Klingel et al v. DAS Acquisition Company, LLC et al

Filing 41

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant DAS Acquisition Company, LLC's Motion for Summary Judgment (ECF NO. 35 ) is GRANTED, and Plaintiffs' claims are DISMISSED with prejudice. An appropriate Judgment will accompany this Memorandum and Order. Signed by District Judge Jean C. Hamilton on 2/8/13. (TRC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

RUSSELL F. KLINGEL, KATHLEEN
E. KLINGEL, and LEE C. MCMURRAY,
Plaintiff(s),
vs.
DAS ACQUISITION COMPANY, LLC,
d/b/a USA Mortgage,
Defendant(s).

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Case No. 4:12CV1194 JCH

MEMORANDUM AND ORDER
This matter is before the Court on Defendant DAS Acquisition Company, LLC’s (“DAS”)
Motion for Summary Judgment, filed December 17, 2012. (ECF No. 35). The motion is fully briefed
and ready for disposition.
BACKGROUND
In 2011, Plaintiffs Russell F. Klingel and Kathleen E. Klingel entered into a transaction with
DAS to obtain a residential mortgage loan for property located in Missouri. (Amended Class Action
Complaint (“Compl.”), ¶ 11). The settlement date for the Klingels’ loan transaction was July 29,
2011. (Id., ¶ 12). In association with the loan, DAS charged an origination charge of $1,215.
(DAS’s Statement of Undisputed Material Facts in Support of its Motion for Summary Judgment
(“DAS’s Facts”), ¶ 3).
In late 2010, Plaintiff Lee C. McMurray entered into a transaction with DAS to obtain a
residential mortgage loan for a property located in Missouri. (Compl., ¶ 19). The settlement date

for Ms. McMurray’s loan transaction was December 27, 2010. (Id., ¶ 20). In association with the
loan, DAS charged an origination charge of $1,569. (DAS’s Facts, ¶ 10).1
Plaintiffs maintain the origination charges, referenced in the HUD-1 statements allegedly
prepared by DAS, were “illegal and improper charges.” (Compl., ¶¶ 13-16, 21-24). Specifically,
Plaintiffs assert that for valuable consideration, DAS prepared, procured, and/or assisted in the
preparation or procurement of legal documents in connection with Plaintiffs’ loan transactions,
including deeds, notes, and/or a PUD rider, which were not created or reviewed by a licensed
Missouri attorney. (Id., ¶¶ 48-54). Plaintiffs thus maintain that “[a]ll fees [Plaintiffs] paid to DAS
concerning the illegal transaction[s] should be disgorged.” (Id., ¶¶ 18, 26).2
Based on these allegations, as stated above Plaintiffs filed their original Class Action Petition
against DAS and Ellie Mae in Missouri State Court on May 4, 2012. DAS removed the Petition to
this Court on July 3, 2012. (ECF No. 1). On September 10, 2012, Plaintiffs dismissed their claims
against Ellie Mae without prejudice. (ECF Nos. 23, 24). Plaintiffs then filed their Amended Class
Action Complaint against DAS on December 14, 2012. (ECF No. 32).
In Count I of their Amended Class Action Complaint, Plaintiffs assert DAS unlawfully was
“doing law business,” when it prepared, procured, and/or assisted in the preparation or procurement
of the above-mentioned legal documents. (Compl., ¶¶ 46-55). In Count II, Plaintiffs maintain DAS
violated the Missouri Merchandising Practices Act. (Id., ¶¶ 56-63). In Count III, Plaintiffs allege

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Plaintiffs attached the U.S. Department of Housing and Urban Development Settlement
Statements (HUD-1) for both loan transactions to their original Class Action Petition, filed in
Missouri State Court on May 4, 2012, and removed to this Court on July 3, 2012.
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Plaintiffs further assert that all fees paid by DAS to non-party Ellie Mae, Inc. concerning
Plaintiffs’ transactions were illegal and improper charges that should be returned to Plaintiffs.
(Compl., ¶¶ 17, 25).
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DAS was unjustly enriched, when it charged Plaintiffs for services it did not perform or did not
perform lawfully. (Id., ¶¶ 64-69).
As stated above, DAS filed the instant Motion for Summary Judgment on December 17, 2012,
claiming there exist no genuine issues of material fact and DAS is entitled to judgment as a matter
of law. (ECF No. 35).
SUMMARY JUDGMENT STANDARD
The Court may grant a motion for summary judgment if, “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The substantive
law determines which facts are critical and which are irrelevant. Only disputes over facts that might
affect the outcome will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). Summary judgment is not proper if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party. Id.
A moving party always bears the burden of informing the Court of the basis of its motion.
Celotex, 477 U.S. at 323. Once the moving party discharges this burden, the nonmoving party must
set forth specific facts demonstrating that there is a dispute as to a genuine issue of material fact, not
the “mere existence of some alleged factual dispute.” Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at
247. The nonmoving party may not rest upon mere allegations or denials of its pleadings. Anderson,
477 U.S. at 256.
In passing on a motion for summary judgment, the Court must view the facts in the light most
favorable to the nonmoving party, and all justifiable inferences are to be drawn in its favor. Anderson,

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477 U.S. at 255. The Court’s function is not to weigh the evidence, but to determine whether there
is a genuine issue for trial. Id. at 249.
DISCUSSION
I.

Count I
Missouri statutes define the “law business” as:
[T]he advising or counseling for a valuable consideration of any person, firm,
association, or corporation as to any secular law or the drawing or the procuring of
or assisting in the drawing for a valuable consideration of any paper, document or
instrument affecting or relating to secular rights....

Mo. Rev. Stat. § 484.010.2; see also Hargis v. JLB Corp., 357 S.W.3d 574, 578 (Mo. banc 2011).
The Missouri Supreme Court has held that promissory notes and deeds of trust are legal documents,
and that it constitutes the unauthorized practice of law to have non-attorneys charge a fee or vary
their customary charges to prepare such documents. See Hargis, 357 S.W.3d at 579 (citing Eisel v.
Midwest BankCentre, 230 S.W.3d 335, 339 (Mo. banc 2007)). In striking a workable balance
between public convenience and protection, however, the Missouri Supreme Court has allowed the
completion of certain standardized legal forms by non-attorneys, “so long as the preparing party has
a personal interest in the transaction and no separate fee is assessed.” Carpenter v. Countrywide
Home Loans, Inc., 250 S.W.3d 697, 702 n. 4 (Mo. banc 2008) (citing In re First Escrow, Inc., 840
S.W.2d 839, 846-47 (Mo. banc 1992); Hulse v. Criger, 247 S.W.2d 855, 860-63 (1952)).
In its motion, DAS asserts the undisputed evidence conclusively demonstrates it did not
engage in the unauthorized practice of law, because DAS neither charged Plaintiffs a separate
additional fee for document preparation, nor varied its customary charges based upon whether legal
documents were prepared. (DAS’s Memorandum of Law in Support of its Motion for Summary
Judgment, P. 8). As support for this assertion, DAS notes the HUD-1 settlement statements, which
Plaintiffs certified as true and accurate statements of the relevant charges, did not include any separate
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fee for document preparation. (Id.). DAS further attaches an affidavit from Douglas A. Schukar,
President and Chief Executive Officer of DAS, in which he attests DAS did not charge Plaintiffs a
separate additional fee for document preparation, or vary its customary charges based on whether
legal documents were to be prepared in connection with Plaintiffs’ loan transactions. (Schukar
Affidavit, ¶¶ 8, 15).3
Upon consideration, the Court agrees Plaintiffs’ allegations fail to state a claim for the
unauthorized practice of law business. For example, in their Amended Class Action Complaint,
Plaintiffs allege only that the HUD-1 statements referred to origination and adjusted origination
charges, and that such charges were “illegal and improper.” (Compl., ¶¶ 14-16, 22-24). Plaintiffs
fail to connect the fees with any document preparation by DAS, however, as required to establish the
unauthorized practice of law. See, e.g., Eisel, 230 S.W.3d at 339 (“[A] non-lawyer charging a fee
for document preparation constitutes the unauthorized business of law”) (emphasis added); Hargis,
357 S.W.3d at 579 (holding promissory notes and deeds of trust “were legal documents and that
[Defendant] engaged in the unauthorized practice of law by having non-attorneys prepare such
documents for a fee”) (emphasis added); Westerfeld v. Independent Processing, LLC, 2012 WL
1684500 (E.D. Mo. May 15, 2012). Furthermore, Plaintiffs fail to present any competent evidence
tending to show that DAS varied its customary charges based on the preparation of legal documents.
Rather, Plaintiffs attempt to support this contention merely by noting that the Klingels and Ms.
McMurray were charged different origination fees for their transactions, and executed different
documents. The fact of differing fee schedules and documentation alone, however, does not establish

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Schukar testified the origination charges were imposed to compensate DAS for its
lending services in connection with the loan transactions. (Schukar Aff., ¶¶ 6, 13).
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a variance in charges based on document preparation. This portion of DAS’s Motion for Summary
Judgment must therefore be granted.
II.

Counts II And III
Upon review, the Court finds Plaintiffs’ claim for violation of the Missouri Merchandising

Practices Act is predicated on the unauthorized practice of law claim, and thus fails for the above
stated reasons. See Schriener v. Quicken Loans, Inc., 2012 WL 6553830, at *2 (E.D. Mo. Dec. 14,
2012). Further, while it is true that the elements of an unjust enrichment claim are “entirely different”
than those of an unauthorized practice of law claim, see Hargis, 357 S.W.3d at 586, Plaintiffs
nevertheless fail to state a claim for unjust enrichment. Schriener, 2012 WL 6553830, at *2. In other
words, the inequitable circumstances alleged in Plaintiffs’ unjust enrichment claim are that DAS
benefitted from a loan transaction in which the underlying documents were created without the
involvement of a Missouri-licensed attorney, and therefore the claim depends on Plaintiffs’ having
directly paid a fee for the preparation of said documents, a fact they do not plead. See Schriener v.
Quicken Loans, Inc., 2013 WL 147842, at *2 (E.D. Mo. Jan. 14, 2013). Plaintiffs’ unjust enrichment
claim thus is inextricably tied to their unauthorized practice claim, and so DAS’s Motion for Summary
Judgment on Count III of Plaintiffs’ Amended Class Action Complaint must be granted.4

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In light of the above rulings, the Court need not consider DAS’s alternative basis for
summary judgment with respect to Ms. McMurray. In any event, the Court finds fact questions
remain with respect to whether Ms. McMurray had standing to pursue her claims in this Court.
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CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant DAS Acquisition Company, LLC’s Motion for
Summary Judgment (ECF NO. 35) is GRANTED, and Plaintiffs’ claims are DISMISSED with
prejudice. An appropriate Judgment will accompany this Memorandum and Order.

Dated this 8th day of February, 2013.

/s/ Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

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