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SUPREME COURT OF THE UNITED STATES
TAMMY FORET FREEMAN, et al., PETITIONERS
QUICKEN LOANS, INC.
on writ of certiorari to the united states
court of appeals for the fifth circuit
[May 24, 2012]
Justice Scalia delivered the opinion of the
A provision of the Real Estate Settlement
Procedures Act (RESPA), codified at 12 U. S. C.
§2607(b), prohibits giving and accepting “any portion,
split, or percentage of any charge made or received for the
rendering of a real estate settlement service . . . other
than for services actually performed.” We consider whether,
to establish a vio-lation of §2607(b),[1
] a plaintiff must demonstrate that a charge was
divided between two or more persons.
Enacted in 1974, RESPA regulates the market
for real estate “settlement services,” a term defined
by statute to include “any service provided in connection
with a real estate settlement,” such as “title
searches, . . . title insurance, services rendered by an
attorney, the preparation of documents, property surveys, the
rendering of credit reports or appraisals, . . . services
rendered by a real estate agent or broker, the origination of a
federally re-lated mortgage loan[[2
]] . . . , and the handling of the processing,
and closing or settlement.” §2602(3). Among
RESPA’s consumer-protection provisions is §2607, which
directly furthers Congress’s stated goal of
“eliminat[ing] . . . kickbacks or referral fees
that tend to increase un-necessarily the costs of certain
settlement services,” §2601(b)(2). Section 2607(a)
“No person shall give and no person
shall accept any fee, kickback, or thing of value pursuant to any
agreement or understanding, oral or otherwise, that business
incident to or a part of a real estate settlement service involving
a federally related mortgage loan shall be referred to any
The neighboring provision, subsection (b), adds
“No person shall give and no person
shall accept any portion, split, or percentage of any charge made
or received for the rendering of a real estate settlement service
in connection with a transaction involving a federally related
mortgage loan other than for services actually
These substantive provisions are enforceable
through, in-ter alia,
actions for damages brought by
consumers of settlement services against “[a]ny person or
persons who violate the prohibitions or limitations” of
§2607, with recovery set at an amount equal to three times the
charge paid by the plaintiff for the settlement service at issue.
Petitioners in this case are three married
couples who obtained mortgage loans from respondent Quicken Loans,
Inc. In 2008, they filed separate actions in Louisiana state court,
alleging, as pertinent here, that respondent had violated
§2607(b) by charging them fees for which no services were
provided. In particular, the Freemans and the Bennetts allege that
they were charged loan discount fees of $980 and $1,100,
respectively, but that respondent did not give them lower interest
rates in return. The Smiths’ allegations focus on a $575 loan
“processing fee” and a “loan origination”
fee of more than $5,100.[3
Respondent removed petitioners’ lawsuits
to federal court, where the cases were consolidated. Respondent
thereafter moved for summary judgment on the ground that
petitioners’ claims are not cognizable under §2607(b)
because the allegedly unearned fees were not split with another
party. The District Court agreed; and because petitioners did not
allege any splitting of fees it granted summary judgment in favor
A divided panel of the United States Court of
Appeals for the Fifth Circuit affirmed. 626 F.3d 799 (2010). We
granted certiorari. 565 U. S. ___ (2011).
The question in this case pertains to the
scope of §2607(b), which as we have said provides that
“[n]o person shall give and no person shall accept any
portion, split, or percentage of any charge made or received for
the rendering of a real estate settlement service . . .
other than for services actually performed.” The dispute
between the parties boils down to whether this provision prohibits
the collection of an unearned charge by a single settlement-service
provider—what we might call an undivided unearned
fee—or whether it covers only transactions in which a
provider shares a part of a settlement-service charge with one or
more other persons who did nothing to earn that part.
Petitioners’ argument that the former
interpretation should prevail finds support in a 2001 policy
statement issued by the Department of Housing and Urban Development
(HUD), the agency that was until recently authorized by Congress to
“prescribe such rules and regulations” and “to
make such interpretations” as “may be necessary to
achieve the purposes of [RESPA],” §2617(a).[4
] That policy statement says that
§2607(b) “prohibit[s] any person from giving or
accepting any unearned fees, i.e., charges or payments for real
estate settlement services other than for goods or facilities
provided or services performed.” 66 Fed. Reg. 53057 (2001).
It “specifically interprets [§2607(b)] as not being
limited to situations where at least two persons split or share an
unearned fee.” Ibid.
More broadly, the policy
statement construes §2607(b) as authority for regulation of
the charges paid by consumers for the provision of settlements. It
says that “a settlement service provider may not mark-up the
cost of another provider’s services without providing
additional settlement services; such payment must be for services
that are actual, necessary and distinct.” Id.,
53059. Moreover, in addition to facing liability when it collects a
fee that is entirely unearned, a provider may also “be liable
under [§2607(b)] when it charges a fee that exceeds the
reason-able value of goods, facilities, or services
, on the theory that the excess over
reasonable value constitutes a “portion” of the charge
“other than for services actually performed,”
The last mentioned point, however, is manifestly
in-consistent with the statute HUD purported to construe. When
Congress enacted RESPA in 1974, it included a directive that HUD
make a report to Congress within five years regarding the need for
further legislation in the area. See §2612(a) (1976 ed.).
Among the topics required to be included in the report were
“recommendations on whether Federal regulation of the charges
for real estate settlement services in federally related mortgage
transactions is necessary and desirable,” and, if so,
recommendations with regard to what reforms should be adopted.
§2612(b)(2). The directive for recommendations regarding the
desirability of price regulation would make no sense if Congress
had already resolved the issue—if §2607(b) already
carried with it authority for HUD to proscribe the collection of
unreasonably high fees for settlement services, i.e.,
engage in price regulation.
No doubt recognizing as much, petitioners do not
fully adopt HUD’s construction of §2607(b). Noting that
even those Courts of Appeals which have found §2607(b) not to
be limited to fee-splitting situations have held that the statute
does not reach unreasonably high fees, see Kruse
Fargo Home Mortgage, Inc.
383 F.3d 49
, 56 (CA2 2004); Santiago
v. GMAC Mortgage
417 F.3d 384
, 387 (CA3 2005); Friedman
Street Mortgage Corp.
, 520 F.3d 1289, 1297 (CA11 2008),
petitioners ac-knowledge that the statute does not cover
overcharges. They nonetheless embrace HUD’s construction of
§2607(b) insofar as it holds that a provider violates the
statute by retaining a fee after providing no services at all in
return. In short, petitioners contend that, by allegedly charg- ing
each of them an unearned fee, respondent “accept[ed]” a
“portion, split, or percentage” of a settlement,
service charge (i.e.,
100 percent of the charge)
“other than for services actually performed.”
§2607(b) (2006 ed.).
The parties vigorously dispute whether the
position set forth in HUD’s 2001 policy statement should be
accorded deference under the framework announced by this Court in
Chevron U. S. A. Inc.
v. Natural Resources
Defense Council, Inc.
, 467 U.S.
(1984). We need not resolve that dispute—or address
whether, if Chevron
deference would otherwise apply, it is
eliminated by the policy statement’s palpable overreach with
regard to price controls. For we conclude that even the more
limited position espoused by the policy statement and urged by
petitioners “goes beyond the meaning that the statute can
bear,” MCI Telecommunications Corp.
Telephone & Telegraph Co.
, 512 U.S.
, 229 (1994). In our view, §2607(b) unambiguously
covers only a settlement-service provider’s splitting of a
fee with one or more other persons; it cannot be understood to
reach a single provider’s retention of an unearned
By providing that no person “shall
give” or “shall accept” a “portion, split,
or percentage” of a “charge” that has been
“made or received,” “other than for services
actually performed,” §2607(b) clearly describes two
distinct exchanges. First, a “charge” is
“made” to or “received” from a consumer by
a settlement-service provider. That provider then
“give[s],” and another person “accept[s],”
a “portion, split, or percentage” of the charge.
Congress’s use of different sets of verbs, with distinct
tenses, to distinguish between the consumer-provider transaction
(the “charge” that is “made or received”)
and the fee-sharing transaction (the “portion, split, or
percentage” that is “give[n]” or
“accept[ed]”) would be pointless if, as petitioners
contend, the two transactions could be collapsed into one.
Petitioners try to merge the two stages by
arguing that a settlement-service provider can “make” a
charge (stage one) and then “accept” (stage two) the
portion of the charge consisting of 100 percent. See Reply Brief
for Petitioners 6. But then is not the provider also
“receiv[ing]” the charge at the same time he is
“accept[ing]” the portion of it? And who
“give[s]” the portion of the charge consisting of 100
percent? The same provider who “accept[s]” it? This
reading does not avoid collapsing the sequential relationship of
the two stages, and it would simply destroy the tandem character of
activities that the text envisions at stage two (i.e.,
giving and accepting).
Petitioners seek to avoid this consequence, at
stage two at least, by saying that the consumer
person who “give[s]” a “portion, split, or
percentage” of the charge to the provider who
“accept[s]” it. See Brief for Petitioners 21; Reply
Brief for Petitioners 5. But since under this statute it is (so to
speak) as accursed to give as to receive, this would make
lawbreakers of consumers—the very class for whose benefit
§2607(b) was enacted, see §2601. It is no answer to say
that a consumer would not face damages liability because a violator
is liable only “to the person or persons charged for the
settlement service,” §2607(d)(2), and it would not make
sense to render a consumer liable to himself. It is the logical
that a consumer would be liable to himself, not the
specter of actual damages liability, which provides strong
indication that something in petitioners’ interpretation is
At any rate, §2607(b) is also enforceable
through criminal prosecutions, §2607(d)(1), and actions for
injunctive relief brought by federal and state regulators,
§2607(d)(4). HUD’s 2001 policy statement asserts that
“HUD is, of course, unlikely to direct any enforcement
actions against consumers for the payment of unearned fees,”
66 Fed. Reg. 53059, n. 6, but that assurance is cold comfort.
Moreover, even assuming (as seems realistic) that the Justice
Department would be similarly reluctant to prosecute consumers for
criminal violations of §2607(b), “prosecutorial
discretion is not a reason for courts to give improbable breadth to
criminal statutes.” Abuelhawa
v. United States
, 823, n. 3 (2009).
Nor is the problem of consumer criminal
liability solved by petitioners’ suggestion that an unstated
requirement be read into the criminal enforcement
provision, §2607(d)(1), see, e.g., Staples
, 511 U.S.
, 605 (1994). If that would excuse only those consumers who
are unaware that they are paying for unearned services, some
consumers would remain criminally liable—those who know that
the fee is unearned but decide to pay it anyway, perhaps because
the provider’s proposal is still the best deal. And if it
would immunize all
consumers, the statute’s
criminalization of the entire “giving” portion of
consumer-provider transactions would make little sense. We find it
virtually unthinkable that Congress would leave it to imputed
to preserve from criminal liability some or all of
the class RESPA was designed to protect—and entirely
unthinkable that Congress would have created that strange
disposition through language as obscure as that relied upon
The phrase “portion, split, or
percentage” reinforces the conclusion that §2607(b) does
not cover a situation in which a settlement-service provider
retains the entirety of a fee received from a consumer. It is
certainly true that “portion” or
be used to include the
entirety, or 100 percent. See, e.g.,
18 U. S. C.
§648 (“portion”); 5 U. S. C.
§8348(g) (2006 ed., Supp. IV) (“percentag[e]”); 5
U. S. C. §8351(b)(2)(B) (2006 ed.) (same); 12
U. S. C. §1467a(m)(7)(B)(ii)(II) (same). But that is
not the normal meaning of “portion” when one speaks of
“giv[ing]” or “accept[ing]” a portion of
the whole, as dictionary definitions uniformly show.[6
] Aesop’s fable would be just as wryly
humorous if the lion’s claim to the entirety of the kill he
hunted in partnership with less ferocious animals had been
translated into English as the “lion’s portion”
instead of the lion’s share. As for “percentage,”
that word can
include 100 percent—or even 300
percent—when it refers to merely a ratable measure
(“unemployment claims were up 300 percent”).[7
] But, like “portion,” it
normally means less than all when referring to a
“percentage” of a specific whole (“he demanded a
percentage of the profits”).[8
] And it is normal usage that, in the absence of contrary
indication, governs our interpretation of texts. Crawford
Metropolitan Government of Nashville and Davidson Cty.
, 276 (2009); Asgrow Seed Co.
, 187 (1995).
In the present statute, that meaning is
confirmed by the “commonsense canon of noscitur a
—which counsels that a word is given more precise
content by the neighboring words with which it is
associated.” United States
, 294 (2008). For “portion” and
“percentage” do not stand in isolation, but are part of
a phrase in which they are joined together by the intervening word
“split”—which, as petitioners acknowledge, Brief
for Petitioners 19, cannot possibly mean the entirety. We think it
clear that, in employing the phrase “portion, split, or
percentage,” Congress sought to invoke the words’
common “core of meaning,” Graham County Soil and
Water Conservation Dist.
v. United States ex rel.
, 559 U. S. ___, ___, n. 7 (2010) (slip op., at
7, n. 7), which is to say, a part of a whole. That is so even
though the phrase is preceded by “any”—a word
that, we have observed, has an “ ‘expansive
meaning,’ ” Department of Housing and Urban
, 535 U.S.
, 131 (2002). Expansive, yes; transformative, no. It can
broaden to the maximum, but never change in the least, the clear
meaning of the phrase selected by Congress here.
Contrary to petitioners’ contention, the
natural connotation of “portion, split, or percentage”
is not undermined in this context by our “general
‘reluctan[ce] to treat statutory terms as
surplusage.’ ” Board of Trustees of Leland
Stanford Junior Univ.
v. Roche Molecular Systems, Inc.
563 U. S. ___, ___ (2011) (slip op., at 9) (quoting
, 533 U.S.
, 174 (2001)). Petitioners rightly point out that under our
interpretation “portion,” “split,” and
“percentage” all mean the same thing—a perhaps
regrettable but not uncommon sort of lawyerly iteration
(“give, grant, bargain, sell, and convey”). But the
canon against surplusage merely favors that interpretation which
surplusage, see Microsoft Corp.
v. i4i Ltd.
, 564 U. S. ___, ___–___ (2011) (slip
op., at 12–13)—and petitioners’ interpretation no
more achieves that end than ours does. It is impossible to imagine
a “portion” (even a portion consisting of the entirety)
or a “split” that is not also a
Petitioners invoke the presumption against
surplusage a second time, urging that if §2607(b) is not
construed to reach undivided unearned fees, it would be rendered
“largely surplusage” in light of §2607(a)’s
express prohibition of kickbacks. Brief for Petitioners 24. Not so.
Section 2607(a) prohibits giving or accepting “any fee,
kickback, or thing of value pursuant to any agreement or
understanding . . . that business incident to or a part
of a real estate settlement service . . . shall be
referred to any person.” §2607(a). That prohibition is
at once broader than §2607(b)’s (because it applies to
the transfer of any “thing of value,” rather than to
the dividing of a “charge” paid by a consumer) and
narrower (because it requires an “agreement or
understanding” to refer business). Thus, a settlement-service
provider who agrees to exchange valuable tickets to a sporting
event in return for a referral of business would violate
§2607(a), but not §2607(b). So too a provider who agrees
to pay a monetary referral fee that is not tied in any respect to a
charge paid by a particular consumer—for instance, a
“retainer” agreement pursuant to which the provider
pays a monthly lump sum in exchange for the recipient’s
agreement to refer any business that comes his way. By contrast, a
settlement-service provider who gives a portion of a charge to
another person who has not rendered any services in return would
violate §2607(b), even if an express referral arrangement does
not exist or cannot be shown. In short, each subsection reaches
conduct that the other does not; there is no need to adopt
petitioners’ improbable reading of §2607(b) to avoid
rendering any portion of §2607 superfluous.
It follows that petitioners can derive no
support from §2607’s caption: “Prohibition against
kickbacks and unearned fees.” Subsection (a) prohibits
certain kickbacks (those agreed to in exchange for referrals) and
subsection (b) prohibits certain unearned fees (those paid from a
part of the charge to the customer).[9
Petitioners also appeal to statutory purpose,
arguing that a prohibition against the charging of undivided
unearned fees would fit comfortably with RESPA’s stated goal
of “insur[ing] that consumers . . . are protected
from unnecessarily high settlement charges caused by certain
abusive practices,” §2601(a). It bears noting that
RESPA’s declaration of purpose is by its terms limited to
abusive practices”—making the
statute an even worse candidate than most for the expansion of
limited text by the positing of an unlimited purpose. RESPA’s
particular language ultimately serves to drive home a broader
point: “[N]o legislation pursues its purposes at all
v. United States
, 480 U.S.
, 525–526 (1987) (per curiam)
“[e]very statute purposes, not only to achieve certain ends,
but also to achieve them by particular means,” Director,
Office of Workers’ Compensation Programs
News Shipbuilding & Dry Dock Co.
, 136 (1995). Vague notions of statutory purpose
provide no warrant for expanding §2607(b)’s prohibition
beyond the field to which it is unambiguously limited: the
splitting of fees paid for settlement services.
Nor is there any merit to petitioners’
related contention that §2607(b) should not be given its
natural meaning because doing so leads to the allegedly absurd
result of permitting a provider to charge and keep the entirety of
a $1,000 unearned fee, while imposing liability if the provider
shares even a nickel of a $10 charge with someone else. That result
does not strike us as particularly anomalous. Congress may well
have concluded that existing remedies, such as state-law fraud
actions, were sufficient to deal with the problem of entirely
fictitious fees, whereas legislative action was required to deal
with the problems posed by kickbacks and fee splitting.
In any event, petitioners’ reading of the
statute leads to an “absurdity” of its own: Because
§2607(b) manifestly cannot be understood to prohibit
unreasonably high fees, see supra,
at 5, a service provider
could avoid liability by providing just a dollar’s worth of
services in exchange for the $1,000 fee. Acknowledging that
§2607(b)’s coverage is limited to fee-splitting
transactions at least has the virtue of making it a coherent
response to that particular problem, rather than an incoherent
response to the broader problem of unreasonably high fees.
* * *
In order to establish a violation of
§2607(b), a plaintiff must demonstrate that a charge for
settlement services was divided between two or more persons.
Because petitioners do not contend that respondent split the
challenged charges with anyone else, summary judgment was properly
granted in favor of respondent. We therefore affirm the judgment of
the Court of Appeals.
It is so ordered.