Eighth Circuit Holds Borrower Failed to Demonstrate Alleged Injuries Were Caused by RESPA Violation

The United States Court of Appeals for the Eighth Circuit recently affirmed a District Court’s dismissal of a borrower’s claim under the Real Estate Settlement Procedures Act ("RESPA") and Minnesota Mortgage Originator and Servicer Licensing Act ("MOSLA") when the borrower failed to demonstrate that his alleged injuries were caused by the RESPA violation. See Wirtz v. Specialized Loan Servicing, LLC, 2021 WL 503306 (8th Cir. Feb. 11, 2021). In the case, Plaintiff secured a mortgage loan, which Defendant began to service after an assignment in June 2013. Upon review of Plaintiff’s payment history dating back to June 2011, Defendant determined that Plaintiff was two months delinquent and subsequently notified Plaintiff. Plaintiff’s counsel sent three qualified written requests to Defendant requesting information regarding Plaintiff’s loan, including payment history from origination to present. In response to the requests, Defendant demanded certain records to prove that Plaintiff’s account was current. Thereafter, Plaintiff’s counsel sent two more qualified written requests, in which he provided a copy of Plaintiff’s loan payment history and bank records from January 2012 to November 2013 and reiterated Plaintiff’s claim that Defendant’s accounting of the loan was erroneous. Plaintiff paid eighty dollars for the bank records and requested reimbursement for the expense and attorney’s fees that he incurred to resolve the matter. Defendant again alleged that Plaintiff’s account was delinquent. Plaintiff then brought an action under RESPA and MOSLA, alleging that Defendant failed to adequately respond to his qualified written requests.

The District Court initially granted summary judgment in favor of Plaintiff, and the Eight Circuit reversed and remanded the case for further proceedings on Plaintiff’s MOSLA claim. With regard to Plaintiff’s RESPA claim, the Eighth Circuit found that Defendant violated RESPA when it failed to investigate Plaintiff’s loan payment history and provide Plaintiff with his payment history upon request. However, Plaintiff "'did not present evidence of damages resulting from [Defendant's] failure to comply with RESPA,' and thus failed to prove an essential element of his [RESPA] claim." On remand, the District Court granted summary judgment in favor of Defendant, finding that "because '[t]he MOSLA violation [was] predicated solely on the RESPA violation,' if there 'were no actual damages under RESPA, then there [were] no actual damages under MOSLA.'"

On a second appeal, the Eighth Circuit affirmed. The Court rejected Plaintiff’s arguments that: (1) Plaintiff was entitled to statutory remedies under MOSLA simply because Defendant violated RESPA; and (2) a borrower may be "injured by" the conduct of a loan servicer without sustaining actual damages. The Court determined that "injured by" is an umbrella term that encompasses several types of damages and should not be construed as requiring no actual injury. Accordingly, Plaintiff’s injury "must be something more than court costs and reasonable attorney’s fees that are generated in litigation under MOSLA. Otherwise, the statute would permit a borrower to create an injury by filing a lawsuit based on a violation that caused the injury." Although Plaintiff properly alleged a violation of RESPA for Defendant’s failure to investigate and provide loan payment history, the Court found that Plaintiff’s alleged damages did not constitute an injury that was "caused by" or "as a result of" the violation. Therefore, the District Court properly dismissed Plaintiff’s MOSLA claim as well.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, Desiree McDonald at dmcdonald@riker.com, or Andrew Raimondi at araimondi@riker.com.