Case: 17-11429        Document: 00514771912      Page: 1     Date Filed: 12/21/2018




          IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                      December 21, 2018
                                     No. 17-11429
                                                                        Lyle W. Cayce
                                                                             Clerk
CHRISTIANA TRUST, A DIVISION OF WILMINGTON SAVINGS FUND
SOCIETY, FSB, AS TRUSTEE,

              Plaintiff,

v.


MARY SUE RIDDLE,

              Defendant Third Party Plaintiff – Appellant,

v.

BANK OF AMERICA, N.A.,

              Third Party Defendant – Appellee.



                   Appeal from the United States District Court
                        for the Northern District of Texas


Before KING, ELROD, and HAYNES, Circuit Judges. ∗
JENNIFER WALKER ELROD, Circuit Judge:
      Mary Sue Riddle, who took out a home-equity loan from Bank of
America, alleges that the bank is vicariously liable for the failure of the bank’s



      ∗
         Judge Haynes concurs in the judgment of affirmance and agrees with the reasoning
of Section II.A. She would not reach the issue in Section II.B, so she does not join in the
alternative holding.
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                                     No. 17-11429
loan servicer to comply with the Real Estate Settlement Procedures Act
(RESPA). The district court dismissed Riddle’s claims under Rule 12(b)(6). We
affirm for two independent reasons. First, Riddle did not plead an agency
relationship between Bank of America and the loan servicer, an essential
element of a vicarious liability claim. Second, even if Bank of America had an
agency relationship with the loan servicer, the bank cannot be held vicariously
liable, as a matter of law, for the servicer’s alleged RESPA violations.
                                            I.
       In December 2006, Mary Sue Riddle executed a home-equity note with
Bank of America for a loan of $127,000. To secure her obligations on the note,
Riddle executed a security instrument—a Homestead Lien Contract and Deed
of Trust on her property in San Angelo, Texas—in favor of Bank of America.
In September 2012, Bank of America sent a letter to Riddle stating that Ocwen
Loan Servicing, LLC (Ocwen), would start servicing the loan. 1 In January
2015, Bank of America assigned the loan, including the security interest in
Riddle’s property, to Christiana Trust, a division of the Wilmington Savings
Fund Society.      In April 2015, Ocwen notified Riddle that BSI Financial
Services (BSI) would take over as the new loan servicer.
      In October 2016, Christiana Trust filed a complaint against Riddle for
judicial foreclosure of her property, alleging that Riddle had failed to make
payments on the note. In response, Riddle filed an answer, counterclaims
against Christiana Trust, and a third-party complaint against Ocwen, BSI, and
Bank of America. Bank of America responded to Riddle’s complaint with a
Rule 12(b)(6) motion to dismiss. Riddle then filed both an amended complaint



      1 Generally, loan servicers take care of “the administrative aspects of a loan.” Loan
Servicing,   Investopedia    (Mar.   26,    2018),    https://www.investopedia.com/terms/l/
loan_servicing.asp. This includes “sending monthly payment statements and collecting
monthly payments,” as well as “maintaining records of payments and balances.” 

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                                         No. 17-11429
against the same third-party defendants and a response in opposition to Bank
of America’s motion to dismiss the original third-party complaint.                            The
amended complaint—like the original one—includes, as relevant for this
appeal, 2 claims under the Real Estate Settlement Procedures Act (RESPA), a
federal statute that governs the procedures of mortgage loans.                          Bank of
America quickly moved to dismiss the amended third-party complaint, too. In
her response opposing this second motion to dismiss, Riddle clarified her
RESPA theory against Bank of America, alleging that “Ocwen was [Bank of
America’s] servicing agent” and that Bank of America “is vicariously liable for
[Ocwen’s] RESPA violations.”
       The district court dismissed all of Riddle’s claims against Bank of
America with prejudice. 3 Soon after, Riddle filed a motion for reconsideration,
which the district court denied. Riddle then filed a notice of interlocutory
appeal. 4



       2 Riddle’s amended third-party complaint includes claims for breach of contract,
violations of the Texas Debt Collection Practices Act, violations of the Fair Debt Collection
Practices Act, violations of RESPA, negligent misrepresentation, and equitable relief, and
she also sued to quiet title. In her response to Bank of America’s motion to dismiss the
amended third-party complaint, however, she clarified that she was asserting claims against
the bank only for breach of contract and vicarious liability for the RESPA violations of the
bank’s loan servicer. Riddle does not contest the district court’s dismissal of her breach of
contract claim, so this appeal concerns only the dismissal of her RESPA claims against Bank
of America.

       3The district court denied Bank of America’s motion to dismiss the original third-
party complaint because it was moot in light of Riddle’s filing of the amended one.

       4 The appeal is interlocutory because the district court has not yet resolved all the
claims raised against all parties. We have jurisdiction under 28 U.S.C. § 1291 because the
district court designated its dismissal of the claims against Bank of America as a final
judgment and expressly determined that there was no just reason for delay. See Judgment
Pursuant to Rule 54(b), Christiana Trust v. Riddle, No. 6:16-CV-59-C (N.D. Tex. Oct. 16,
2017), ECF No. 38; see also Fed. R. Civ. P. 54(b) (“When an action presents more than one
claim for relief . . . or when multiple parties are involved, the court may direct entry of a final
judgment as to one [party] . . . only if the court expressly determines that there is no just
reason for delay.”).
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                                             II.
       We review a district court’s dismissal under Rule 12(b)(6) de novo.
Sullivan v. Leor Energy, LLC, 

, 546 (5th Cir. 2010). We may
affirm the dismissal of a claim on any ground made manifest by the record
below. See 

the district court’s dismissal for two independent
reasons. First, Riddle’s amended third-party complaint fails to plead that
Bank of America had an agency relationship with either Ocwen or BSI, an
essential element of her vicarious liability theory. Second, as a matter of law,
Bank of America cannot be held vicariously liable for the alleged RESPA
violations of its loan servicer—regardless of whether the servicer is Bank of
America’s agent.
                                             A.
       “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 

, 678 (2009) (quoting Bell Atlantic
Corp. v. Twombly, 

, 570 (2007)); Hinojosa v. Livingston, 

, 683–84 (5th Cir. 2015). Riddle’s claim for relief, as articulated on appeal,
asserts that Bank of America is vicariously liable for Ocwen’s violations of 12
C.F.R. § 1024.41(c)(1). The Consumer Financial Protection Bureau (CFPB)
promulgated this regulation pursuant to its rulemaking authority under
RESPA.      See 12 U.S.C. § 2605(k)(1)(E) (conferring this authority).                  The
regulation imposes duties on servicers who “receive[] a complete loss
mitigation application more than 37 days before a foreclosure sale.” 12 C.F.R.
§ 1024.41(c)(1). When a servicer receives such an application, 5 the servicer



       5 “A loss mitigation application is simply a request by a borrower for any of a number
of alternatives to foreclosure, known as loss mitigation options, including, among others,
modification of the mortgage.” Lage v. Ocwen Loan Servicing LLC, 

, 1006 (11th
Cir. 2016).
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                                      No. 17-11429
must—within thirty days of receiving the application—“evaluate the borrower
for all loss mitigation options available to the borrower” and “provide the
borrower with a notice . . . stating the servicer’s determination of which loss
mitigation options, if any, it will offer the borrower[.]” 

that Ocwen and BSI received timely loss-mitigation
applications but failed to consider them and notify Riddle of her loss-mitigation
options. 6 Specifically, Riddle alleges the following in her amended third-party
complaint:
       44. Third-Party Defendants, Ocwen and BSI failed to comply with
       their RESPA obligations under 12 C.F.R. § 1024.41. Specifically,
       Ocwen and BSI violated 12 C.F.R. § 1024.41(c) because they
       received a complete or facially complete loss mitigation
       applications [sic] at least 37 days before a scheduled foreclosure
       sale, and yet failed to consider Mary for all loss mitigation options
       and notify Mary in writing of all loss mitigation options available
       to her.
See Counter-Plaintiff/Third-Party Plaintiff’s First Amended Counterclaim and
Third-Party Complaint at 12, Christiana Trust, No. 6:16-CV-59-C (N.D. Tex.
Apr. 6, 2017), ECF No. 28.
       Noticeably absent from this part of the pleading is any reference to Bank
of America. In opposition to Bank of America’s motion to dismiss, Riddle
claims that we should overlook this omission because “Ocwen was [Bank of
America’s] servicing agent” and Bank of America “is vicariously liable for the
RESPA violations of its servicing agent.” Her amended third-party complaint
does reference vicarious liability principles generally: she states that



       6Riddle clarifies on appeal that Bank of America is vicariously liable “so long as it
continues to own the loan” and that the bank relinquished ownership of the loan before BSI
took over as the servicer. For this reason, we do not look to Paragraph 45 of the complaint—
which alleges further violations of 12 C.F.R. § 1024.41 only against BSI and Christiana Trust,
based on conduct occurring after the assignment of the loan—for potential claims against
Bank of America.
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                                  No. 17-11429
“mortagees [sic] can be vicariously liable for the RESPA violations of their
servicers.” The beginning of the complaint also states that whenever she
alleges that a “Third-Party Defendant did, or failed to do” something, she
means either (1) that the defendant itself did or failed to do it; or (2) that the
defendant’s “agents, officers, servants, employees, vice principals, or
representatives” did or failed to do it and the defendants are liable under
respondeat superior.
      But Riddle’s theory of vicarious RESPA liability theory requires pleading
facts that suggest an agency relationship between Bank of America and either
Ocwen or BSI. Meyer v. Holley, 

, 285 (2003) (“It is well established
that traditional vicarious liability rules ordinarily make principals or
employers vicariously liable for acts of their agents or employees in the scope
of their authority or employment.”) (emphasis added). To determine whether
an agency relationship exists, the Supreme Court looks to the Restatement of
Agency, which requires both the principal’s control over the agent and both
parties’ consent to the agent’s acting on the principal’s behalf. 

see
also Restatement (Third) of Agency § 1.01 cmt. f(1) (2006) (“An essential
element of agency is the principal’s right to control the agent’s actions. . . . The
power to give interim instructions distinguishes principals in agency
relationships from those who contract to receive services provided by persons
who are not agents.”).
      Riddle’s amended third-party complaint alleges no such facts.            Her
statement that “mortagees [sic] can be vicariously liable for the RESPA
violations of their servicers,” sheds no light on the particular relationship
between Bank of America and the two loan servicers.              And her general
respondeat superior statement at the beginning of the complaint runs in only
one direction, telling us to read her allegations against principals to include
allegations against agents—not vice versa.         She never pleads a RESPA
                                         6
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                                       No. 17-11429
violation by Bank of America, the putative principal, so this section does not
help her. Without facts suggesting an agency relationship, even if everything
Riddle alleges in her complaint is true, her complaint does not “state a
[RESPA] claim” against Bank of America at all—let alone one that is “plausible
on its face.” 

–84 (quoting 

).
Accordingly, we affirm the district court’s dismissal on this basis.
                                              B.
       Even if Riddle had pleaded facts suggesting such a relationship, we hold
in the alternative 7 that the district court appropriately dismissed her RESPA
claim for another reason: Bank of America, as a matter of law, is not vicariously
liable for the alleged RESPA violations of its servicers. This is an issue of first
impression in our circuit, and we are apparently the first circuit court to
address it.
       By its plain terms, the regulation at issue here imposes duties only on
servicers. 12 C.F.R. § 1024.41(c)(1) (“[A] servicer shall . . .”) (emphasis added);
see also 12 U.S.C. § 2605(i)(2), (i)(3) (defining a servicer as the “person
responsible” for “receiving any scheduled periodic payments from a borrower
. . . and making the payments of principal and interest and such other
payments with respect to the amounts received from the borrower as may be
required pursuant to the terms of the loan”). A loan servicer’s obligation to
follow this regulation derives from RESPA itself, which also confines this




       7 “This circuit follows the rule that alternative holdings are binding precedent and not
obiter dictum.” Texas v. United States, 

, 178 n. 158 (5th Cir. 2015) (quoting
United States v. Potts, 

, 237 n. 3 (5th Cir. 2011)), aff’d by an equally divided
Court, 

(2016); see also United States v. Reyes-Contreras, No. 16-41218, 

, at *7 n. 19 (5th Cir. Nov. 30, 2018) (en banc).

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                                     No. 17-11429
obligation to servicers alone. 8 Specifically, the statute provides that “a servicer
of a federally related mortgage shall not . . . fail to comply with any other
obligation found by the Bureau of Consumer Financial Protection, by
regulation, to be appropriate to carry out the consumer protection purposes of
this chapter.”       12 U.S.C. § 2605(k)(1)(E) (emphasis added); see also
Amendments to the 2013 Mortgage Rules, 78 Fed. Reg. 60,382, 60,384 (Oct. 1,
2013) (citing this statutory provision, among others, as the authority for the
regulation that Ocwen and BSI allegedly violated). RESPA’s answer on the
ultimate question of § 2605 liability is similarly limited. The statute prescribes
that “[w]hoever fails to comply with any provision of this section shall be liable
to the borrower for each such failure[.]” 12 U.S.C. § 2605(f). Because only
“servicers” can “fail to comply” with 12 U.S.C. § 2605(k)(1)(E), only servicers
can be “liable to the borrower” for those failures. 12 U.S.C. § 2605(f). The text
squarely settles the issue. See Aviles v. Merit Systems Protection Bd., 

, 465 (5th Cir. 2015) (“Because we conclude that the text of the amended
statute . . . supports the Board’s interpretation, we need not [analyze
further].”).
      When Congress chose to impose RESPA duties more broadly, it did so
clearly and explicitly. The statute’s prohibition on kickbacks and unearned
fees states that “no person” shall engage in the forbidden conduct. 12 U.S.C.
§ 2607; see also Hawk v. Carrington Mortgage Services, LLC, No. 3:14-CV-
1044, 

, at *2 (M.D. Pa. Aug. 17, 2016) (explaining this
interpretive reasoning).      But Congress chose a narrower set of potential
defendants for the violations that Riddle alleges here. The difference matters.
“When Congress includes particular language in one section of a statute but


      8 Riddle did not plead, and she does not argue on appeal, that Bank of America acted
as a servicer itself. So this case turns entirely on whether Bank of America can be held
vicariously—not directly—liable.
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                                  No. 17-11429
omits it in another,” we “presume[] that Congress intended a difference in
meaning.” Digital Realty Trust, Inc. v. Somers, 

, 777 (2018)
(Ginsburg, J.) (alteration omitted) (quoting Loughrin v. United States, 134 S.
Ct. 2384, 2390 (2014)); see also, e.g., Asadi v. G.E. Energy (USA), L.L.C., 

, 626 (5th Cir. 2013) (“The use of the term ‘whistleblower,’ as compared
with terms such as ‘individual’ or ‘employee,’ is significant.”); King v. St.
Vincent’s Hospital, 

, 220–21 (1991) (“Given the examples of
affirmative limitations on reemployment benefits conferred by neighboring
provisions, we infer that the simplicity of subsection (d) was deliberate.”); In re
Burnett, 

, 172 (5th Cir. 2011) (interpreting a statute—which
forbade government agencies from “deny[ing] employment to” a person in
bankruptcy but prohibited private employers merely from “terminat[ing] the
employment” of such a person—to allow private employers to deny employment
to someone in bankruptcy); Antonin Scalia & Bryan A. Garner, Reading Law:
The Interpretation of Legal Texts 170 (2012) (“[A] material variation in terms
suggests a variation in meaning.”).
      Most of the district courts that have reached this issue agree with our
reading of the statute. See, e.g., Hawk, No. 3:14-CV-1044, 

,
at *2; Green v. Cent. Mortg. Co., No. 3:14-CV-04281 LB, 

, at
*15 (N.D. Cal. Dec. 1, 2015); Bennett v. Nationstar Mortg., LLC, No. CV 15-
00165-KD-C, 

, at *10 (S.D. Ala. Sept. 8, 2015); McAndrew v.
Deutsche Bank Nat’l Trust Co., 

, 445 (M.D. Pa. 2013). The
main case espousing a contrary view is Rouleau v. US Bank, NA, an
unpublished opinion from the District of New Hampshire. No. 14-CV-568 JL,

, at *7 (D. N.H. Apr. 17, 2015). The Rouleau court reasoned
that RESPA creates “a species of tort liability.” 

of Monterey v.
Del Monte Dunes at Monterey, Ltd., 

, 709 (1999)). The court
observed that “when Congress creates a tort action, it legislates against a legal
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                                  No. 17-11429
background of ordinary tort-related vicarious liability rules.”       

537 U.S. at 285). Unless Congress has “expressed a contrary intent,”
its statutorily created torts “incorporate those rules.” 

537
U.S. at 285, 287). Seeing no contrary congressional intent, the Rouleau court
concluded that RESPA incorporates principles of vicarious liability.
      We decline to adopt Rouleau’s reasoning because it falls short even on its
own terms. Congress did express an intent contrary to the incorporation of
traditional vicarious liability rules. 12 U.S.C. § 2605(f) defines the parameters
of § 2605 liability: “[w]hoever fails to comply with any provision of this section”
is liable.   This legislatively prescribed definition—which makes parties
responsible solely for their own failures to comply—fundamentally conflicts
with traditional vicariously liability, which imputes liability “based on the
tortious acts of another.” Restatement (Third) of Torts § 13 (2000) (emphasis
added). Congress could have imposed § 2605 liability on “whoever fails to
comply or whoever has hired an agent who fails to comply.” It could have
imposed liability on “whoever would be liable under traditional principles of
tort law.” It could have said nothing at all, perhaps leaving the common law
as a gap filler. It could have imposed the statutory duty to ensure compliance
with the CFPB’s regulations not only on loan servicers, but also on lenders.
But Congress did none of those things.
      “The preeminent canon of statutory interpretation requires us to
presume that the legislature says in a statute what it means and means in a
statute what it says there.” 

(quoting BedRoc Ltd. v.
United States, 

, 183 (2004)) (internal quotation marks and
alterations omitted). If a statute’s text is “plain and unambiguous, it must be
given effect.” BMC Software, Inc. v. C.I.R., 

, 674 (5th Cir. 2015)
(quoting Kelly v. Boeing Petroleum Servs., Inc., 

, 362 (5th Cir.
1995)); see also United States v. Ary, 

, 789 (5th Cir. 2018) (“Our
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                                 No. 17-11429
inquiry begins with the statutory text, and ends there as well if the text is
unambiguous.”) (quoting 

) (alterations omitted). The
text of this statute plainly and unambiguously shields Bank of America from
any liability created by the alleged RESPA violations of its loan servicer.
Accordingly, we affirm the district court’s dismissal on this basis.
                                      III.
      The allegations of RESPA violations in Riddle’s complaint fail to even
mention Bank of America—let alone allege the agency relationship that her
vicarious liability theory requires. Accordingly, we AFFIRM the district court’s
dismissal on this basis.    And even if Riddle had pleaded such an agency
relationship, the text of the regulation and statute at issue here plainly and
unambiguously shields Bank of America from any liability arising from its loan
servicer’s alleged RESPA violations. Accordingly, we alternatively AFFIRM
the district court’s dismissal on this independent basis as well.




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