Wooten v. Quicken Loans, Inc.
2010 U.S. App. LEXIS 24077
| 11th Cir. | 2010Background
- Plaintiffs Wooten and Buckhaults sued Quicken Loans under RESPA § 8(b) alleging it charged loan discount points (points) without providing a corresponding interest-rate discount or legitimate settlement services.
- Wooten closed on a 132,250 loan with 5.875% interest and paid 4.5% in loan discount; HUD-1 line 802 stated Loan Discount percentage.
- Buckhaults closed on a 140,000 loan at 6.5% and paid 1.5% loan discount; a second Buckhaults loan in 2007 charged 1.375% for 6.125%.
- Complaint also alleged HUD-1s and notes supported a theory that discounts were unearned fees or for services not rendered, contrary to RESPA § 2607(b).
- District court dismissed Count I (RESPA) as the loan-discount fees did not constitute settlement services; Count II (breach of contract) was dismissed as no meeting of the minds.
- Court reviews de novo whether points are a settlement service and whether the complaint plausibly states a RESPA violation or contract breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are loan discount points a RESPA settlement service? | Wooten/Buckhaults contend points are fees for a below-market rate and thus a settlement service. | Quicken contends points are not settlement services but relate to the loan's interest terms. | Points are not a settlement service under RESPA § 8(b). |
| Did Count I state a RESPA § 8(b) claim? | Complaint alleges unearned or duplicative fees disguised as loan discount. | Alleged fees were agreed points for a specific rate; no unearned services shown. | Count I dismissed for lack of plausible RESPA violation. |
| Did Count II state a breach of contract claim? | Quicken charged for points without delivering a discount or agreed service. | There was a meeting of the minds and plaintiffs received the bargained-for rate; no breach. | Count II affirmed; no breach. |
Key Cases Cited
- Graham Mortg. Corp. v. United States, 740 F.2d 414 (6th Cir. 1984) (mortgage origination context; points not settlement service)
- Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294 (11th Cir. 2002) (definitions of settlement services post-Graham)
- Schwarz v. City of Treasure Island, 544 F.3d 1201 (11th Cir. 2008) (definition and interpretation of 'settlement service' under RESPA)
- Hazewood v. Found. Fin. Grp., LLC, 551 F.3d 1223 (11th Cir. 2008) (de novo review and plausibility standard for RESPA claims)