Dennis Hardy v. Regions Mortgage, Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
MAY 26, 2006
No. 05-14678 THOMAS K. KAHN
________________________ CLERK

D. C. Docket No. 04-02317-CV-2-IPJ

DENNIS HARDY,
HENRIETTA HARDY,

Plaintiffs-Appellants,

versus

REGIONS MORTGAGE, INC.,

Defendant,

CENDANT CORPORATION,
REGIONS BANK,

Defendants-Appellees.

________________________

Appeal from the United States District Court
for the Northern District of Alabama
_________________________

(May 26, 2006)
Before HULL and WILSON, Circuit Judges, and GOLDBERG *, Judge.

HULL, Circuit Judge:

Dennis and Henrietta Hardy (the “Hardys”) appeal the judgment entered

against their complaint. The district court granted a judgment on the pleadings on

the ground that no private right of action exists under § 10 of the Real Estate

Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2609. The Hardys do not

dispute that, after obtaining their mortgage, they enrolled in a retail shopping

discount program and authorized defendant Regions Mortgage, Inc. (“Regions”) to

add five dollars to their mortgage payment each month as payment for the

program. Instead, the dispute here involves the Hardys’ allegation that Regions

violated RESPA and its corresponding regulations by failing to list their monthly

five-dollar payment on their escrow account statement. See 24 C.F.R.

§ 3500.17(o). Because the Hardys’ complaint involves a violation of RESPA § 10,

for which no private right of action exists, we affirm.

I. BACKGROUND

In 1996, the Hardys refinanced their home with Regions. Later that year, the

Hardys received information from Cendant Corporation about “Shoppers

Advantage,” a program that provided discounts at participating retailers to

*
Honorable Richard W. Goldberg, Judge, United States Court of International Trade,
sitting by designation.

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members of the program. Mrs. Hardy consented to have five dollars a month

added to the Hardys’ mortgage payment to enroll in the program. Over the next

seven years, the Hardys forgot about their membership in “Shoppers Advantage.”

In 2003, the Hardys discovered that a five dollar monthly fee had been paid out of

their escrow account but was not listed on their mortgage statements. The Hardys

filed suit. They alleged that Regions had violated § 3500.17(o) of regulations

under RESPA and that Regions had conspired with Cendant to violate RESPA.

The Hardys also requested certification of a class action.

On a motion for judgment on the pleadings, the district court found that thte

Hardys failed to allege a violation of RESPA § 6, for which Congress created a

private right of action, but had instead alleged a violation of RESPA § 10, for

which no private right of action exists. The district court entered a judgment on the

pleadings against the Hardys.

II. STANDARD OF REVIEW

We review de novo the grant of judgment on the pleadings by the district

court. Moore v. Liberty Nat’l Life Ins. Co., 267 F.3d 1209, 1213 (11th Cir. 2001).

In reviewing a judgment on the pleadings, “[w]e must accept all facts in the

complaint as true and view them in the light most favorable to the plaintiffs.” Id.

(quotation marks omitted).

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 III. DISCUSSION

The Hardys argue that the district court erred by entering judgment against

their complaint, in which they alleged that Regions violated § 3500.17(o) of the

regulations implementing RESPA and conspired with Cendant to violate

§ 3500.17(o). The Hardys contend that § 3500.17(o) was promulgated under

RESPA § 6. Because § 6 provides an express private right of action, the Hardys

conclude that a private right of action exists for the alleged failure by Regions to

disclose the monthly five-dollar payments on their escrow account statements. We

disagree.

RESPA is a consumer protection statute that regulates the real estate

settlement process. See 12 U.S.C. § 2601(a). Sections 6 and 10 of RESPA

regulate two different aspects of mortgage lending. The Hardys’ complaint

involves a violation of § 10, not § 6.

RESPA § 6 provides that “[e]ach person who makes a federally related

mortgage loan” must disclose to loan applicants that “the loan may be assigned,

sold, or transferred” while the loan is outstanding. 12 U.S.C. § 2605(a). Because a

lender who “fails to comply with any provision of [§ 6] shall be liable to the

borrower,” § 6 provides an express private right of action. Id. § 2605(f)(1). The

Hardys did not allege that Regions either transferred or failed to disclose a transfer

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of their mortgage loan.

RESPA § 10 states that lenders must provide annual escrow account

statements that clearly itemize “the amount of the borrower’s current monthly

payment . . . the total amount paid out of the escrow account during the period for

taxes, insurance premiums, and other charges . . . , and the balance in the escrow

account at the conclusion of the period.” Id. § 2609(c)(2)(A). Under § 10, no

private right of action exists because “the Secretary shall assess to the lender or

escrow servicer failing to submit the statement a civil penalty.” Id. § 2609(d)(1).

The Hardys’ complaint alleges facts that involve a violation of § 10.

The Secretary promulgated additional regulations for escrow account

statements. See 24 C.F.R. § 3500.17. Under § 3500.17(o) of the regulations,

“[a]ny borrower’s discretionary payment . . . made as part of a monthly mortgage

payment is to be noted on the initial and annual statements.” Id. § 3500.17(o). A

failure to comply with the requirements under § 3500.17 “shall constitute a

violation of section 10(d) of RESPA.” Id. § 3500.17(m)(1). Section 3500.17 of

the regulations also states that “the Secretary shall assess a civil penalty” for

violations. Id. The parties do not dispute that the five-dollar monthly payment is a

“discretionary payment” within the meaning of the regulations and that the Hardys

joined the “Shoppers Advantage” program and agreed to that “discretionary

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payment” being added to their monthly mortgage payment.

The Hardys argue that Regions’ failure to note the five-dollar monthly

payment on the escrow account statements, and, thus, its failure to comply with

regulation § 3500.17(o) is a violation of RESPA § 6. We disagree. First, the

regulations explicitly state that failure to comply with § 3500.17 is a violation of

RESPA § 10, not a violation of RESPA § 6. 24 C.F.R. § 3500.17(m)(1).

Regulation § 3500.17 and RESPA § 10 both detail the items that a lender must

disclose in an escrow account statement. See, e.g., id. § 3500.17(a), (g)-(j), (o); 12

U.S.C. § 2609(c)(1)(A), (c)(2)(A). Section 6, on the other hand, does not address

the requirements of escrow account statements. See generally 12 U.S.C. § 2605.1

No private right of action exists for the harm alleged by the Hardys. Failure

to comply with regulation § 3500.17(o) is a violation of RESPA § 10, and RESPA

explicitly states that the Secretary of Housing and Urban Development enforces

1
We note that RESPA § 6 does contain a subsection addressing escrow accounts and the
timing of payments from escrow accounts. See 12 U.S.C. § 2605(g). The Hardys argue that the
Secretary’s assertion that 24 C.F.R. § 3500.17 “establishes escrow accounting procedures under
Sections 6(g) and 10” of RESPA demonstrates that § 3500.17(o) was enacted pursuant to
RESPA § 6. See 59 Fed. Reg. 53890, 53890 (Oct. 26, 1994). This argument is misplaced.
Section 3500.17 addresses a range of regulatory concerns, most of which fall under RESPA §10,
but one of which falls under RESPA § 6(g). Notably, § 3500.17(k) addresses the timing of
escrow account payments as set out in RESPA § 6(g). By contrast, § 3500.17(o) regulates the
disclosure of discretionary payments in escrow account statements, a matter detailed in RESPA
§ 10(c)(2). Congress unambiguously designated authority to the Secretary to enact disclosure
regulations under RESPA § 10, not § 6(g). Therefore, the Secretary’s authority to promulgate
§ 3500.17(o) necessarily must come from RESPA § 10.

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violations of § 10. 12 U.S.C. § 2609(d)(1). The regulations also provide that “the

Secretary shall assess” the penalties. 24 C.F.R. § 3500.17(m)(1). “The express

provision of one method of enforcing a substantive rule suggests that Congress

intended to preclude others.” Alexander v. Sandoval, 532 U.S. 275, 290, 121 S.

Ct. 1511, 1521-22 (2001); see also Collins v. FMHA-USDA, 105 F.3d 1366,

1367-68 (11th Cir. 1997) (finding no “implied private civil remedy” under 12

U.S.C. § 2604(c) because, among other reasons, other provisions of RESPA

explicitly provided for private civil remedies but § 2604(c) did not, and stating

“[t]hat . . . indicates Congress did not intend such a remedy for § 2604(c)

violations.”).

The Hardys also allege that Regions and Cendant conspired to violate

§ 3500.17(o) of the regulations. Because no private right of action exists for the

substantive claim that the Hardys allege, their conspiracy claim also necessarily

fails.

IV. CONCLUSION

For the above reasons, we affirm the district court’s grant of judgment on the

pleadings against the Hardys.

AFFIRMED.

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