Seventh Circuit Affirms Dismissal of RESPA Claim for Lack of Actual Damages

The United States Court of Appeals for the Seventh Circuit recently affirmed a district court’s decision granting a loan servicer summary judgment dismissing a claim under the Real Estate Settlement Procedures Act (“RESPA”) because the plaintiff borrower did not suffer any actual damages.  See Linderman v. U.S. Bank Nat’l Ass’n, 887 F.3d 319 (7th Cir. 2018).  In the case, the borrower purchased a home that she and her family eventually abandoned.  While vacant, the property was vandalized.  The borrower hired a contractor to repair the vandalism and the servicer paid $10,000 towards the cost of repairs from insurance money that it had received, but the contractor eventually abandoned the job due to concerns about whether he would be paid in full.  Five months later, the borrower sent the servicer a letter asking about the status of the loan and how the servicer was handling the insurance money.  Although the servicer sent a response, the borrower claimed she never received it and filed this RESPA action for the servicer’s alleged failure to respond to a qualified written request.  The district court granted the servicer’s motion for summary judgment because the borrower did not prove any actual damages, and the borrower appealed.

On appeal, the Court affirmed.  Although the borrower had alleged numerous ways in which she had been damaged, including a divorce allegedly caused by her financial issues and personal monies expended to repair the house, none of these damages were related to the alleged non-receipt of the servicer’s response to her qualified written request.  The Court held that “[t]he lack of money disbursed from the escrow may be a cause of continuing loss,” but that RESPA “does not require a servicer to pay money in response to a written request.” (emphasis in original.)  The Court also noted that the borrower may have had claims against the contractor for abandoning the job and her family members for failing to pay the mortgage, but that “[a] focus on federal rules can distract people (including lawyers) from the more mundane doctrines of state law that may offer greater prospect of success.”  As such, the Court affirmed the district court’s decision granting summary judgment to the servicer.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Dylan Goetsch at dgoetsch@riker.com.