the Council of
the District of Columbia, Committee on Consumer and Regu-
latory Affairs, on Bill 8-111 and Bill 8-271, at 3-4 (1990)
("1990 Report") (noting that the Committee was expanding
the definition of " 'goods and services' to cover the holding in
the matter of Owen[s]"); see also Schiff v. American Ass'n of
Retired Persons, 697 A.2d 1193, 1197 & n.10 (1997) (noting
that the 1990 Amendment was "adopted with the express
purpose of reversing the holding" of Owens).
The district court below was under the misapprehension
that Owens was still good law; its denial of Ms. DeBerry's
claim on that basis is accordingly unpersuasive. Despite the
foregoing, however, First Government argues that while D.C.
Code s 28-3904(r) may now--post-Owens--apply to the sale
of real estate, it still does not apply to a real estate mortgage
finance transaction because one cannot "sell" or "lease" a
mortgage refinance and D.C. Code s 28-3904(r) specifically
mentions "sales or leases."
Ms. DeBerry in turn argues that a careful reading of the
statute reveals serious impediments to the success of First
Government's argument. D.C. Code s 28-3904(r) provides
that it is an unlawful trade practice to "make or enforce
unconscionable terms or provisions of sales or leases." To
determine whether real estate mortgages are covered under
this provision, a reader asks, "sale or lease of what?" D.C.
Code s 28-3904(r) does not itself provide the answer to this
question, but the reader may go back to the definitional
section--which applies to all of the subsections in D.C. Code
s 28-3904--to seek guidance. Under the definition of a
"trade practice," it provides that a trade practice is any act
relating to the "sale, lease or transfer, of consumer goods or
services." D.C. Code s 28-3901(a)(6) (emphasis added); see
also id. s 28-3901(a)(2) (defining "consumer" to include a
"person who does or would purchase, lease (from), or receive
consumer goods or services" (emphasis added); id.
s 28-3901(a)(3) (defining a "merchant" as a "person who does
or would sell, lease (to), or transfer, either directly or indi-
rectly, consumer goods or services, or a person who does or
would supply the goods or services which are or would be the
subject matter of a trade practice" (emphasis added). The
reader may ask, "well, what does goods and services include?"
"Goods and services" is defined in the very next subsection:
"goods and services" means "any and all parts of the econom-
ic output of society, at any stage or related or necessary point
in the economic process, and includes consumer credit, fran-
chises, business opportunities, real estate transactions, and
consumer services of all types." D.C. Code s 28-3901(a)(7)
(emphases added).5 Considering that a mortgage finance
constitutes a sale of consumer credit and consumer services
as well as qualifying as a real estate transaction, the reader,
turning back to D.C. Code s 28-3904(r), may conclude that it
is an unlawful trade practice to make or enforce unconsciona-
ble terms or provisions of sales or leases of goods and
services, including consumer credit, consumer services, and
real estate transactions; or, in other words, that D.C. Code
s 28-3904(r) applies to real estate mortgage transactions.6
__________
5 This interpretive approach is consistent with that employed by
the District of Columbia Court of Appeals. In Owens v. Curtis, 432
A.2d 737 (D.C. 1981), the court interpreted the applicable scope of
D.C. Code ss 28-3904(e) and (f). Although neither section men-
tioned the words "trade practice" or "goods and services"--just as
D.C. Code s 28-3904(r) does not use those words--the Court
nonetheless determined the applicable scope of those provisions
with reference to the definitions of those terms found in D.C. Code
s 28-3901. In particular, it read the definitions contained D.C.
Code ss 28-3901(a)(6) and (7) in tandem. See id. at 738-39 & n.2.
(As previously noted, Owens was overruled by statute for other
reasons).
6 Apart from the text and structure of the CPPA, the legislative
history provides only general background for interpretation of D.C.
Code s 28-3904(r). There is nothing in the general history to
suggest that D.C. Code s 28-3904(r) was intended to operate any
differently than any other unfair trade practice under D.C. Code
s 28-3904, and the specific history of (r) indicates only that its
purpose was to ensure that "all merchants do not ... (r) make
contracts so unfair as to be 'unconscionable.' " Report of the
Council of the District of Columbia, Committee on Public Services
and Consumer Affairs, on Bill 1-253, at 14, 17-18 (1976) ("1976
Report") (emphasis added).
However, First Government would limit "sale," as it ap-
pears in D.C. Code s 28-3904(r), to its most narrow and
traditional of senses, that is, X pays Y a certain amount to
purchase a certain good. First Government thus argues that
because it did not sell the property which was the basis of the
mortgage refinance, it did not in fact "sell" anything to Ms.
DeBerry at all. Ms. DeBerry replies that such is an oversim-
plification, as consumer transactions are often more complex
than X paying Y for a certain good. Take as an example the
common situation where X buys a good from Y but ultimately
pays Z who has financed the deal and has security in the
chattel in case of default. Has Z "sold" anything to X in this
scenario? Ms. DeBerry argues that the CPPA assumes that
Z has sold a good or service to X by extending consumer
credit and hence that the transaction between Z and X would
be covered by D.C. Code s 28-3904(r).7 See Jackson v.
Culinary School of Washington, 788 F. Supp. 1233, 1253
(D.D.C. 1992) (applying D.C. Code s 28-3904(r) to extension
of consumer credit, holding that a "merchant includes one
who sells consumer credit as well as those entities which take
an assignment of the credit account and continue the exten-
sion of credit to the consumer"); rev'd on other grounds 27
F.3d 573 (D.C. Cir. 1994); Lawson v. Nationwide Mortgage
Corp., 628 F. Supp. 804, 807 (D.D.C. 1986) (holding that
mortgage refinancing transaction was covered by the CPPA
__________
7 The legislative history of the 1990 Amendment bears out this
thesis.
The definition of "goods and services" is amended to include all
residential real estate transactions. This amendment was ex-
panded to address problems that have arisen in recent years.
Given their complexity, it is hard to discern when a real estate
transaction may be considered a sale. It is the Committee's
belief that the inclusion of the term "transaction" will give the
court sufficient range to discern whether a transaction is a sale
or a lease arrangement. Furthermore, as the statute presently
prohibits application to landlord-tenant issues, it is felt that the
use of the term "transaction" has been given specific parame-
ters for court interpretation.
1990 Report, at 3.
because the CPPA "specifically encompasses such 'consumer
credit' transactions").8
Ms. DeBerry's interpretation of D.C. Code s 28-3904(r), in
light of the text and structure of the CPPA as a whole, does
not lack persuasive force, but because the local courts have
not ruled directly on this issue and because the answer will
have significant effects on District of Columbia mortgage
finance practice, we have decided to save the issue for the
District of Columbia Court of Appeals. According, we certify
the following question pursuant to D.C. Code s 11-723:
Does D.C. Code s 28-3904(r) apply to real estate
mortgage finance transactions?
Appended to this certification are the briefs and portions of
the trial court record provided by the parties to this appeal.
In addition, we shall provide the District of Columbia Court
of Appeals with any other portion of the trial court record it
might desire to have in order to answer the certified question.
B.Statute of Limitations
Ms. DeBerry argues that the district court erred in dis-
missing her claims relating to loans made in 1991 and 1992.
Ms. DeBerry filed her complaint in 1996 and, hence, these
loans, if considered separately, are on their faces barred by
the relevant statute of limitations. See D.C. Code
s 12-301(8) (limitation is three years where not otherwise
specifically prescribed). However, Ms. DeBerry argues that
the district court ought not to have dismissed these claims
based solely on the pleadings, that is, before she had an
opportunity to conduct discovery. While it might be difficult
for Ms. DeBerry to demonstrate that the 1991 and 1992 loans
are not to be viewed as separate incidents vulnerable to the
statute of limitations, she should have been afforded an
__________
8 See also 1976 Report, at 13-14 (defining "goods and services" as
"the subject matter of any trade practice, including any action
normally considered only incidental to the supply of goods and
services to consumers") (emphasis added).
opportunity to do so.9 Accordingly, we find that the district
court erred in dismissing the claims before appropriate dis-
covery could be conducted. The reinstatement of these
claims will of course be held in abeyance until the question of
whether D.C. Code s 28-3904(r) applies to real estate mort-
gage transactions has been resolved by the District of Colum-
bia Court of Appeals.
C. Claim for Infliction of Emotional Distress
Ms. DeBerry challenges the grant of summary judgment
for First Government with respect to her claim for common
law infliction of emotional distress. The only reason the
district court gave for its dismissal was that the claim was
dependent on the CPPA claims and that the dismissal of the
latter therefore required the dismissal of the former. Dis-
missal on this ground was incorrect. See Saunders v. Nema-
ti, 580 A.2d 660, 661 (D.C. 1990). Accordingly, we reinstate
Ms. DeBerry's claim for common law infliction of emotional
distress and remand it for reconsideration by the district
court.
__________
9 For example, Ms. DeBerry may be able to demonstrate that she
only realized First Government's alleged scheme to strip equity
from her home after a number of the loans had been made and
hence that the 1991 and 1992 loans were not barred pursuant to the
"discovery rule." See Farris v. Compton, 652 A.2d 49 (D.C. 1994).
However, a second argument against dismissal based on a "continu-
ing tort" theory appears to be unavailable. Ms. DeBerry relied on
this court's decision in Page v. United States, 729 F.2d 818, 821
(D.C. Cir. 1984) ("It is well-settled that '[w]hen a tort involves
continuing injury, the cause of action accrues ... at the time the
tortious conduct ceases' ") (footnote omitted), to argue that First
Government's actions constituted a continuing tort and hence that
the 1991 and 1992 loans were not untimely. However, the District
of Columbia Court of Appeals has specifically rejected the reason-
ing in Page, see National R.R. Passenger Corp. v. Krouse, 627 A.2d
489, 497-98 (D.C. 1993), and has held that "the policy disfavoring
stale claims makes application of the 'continuous tort' doctrine
inappropriate." Wallace v. Skadden, Arps, Slate, Meagher & Flom,
715 A.2d 873, 883 (D.C. 1998). Accordingly, the "continuing tort"
argument appears to be unavailable under District of Columbia law.
D.Attorneys' Fees
Finally, Ms. DeBerry argues that a court order to pay
attorneys' fees with respect to discovery issues is independent
of the merits of the underlying case and, hence, that the
district court erred in failing to rule on the magistrate's order
of fees before disposing of the case. We agree and, accord-
ingly, remand the issue of attorneys' fees with instructions
that the district court rule on the issue irrespective of the
outcome of the case on the merits.
III. Conclusion
For the foregoing reasons, we reverse the district court's
dismissal of Ms. DeBerry's claim for common law infliction of
emotional distress and remand for further consideration; we
reinstate Ms. DeBerry's claims relating to loans made in 1991
and 1992, contingent on the District of Columbia Court of
Appeals' affirmative response to the question certified; and
we reverse the district court's dismissal of the order of
attorneys' fees and remand with instructions to rule on the
order irrespective of the outcome of the case on the merits.
Finally, we certify the question of whether D.C. Code
s 28-3904(r) applies to real estate mortgage finance transac-
tions to the District of Columbia Court of Appeals for resolu-
tion.
So ordered.