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Consumer Financial Protection Bureau v. Borders & Borders, PLC

United States District Court, W.D. Kentucky, Louisville

March 21, 2018




         I. Introduction

         This matter is before the court on plaintiff Consumer Financial Protection Bureau's (hereinafter “the Bureau”) motion for reconsideration of the court's July 13, 2017 order granting defendants' motion for summary judgment and denying plaintiff's motion for partial summary judgment. ECF No. 161. Defendants Borders & Borders, PLC, Harry Borders, John Borders, Jr., and J. David Borders (collectively “Borders & Borders”) responded. ECF No. 164. The Bureau subsequently replied. ECF No. 165. For the reasons stated below, the court will deny the Bureau's motion for reconsideration.

         II. Factual Background

         Borders & Borders is a law firm in Louisville, Kentucky that specializes in real estate law. ECF No. 128-3, p. 1. The law firm was founded in 1971 by J. David Borders. Id. His sons, David Borders, Jr. and Harry Borders, later joined him in practice. Id. at 2. Borders & Borders “has handled tens of thousands of Kentucky real estate closings, ” and is also “an authorized agent to issue title insurance policies in Kentucky.” Id. at 1.

         In 2006, Borders & Borders established nine joint ventures with various real estate agents and mortgage brokers in the Louisville market. Id. at 10. These joint ventures were title insurance agencies (hereinafter “Title LLCs”) that could write policies for mortgage lenders and consumers. Id. Fifty percent of each Title LLC was owned by Borders & Borders, and the other fifty percent was owned by a corresponding joint venture partner or partners (hereinafter “JVPs”). Id.

         Mortgage lenders typically require consumers to purchase a lender's title insurance policy to protect it against any title defects. ECF No. 129-30, p. 1. Although many mortgage lenders in the Louisville market have their own affiliated title insurance agencies, some do not. ECF No. 128-3, p. 10. When Borders & Borders served as the closing attorney for a real estate transaction where there was no captive lender agency involved, the law firm would refer the consumer to one of its Title LLCs for the provision of title insurance. ECF No. 129-36, p. 2. The particular Title LLC to which the consumer was referred depended on which JVP had served as the real estate agent or mortgage broker in the real estate transaction. Id. Borders & Borders provided each consumer with a disclosure statement at the time of referral, indicating that the Title LLC was jointly owned by Borders & Borders and the JVP and providing its standard rates. ECF No. 128-3, p. 16. The consumer then had thirty days from the closing to choose whether to purchase title insurance from the Title LLC or from another vendor. Id. From 2009 to 2011, the Title LLCs issued over 1, 000 title insurance policies relating to over 700 real estate closings. Id.

         On February 23, 2011, the Housing and Urban Development Office (“HUD”) sent Borders & Borders a letter stating that they had initiated a Real Estate Settlement Practices Act (RESPA) investigation of the law firm's title insurance referrals. Id. at 19. HUD issued a Request for Information and Documents, to which Borders & Borders responded. Id., ECF No. 129-5. Then, on April 25, 2012, HUD advised Borders & Borders that the investigation would be transferred to the Bureau, and requested additional information and documents. ECF No. 128-3, p. 20.

         On October 24, 2013, the Bureau filed suit against Borders & Borders, alleging that Borders & Borders arranged for the Title LLCs to pay distributions to the JVPs in exchange for closing services referrals in violation of section 8(a) of RESPA. 12 U.S.C. § 2607(a). ECF No. 1, ¶¶ 28-30. Both parties filed motions for summary judgment. ECF Nos. 128, 129. This court granted Borders & Borders' motion for summary judgment, and denied the Bureau's motion for partial summary judgment. ECF No. 158. The Bureau now moves this court to reconsider its decision. ECF No. 161.

         III. Legal Standard

         Under Federal Rule of Civil Procedure 59(e), a party may move to alter or amend a judgment within twenty-eight days of its entry. Rule 59(e) motions allow district courts to correct their own errors, “sparing the parties and appellate courts the burden of unnecessary appellate proceedings.” Howard v. United States, 533 F.3d 472, 475 (6th Cir. 2008). Granting a Rule 59(e) motion is appropriate when there is: “(1) a clear error of law; (2) newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest injustice.” Schlaud v. Snyder, 785 F.3d 1119, 1124 (6th Cir. 2015) (citation omitted).

         The Bureau asks this court to reconsider its ruling granting Borders & Borders' motion for summary judgment and denying the Bureau's motion for partial summary judgment. A trial court shall grant summary judgment in a case “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The party moving for summary judgment bears the initial burden of “demonstrating that [there is] no genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party satisfies this burden, the burden then shifts to the nonmoving party to “point to evidence demonstrating that there is a genuine issue of material fact for trial.” Id. at 323 (emphasis added).

         In considering a motion for summary judgment, the court must consider the facts in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). However, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). There must actually be “evidence on which the jury ...

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