               Case: 14-11636       Date Filed: 03/02/2015      Page: 1 of 11


                                                                                [PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT
                             ________________________

                                    No. 14-11636
                              ________________________

                         D.C. Docket No. 1:13-cv-01468-RWS

PATRICIA L. CLEMENTS,
Individually and on behalf of all others similarly situated,


                                                                       Plaintiff-Appellant,

                                           versus

LSI TITLE AGENCY, INC.,
a division of Lender Processing Services, Inc.,
LAW OFFICES OF WILLIAM E. FAIR III, LLC,
WILLIAM EVE FAIR III, ET AL.,

                                                                    Defendants-Appellees.

                              ________________________

                     Appeal from the United States District Court
                        for the Northern District of Georgia
                           ________________________

                                      (March 2, 2015)

Before WILLIAM PRYOR and JORDAN, Circuit Judges, and HAIKALA, ∗
District Judge.


∗
 Honorable Madeline Hughes Haikala, United States District Judge for the Northern District of
Alabama, sitting by designation.
              Case: 14-11636     Date Filed: 03/02/2015    Page: 2 of 11




WILLIAM PRYOR, Circuit Judge:

      This appeal requires us to decide three questions: (1) whether an allegation

that a lender charged a borrower for unearned fees confers standing on the

borrower; (2) whether a mortgage service provider performs only nominal services,

12 U.S.C. § 2607(b), when it procures a closing attorney; and (3) whether a

mortgage service provider “give[s or] . . . accept[s] any portion, split, or percentage

of any [settlement] charge” when it marks up the price of a third-party service, id.

After Patricia L. Clements refinanced a mortgage, she sued LSI Title Agency, Inc.,

the mortgage service provider that facilitated the refinancing; the Law Offices of

William E. Fair III, LLC, which LSI hired to witness the mortgage closing; and

William Eve Fair III, an attorney. Clements alleged two violations of the Real

Estate Settlement Procedures Act, id. §§ 2601–2617, and three violations of

Georgia law. The district court dismissed the amended complaint for lack of

standing. Fed. R. Civ. P. 12(b)(1). Although we conclude that Clements has

standing to sue, we affirm in part the dismissal of her federal claims for failure to

state a claim upon which relief can be granted, Fed. R. Civ. P. 12(b)(6), and we

vacate in part and remand for the district court to decide whether to exercise

supplemental jurisdiction over her claims under Georgia law.




                                           2
              Case: 14-11636    Date Filed: 03/02/2015    Page: 3 of 11


                                I. BACKGROUND

      Clements refinanced a mortgage with Wells Fargo Bank, N.A., which hired

LSI to provide mortgage refinancing services for the transaction. Because Georgia

law requires all closing services to be performed by a licensed attorney, In re UPL

Advisory Op. 2003-2, 588 S.E.2d 741, 741–42 (Ga. 2003), LSI contracted with the

Law Offices to provide a closing attorney, and the Law Offices arranged for Sean

Rogers to serve in that capacity.

      After the refinancing, Clements filed a putative class action in a state court

against LSI, the Law Offices, Fair, and other unnamed defendants. The defendants

removed the complaint to the district court, and Clements filed an amended

complaint. Clements alleged that LSI routinely had non-attorneys prepare all of the

documents for the closing and that the Law Offices and Fair arranged for a

licensed attorney, Rogers, to witness the signing of the documents, in violation of

Georgia law, id.

      Clements alleged two violations of the Real Estate Settlement Procedures

Act, 12 U.S.C. §§ 2601–2617, which makes it illegal for any person to accept any

portion of a settlement charge unless that person rendered a service for the charge.

Id. § 2607(b). First, Clements alleged that she paid a $300 settlement fee for

services that LSI provided in violation of Georgia law, In re UPL Advisory Op.

2003-2, 588 S.E.2d at 741–42. Clements alleged that the defendants and Rogers

                                          3
              Case: 14-11636     Date Filed: 03/02/2015   Page: 4 of 11


split the settlement fee in violation of the Act because the defendants “provided no

actual services related to the closing of the loan.” See 12 U.S.C. § 2607(b). Second,

Clements alleged that LSI violated the Act because LSI charged Clements $125 for

“[g]overnment recording charges” even though LSI paid only $40. See Id.

Clements alleged that LSI provided no services for the $85 markup.

      Clements also alleged violations of Georgia law. Clements alleged that LSI,

the Law Offices, and Fair violated sections 16-14-4 and 44-14-13 of the Georgia

Code. And Clements alleged that LSI, the Law Offices, and Fair were unjustly

enriched by the mortgage closing.

      LSI, the Law Offices, and Fair moved to dismiss the amended complaint on

two grounds. First, they argued that, because Clements received a credit for the

exact amount of the mortgage closing costs, which included the $300 settlement

fee and the $125 recording charges, she failed to allege an injury and lacked

standing. Fed. R. Civ. P. 12(b)(1). Second, they argued, in the alternative, that

Clements failed to state claims upon which relief could be granted. Fed. R. Civ. P.

12(b)(6).

      The district court ruled that Clements lacked standing and dismissed the

amended complaint. Clements’s schedule of settlement charges, which was

attached to the amended complaint, stated that Clements paid the settlement fee

and recording charges “[f]rom [b]orrower’s [f]unds at [s]ettlement,” and that the

                                          4
               Case: 14-11636      Date Filed: 03/02/2015     Page: 5 of 11


credit Clements received was “for the specific interest rate chosen,” but the district

court ruled that, because Clements received a credit for the exact amount of the

closing costs, Clements did not allege an injury.

                           II. STANDARD OF REVIEW

       A dismissal “for lack of subject matter jurisdiction presents a legal question

that we review de novo.” Miccosukee Tribe of Indians v. U.S. Army Corps of

Eng’rs, 619 F.3d 1289, 1296 (11th Cir. 2010). We “accept[] the allegations in the

complaint as true and constru[e] them in the light most favorable to the plaintiff.”

Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003). “[W]e may affirm the

dismissal of a complaint on any ground supported by the record[,] even if that

ground was not considered by the district court.” Seminole Tribe of Fla. v. Fla.

Dep’t of Revenue, 750 F.3d 1238, 1242 (11th Cir. 2014). “If [the] . . . complaint

fails to state a claim . . . , then the dismissal of the . . . complaint must be

affirmed.” Brown v. Johnson, 387 F.3d 1344, 1351 (11th Cir. 2004).

                                  III. DISCUSSION

       The parties present two issues. First, the parties dispute whether Clements

has standing to sue in a federal court. Second, LSI, the Law Offices, and Fair argue

that, if Clements has standing, we should affirm the dismissal of the amended

complaint because Clements failed to state claims upon which relief could be

granted. We address each issue in turn.

                                             5
              Case: 14-11636     Date Filed: 03/02/2015   Page: 6 of 11


             A. Clements Has Standing Because She Alleged an Injury.
      As a threshold matter, Clements must have standing to pursue her complaint

in a federal court. Hollywood Mobile Estates Ltd. v. Seminole Tribe of Fla., 641

F.3d 1259, 1265 (11th Cir. 2011). “The Supreme Court has explained that the

‘irreducible constitutional minimum’ of standing under Article III [of the

Constitution] consists of three elements: an actual or imminent injury, causation,

and redressability.” Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–

61, 112 S. Ct. 2130, 2136 (1992)). Although the parties do not dispute causation or

redressability, they do not agree that Clements has alleged an injury.

      Clements alleged an actual injury. Clements alleged in the amended

complaint that, had she “not been charged [the settlement fee and government

recording charges], . . . [she would have] receiv[ed] an additional $300 . . . [and] an

additional $85.” And Clements’s schedule of settlement charges, which was

attached to the amended complaint, stated that the $300 and $85 were paid “[f]rom

[b]orrower’s [f]unds at [s]ettlement” and that the credit was “for the specific

interest rate chosen.” Clements’s allegation that she would have received a $385

refund is an actual injury. That Clements received a credit for an amount equal to

the exact total of the closing costs undermines the credibility of Clements’s

allegation, but it does not necessarily refute her allegation that she would have

otherwise received that amount in addition to the credit for the interest rate chosen.


                                          6
              Case: 14-11636     Date Filed: 03/02/2015    Page: 7 of 11


Clements did not need to prove her allegations at the pleading stage, and her

“general factual allegations of injury resulting from the defendant[s’] conduct . . .

suffice to establish standing,” Resnick v. AvMed, Inc., 693 F.3d 1317, 1323 (11th

Cir. 2012) (internal quotation marks and citation omitted). The district court erred

when it dismissed Clements’s complaint for lack of standing, so we must consider

whether the record supports an alternative ground for dismissal.

                 B. Clements Failed to State a Claim under the Act.

      The Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601–2617,

provides that “[n]o 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 . . . other than for services actually performed.” Id. § 2607(b).

To plead a violation of the Act, a plaintiff must “allege that no services were

rendered in exchange for a settlement fee.” Friedman v. Mkt. St. Mortg. Corp., 520

F.3d 1289, 1298 (11th Cir. 2008). This Court has stated that “no services,” id.,

means “no, nominal, or duplicative” services. Heimmermann v. First Union Mortg.

Corp., 305 F.3d 1257, 1263 n.8 (11th Cir. 2002) (internal quotation marks

omitted).

      Clements contends that the defendants violated the Act in two ways. First,

Clements argues that LSI, the Law Offices, and Fair violated the Act when they

split the $300 settlement fee, because they provided only “nominal” services. She

                                           7
              Case: 14-11636     Date Filed: 03/02/2015    Page: 8 of 11


maintains that the services were nominal because LSI provided services that only

licensed attorneys can provide, In re UPL Advisory Op. 2003-2, 588 S.E.2d 741,

and the Law Offices and Fair provided only the service of “finding [Rogers] to

provide the service [that the Law Offices and Fair were supposed to provide].”

Second, Clements argues that LSI individually violated the Act when it marked up

the price of the government recording charges from $40 to $125, because the

markup was a “split” between “the government and LSI” and LSI provided no

service for the additional $85. But neither argument describes a violation of the

Act.

       Clements’s allegation that LSI, the Law Offices, and Fair split the settlement

fee fails to allege a violation of the Act. A “nominal” service “[e]xist[s] in name

only.” Black’s Law Dictionary 1148 (9th ed. 2009) (“nominal”). That Georgia law

made it illegal for LSI to provide settlement services does not mean that the

services “[e]xist[ed] in name only,” id. Although the settlement fee “was arguably

‘unearned’ as a matter of [Georgia] law, as a factual matter it was not in exchange

for nothing.” Hazewood v. Found. Fin. Grp., LLC, 551 F.3d 1223, 1226 (11th Cir.

2008). And the Law Offices and Fair earned their portion of the settlement fee

because “arranging for [a] third party contractor[] to perform [a service]” is itself a

service. Sosa v. Chase Manhattan Mortg. Corp., 348 F.3d 979, 983–84 (11th Cir.




                                           8
              Case: 14-11636     Date Filed: 03/02/2015    Page: 9 of 11


2003). LSI, the Law Offices, and Fair “actually performed” “services” for their

“portion[s], split[s], or percentage[s]” of the settlement fee. 12 U.S.C. § 2607(b).

      Clements’s allegation that LSI marked up the price of the government

recording charges also fails to allege a violation of the Act. Clements argues that a

markup of a charge to the consumer violates the Act when the mortgage service

provider accepts an unearned portion of that charge, but the Supreme Court

explained in Freeman v. Quicken Loans, Inc., that “[section] 2607(b) clearly

describes two distinct exchanges.”      U.S.    ,   , 132 S. Ct. 2034, 2040 (2012).

The Act requires that, “[f]irst, a ‘charge’ is ‘made’ to or ‘received’ from a

consumer by a settlement-service provider. That provider then ‘give[s],’ and

another person ‘accept[s],’ a ‘portion, split, or percentage’ of the charge.” Id.

(second and third alteration in original) (quoting 12 U.S.C. § 2607(b)). The

Supreme Court read the terms “give” and “accept” as referring to the second

exchange between the service provider and the third party, not the first exchange

between the consumer and the service provider. Id. at 2041. When a service

provider marks up a fee, the service provider “give[s]” a “portion, split, or

percentage” to a third party, and the third party “accept[s]” that “portion, split, or

percentage.” 12 U.S.C. § 2607(b). But the second exchange does not violate the

Act when the third party has “actually performed” a “service.” Id. And the third

party “give[s]” nothing back to the service provider, so the service provider does

                                           9
             Case: 14-11636      Date Filed: 03/02/2015    Page: 10 of 11


not “accept” something for which it did not perform a service. Id. Although we

have stated in dicta that a markup violates the Act, Sosa, 348 F.3d at 981–83, our

dicta cannot be squared with the later reading of the text by the Supreme Court in

Freeman, 132 S. Ct. 2034. LSI has neither “give[n] . . . [nor] accept[ed] any

portion, split, or percentage of any charge . . . other than for services actually

performed.” 12 U.S.C. § 2607(b).

      Our reading of the Act comports with the majority of the circuit courts that

have addressed this issue and held that “Congress chose to leave markups . . . to

the free market.” Boulware v. Crossland Mortg. Corp., 291 F.3d 261, 268 (4th Cir.

2002); see also Freeman v. Quicken Loans, Inc., 626 F.3d 799, 804 (5th Cir.

2010), aff’d 132 S. Ct. 2034; Haug v. Bank of Am., N.A., 317 F.3d 832, 836 (8th

Cir. 2003); Krzalic v. Republic Title Co., 314 F.3d 875, 880 (7th Cir. 2002). These

sister circuits have held that the text of the Act is unambiguous, Krzalic, 314 F.3d

at 879, and that, if Congress wanted to prohibit markups, it “could easily have

written [section 2607(b)] to state that ‘there shall be no markups or overcharges for

real estate settlement services[,]’ [o]r . . . that ‘a mortgage lender shall only charge

the consumer what is paid to a third party for a real estate settlement service,’”

Boulware, 291 F.3d at 267. These decisions also are consistent with the analysis in

Freeman. Two of our sister circuits have held that markups are a violation of the

Act, Santiago v. GMAC Mortg. Grp., Inc., 417 F.3d 384, 389 (3d Cir. 2005); Kruse

                                           10
             Case: 14-11636     Date Filed: 03/02/2015    Page: 11 of 11


v. Wells Fargo Home Mortg., Inc., 383 F.3d 49, 59 (2d Cir. 2004), but those

decisions are unpersuasive and inconsistent with the later decision of the Supreme

Court in Freeman.

      Because we conclude that Clements failed to state a claim for relief under

federal law, we do not address her claims for relief under state law. See Carnegie-

Mellon Univ. v. Cohill, 484 U.S. 343, 350, 108 S. Ct. 614, 619 (1988); Mergens v.

Dreyfoos, 166 F.3d 1114, 1119 (11th Cir. 1999). We remand to the district court to

decide whether to exercise supplemental jurisdiction over these claims or remand

them to state court. Cook ex rel. Estate of Tessier v. Sheriff of Monroe Cnty., Fla.,

402 F.3d 1092, 1123 (11th Cir. 2005).

                                IV. CONCLUSION

      We AFFIRM the dismissal of Clements’s federal claims, VACATE the

dismissal of her state claims, and REMAND for the district court to decide

whether to exercise supplemental jurisdiction over her state claims.




                                          11
