UFMC responds by arguing that these payments are lawful under section 2607(c) which provides that "nothing in this section shall be construed as prohibiting ... the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed." Under this section of the statute, compensation for allowing Dearborn to hold closings at UFMC offices is legal under RESPA. UFMC is therefore entitled to have a jury decide whether Dearborn agreed to pay UFMC rent to use its facilities.
The problem with the agreement as explained by UFMC, however, is that Dearborn allegedly agreed to pay UFMC $ 200 more for each closing in which UFMC was the lender. I agree with Lawyers Title that this extra payment of $ 200 must be viewed as an improper referral fee because UFMC did nothing to earn the extra money. UFMC offers no explanation for charging Dearborn more to conduct a UFMC closing at UFMC's offices than it charged Dearborn to conduct a non-UFMC closing.
In response to Lawyers Title's assertion in its Rule 12(M) statement that "United Financial did nothing to earn the $ 200 difference," UFMC said only that "it permitted Dearborn to use its offices for closing purposes; that [UFMC] permitted Dearborn to be listed on its building directory and that it supplied Dearborn with a key to its facilities." UFMC does not explain how providing Dearborn with a key to its facilities or listing it on the directory justified charging Dearborn three times as much to hold a UFMC closing at UFMC's offices. UFMC's statement simply does not address the distinction between the two prices charged. I therefore find, as a matter of law, that the extra $ 200 Dearborn paid UFMC for UFMC closings constituted an illegal kickback and therefore UFMC may not base its setoff claim on those payments.
Finally, UFMC asserts that it is entitled to keep the money as a setoff for its claims against Dearborn and Lawyers Title for Dearborn's negligence. These claims include damages for "lost loan locks," extra interest UFMC allegedly had to pay on its warehouse line of credit resulting from Dearborn's failure to timely remit closing proceeds to UFMC, and damages from lost loan documents. UFMC, however, presents no evidence to prove any of these claims.
For example, UFMC claims that it is entitled to damages of $ 78,149.50 for lost loan locks. As support for this contention, UFMC points to Khoshabe's testimony that he had discussed the blown lock damages with Rasulis and she had agreed that Dearborn owed UFMC money for those damages. UFMC also points to two lists it compiled entitled "Loss on Files Due to Dearborn Title Negligence." The lists appear to provide the names of files, Dearborn's mistakes, and the amount lost on each file. UFMC offers no proof to substantiate either list, however, nor even an explanation for what the terms in the lists mean or how it developed the lists. The transactions on the lists are not even dated. I find that neither the two lists nor Khoshabe's testimony allows UFMC to withstand summary judgment on this issue. "Summary judgment is properly granted when a non-movant fails to produce any proof to establish an element essential to the party's case and upon which the party will bear the burden of proof at trial." Bell v. Purdue University, 975 F.2d 422, 430 (7th Cir. 1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)). Because UFMC has come forward with inadequate proof of its claim to over $ 78,000 in damages for lost loan locks, Lawyers Title is entitled to summary judgment on this claim.
To support its claim that Dearborn owes it money for extra interest it had to pay on its warehouse line of credit, UFMC cites solely to Khoshabe's testimony. Khoshabe testified only that he had discussed the extra interest damages with Rasulis. He admitted that at the time he did not know exactly what UFMC's damages were, but by the time of his deposition, he had estimated that Dearborn owed UFMC "somewhere around about 50 to 60,000, maybe more." UFMC also says that Khoshabe and Rasulis agreed that Dearborn owed UFMC $ 38,209.74 for extra interest, and cites to an affidavit from Khoshabe with handwritten notes attached. UFMC offers no proof of its damages other than Khoshabe's testimony that he calculated that Dearborn owed UFMC $ 38,209.74. UFMC provides no basis for Khoshabe's calculation and consequently I conclude that a reasonable jury could not decide in UFMC's favor on this issue.
Finally, UFMC says that it holds loan files which are missing documents due to Dearborn's negligence. UFMC contends that it "could be subject to repurchasing hundreds of thousands of dollars worth of loans as a result of delinquent documents from Dearborn."
To this point, however, UFMC has not had to buy back any loans and therefore has not suffered any damages due to the delinquent documents. It is not entitled to keep Dearborn's money as a setoff for a claim that it does not have against Dearborn. Lawyers Title is therefore entitled to judgment as a matter of law on this issue.
I find that Lawyers Title has proven as a matter of law that the two amounts, $ 87,800 from the Larios transaction and $ 565,649.26 from the Debt-Repayment Check, could be recovered by Dearborn in an appropriate action and therefore Lawyers Title, as Dearborn's judgment creditor, may collect those funds. I also find that UFMC has no right to setoff any claims it has against Dearborn for the bounced check-double payment agreement or for any damages allegedly due to Dearborn's negligence. Finally, I find that the additional facilities charge for UFMC closings is an illegal kickback under RESPA and therefore the most UFMC could retain from the funds is $ 100 per transaction which closed at UFMC offices. UFMC is not entitled to summary judgment on this issue, however, because UFMC has not shown as a matter of law that it is entitled to those payments. Because the most UFMC would be entitled to retain under the facilities agreement is $ 100 per transaction for 704 (629 ) transactions, for a total of $ 70,400, the remaining funds must be turned over to Lawyers Title.
Elaine E. Bucklo
United States District Judge
Dated: August 16, 1996