Chultem v. Ticor Title Insurance Co.

2015 IL App (1st) 140808

THIRD DIVISION
December 16, 2015

Nos. 1-14-0808 and 1-14-0820 (consolidated)

DOLJIN CHULTEM, Individually and on Behalf ) Appeal from the
of All Others Similarly Situated, ) Circuit Court of
) Cook County
Plaintiffs-Appellants and Cross-Appellees, )
) Nos. 06 CH 09488
v. ) 06 CH 09489
)
TICOR TITLE INSURANCE COMAPNY, ) Honorable
CHICAGO TITLE AND TRUST COMPANY, and ) Mary L. Mikva,
FIDELITY NATIONAL FINANCIAL, INC., ) Judge Presiding.
)
Defendants-Appellees and Cross-Appellants. )
_________________________________________ )
)
PAUL COLELLA, Individually and on Behalf of )
All Others Similarly Situated, )
)
Plaintiffs-Appellants and Cross-Appellees, )
)
v. )
)
CHICAGO TITLE INSURANCE COMPANY and )
CHICAGO TITLE AND TRUST COMPANY, )
)
Defendants-Appellees and Cross-Appellants. )

PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion.
Justice Lavin concurred in the judgment and opinion.
Justice Pucinski dissented, with opinion.

OPINION

¶1 In this consolidated class action appeal, plaintiffs Doljin Chultem and Paul Collella,

individually and on behalf of all others similarly situated, appeal the trial court's ruling that

defendants Ticor Title Insurance Company (Ticor), Chicago Title Insurance Company (Chicago

Title), Chicago Title and Trust Company (CT&T) and Fidelity National Financial, Inc. (Fidelity)
 Nos. 1-14-0808 and 1-14-0820 (consolidated)

(collectively, the "title companies") did not make illegal kickback payments by splitting a fee

with attorneys for their referral of business to the title companies in violation of the Illinois Title

Insurance Act (215 ILCS 155/1 (West 2002)) (Title Act) 1 and the Illinois Consumer Fraud and

Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2002)) (Consumer Fraud Act).

Plaintiffs assert that payments made by the title companies to attorneys who also served as title

agents (attorney agents) were unlawful because the title companies provided those attorneys with

a pro forma title commitment that determined the insurability of a property's title—a function

they assert must be performed by the attorney agents to earn the fee paid by the title companies.

Plaintiffs claim that because the attorney agents received the pro forma commitment, they did

not perform "core title services" and the title company's payment was unearned and, in reality, an

illegal kickback. Because recent case law fails to support plaintiffs' position, we affirm.

¶2 BACKGROUND

¶3 A. RESPA and HUD Policy Statements

¶4 We begin by providing a brief overview of the pertinent statutory and regulatory

framework to place in context the issues and arguments raised in this appeal. The Real Estate

Settlement Procedures Act (12 U.S.C. § 2601 et seq. (2000)) (RESPA) is a federal statute

establishing various requirements relating to the residential real estate settlement process.

Weatherman v. Gary-Wheaton Bank of Fox Valley, N.A., 186 Ill. 2d 472, 481 (1999). Congress

enacted RESPA to provide purchasers and sellers of real property with more detailed advance

disclosure of the settlement costs associated with real estate closings. Id. Congress also sought

to protect consumers "from unnecessarily high settlement charges caused by certain abusive

1
The Title Act incorporates the Real Estate Settlement Procedures Act (12 U.S.C. § 2607
(2000)). See 215 ILCS 155/21 (West 2002).

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practices that have developed in some areas of the country." 12 U.S.C. § 2601(a) (2000). More

specifically, Congress sought to eliminate kickbacks or referral fees for title insurance business

that contributed to increased costs of settlement services. 12 U.S.C. § 2601(b)(2) (2000).

¶5 Two sections of RESPA address these practices. RESPA section 2607(a) (12 U.S.C. §

2607(a) (2000)) prohibits kickbacks for referrals and states:

"No person shall give and no person shall accept any fee, kickback, or thing of

value pursuant to any agreement or understanding, oral or otherwise, that business

incident to or a part of a real estate settlement service involving a federally related

mortgage loan shall be referred to any person." Id.

To establish a violation of section 2607(a), the following elements must be demonstrated: "(1) a

payment or thing of value; (2) given and received pursuant to an agreement to refer settlement

business; and (3) an actual referral." Galiano v. Fidelity National Title Insurance Co., 684 F.3d

309, 314 (2d Cir. 2012).

¶6 RESPA section 2607(b) (12 U.S.C. § 2607(b) (2000)) prohibits unearned fee splitting and

states in pertinent part:

"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 performed." Id.

Section 2607(b) is violated where: (1) a person gives or accepts any portion, split or percentage

of any charge; (2) the fee-split relates to the rendering of a real estate settlement service; and (3)

the fee-split or payment is made "other than for services actually performed." (Internal quotation

marks omitted.) Sosa v. Chase Manhattan Mortgage Corp., 348 F.3d 979, 983 (11th Cir. 2003).

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Simply stated, a party violates section 2607(b) where no services are performed in exchange for

the fee charged to the consumer by a title company and later split with another party. Clements

v. LSI Title Agency, Inc., 779 F.3d 1269, 1274 (11th Cir. 2015) (a plaintiff must plead that " 'no

services were rendered in exchange for a settlement fee' " (quoting Friedman v. Market Street

Mortgage Corp., 520 F.3d 1289, 1298 (11th Cir. 2008))).

¶7 As is apparent, each subsection addresses specific conduct not addressed by the other

subsection, i.e., "[s]ubsection (a) prohibits certain kickbacks (those agreed to in exchange for

referrals) and subsection (b) prohibits certain unearned fees (those paid from a part of the charge

to the customer)." Freeman v. Quicken Loans, Inc., 566 U.S. __, __, 132 S. Ct. 2034, 2043

(2012).

¶8 In enacting RESPA, Congress also included "safe harbor provision[s]" that exempt

certain payments from the prohibition against kickbacks. Johnson v. Matrix Financial Services

Corp., 354 Ill. App. 3d 684, 689 (2004). RESPA section 2607(c)(1)(B) provides that the

payment of a fee "by a title company to its duly appointed agent for services actually performed

in the issuance of a policy of title insurance" shall not be considered a prohibited payment. 12

U.S.C. § 2607(c)(1)(B) (2000). RESPA section 2607(c)(2) provides that the payment "to any

person of a bona fide salary or compensation or other payment for goods or facilities actually

furnished or for services actually performed" shall likewise not be considered a prohibited

payment. 12 U.S.C. § 2607(c)(2) (2000). The two safe harbor exemptions are not mutually

exclusive. Howland v. First American Title Insurance Co., 672 F.3d 525, 533 (7th Cir. 2012).

¶9 Until recently, the Department of Housing and Urban Development (HUD) was the

administrative agency responsible for drafting regulations and rendering interpretations

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consistent with RESPA's objectives. 2 Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 124 (2d

Cir. 2007). Following RESPA's enactment, HUD promulgated regulations using language that

mirrors RESPA's provisions regarding the prohibition against kickbacks and unearned fees. The

regulations provide that "any referral of a settlement service is not a compensable service, except

as set forth in § 3500.14(g)(1)." 24 C.F.R. § 3500.14(b) (2001). Section 3500.14(g)(1) adopts

RESPA's "safe harbor" provisions in language identical to the statute. The regulation addressing

fee splitting provides further elaboration and states that "[a] charge by a person for which no or

nominal services are performed or for which duplicative fees are charged is an unearned fee and

violates this section." 24 C.F.R. § 3500.14(c) (2001). The regulations specify that for an

attorney, who provides multiple services and is in a position to refer settlement service business,

to receive "a payment for providing additional settlement services as part of a real estate

transaction, such payment must be for services that are actual, necessary and distinct from the

primary services provided by such person." 24 C.F.R. § 3500.14(g)(3) (2001). To further

clarify, the regulation provides the following example:

"[F]or an attorney of the buyer or seller to receive compensation as a title agent, the

attorney must perform core title agent services (for which liability arises) separate from

attorney services, including the evaluation of the title search to determine the insurability

of the title, the clearance of underwriting objections, the actual issuance of the policy or

policies on behalf of the title insurance company, and, where customary, issuance of the

title commitment, and the conducting of the title search and closing." 24 C.F.R. §

3500.14(g)(3) (2001).

2
On July 21, 2011, the Bureau of Consumer Financial Protection took over HUD's
consumer-protection functions. Freeman, 566 U.S. at __, 132 S. Ct. at 2039 n.4. In this opinion,
we continue to refer to HUD as the responsible agency.

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¶ 10 In 1996, HUD issued a statement of policy (HUD, RESPA Statement of Policy 1996-4, 61

Fed. Reg. 49398, 49399-400 (Sept. 19, 1996)) (Florida Policy Statement) 3 reflecting its

interpretation of the safe harbor exceptions set forth in section 2607(c)(1)(B) and section

2607(c)(2). Howland, 672 F.3d at 529. In HUD's opinion, "a title agent does not qualify under

the Section 8(c)(1)(B) safe harbor if the title insurance company performs any of the core title

services itself," including preparation of a preliminary or pro forma commitment. Id. at 529-30

(citing Florida Policy Statement, 61 Fed. Reg. at 49400). HUD further explained that an attorney

agent may receive compensation for services performed under section 2607(c)(2) even though

payment was prohibited under the first safe harbor provision on the basis that the attorney did not

perform any "core title agent services." (Internal quotation marks omitted.) Id. at 529. However,

HUD cautioned that the payment must be "reasonably related to the value of the services

performed" and less than the payment made to an attorney who performed all "core title

services." Id. at 530; see 24 C.F.R. § 3500.14(g)(2) (2001); Florida Policy Statement, 61 Fed.

Reg. at 49400.

¶ 11 In 2001, HUD issued a statement of policy (HUD, RESPA Statement of Policy 2001-1, 66

Fed. Reg. 53052-01 (Oct. 18, 2001)) (2001-1 SOP) detailing its position regarding the payment

of yield spread premiums by lenders to mortgage brokers. In the 2001-1 SOP, HUD reiterated

that its guidance and regulations have uniformly interpreted section 8b—codified at 12 U.S.C. §

2607(b)—as prohibiting all unearned fees. 2001-1 SOP, 66 Fed. Reg. at 53057. HUD explained

that section 8(b) "prohibits any person from giving or accepting any fees other than payments for

goods and facilities provided or services actually performed." Id. at 53053. HUD also explained

3
This policy statement is commonly referred to as the "Florida Policy Statement"
because it specifically addressed the issues and practices involving title insurance companies and
title insurance agents regarding their compliance with RESPA that HUD reviewed in Florida.

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that a single service provider incurs liability "under Section 8(b) when it charges a fee that

exceeds the reasonable value of goods, facilities, or services provided." Id. at 53059. The policy

statement considered a prohibited unearned fee to include a service provider charging "the

consumer a fee where no, nominal, or duplicative work is done, or the fee is in excess of the

reasonable value of goods or facilities provided or the services actually performed." Id.

¶ 12 Interpretation of section 2607(b) next significantly evolved following the United States

Supreme Court's decision in Freeman, 566 U.S. at __, 132 S. Ct. at 2034. In Freeman, the Court

addressed whether a charge for settlement services must be divided between two or more persons

to be considered a prohibited fee splitting payment under section 2607(b). Id. at __, 132 S. Ct. at

2037. The Freeman Court identified the dispute between the parties as to whether section

2607(b) "prohibits the collection of an unearned charge by a single settlement-service provider–

what we might call an undivided unearned fee–or whether it covers only transactions in which a

provider shares a part of a settlement-service charge with one or more other persons who did

nothing to earn that part." Id. at __, 132 S. Ct. at 2039. The court concluded that section

2607(b) does not apply where a settlement-service provider retains the fee charged to the

customer in its entirety, i.e., where there is no dividing or splitting of the fee with another party.

Id. at __, 132 S. Ct. at 2041. Thus, no violation of section 2607(b) occurred and the court

affirmed summary judgment in favor of the settlement-service provider. Id. at __, 132 S. Ct. at

2044. We further discuss below Freeman's application to the issue presented in this appeal.

¶ 13 B. Procedural History

¶ 14 This case commenced when Chultem and Colella each filed a complaint, individually and

on behalf of all others similarly situated, against the title companies claiming that the title

companies made unlawful payments to the attorney agents because the attorney agents did not

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perform "core title agent services" in addition to the services the attorneys rendered to their

clients in a real estate transaction. The Colella proposed class included transactions where

individuals purchased title insurance from Chicago Title during the period from January 1, 2001,

to September 1, 2005, and Chicago Title paid attorney agents their full compensation. The

Chultem proposed class included transactions where individuals purchased title insurance from

Ticor during the period from February 1, 2000, to September 30, 2005, and Ticor paid the

attorney agents in full after sending the attorney agents a preliminary title exam (A-Exam) that

was not changed in any way by the attorney agents.

¶ 15 According to the complaints, which were amended multiple times, the putative class

members purchased, sold or mortgaged real property and paid for a title insurance policy from

the title companies to protect the purchasers against any defect or irregularity in the property's

title. A portion of the premium paid for the policy was then shared by the title company with an

attorney agent in exchange for allegedly performing title services. The title companies typically

paid an attorney agent 70% to 80%, and at all times more than 50%, of the premium collected for

the title insurance policy. Plaintiffs claimed the title companies' payments to the attorney agents

were unlawful because the attorney agents did not perform any "core title services" 4 if the title

companies sent the attorney agents a title insurance commitment, i.e., either a Preliminary

Commitment provided by Chicago Title to the Colella class members or an A-Exam provided by

Ticor to the Chultem class members. Plaintiffs argued that those documents examined the real

property's title and determined the insurability of the property—a function that should be

4
Plaintiffs defined "core title services" as: "evaluation of the title search to determine
the insurability of the title, the clearance of underwriting objections, the actual issuance of the
policy or policies on behalf of the title insurance company, and, where customary, issuance of
the title commitment, and the conducting of the title search and closing."

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performed by the attorney agent to justify the payment received from the title companies.

Plaintiffs alleged that the title companies disguised prohibited kickbacks for the referral of

business by implementing a program where the attorney agents would receive payments from the

title companies—a portion that was collected from consumers—under the guise of providing

"core title agent services." The attorney agents received compensation from both the title

companies—for services as a title agent—and their clients—for services as an attorney. Based

on these common allegations, Chultem and Colella sought class certification.

¶ 16 In response, the title companies asserted that the payments were not unlawful because

attorney agents were required to perform core title agent services, which they in fact performed,

and plaintiffs received value from the title insurance issued as a direct result of the attorney

agents' services. The title companies also asserted that no statute supports and no case law

adopts plaintiffs' position that sending a Preliminary Commitment or A-Exam to an attorney

agent automatically renders payments by the title companies to attorney agents violative of

RESPA.

¶ 17 The parties continued to litigate their positions until the trial court ultimately denied

plaintiffs' amended second motion for class certification. Plaintiffs filed a petition for leave to

appeal pursuant to Illinois Supreme Court Rule 306(a)(8) (eff. Feb. 16, 2011) regarding the

denial of class certification along with a motion to consolidate, which a different division of this

court allowed. On April 15, 2010, we issued an opinion reversing the trial court's order denying

class certification and remanded with instructions to certify the class. Chultem v. Ticor Title

Insurance Co., 401 Ill. App. 3d 226, 238 (2010). In reaching that conclusion, this court

considered only the predominance element under section 2-801 of the Illinois Code of Civil

Procedure (735 ILCS 5/2-801 (West 2006)), which requires "that common questions

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predominate over any questions involving only individual members." Chultem, 401 Ill. App. 3d

at 235. We stated that a transaction-by-transaction review to determine whether an attorney

agent provided " 'core title services' " or actually performed services was not necessary if the title

companies sent the attorney agents " 'pro forma commitments' " because the title companies

would have unlawfully paid the attorney agents the full amount of compensation for unearned

" 'core title services.' " Id. Accordingly, we identified two questions for the trial court to address

on remand: (1) "whether the defendants were sending their attorney agents pro forma

commitments" and (2) "whether the defendants lawfully can pay their attorney agents full

contract compensation after sending them pro forma commitments." Id. at 237. This court

reasoned that those determinations were questions common to all class members and would

establish a right to recovery in other class members. Id. at 236-37.

¶ 18 Following remand, the trial court certified the class and both parties filed motions for

partial summary judgment addressing the two questions identified by this court. The trial court

granted the plaintiffs' motion regarding the second question finding that the title companies were

prohibited from paying attorney agents in full after sending a pro forma title commitment as that

term was defined by the Florida Policy Statement.

¶ 19 The trial court denied both summary judgment motions on the issue of whether the

Preliminary Commitments and A-Exams were pro forma commitments and set the case for a

bench trial to address that issue. The trial court identified the underlying issue at trial as

"whether there were actual, necessary and distinct services remaining after the title companies

sent an A-Exam or a Preliminary Commitment to their attorney agents." The following pertinent

testimony was adduced during trial.

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¶ 20 The attorney agents in the underlying Colella and Chultem real estate transactions

testified regarding services they performed. Richard Cohn served as the attorney agent for

Chicago Title in the Colella transaction and also represented the property's sellers. Jay Orlowski

served as the attorney agent for Ticor in the Chultem transaction and likewise represented the

property's sellers.

¶ 21 Generally, an attorney agent performs the following services: (1) orders a title search

package; (2) identifies liens or encumbrances recorded against the title; (3) ensures the clearing

of liens recorded against the title; (4) verifies the individual selling the property held title to the

property; (5) recommends the waiver of exceptions to title; (6) attends closings; and (7)

maintains records of the transaction. Basically, an attorney agent ensures that exceptions to title

are cleared so that good title is transferred during the real estate transaction, i.e., obtains a release

or payoff of a mortgage recorded on the property and ensures the payoff letter matches the lien.

An attorney agent also communicates with the lender throughout the process to incorporate any

changes to the loan amount or identity of the lender and to identify the information that should

be included on the endorsements to the title policy. An attorney agent's role in clearing

underwriting objections and recommending the waiver of exceptions to title results in the

issuance of a title insurance policy. An attorney agent is exposed to liability for the exceptions

he or she deems should be waived. Unlike an attorney agent, a seller's attorney does not provide

comparable clearing and waiver services. As an attorney in an approved attorney agent program,

the attorney agent must comply with guidelines established by the title companies to ensure the

attorney agent does not waive exceptions without proper clearance.

¶ 22 Regarding the Colella transaction, Cohn knew before receiving the title search package

from Chicago Title that he would have to clear liens recorded on the property's title, and he

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received payoff letters before obtaining the search package. Cohn reviewed the search package

and identified exceptions that needed to be disclosed on the title commitment. Based on his

review, Cohn concluded that there were no judgments against either party that would need to be

cleared before issuance of the title policy. Cohn also compared the mortgages listed in the

search package with the payoff letters that he had already investigated before receiving the

package. Cohn likewise compared the tax information listed in the search package with the

information Cohn had previously obtained. Cohn instructed Chicago Title to change the owner's

name from "Thome" as reflected in the search package to "Thomas" as reflected in the payoff

letters and the sales contract (although Chicago Title never made the change), indicated that

Chicago municipal taxes must be paid and the condominium association must provide a payoff

letter regarding assessments—all of which were required to determine final insurability. Cohn

also attended the closing where he determined what exceptions to title should be waived.

¶ 23 Regarding the Chultem transaction, Orlowski stated that after receiving the search

package, he: (1) cleared the identified exceptions noted in the A-Exam; (2) verified the property's

legal description and property identification number; (3) determined whether the search package

was complete; (4) attended the closing; and (5) determined what exceptions should be waived to

get the final policy issued. Orlowski acknowledged that he did not identify the misspelling of

the sellers' names during his review of the search package.

¶ 24 Plaintiffs offered expert testimony regarding the services provided by attorney agents.

According to Jerrold Hobfoll, an attorney agent is expected to examine the raw data included in a

search package, determine insurability and complete an exam summary providing the title

company with the information necessary to prepare the title commitment. Hobfoll

acknowledged that attorney agents must waive exceptions at closing, which was a core title

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service under RESPA, and a seller's attorney would not provide that service. Hobfoll believed

that an attorney agent who does not perform core title services under section 8(c)(1)(b) may still

be paid for services actually performed under section 8(c)(2) provided that the payment is

reasonably commensurate with the reduced work load or responsibilities assumed by the attorney

agent. Hobfoll agreed that an attorney agent provided some services before and after a search

package was received from the title company, and that the attorney agent should be compensated

for those services, which ranged, in his opinion, from 20% to 50% of the full amount of the

attorney agent's fee. Hobfoll also agreed that an attorney who was not an attorney agent would

not assume responsibility or liability for the title examination function. Hobfoll conceded that

Cohen's search of tax information would be an actual service provided to the title company,

albeit a minimal one.

¶ 25 Consistent with Hobfoll's testimony, plaintiffs' expert Grant Mitchell stated that an

attorney agent may be paid for actual work performed under section 8(c)(2), even for work not

considered core title services. Mitchell opined that an attorney agent who received a pro forma

commitment may be paid for any actual service performed, but may not be paid the full contract

amount as an attorney agent.

¶ 26 Plaintiffs' expert Michael Rooney disputed the claim that the determination of insurability

was an ongoing process completed upon the issuance of a title insurance policy. But he agreed

that throughout the class period, the attorney agents issued or caused the issuance of title polices,

which was a core title service, and that a non-attorney agent representing a seller would not issue

a title commitment. Rooney acknowledged that attorney agents must perform the function of

clearing liens and judgments and exercise their authority to waive or cause the waiver of

exceptions at the closing. Rooney stated that unlike attorney agents, a seller's attorney incurs no

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liability associated with the clearing of exceptions to title. Rooney also acknowledged that after

an attorney agent received a search package, an attorney agent must still perform services to

determine insurability, i.e., whether the mortgage to be insured was valid and enforceable and

whether the deed would effectively transfer title to the purchaser.

¶ 27 Following trial, the parties filed post-trial briefs. The title companies also moved to

decertify the class, which the trial court denied. The trial court issued a written order finding that

"actual, necessary and distinct services" still remained for attorney agents to perform relating to

the issuance of a title insurance policy even where they received a title exam or preliminary

commitment that met most of the requirements of a pro forma commitment under the Florida

Policy Statement. The trial court rejected plaintiffs' assertion that the attorney agents must

perform all of the core title services to avoid violating section 2607, and that under Freeman, it

was irrelevant whether an attorney agent was overpaid for their services when performing less

than all core title services. Accordingly, the trial court ruled that the title companies' payments

to attorney agents under their attorney agent programs did not violate RESPA's prohibition

against either kickbacks for referral fees or fee splitting because the evidence offered at trial

established that attorney agents provided title services independent of the services provided as

counsel for the seller. Thus, the court entered judgment in favor of the title companies because

plaintiffs could not demonstrate a RESPA violation, which necessarily precluded a finding of a

violation of the Title Act and Consumer Fraud Act. Plaintiffs timely appealed.

¶ 28 The title companies filed a cross-appeal contending that if the judgment in their favor is

reversed, we should consider whether the trial court erred in refusing to decertify the class.

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¶ 29 ANALYSIS

¶ 30 On appeal, plaintiffs claim that the trial court erred in entering judgment in favor of the

title companies on the basis that sections 2607(a) and (b) were not violated where an attorney

agent performed any service in connection with the issuance of a title insurance policy in

exchange for a portion of the payment received by the title company from consumers in a real

estate transaction. Plaintiffs claim that the payments made to the attorney agents were illegal

because they did not earn their compensation. We disagree.

¶ 31 We will not reverse a trial court's judgment entered following a bench trial unless the

judgment was against the manifest weight of the evidence. Chicago's Pizza, Inc. v. Chicago's

Pizza Franchise Ltd. USA, 384 Ill. App. 3d 849, 859 (2008); see also Corral v. Mervis

Industries, Inc., 217 Ill. 2d 144, 154 (2005) (trial court's findings of fact will not be reversed

unless the findings are against the manifest weight of the evidence). A judgment is against the

manifest weight of the evidence "only when an opposite conclusion is apparent or when the

findings appear to be unreasonable, arbitrary, or not based on the evidence." Eychaner v. Gross,

202 Ill. 2d 228, 252 (2002). We review a court's interpretation of RESPA de novo. Freeman v.

Quicken Loans, Inc., 626 F.3d 799, 801 (5th Cir. 2010), aff'd, 566 U.S. __, 132 S. Ct. 2034

(2012); see also Solon v. Midwest Medical Records Ass'n, 236 Ill. 2d 433, 439 (2010) (issues

involving statutory construction are questions of law subject to de novo review).

¶ 32 Plaintiffs suggest that the only standard of review applicable to the issues on appeal is de

novo because their appeal presents solely questions of law. In essence, plaintiffs contend that the

trial court erred in denying their motion for summary judgment on the issue of whether the

Preliminary Commitments and A-Exams provided to attorney agents constituted pro forma

commitments, which under plaintiffs' theory would preclude the attorney agents from collecting

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their full fee. But while we agree that we review the trial court's interpretation of RESPA de

novo, the court's findings regarding the nature of the attorney agent programs, i.e., whether they

were "make-work" programs, as plaintiffs contended, or whether they instead required the

attorney agents to actually perform services in exchange for a fee, are entitled to deference under

the manifest weight standard.

¶ 33 We first consider the application of Freeman's rationale to this case. Because RESPA is

a federal statute, pronouncements of the United States Supreme Court are controlling with

respect to the statute's interpretation. State Bank of Cherry v. CGB Enterprises, Inc., 2013 IL

113836, ¶ 33. Plaintiffs correctly note that Freeman addressed section 2607(b) (whether the

prohibition against fee-splitting requires sharing a fee between two parties) and did not

separately analyze section 2607(a) (kickbacks), and that this case involves claimed violations of

both subsections. We find this distinction is irrelevant because Freeman's reasoning relating to

2607(b) is readily applicable to section 2607(a). Moreover, the record establishes that the title

companies and the attorney agents split the fee collected from consumers relating to the purchase

of a title insurance policy, which is the precise context the court analyzed in Freeman.

Furthermore, we consider Freeman dispositive because it indisputably considered section

2607(b)'s "other than for services actually performed" statutory language. Both safe harbor

provisions use an abridged version of that phrase, but importantly incorporate the same "services

actually performed" language. Unless a contrary intent by Congress is clearly evident, "use of

the same words or phrases in different sections of statute should be given a consistent meaning."

Clardy v. Rapistan Division of Lear Siegler, Inc., 254 Ill. App. 3d 1066, 1070 (1993). It is well

settled that statutory "provisions should be read in concert and harmonized." Hartney Fuel Oil

Co. v. Hamer, 2013 IL 115130, ¶ 25. As recognized by Freeman, subsection (b) is a neighboring

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provision to subsection (a). Freeman, 566 U.S. at __, 132 S. Ct. at 2038. Thus, both subsections

must be read in harmony and consistently. Accordingly, Freeman's reasoning applies here.

¶ 34 In Freeman, the court stated that "a settlement-service provider who gives a portion of a

charge to another person who has not rendered any services in return would violate § 2607(b),

even if an express referral arrangement does not exist or cannot be shown." (Emphasis added.)

Id. at __, 132 S. Ct. at 2043. Conversely, Freeman recognized that "a service provider could

avoid [RESPA] liability by providing just a dollar's worth of services in exchange for [a] $1,000

fee" because RESPA is not a price control statute and is not concerned with the "value, amount

or quality of services" rendered. Id. at __, 132 S. Ct. at 2044. The court reasoned that if

Congress had intended for RESPA to be a price control provision, there would have been no

need for Congress to direct HUD to provide, five years after RESPA's enactment,

recommendations to Congress regarding whether price controls should be enacted. Id. at __, 132

S. Ct. at 2039 (citing 12 U.S.C. § 2612(a) (1976 ed.)).

¶ 35 From this, the only reasonable interpretation of section 2607(b) is that it prohibits fee-

splitting with a party where no services are provided in return for the fee, which is consistent

with RESPA's underlying purpose of preventing the abusive practice of paying a party merely

for the referral of business. See Martinez v. Wells Fargo Home Mortgage, Inc., 598 F.3d 549,

553 (9th Cir. 2009) (section 2607(b) "prohibits only the practice of giving or accepting money

where no service whatsoever is performed in exchange for that money"); Hazewood v.

Foundation Financial Group, LLC, 551 F.3d 1223, 1226 (11th Cir. 2008) (a section 2607(b)

violation requires that no services were provided in return for the settlement fee). Consequently,

adopting Freeman's rationale, the relevant inquiry is whether any service was performed by the

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attorney agent in return for the fee paid by the title company so that the compensation paid to the

attorney agent was not unearned or merely a kickback.

¶ 36 Here, the title companies offered evidence supporting a finding that the attorney agents

performed actual title settlement services. The record reveals that after attorney agents received

a search package and contemporaneously with or shortly thereafter an A Exam or Preliminary

Commitment, attorney agents still performed services, some of which included: (1) clearing any

cloud to the real property's title, i.e., any liens; (2) providing instructions on what to include on

title commitments; (3) recommending the waiver of exceptions to title; (4) making changes to the

A-Exam or Preliminary Commitment; and (4) attending closings. The record further reveals that

a non-attorney agent does not perform the same clearing and waiver services at closing nor is he

or she exposed to potential liability associated with the waiver of exceptions. Importantly, the

clearing and waiver of exceptions are necessary functions to determine final insurability.

Moreover, plaintiffs do not contend that attorney agents under the programs provided no services

in exchange for their compensation.

¶ 37 Based on the evidence in the record and in light of the reasoning set forth in Freeman, we

cannot conclude the trial court's finding that the attorney agent programs satisfied the minimum

threshold of requiring an attorney agent to perform actual services relating to the issuance of a

title insurance policy was against the manifest weight of the evidence. See Lane v. Residential

Funding Corp., 323 F.3d 739, 744 (9th Cir. 2003) (noting that section 2607 prohibits payments

that are for the referral of business and nothing else (quoting Schuetz v. Banc One Mortgage

Corp., 292 F.3d 1004, 1013 (9th Cir. 2002)). Consequently, the title companies' payments to

attorney agents were not merely kickbacks for the referral of business or unearned fees because

the attorney agents performed services to earn the fees. As Freeman tells us, RESPA is not

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concerned with whether the attorney agents were paid too much for their actual services, but asks

only whether actual services were rendered. Thus, the title companies' payments were not

unlawful under section 2607.

¶ 38 Plaintiffs also assert that the trial court erred in declining to assess the reasonableness of

the fee paid to attorney agents in comparison to the amount of services provided relating to the

issuance of a title insurance policy. Plaintiffs claim that attorney agents were prohibited from

receiving full payment for their services when they only performed a portion of the contracted

for services under the program because they were provided a pro forma commitment, which

eliminated the need for attorney agents to perform many "core title agent services."

¶ 39 We again turn to Freeman, which holds that the reasonableness of the amount paid to a

party for services provided is irrelevant to establish a violation of section 2607(b). Freeman, 566

U.S. at __, 132 S. Ct. at 2039. Freeman reiterated that RESPA does not address overcharges for

services. Id. at __, 132 S. Ct. at 2040. Here, though not framed as a claim that the attorney

agents were paid excessive fees, the plaintiffs' claim resonates as an "overpaid" claim because

they assert that attorney agents were "overpaid" if they received the full contract payment

amount even though they did not provide all of the services that the payment amount was for,

e.g., they received 100% of their fee for only performing 20% of the work. But under Freeman,

a payment to a party cannot be divided between an earned and unearned portion. Id. at __, 132

S. Ct. at 2010. Thus, Freeman is dispositive and directly refutes plaintiffs' claim.

¶ 40 Ultimately, the relevant consideration under section 2607 is whether a title company paid

a fee to another party who did nothing to earn that fee. Freeman instructs that we must analyze

whether the fee paid by the title company was earned by an attorney agent in that the attorney

agent in fact rendered services in exchange for the fee, but the reasonableness of the amount of

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the fee is irrelevant. 5 Here, as stated, the attorney agents performed services to earn the

payments made by the title companies, and we need not consider the reasonableness of the

amount paid to the attorney agent under Freeman. Moreover, plaintiffs' position that a title

company is prohibited from paying attorney agents their full contract amount when they did not

provide all required "core title services" essentially advocates for a per se violation of RESPA—

a position found to be inconsistent with HUD's general resistance to per se kickback rules. 6

Howland, 672 F.3d at 534. Particularly persuasive is the Seventh Circuit Court of Appeals'

decision in Howland, (id. at 535) (a decision issued less than three months before Freeman) in

which the court expressly stated "we do not read the [Florida Policy Statement] to suggest a per

se rule that a title agent who does not qualify under the Section 8(c)(1)(B) safe harbor may not be

paid a full contractual title examination fee under Section 8(c)(2)." Id. at 534. The Howland

court ultimately held that RESPA kickback claims premised on unreasonably high compensation

for services actually performed were inherently unsuitable for class action treatment. Id. at 535.

¶ 41 We are also not persuaded by plaintiffs' position that the Florida Policy Statement should

be given deference pursuant to Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 842 (1984), which established a two-part test for judicial review of an agency's

construction of a statute which it administers. Under the Chevron test, a court must first

determine whether Congress has directly addressed the precise question at issue. Id. If

5
As Freeman noted, federal courts have consistently recognized that section 2607(b)
"does not reach unreasonably high fees." Freeman, 566 U.S. at __, 132 S. Ct. at 2040 (citing
Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49, 56 (2nd Cir. 2004); Santiago v. GMAC
Mortgage Group, Inc., 417 F.3d 384, 387 (3d Cir. 2005), and Friedman v. Market Street
Mortgage Corp., 520 F.3d 1289, 1297 (11th Cir. 2008)).
6
Plaintiffs pled in their complaint that the title companies' performance of "core title
services" "necessarily renders all payments to attorney agents through these programs mere
kickbacks in violation of Illinois and federal law."

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Congress' intent is clear, the inquiry ends and the court and the agency must give effect "to the

unambiguously expressed intent of Congress." Id. at 842-43. If Congress has not directly

addressed the specific issue or the statute is ambiguous, then the court must determine whether

the agency's interpretation of the ambiguous provision is based on a permissible construction of

the statute. Id. at 843. The agency's interpretation of a statutory scheme it is entrusted to

administer is given considerable weight, unless it is arbitrary, capricious, or manifestly contrary

to the statute. Id. at 844.

¶ 42 We note that Freeman declined to resolve the issue of whether the later 2001-1 SOP

warranted Chevron deference, which illustrates that judicial deference to a HUD statement of

position is not always warranted. Freeman, 566 U.S. at __, 132 S. Ct. at 2040. The 2001-1 SOP

opined that a service provider faces liability under 2607(b) by not only collecting an entirely

unearned fee, but also by charging a fee that " 'exceeds the reasonable value of goods, facilities,

or services provided.' " Id. at __, 132 S. Ct. at 2039 (quoting 66 Fed. Reg. 53059 (2001)).

Freeman found that any consideration regarding the "value" of the services provided set forth in

2001-1 SOP resulted in price regulation and that was a palpable overreach going " 'beyond the

meaning that the statute can bear.' " Id. at __, 132 S. Ct. at 2040 (quoting MCI

Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218, 229 (1994)).

¶ 43 Plaintiffs continued to maintain during oral argument that the Florida Policy Statement

and corresponding regulations must be given deference and Freeman is inapplicable because it

addressed a different policy statement. Plaintiffs attempt to distinguish Freeman mainly on the

basis that a different policy statement was considered, but a close analysis of the policy

statements—2001-01 SOP and Florida Policy Statement—reveals that the principles in both are

consistent. Both HUD interpretations pronounced HUD's position that RESPA was violated

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where another party received a payment that was not reasonably commensurate with the services

provided, i.e., the interpretations require an analysis of the reasonableness of the fees in

comparison to the services provided. Compare Florida Policy Statement, 61 Fed. Reg. at 49400

("agent may receive payment for services actually performed pursuant to section 8(c)(2), so long

as the payment is reasonably commensurate with the reduced level of responsibilities assumed

by the agent"), with 2001-1 SOP, 66 Fed. Reg. at 53059 (prohibiting a fee "in excess of the

reasonable value of goods or facilities provided or the services actually performed"). Freeman

expressly found this approach to be "manifestly inconsistent with the statute HUD purported to

construe" and Congress' intent. Freeman, 566 U.S. at __, 132 S. Ct. at 2039. Consequently,

Freeman's rationale precludes affording any deference to the Florida Policy Statement.

¶ 44 Likewise, we believe HUD's regulations regarding the prohibition against kickbacks and

unearned fees (24 C.F.R. § 3500.14 (2001)) may be read in harmony with Freeman to the extent

that they both require an analysis to identify the services the attorney agents provided under the

programs. Freeman's reasoning that a party earns the fee paid by a settlement service provider

when any service is performed does not contradict the guidance provided in the regulations. But

the regulation is now at odds with Freeman because the regulation, much like the Florida Policy

Statement, requires a comparison of the services performed by the attorney agents in comparison

to the fee paid by the title companies to ensure the amount paid bears a "reasonable relationship

to the market value of the goods or services provided" (24 C.F.R. 3500.14(g)(2) (2001)) where

such a consideration is not relevant under Freeman. Notably, the regulation provided HUD with

the authority to investigate whether settlement fees were the product of a kickback or an

unearned fee split, but it does not vest HUD with the authority to regulate the reasonableness of

fees charged. Id. Because Freeman is clear that RESPA is not a price control statute, the

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regulation's interpretation of section 2607 to the extent that it requires an analysis of the "value"

of the services rendered by attorney agents is no longer authoritative and warrants no deference.

¶ 45 Similarly, section 21 of the Title Act (215 ILCS 155/21(a)(5) (West 2002)) does not

provide a basis for giving deference to the Florida Policy Statement over Freeman. Section 21

generally permits the suspension, revocation or refusal to grant a certificate of authority,

registration or license or the imposition of a fine for violating the Act where a payment was

made in "violation of any State or federal law or regulations or opinion letters issued under the

federal Real Estate Settlement Procedures Act of 1974." Id. But section 21 does not expressly

include HUD statements of policy. Moreover, a claim under the Title Act must be premised on a

finding that RESPA (section 2607) was violated, which was not the case here. See 215 ILCS

155/21 (West 2002) (incorporating RESPA). Under Freeman's rationale, payments to attorney

agents are not prohibited where actual services were provided relating to the issuance of a title

insurance policy. Thus, nothing in section 21 requires a departure from Freeman's holding and

rationale, or deference to the Florida Policy Statement.

¶ 46 Finally, we find plaintiffs' reliance on this court's prior decision on the issue of class

certification as a basis to reverse the trial court's judgment misplaced. Notably, plaintiffs do not

dispute that the attorney agents performed actual services relating to the issuance of a title

insurance policy. But plaintiffs assert that evaluating whether an attorney agent performed actual

work is irrelevant because this court instructed the trial court only to determine whether attorney

agents received a pro forma commitment as defined by the Florida Policy Statement. Plaintiffs

claim that the relevant inquiry on remand was not whether the attorney agents performed any

work and the trial court was only directed to determine whether the A-Exam and Preliminary

Commitment were pro forma commitments.

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¶ 47 Importantly, this court's prior decision was limited to whether the class should be

certified under section 2-801 of the Code of Civil Procedure (735 ILCS 5/2-801 (West 2006)).

Chultem, 401 Ill. App. 3d at 235. This court determined that the questions of whether pro forma

commitments were given to attorney agents and if it was illegal to pay the full contract rate when

pro forma commitments were provided (rendering the safe harbor provisions of sections

8(c)(1)(B) and 8(c)(2) inapplicable) were questions common to the class that predominated over

any individual questions eliminating the need for a transaction-by-transaction analysis. Id. at

236. Although it is true that we deemed it necessary to determine whether the attorney agents

received pro forma commitments, the context of that determination was limited to identifying

whether there was an issue common to the class that predominated over individual issues. This

court expressly declined to address the merits of the underlying actions and limited our analysis

to examining the "propriety of class certification." Id. at 237. More importantly, this court's

decision was issued before Freeman, which as noted, supports the proposition that the actual

work performed by attorney agents under the programs is a relevant consideration under section

2607 because, if any services were performed, the attorney agents were not paid an unearned fee

for the referral of title insurance business.

¶ 48 We are also not persuaded by plaintiffs' claim that the law of the case precludes an

analysis of the work performed by attorney agents under the program on the basis that this court

previously resolved the issue. In our prior decision, we stated that "[t]he allegations in plaintiffs'

complaint, taken as true for purposes of determining class certification, are that Ticor's A-exam

and CTI's preliminary commitment are 'pro forma commitments' and, as such, any attorney agent

would not be providing 'core title services' for the payments to come within the section

8(c)(1)(B) exemption." (Emphasis added.) Id. at 235. Thus, this court assumed the allegations

to be true for purposes of deciding the procedural matter of whether the class should be certified.

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 Nos. 1-14-0808 and 1-14-0820 (consolidated)

See Howland, 672 F.3d at 534 n.3 ("Chultem merely assumed (without evidence) that the

plaintiffs could prove that a payment of the full contract rate would violate RESPA."). Again,

the context of our prior decision was to determine the limited issue of whether litigation should

proceed as a class action–an issue distinct from resolving any claim on its merits.

¶ 49 Our decision in Aguilar v. Safeway Insurance Co., 221 Ill. App. 3d 1095 (1991), is

dispositive. In Aguilar, our prior decision on appeal reversed a section 2-615 dismissal of a

complaint (Ill. Rev. Stat. 1989, ch. 110, ¶ 2-615), finding that the complaint stated a cause of

action and remanding with directions that the complaint be reinstated. Aguilar, 221 Ill. App. 3d

at 1099. The plaintiffs in their second appeal claimed that our first decision precluded the

defendants on remand from raising affirmative defenses because doing so was contrary to this

court's prior ruling. Id. at 1098. Plaintiffs asserted that the trial court's only function was to

reach a determination of damages to be assessed against each defendant. Id. at 1100. But this

court's mandate did not direct that on remand the proceedings should be limited to proof of

damages; the trial court was merely directed to reinstate the complaint. Id. at 1099. In the

second appeal, we rejected the plaintiffs' claim and held that the prior appeal "did not purport to

enter judgment, and beyond directing the reinstatement of plaintiffs' complaint, the court did not

limit further proceedings in any way. The filing of an answer and affirmative defenses is fully

consistent with the mandate of this court to reinstate the complaint and proceed with the

litigation." Id. at 1101.

¶ 50 Similarly here, our prior decision directed the trial court to certify the class and continue

litigation. See Chultem, 401 Ill. App. 3d at 238 ("As plaintiffs have met all the requirements of

section 2-801, including the predominance requirement, we reverse and remand with instructions

the circuit court certify these cases as class actions."). Contrary to plaintiffs' positions, nothing

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in our prior decision purported to: (1) determine the title companies' liability; (2) find that

plaintiffs had established a violation of RESPA; or (3) limit the issue on remand to only address

damages. The only direction to the trial court was to certify the class–which the trial court

followed on remand.

¶ 51 Plaintiffs' prior appeal was limited to reviewing a procedural issue, i.e., whether they met

the statutory requirements for class certification. See Avery v. State Farm Mutual Auto Mobile

Insurance Co., 216 Ill. 2d 100, 236 (2005) (reiterating that " '[a] class action is a potent

procedural vehicle' " (quoting Steinberg v. Chicago Medical School, 69 Ill. 2d 320, 334-35

(1977))); Weiss v. Waterhouse Securities, Inc., 208 Ill. 2d 439, 449-50 (2004) ("a class action

complaint should be dismissed at the pleading stage if the complaint fails to meet the statutory

requirements for class certification" (internal quotation marks omitted)). Because this court did

not address matters concerning the merits of plaintiffs' substantive claims, the law of the case

doctrine is inapplicable here and the trial court properly considered the merits of plaintiffs' class

action complaint on remand. See Aguilar, 221 Ill. App. 3d at 1101 (" 'Although questions of law

actually decided in a previous appeal are binding, matters concerning the merits of a controversy

which were not decided by the appellate court do not become the law of the case.' " (quoting

Huber v. Seaton, 186 Ill. App. 3d 503, 505 (1989), citing Zokoych v. Spalding, 84 Ill. App. 3d

661, 667 (1980))).

¶ 52 Likewise, we are not persuaded by plaintiffs' claim that the trial court's judgment cannot

be reconciled with its prior summary judgment ruling. In both rulings, the trial court determined

that the relevant inquiry was whether an attorney agent provided actual, necessary and distinct

services. The trial court's ruling after trial was based on resolution of that issue after

consideration of the evidence. But even if there was an inconsistency between the order denying

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summary judgment and the court's ruling after trial, it would not warrant reversal because an

order denying summary judgment is an interlocutory order and nothing precluded the trial court

from modifying or vacating that interlocutory order before final judgment. See Hernandez v.

Pritikin, 2012 IL 113054, ¶ 42 ("[T]his court has repeatedly held that the circuit court has the

inherent power to modify or vacate an interlocutory order granting summary judgment any time

before final judgment."). In any event, plaintiffs' claim that they were somehow prejudiced by

the claimed inconsistency is belied by the fact that following class counsel's complaint on this

point, the trial court offered plaintiffs the opportunity to submit any additional evidence they felt

was necessary—an offer which was declined. Under these circumstances, counsel cannot

complain that they were misled about the issues to be resolved at trial.

¶ 53 In sum, applying Freeman's rationale to the facts of this case, we conclude that plaintiffs

failed to establish a violation of RESPA because the attorney agents provided services to earn

their payment from the title companies. Freeman holds that the reasonableness of the amount

paid to the attorney agents is irrelevant. Because Freeman now interprets section 2607, we are

no longer at liberty to give deference to the Florida Policy Statement and the related regulations

addressing the issues presented in this appeal, which are inconsistent with Freeman.

Consequently, the trial court did not err in entering judgment in favor of the title companies. As

such, we need not address the alternative grounds the title companies raise as a basis to affirm

the trial court's judgment, which include: (1) their good faith compliance with RESPA; (2) state

regulators authorized attorney agents to participate in the programs; (3) plaintiffs suffered no

actual damages; (4) plaintiffs failed to prove proximate cause; and (5) plaintiffs cannot

demonstrate a need for injunctive relief.

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¶ 54 Cross-Appeal

¶ 55 The title companies' cross-appeal addresses whether the trial court erred in certifying the

class and then refusing to decertify the class. The title companies assert that disposition of their

cross-appeal is contingent on and must be decided only if we reverse the trial court's ruling in

their favor. Because we find no error in the trial court's ruling in favor of the title companies, we

need not address the title companies' cross-appeal.

¶ 56 CONCLUSION

¶ 57 We affirm the trial court's ruling that the title companies' payments to attorney agents

were not prohibited under section 2607 where attorney agents provided settlement services in

return for the payment, and the reasonableness of the monetary amount of those payments is

irrelevant. Consequently, plaintiffs failed establish a violation of the Title Act (215 ILCS 155/1

(West 2002)) and Consumer Fraud Act (815 ILCS 505/1 (West 2002)), claims which are both

premised on a violation of section 2607.

¶ 58 Affirmed.

¶ 59 JUSTICE PUCINSKI, dissenting.

¶ 60 With great respect to my colleagues and to the trial judge, I dissent.

¶ 61 When this case first came to the Appellate Court in Chultem v. Ticor Title Insurance Co.,

401 Ill. App. 3d 226 (2010) (Chultem I), our colleagues remanded to the trial court to certify a

class and stated: "if the plaintiffs are able to prove at trial Ticor's A-exam and CTI's preliminary

commitments are 'pro forma commitments' and defendants cannot lawfully send their attorney

agents pro forma commitments and pay them full compensation, they will prevail on their

individual claims and will have established a right to recovery for all class members regardless

of the services performed by said attorney agents." Id. at 236. In Chultem I, our colleagues

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specifically found that the "trier of fact will not have to make a transaction-by-transaction review

of whether the attorney agents performed core title services pursuant to the section 8(c)(1)(B)

exemption." (Emphasis omitted.) Id.

¶ 62 Yet, after agreeing that if, in fact, the title companies were sending pro forma

commitments to their title agent/ attorneys, the title companies could not legally pay them the

full amount of their contract, the trial court then went on and did exactly what it should not have

done, i.e., it held a trial on what the attorneys did, and NOT on whether the documents sent met

the definition of pro forma commitments.

¶ 63 Our colleagues in Chultem I based their decision on a reading of the Real Estate

Settlement Procedures Act (RESPA) (12 U.S.C. § 2607 (2000). They noted that "RESPA

sections 8(a) and (b) prohibit persons from giving or receiving kickbacks for the referral of title

insurance business and from giving or receiving a portion of any title insurance premium other

than for services actually performed. 12 U.S.C. §§ 2607 (a), (b) (2000)." Chultem I, 401 Ill.

App. 3d at 227.

¶ 64 In order to figure out what Congress meant by those sections, our colleagues gave

Chevron deference to and relied on the regulations promulgated by HUD:

" '[F]or an attorney of the buyer or seller to receive compensation as a title agent, the

attorney must perform core title agent services (for which liability arises) separate from

attorney services, including the evaluation of the title search to determine the insurability

of the title, the clearance of underwriting objections, the actual issues of the policy or

policies on behalf of the title insurance company, and, where customary, issuance of the

title commitment, and the conduction of the title search and closing.' " Id. at 228 (quoting

24 C.F.R. § 3500.14(g)(3) (2001)).

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¶ 65 Our colleagues also relied on the RESPA Statement of Policy 1996-4, later issued in the

Federal Register (61 Fed. Reg. 49398, 49400 (Sept. 19, 1996)):

"[I]f the title insurance company provides its title insurance agent with a pro forma

commitment, *** the tile insurance agent is not 'actually performing' these services. As

such, the title insurance agent would not be providing 'core title services' for the

payments to come within the section 8(c)(1)(B) exemption." (Internal quotation marks

omitted.) Chultem I, 401 Ill. App. 3d at 228.

¶ 66 Finally, our colleagues relied on the RESPA Statement of Policy 1996-4 (61 Fed. Reg.

49399 (Sept. 19, 1996)), which defines "pro forma commitment" as:

"[A] document that contains a determination of the insurability of the title upon which

a title insurance commitment or policy may be based and that contains essentially the

information stated in Schedule A and B of a title insurance commitment (and may legally

constitute a commitment when countersigned buy an authorized representative). A pro

forma commitment is a document that contains determinations or conclusions that are the

product of legal or underwriting judgment regarding the operation or effect of the various

documents or instruments or how they affect the title, or what matters constitute defects

in title, or how the defects can be removed, or instructions concerning what items to

include and/or to exclude in any title commitment or policy to be issued on behalf of the

underwriter." (Internal quotation marks omitted.) Chultem I, 401 Ill. App. 3d at 228-29.

¶ 67 The Florida Policy of HUD with respect to RESPA kickbacks and pro forma

commitments became federal regulations in l996. (The same regulations were later reissued by

the Bureau of Consumer and Financial Protection.) Our colleagues in Chultem I relied on those

federal regulations in assessing the issues in the original appeal. I believe this demonstrates that

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this court has already given Chevron deference to the regulations. And, in fact, the trial court did

as well when it accepted the definition of pro forma commitments.

¶ 68 What the trial court did not do is compare Ticor A-exam and CTI's preliminary

commitments to the definition of pro forma commitments. This relatively simple document

comparing exercise would have answered the question posed in Chultem I and resolved this case.

¶ 69 A pro forma commitment, taking one part at a time, is:

(1) a document that contains a determination of the insurability of the title upon

which a title insurance commitment or policy may be based. CTI employees used

underwriting judgment and made the preliminary decision about insurability by analyzing

starter files, determining exceptions, whether to use the legal description of the previous

policy, what exceptions and tax exceptions to raise and if there were any liens, mortgages

or judgments which might affect the property that still needed to be released. Ticor

employees did the data entry, got information about the property from their files,

analyzed starter files to determine what exceptions to bring forward and what standard

exceptions and tax exceptions to raise and if there were any mortgages, liens or

judgments affecting the property that still needed to be released. These activities

determined the insurability of the title; and

(2) that contains essentially the information stated in Schedule A and B of the title

insurance commitment. Both CTI and Ticor's documents contained all the information

essentially stated in Schedule A and B of the title insurance commitment; and

(3) may legally constitute a commitment when countersigned buy an authorized

representative. Both CTI and Ticor actually issued the owner's title policy and the loan

title policy after the closing. The CTI policies and the Ticor policies did not rely on the

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title agent/attorney's signature, since, the title agent/ attorneys had no unilateral authority

to agree to any waivers; and

(4) a document that contains determinations of conclusions that are the product of

legal or underwriting judgment regarding the operation of effect of the various documents

or instruments or how they affect the title. Both CTI and Ticor preliminary commitments

contained all of the conclusions and legal or underwriting judgment that would affect

title. In fact, the CTI preliminary commitment was the only title commitment issued in

the transaction and Ticor printed the title commitment three days before the title

agent/attorney returned his A-Exam; or

(5) what matters constitute defects in title. This work was done in all cases by the

employees of the title company; or

(6) how the defects can be removed. This work was done in all cases by the

employees of the title company; or

(7) instructions concerning what items to include and/or to exclude in any title

commitment or policy to be issued on behalf of the underwriter. This work was all done

by employees of the title company. (Definition of pro forma commitment see: RESPA

Statement of Policy 1996-4, 61 Fed. Reg. 49399 (eff. September 19, 1996.)" p. 228.

See id. (quoting RESPA Statement of Policy 1996-4, 61 Fed. Reg. 49399 (Sept. 19, 1996)).

¶ 70 It is clear that the title agent/attorneys did not have the unilateral authority to waive

anything, that their signatures were totally duplicative because the title company had already

decided to issue the title commitment by providing the A-Exam and the preliminary commitment

and the actual title policy was not finally issued until after the closing by the title company, not

at the closing as my colleagues believe. That is because the bundle of papers put together at the

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closing were then sent to the title company by the client's attorney–which would have been done

by any attorney representing either the buyer or seller–and then the title company adds certain

information, including the new bank and mortgage information–to its computer data system and

issues the final owner's and loan policies.

¶ 71 My colleagues argue against Chevron deference, apparently believing that Congress was

crystal clear and unambiguous in its language and intent. Okay, let us test that theory.

¶ 72 If the language and intent are crystal clear then the words Congress used in RESPA: to

protect consumers "from unnecessarily high settlement charges caused by certain abusive

practices" (12 U.S.C. § 2601(a) (2012)) and the intent expressed in § 2601(b)(2), i.e., "the

elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain

settlement services" (12 U.S.C. § 2601(b)(2) (2012)) must defeat the defendant's position that

these shell games were permissible.

¶ 73 Congress wanted to stop any practice among title companies which gouged clients by

adding unnecessary costs for title policies. Title companies were competing for business. So

they developed several creative business models to get more referrals. One of these was by lining

up attorneys as title agents who would make referrals of business. These were clearly the

kickbacks for referrals that Congress wanted to stop. Now, Freeman tells us that RESPA is not a

price fixing law, and so, overcharges are permitted. However, the intent of Congress to prevent

unnecessary add-ons is something different. The two can be reconciled by looking at the

language and what was actually happening. These title agent/attorneys were getting rewarded

with kickbacks for their referrals–since they only referred title business to the respective title

companies by getting no work contracts with the title companies. It was simply a windfall for

the title attorney/agents. The add-ons to attorney agents are exactly the kind of kickbacks for

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 Nos. 1-14-0808 and 1-14-0820 (consolidated)

referrals that Congress intended to stop, specifically because the attorney agents were not

necessary for the title company to do its work since the title company already did all the work

and prepared the pro forma commitment. The money to the attorney was not an overcharge; it

was an add-on for a totally superfluous, duplicative and unnecessary line item.

¶ 74 On the other hand, if the language and intent of Congress are less than clear, i.e.,

ambiguous, then Chevron deference to the HUD regulations is permitted, and then the definition

of pro forma commitments, which was adopted in Chultem I and the trial court, and the language

prohibiting payments to an attorney/agent who has received a pro forma commitment must be

accepted and the majority's analysis must still fail.

¶ 75 And, I note that the trial judge did in fact give deference to the regulations when she

determined that the commitments being sent to the title agent/attorneys were not pro forma

commitments, a determination she made, not by comparing the commitment documents the title

companies sent to its title agent/ attorneys with the definition of pro forma commitments, but by

permitting the defendants to develop what work title agent/attorneys performed. As our

colleagues in Chultem I correctly pointed out, if there were pro forma commitments being sent to

the title agents/attorneys, then no further inquiry was necessary because by definition there was

no additional title work to be done by the title agent/attorneys.

¶ 76 In fact, Congress was very specific that it left to HUD the job of writing the rules and

regulations by authorizing HUD "to prescribe such rules and regulations, to make such

interpretations, and to grant such reasonable exemptions for classes of transactions, as may be

necessary to achieve the purposes of" RESPA. 12 U.S.C. § 2617(a) (2012).

¶ 77 My colleagues here rely on Freeman to dismiss the regulations. But Freeman answered

an entirely different question–whether there could be a split of charges when only one entity or

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person is involved–and looked at an entirely different regulation (i.e., 66 Fed. Reg. 53057 (Oct.

17, 2001)), in which HUD ruled that it was not limited to situations in where there were at least

two persons splitting an unearned fee, that is in yield spread premiums. The Freeman court

determined that, in fact, there has to be more than one person or entity splitting a fee for it to be

split.

¶ 78 The question here is whether the title company may add on a fee for a title agent/attorney

who receives a pro forma commitment. There are two entities and there is an extra add-on. We

know that because the title companies billed the clients for title services at say $1,000, but only

kept $200 - $500 of it. The extra went to the title agent/attorney as an add-on, disguised as a

payment for services. (And, I note, it was not disclosed to the client.) But, round and round it

goes: if the pro forma commitment left no title services to perform, then the title agent/attorney

who received a pro forma commitment could not, by definition, be performing any title services.

This is covered by 61 Fed. Reg. 49399 (Sept. 19, 1996).

¶ 79 These were plain and simple kickbacks for referrals, and no matter how you dress them

up, they are still kickbacks; they are still wrong and the class can demonstrate violations of both

the federal and Illinois laws.

¶ 80 These plaintiffs have appropriately narrowed the class. I would reverse and remand.

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