Cohen v. JP Morgan Chase & Co.

Opinion

 [*113]  REENA RAGGI, Circuit Judge:

Plaintiff Sylvia C. Cohen sued defendants JP Morgan Chase & Co. and JP Morgan Chase Bank (hereinafter referred to collectively as "Chase") in the United States District Court for the Eastern District of New York (Charles P. Sifton, Judge), alleging that Chase's collection of an unearned "post-closing fee" in connection with its refinancing of her  [**2] home mortgage violated Section 8(b) of the Real Estate Settlement Procedures Act of 1974 ("RESPA"), 12 U.S.C. § 2607(b), and New York General Business Law § 349. In a judgment entered on March 16, 2005, Cohen v. J.P. Morgan Chase & Co., No. CV-04-4098(CPS), 2005 U.S. Dist. LEXIS 45466 (E.D.N.Y. Mar. 16, 2005), the district court dismissed Cohen's complaint on the ground that it failed to state a claim under RESPA § 8(b) because (1) the fee at issue was analogous to an "overcharge," which Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49, 55-57 (2d Cir. 2004), held was not prohibited by § 8(b); and (2) plaintiff had, in any event, failed to plead that the challenged fee represented part of a charge split between Chase and one or more third parties. The district court similarly concluded that Cohen failed to state a deceptive practices claim under state law because the pleaded facts demonstrated that the challenged fee was disclosed.

For the reasons stated herein, we conclude that Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d at 55-57, does not control this case. We further conclude that RESPA § 8(b) is ambiguous as to whether its protections can apply to undivided, as well as divided, unearned fees. Because  [**3] the Department of Housing and Urban Development ("HUD"), the agency charged with administering RESPA, reasonably resolves this ambiguity by construing the statute to apply to undivided fees, we accord that construction deference pursuant to Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), and we vacate the dismissal of Cohen's federal claim. We similarly vacate the dismissal of Cohen's state claim because, if she can show that the challenged fee violated RESPA, that fact might allow her to establish a deceptive business practice under New York law. Accordingly, we remand this case to the district court for reinstatement of the complaint and further proceedings consistent with this opinion.

I. Factual Background

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