Fifth Third Bank's Motion To Dismiss The Empire Title Complaint

Case: 1:10-cv-02208-PAG Doc #: 13 Filed: 12/03/10 1 of 37.
PageID #: 107
UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
EMPIRE TITLE SERVICES, INC., CASE NO. 1:10-CV-02208-PAG
Plaintiff,
JUDGE PATRICIA A. GAUGHAN
vs.
FIFTH THIRD MORTGAGE CO., et al.,
Defendants.
DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S COMPLAINT
Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants Fifth Third Mortgage
Company; Vista Settlement Services, LLC; Fifth Third Financial Corporation; and Fifth Third
Bank respectfully move this Court to dismiss the Complaint for failure to state a claim.
Defendants’ supporting memorandum is attached.
Respectfully submitted,
/s/ Michael E. Mumford

Brett A. Wall (0070277) Irene C. Freidel (pro hac vice)
Michael E. Mumford (0073931) Jennifer J. Nagle (pro hac vice)
BAKER & HOSTETLER LLP Brian R. Vaughn Martel (pro hac vice)
PNC Center K&L GATES LLP
1900 East Ninth Street, Suite 3200 State Street Financial Center
Cleveland, Ohio 44114-3482 One Lincoln Street
Telephone: 216.621.0200 Boston, MA 02111-2950
Facsimile: 216.696.0740 Telephone: 617.261.3100
Facsimile: 617.261.3175
Attorneys for Defendants

Case: 1:10-cv-02208-PAG Doc #: 13 Filed: 12/03/10 2 of 37. PageID #: 108
UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
EMPIRE TITLE SERVICES, INC., CASE NO. 1:10-CV-02208-PAG
Plaintiff,
JUDGE PATRICIA A. GAUGHAN
vs.
FIFTH THIRD MORTGAGE CO., et al.,
Defendants.
MEMORANDUM IN SUPPORT OF DEFENDANTS’

MOTION TO DISMISS PLAINTIFF’S COMPLAINT
Brett A. Wall (0070277)

Michael E. Mumford (0073931)
BAKER & HOSTETLER LLP
PNC Center
1900 East Ninth Street, Suite 3200
Cleveland, Ohio 44114-3485
Telephone: (216) 621-0200
Facsimile: (216) 696-0740
Irene C. Freidel (pro hac vice)

Jennifer J. Nagle (pro hac vice)
Brian R. Vaughn Martel (pro hac vice)
K&L GATES LLP
State Street Financial Center
One Lincoln Street
Boston, MA 02111-2950
Telephone: (617) 261.3100
Facsimile: (617) 261.3175

TABLE OF CONTENTS
I. INTRODUCTION ............................................................................................................. 1
II. THE COMPLAINT’S RELEVANT ALLEGATIONS ..................................................... 3
III. LEGAL STANDARD........................................................................................................ 6
IV. ARGUMENT..................................................................................................................... 6
A. Empire Cannot Transform Alleged RESPA Violations, Which It Has No

Right To Pursue, Into RICO Claims ...................................................................... 6
1. Empire alleges RESPA claims dressed up as RICO claims ...................... 6
2. Empire cannot use RICO to avoid Congressionally-imposed

limitations on who can sue under a particular statute ................................ 8
B. Empire Has Offered No Factual Allegations That Would Show How the
Alleged RICO Violations Proximately Caused Empire’s Alleged Injuries......... 10
1. Empire has not, and cannot, allege any direct injury resulting from
Defendants’ purported RESPA violations ............................................... 10
a. Empire’s damages theory is too speculative................................ 11
b. Apportioning damages among the putative class is

impossible .................................................................................... 14
c. Empire’s claims create a stark risk of multiple recoveries .......... 15
2. Empire fails to allege that the various RICO violations asserted

directly caused it injury............................................................................ 16
a. Empire fails to allege that any violation of § 1962(a)

directly caused Empire to lose business....................................... 16
b. Empire fails to allege that any violation of § 1962(c)

c. Empire fails to allege that any violation of § 1962(d)

C. Empire’s RICO Claims Fail Because the Complaint Does Not Sufficiently
Allege the Predicate Offenses of Mail and Wire Fraud....................................... 20
1. Empire’s fraud allegations do not meet Rule 9(b)’s particularity

requirement .............................................................................................. 21
i
TABLE OF CONTENTS
(continued)
2. Empire fails to allege any actual misrepresentations or any duty to

disclose the allegedly concealed information on HUD-1 or GFE
Forms ....................................................................................................... 23
D. Empire Does Not Allege a Viable Association-in-Fact Enterprise ..................... 25
V. CONCLUSION................................................................................................................ 27
CERTIFICATE OF COMPLIANCE........................................................................................... 28
ii
TABLE OF AUTHORITIES
CASES
Advocacy Org. for Patients and Providers v. Auto Club Ins. Ass’n,
176 F.3d 315 (6th Cir. 1999) ................................................................................................. 20
Am. Dental Ass’n v. Cigna Corp.,

605 F. 3d 1283 (11th Cir. 2010) ............................................................................................ 23
Anza v. Ideal Steel Supply Corp.,

547 U.S. 451 (2006)......................................................................................................... 11, 16
Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009)........................................................................................... 6, 17, 18, 21
Ass’n of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc.,

241 F.3d 696 (9th Cir. 2001) ........................................................................................... 11, 13
Ayers v. General Motors Corp.,

234 F.3d 514 (11th Cir. 2000) ................................................................................................. 8
Bates v. Nw. Human Servs.,

466 F. Supp. 2d 69 (D.D.C. 2006) ......................................................................................... 20
Beck v. Prupis,
529 U.S. 494 (2000)............................................................................................................... 19
Bell Atl. Corp. v. Twombly,

127 S. Ct. 1955 (2007)............................................................................................................. 6
Bender v. Southland Corp.,

749 F.2d 1205 (6th Cir. 1984) ............................................................................................... 20
Boyle v. United States,

129 S. Ct. 2237 (2009)........................................................................................................... 26
Bridge v. Phoenix Bond Indem. Co.,

128 S. Ct. 2131 (2008)........................................................................................................... 15
Brown v. First Tennessee National Bank Ass’n,

No. 1:09-CV-0679-BBM, 2009 U.S. Dist. LEXIS 127503 (N.D. Ga.
Nov. 20, 2009) ......................................................................................................................... 8
City of Cleveland v. Ameriquest Mortg. Secs., Inc.,

615 F.3d 496 (6th Cir. 2010) ................................................................................................. 11
iii
(continued)
Conte v. Newsday, Inc.,

703 F. Supp. 2d 126 (E.D.N.Y. 2010) ................................................................................... 26
Craighead v. E.F. Hutton & Co.,

899 F.2d 485 (6th Cir. 1990) ................................................................................................. 16
Dist. Telecomms. v. Dist. Cablevision, Inc.,

638 F. Supp. 418 (D.D.C. 1985) ............................................................................................ 13
Elkins v. Chapman,
36 Fed. Appx. 543 (6th Cir. 2002)......................................................................................... 19
Elsevier, Inc. v. W.H.P.R., Inc.,

692 F. Supp. 2d 297 (S.D.N.Y. 2010).................................................................................... 26
Falise v. Am. Tobacco Co.,

94 F. Supp. 2d 316 (E.D.N.Y. 2000) ..................................................................................... 17
Fogie v. Thorn Americas, Inc.,

190 F.3d 889 (8th Cir. 1999) ................................................................................................. 17
Grantham & Mann, Inc. v. Am. Safety Products, Inc.,

831 F.2d 596 (6th Cir. 1987) ................................................................................................. 12
Greenberg v. Blake,
No. 09-civ-4347, 2010 WL 2400064 (E.D.N.Y. June 10, 2010)........................................... 26
Grider v. Texas Oil & Gas Corp.,

868 F.2d 1147 (10th Cir. 1989) ............................................................................................. 19
Hemi Group, LLC v. City of New York,

130 S. Ct. 983 (2010)......................................................................................................... 9, 10
Holmes v. Secs. Inv. Prot. Corp.,

503 U.S. 258 (1992)............................................................................................. 10, 11, 15, 16
In re Ins. Brokerage Antitrust Litig.,

618 F.3d 300 (3d Cir. 2010)................................................................................................... 26
James Cape & Sons Co. v. PCC Constr. Co.,

453 F.3d 396 (7th Cir. 2006) ................................................................................................. 13
Kramer v. Bachan Aerospace Corp.,

912 F.2d 151 (6th Cir. 1990) ................................................................................................. 18
iv
(continued)
Lerner v. Fleet Bank, NA,

318 F.3d 113 (2d Cir. 2003)................................................................................................... 13
Moll v. US Life Title Ins. Co. of N.Y.,

710 F. Supp. 476 (S.D.N.Y. 1989)......................................................................................... 24
Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co.,

981 F.2d 429 (9th Cir. 1992) ................................................................................................. 17
Parker v. Learn Skills Corp.,

530 F. Supp. 2d 661 (D. Del. 2008)....................................................................................... 14
Powers v. Fifth Third Mortg. Co.,

N.D. Ohio No. 1:09-CV-02059.......................................................................................... 8, 15
Reese v. 1st Metro Mortg. Co.,

No. 03-2185-KHV, 2003 WL 22454658 (D. Kan. Oct. 28, 2003) ........................................ 25
Robinson v. Fountainhead Title Group Corp.,

447 F. Supp. 2d 478 (D. Md. 2006) ....................................................................................... 24
Robinson v. Fountainhead Title Group Corp.,

252 F.R.D. 275 (D. Md. 2008)......................................................................................... 18, 23
Sedima, S.P.R.L. v. Imrex Co.,

473 U.S. 479 (1985)............................................................................................................... 18
Smith v. Jackson,
84 F.3d 1213 (9th Cir. 1996) ................................................................................................... 8
Standard Chorine of Del. v. Sinibaldi,

821 F. Supp. 232 (D. Del. 1992)............................................................................................ 17
Strates Shows, Inc. v. Amusements of Am., Inc.,

379 F. Supp. 2d 817 (E.D.N.C. 2005).............................................................................. 12, 15
Toldy v. Fifth Third Mortg. Co.,

No. 1:09-CV-00377, 2010 WL 2639975 (N.D. Ohio June 29, 2010) ............................. 15, 24
U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc.,

342 F.3d 634 (6th Cir. 2003) ................................................................................................. 20
United States v. Skellers,

940 F. Supp. 1146 (N.D. Ohio 1996)..................................................................................... 23
v
(continued)
United States v. Turkette,

452 U.S. 576 (1981)............................................................................................................... 25
STATUTES AND REGULATIONS
12 U.S.C. § 2601.................................................................................................................... 1, 6, 7
12 U.S.C. § 2603(a) ............................................................................................................... 24, 25
12 U.S.C. § 2604(c) ............................................................................................................... 24, 25
12 U.S.C. § 2607............................................................................................................ 4, 7, 10, 15
18 U.S.C. § 1341...................................................................................................................... 7, 16
18 U.S.C. § 1343...................................................................................................................... 7, 16
18 U.S.C. § 1961............................................................................................................................ 1
18 U.S.C. § 1962................................................................................................................ 7, 16, 18
18 U.S.C. § 1964(c) ........................................................................................................... 7, 10, 16
18 U.S.C. § 2314.......................................................................................................................... 18
24 C.F.R. § 3500.7 ....................................................................................................................... 24
24 C.F.R. § 3500.8(b) .................................................................................................................. 24
RULES
Fed. R. Civ. P. 9(b) ...................................................................................................................... 20
Fed. R. Civ. P. 12(b)(6).................................................................................................................. 6
vi
I. INTRODUCTION
Defendants Fifth Third Mortgage Company, Fifth Third Bank, Fifth Third Financial
Corporation, and Vista Settlement Services, LLC (collectively, “Defendants”) respectfully
submit this brief in support of their motion to dismiss the Complaint for failure to state a claim.
Plaintiff Empire Title Services, Inc. (“Empire”) brings this lawsuit on behalf of itself and
a putative class of title agents that allegedly were “blacklisted” from providing settlement
services for Fifth Third mortgage loans. Empire alleges it was “blacklisted” because it refused to
participate in a referral and kickback scheme perpetrated against consumers by Defendants and
“co-operating settlement agents.” Empire alleges that this referral and kickback scheme violated
the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601, et seq.
Although Empire premises its Complaint entirely on Defendants’ alleged RESPA
violations, Empire has not brought a RESPA claim because title agents like Empire cannot sue
under RESPA. Empire has instead sued Defendants under the Racketeer Influenced Corrupt
Organizations Act (“RICO”), 18 U.S.C. §§ 1961, et seq. Empire vaguely contends that
Defendants engaged in RICO-prohibited racketeering activity by sending consumers misleading
mortgage documents that concealed Defendants’ alleged RESPA violations.
Accordingly, Defendants’ motion presents a straightforward issue: Can a title agent, like
Empire, which has no right of action under RESPA, transform alleged RESPA violations against
consumers into viable RICO claims against its competitors? The answer is “no” for at least four
reasons.
First, the Complaint seeks to evade Congress’s chosen remedial scheme for RESPA
violations. Congress empowered and incentivized consumers to enforce RESPA by granting
them a private right of action, including treble damages and attorneys’ fees. Congress also
provided for civil and criminal enforcement by state and federal officials. In sharp contrast,
II. THE COMPLAINT’S RELEVANT ALLEGATIONS 1
Defendant Fifth Third Mortgage (“FTM”) is a lender that provides home and other loans
to borrowers in various states, including Ohio. (Compl. p. 7, ¶ 7.) 2 Defendant Fifth Third Bank
(“FTB”) is FTM’s sister company and employs mortgage-loan officers who work for FTM. (p.
7, ¶ 9.) Defendant Fifth Third Financial (“FTF”) is the parent company of FTM and FTB. (p. 7,
¶ 10.) (This memorandum refers to FTM, FTB, and FTF collectively as the “Fifth Third
Defendants.”)
The settlement services necessary to close a mortgage loan generally include tasks such
as escrowing funds; preparing loan documents; performing title searches; issuing title-insurance
commitments, policies, and endorsements; and closing loans. (¶ 19.) In many states, third-party
settlement agents who are also licensed title agents offer to provide all of the services necessary
to close a mortgage loan, including issuing title policies, title commitments, and policy
endorsements. (See id.) Hundreds, if not thousands, of such agents exist in Ohio alone. (See ¶¶
14, 57.)
In 2006, FTF created Vista Settlement Services, LLC (“Vista”) to perform settlement
services for lenders, including FTM. (¶ 22.) Vista is licensed to act as a title-insurance agent
and to perform other mortgage-loan settlement services in Ohio and other states. (p. 7, ¶ 13.) As
a licensed title-insurance agent, Vista can issue title commitments, title policies, and policy
endorsements on behalf of several title-insurance carriers. (p. 7, ¶¶ 13–14.) Empire is also a
licensed title agent and is one of Vista’s competitors. (p. 6, ¶ 6.)
1
Defendants dispute many of the factual allegations in the Complaint, but recognize that for
purposes of this motion, well-pled factual allegations are taken as true.
2
Citations to the Complaint containing both a page and a paragraph number are intended to
avoid confusion resulting from Empire’s having designated certain paragraphs of the
Complaint with the same number.
3
Empire alleges that the Fifth Third Defendants created Vista solely to capture one of the
most lucrative settlement services—issuing title insurance commitments, policies, and
endorsements. (¶ 5.) To guarantee that Vista captured this business, Empire alleges the
Defendants engaged in an “illegal referral scheme” in violation of RESPA, whereby FTM’s loan
officers referred settlement work only to certain “co-operating settlement agents” who agreed “in
advance” to refer “all title insurance premium generating business” to Vista. (p. 4, ¶7.) If an
agent refused to “refer” the title business to Vista, Empire alleges that FTM “blacklisted” the
agent and directed settlement work to “co-operating settlement agents.” (¶¶ 6, 11, 12.) In return
for referring business to cooperating agents, Empire alleges FTM’s loan officers “are paid 10%
or more of Vista’s revenue generated by the issuance of title commitments, title insurance
policies and any Fifth Third required title insurance endorsements.” (¶ 7.) Empire appears to
allege that the above-described conduct violates Sections 8(a) and/or (b) of RESPA. See 12
U.S.C. § 2607(a), (b) .
Empire further suggests that Defendants violated Section 8 because Vista does not fall
within RESPA’s safe harbor for affiliated business arrangements. Section 8(c) of RESPA
provides that referrals between affiliates do not violate Section 8 so long as certain requirements
are met. See 12 U.S.C. § 2607(c)(4)(A) . Empire appears to allege that Defendants fall outside
this safe harbor, and thus violated Section 8, by failing to disclose to borrowers the relationship
between Vista and the Fifth Third Defendants “as required by Federal law.” (Compl. ¶ 41.) In
addition, Defendants allegedly unlawfully “required” borrowers to use Vista. (¶ 47.) The
Complaint further vaguely implies that Defendants violated Section 8 because Vista is not a bona
fide provider of settlement services because it “perform[s] no additional services” when it issues
title insurance products. (¶¶ 35, 72,)
4
Empire alleges that Defendants’ purported RESPA violations injured consumers because
(1) FTM’s borrowers were ostensibly required to use Vista (¶ 47); (2) cooperating agents
allegedly inflated their settlement fees to FTM’s borrowers to make up for the revenue they were
not receiving from the title-insurance-premium generating work; and (3) Vista’s title charges to
FTM’s borrowers were “unearned or excessive” and “paid at the expense and to the detriment of
borrowers.” (¶¶ 44, 45.)
Empire’s allegations regarding its own injuries are less clear. Empire does not allege that
it incurred any out-of-pocket damages. Nor does Empire allege that it received any fraudulent
documents from Defendants or that Defendants concealed anything from it. Instead, Empire
alleges that because it “declined to engage in Defendants’ referral scheme,” FTM stopped
referring settlement business to it. (¶ 54.) Accordingly, Empire claims it “lost income”
amounting to “thousands of dollars” that “would have been obtained in settling Fifth Third
Mortgage transactions.” (Id.) Yet, Empire does not identify any particular transaction that it (or
any other member of the putative class) would have obtained but for the alleged unlawful
referrals to Vista. Nor does it offer any way to identify such a transaction.
Based on these alleged facts, Empire seeks to represent a putative class of title agents
who, like Empire, allegedly used to provide settlement services for FTM loan transactions, but
“stopped receiving referrals of title business” after FTM allegedly began “requiring” that
customers use Vista. (¶ 55.) On behalf of itself and this class, Empire asserts six RICO claims
predicated on the alleged RESPA violations described above. Empire contends that Defendants’
conduct violated three different RICO provisions—Sections 1962(a), 1962(c), and 1962(d)—and
it alleges two different RICO-enterprise configurations. (¶¶ 68–69.) Under the first (applicable
to Counts I, III, and V), Vista is the alleged racketeering enterprise. Under the second
(applicable to the even-numbered counts), Vista, the Fifth Third Defendants, and the cooperating
5
settlement agents ostensibly comprise an association-in-fact enterprise. For each count, Empire
and the putative class seek “amounts they would have received as profits from Fifth Third
Mortgage transactions they were not referred due to the Defendants’ fraudulent scheme.” (E.g.,
p. 27, ¶ A.)
III. LEGAL STANDARD
A Rule 12(b)(6) motion should be granted when, even accepting the allegations of a
complaint as true, a plaintiff fails to provide “grounds of entitlement to relief,” amounting to
“more than labels and conclusions.” Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65
(2007). “A formulaic recitation of the elements of a cause of action will not do,” and “[f]actual
allegations must be enough to raise a right to relief above the speculative level.” Id. at 1965.
Further, “[t]hreadbare recitals of a cause of action’s elements, supported by mere conclusory
statements, do not suffice.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1940 (2009). This standard “does
not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id.
IV. ARGUMENT
A. Empire Cannot Transform Alleged RESPA Violations, Which It Has No Right To

Pursue, Into RICO Claims.
Empire’s lawsuit is, at its core, an attempt to use fraud-predicated civil-RICO claims to
enforce RESPA, a statute that provides Empire no private right of action and is not a predicate
offense under RICO. In doing so, Empire seeks to end-run RESPA’s remedial scheme providing
only consumers and the government, not settlement-service providers, with a right of action. For
this reason, all of Empire’s RICO claims should be dismissed.
1. Empire alleges RESPA claims dressed up as RICO claims.
RESPA is a consumer protection statute that governs the provision of settlement
procedures in real estate transactions. 12 U.S.C. § 2601(a), (b). Congress chose to enforce
RESPA in two ways: (1) by imposing criminal penalties for conduct that violates its provisions,
6
and (2) by granting consumers (i.e., borrowers) and the government a right of action to enforce
certain provisions, including Section 8, through civil suits. Id. § 2607(d)(1), (2), (4). Congress
did not provide for civil suits by title agents or other settlement-service providers like Empire.
Indeed, Congress enacted RESPA to protect consumers, not the settlement-service industry. See
id. § 2601(a), (b).
RICO, by contrast, targets organized crime. It criminally prohibits conducting the affairs
of an organization—called an “enterprise”—through a pattern of racketeering activity. 18 U.S.C.
§ 1962(c). RICO also prohibits using racketeering proceeds to acquire or maintain an interest in
an enterprise. Id. § 1962(a). Conspiring to violate these provisions is also a crime. Id.
§ 1962(d). Although RICO falls within the federal criminal code, it grants a private right of
action to anyone whose “business or property” is injured “by reason of” a RICO violation. Id.
§ 1964(c).
Congress defined “racketeering activity” to include a discrete list of federal criminal
statutes. Id. § 1961(1)(B. These predicate offenses include actions indictable under the federal
mail and wire fraud statutes. Id. § 1961(1)(B). Although violating RESPA is a criminal offense,
RESPA is not among the predicate offenses defined as “racketeering activity” under RICO. Id.
The Complaint’s core allegation is that the manner in which the Fifth Third Defendants
refer business to Vista “entailed wholesale violations of RESPA” harming borrowers. (Compl.
¶ 48; see also ¶ 3.) Aware that it cannot sue under RESPA, and that RESPA is not a predicate
offense under RICO, Empire has simply recast these “wholesale violations of RESPA” as
racketeering activities of mail and wire fraud under 18 U.S.C. §§ 1341 and 1343. To do so,
Empire alleges that Defendants or others acting at their behest mailed, emailed, or faxed various
documents that fraudulently concealed Defendants’ alleged RESPA violations. Empire’s
7
allegations are thus no more than a thinly veiled attempt to manufacture for itself a right of
action for alleged RESPA violations allegedly directed at consumers. 3
2. Empire cannot use RICO to avoid Congressionally imposed limitations on

who can sue under a particular statute.
Courts have rejected similar attempts to use RICO to skirt Congress’s chosen method of
enforcing a statute. In Smith v. Jackson, the Ninth Circuit held that the district court properly
dismissed the plaintiffs’ RICO counts because the complaint “d[id] no more than allege
copyright infringement under the label of mail and wire fraud, and copyright infringement is not
a predicate act under RICO.” 84 F.3d 1213, 1217 (9th Cir. 1996), superseded by statute.
Similarly, in Ayers v. General Motors Corp., the plaintiffs alleged that the defendants
committed RICO predicates of mail and wire fraud by failing to disclose defects in certain auto
parts. 234 F.3d 514, 516 (11th Cir. 2000). The mail and wire fraud allegations, in turn, relied on
the National Traffic and Motor Vehicle Safety Act, which imposes a duty to tell consumers about
safety defects. Id. at 521. The court held that while the Safety Act includes various
administrative remedies for violations, it does not confer a private right of action upon
consumers. Id. at 522. Accordingly, the court dismissed the RICO claims, concluding that
“Congress did not intend for a violation of the Safety Act’s notification requirements to be the
basis for a private civil RICO action.” Id.; see also id. at 524.
Likewise, in Brown v. First Tennessee National Bank Ass’n, No. 1:09-CV-0679-BBM,
2009 U.S. Dist. LEXIS 127503 (N.D. Ga. Nov. 20, 2009), the court dismissed a borrower’s civil-
RICO claims against a mortgage lender that were, at bottom, based on alleged violations of
3
No better evidence of this exists than the Powers case, cited by Empire in the Complaint.
(¶ 73.) In Powers, Empire’s counsel represents a putative class of borrowers pursuing
RESPA claims against the very same defendants in this case. See Powers v. Fifth Third
Mortg. Co., N.D. Ohio No. 1:09-CV-02059. A copy of the Powers complaint is attached
hereto as Exhibit A.
8
Department of Veteran’s Affairs (“VA”) regulations. The borrower claimed that the lender had
defrauded a putative class of veteran-borrowers by leading them to believe they were being
charged only lawful charges, when in fact, they were not. To carry out the scheme, the borrower
alleged that the lender mischaracterized settlement charges on HUD-1 forms to disguise that it
was charging fees prohibited under VA regulations. The borrower further alleged that the bank
falsely certified to the VA that it had not imposed charges exceeding those permissible under VA
regulations. Id. at *4–5, *11–12.
Based on these allegations, the borrower asserted civil-RICO claims predicated on mail
and wire fraud, claiming the bank sent deceptive HUD-1 statements and VA certifications
through the mails and wires. In dismissing the RICO counts, the court concluded that
adjudicating the mail and wire fraud predicates would necessarily require the court to determine
whether the lender in fact violated the VA regulations. Because the alleged fraud was “bound up
in the violation of VA regulations,” the plaintiff’s RICO claims were nothing more than “an
attempt to enforce the VA regulations, for which Congress has not afforded a private cause of
action.” Id. at *34, 35. Accordingly, the court held that “[i]t is inconsistent with the legislative
intent to permit [plaintiff] to bring a class action RICO suit that seeks to enforce the VA
regulations.” Id. at *43. See also Hemi Group, LLC v. City of New York, 130 S. Ct. 983, 994-95
(2010) (Ginsberg, J., concurring) (concluding that RICO does not “allow [a plaintiff] to end-run
its lack of authority to” sue under a different statute).
The same principle applies here. At bottom, Empire seeks to enforce RESPA under the
guise of RICO. Whether the Defendants fraudulently concealed that they violated RESPA or
otherwise misrepresented any matters prohibited under RESPA necessarily turns on whether any
of the Defendants actually violated RESPA. The RICO claims are thus “bound up” in the
alleged RESPA violations.
9
RESPA, however, does provide a right of action for title agents like Empire. Instead,
Congress gave only consumers and state and federal officials the right to enforce RESPA’s
prohibitions through private suits and/or criminal proceedings. 12 U.S.C. § 2607(d)(1), (2), (4).
This, combined with the fact that Congress did not define “racketeering activity” to include
RESPA violations, demonstrates that Congress did not intend to allow commercial entities like
Empire to bring RICO claims based on alleged RESPA violations. Accordingly, the Court
should dismiss all of the RICO counts.
B. Empire Has Offered No Factual Allegations That Would Show How the Alleged
RICO Violations Proximately Caused Empire’s Alleged Injuries.
To plead a viable RICO claim, a plaintiff must plead three elements: (1) a RICO
violation; (2) “injury to his business or property,” 18 U.S.C. § 1964(c); and (3) proximate cause,
which requires a “direct relation” linking the first two elements. Holmes v. Secs. Inv. Prot.
Corp., 503 U.S. 258, 268 (1992). Pleading “but for” causation is not sufficient. Hemi Group,
130 S. Ct. 989 (citing Holmes). Nor is “[a] link that is too remote, purely contingent, or
indirect.” Id. (internal quotation marks and alterations omitted).
The Court should dismiss all of Empire’s RICO counts because proximate cause is
altogether lacking. Empire’s theory is that Defendants directly injured borrowers by requiring
them to use Vista and inflating their settlement charges through an alleged “referral scheme,”
which Defendants carried out by sending allegedly fraudulent documents to borrowers. But
Empire’s claimed harm—losing business referrals from FTM—is wholly speculative and has
nothing to do with the alleged RICO violations.
1. Empire has not, and cannot, allege any direct injury resulting from
Defendants’ purported RESPA violations.
Supreme Court precedent confirms that the harm Empire alleges is too indirect to support
a RICO claim. In defining RICO’s proximate-cause standard, Holmes identified three problems
10
that arise when, as here, an alleged harm is too attenuated from the alleged violation. First, it is
difficult to determine the amount of the plaintiff’s injury attributable to the violation, as distinct
from other, independent factors. Second, apportioning damages among different plaintiffs is
excessively complicated. Third, parties who are more directly injured often sue, creating a risk
of multiple recovery. 503 U.S. at 269–70. As Holmes recognized, “the need to grapple with
these problems is simply unjustified by the interest in deterring injurious conduct, since directly
injured victims can generally be counted on to vindicate the law as private attorneys general.”
Id.
Courts have applied this analysis as a three-prong test for determining whether a plaintiff
has sufficiently pled proximate cause. See, e.g., Anza v. Ideal Steel Supply Corp., 547 U.S. 451,
459–60 (2006); City of Cleveland v. Ameriquest Mortg. Secs., Inc., 615 F.3d 496, 503–06
(6th Cir. 2010); Ass’n of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc., 241 F.3d 696, 701–02
(9th Cir. 2001). Empire fails all three prongs.
a. Empire’s damages theory is too speculative.
It is impossible to calculate Empire’s damages because its alleged injury is inherently
speculative. Specifically, Empire seeks lost revenues that it claims it would have received from
closing FTM loan transactions if FTM referred title work to Empire, and not to its affiliate Vista.
But Empire does not allege that it had any contractual or property right to that business; it merely
had an expectancy interest in servicing future FTM transactions. Nor does Empire allege any
method for determining which transactions it—rather than Vista, a cooperating settlement agent,
or a different member of the putative class—would have received. Moreover, whether Empire
suffered any harm depends on the actions of independent third parties (i.e., the borrowers
themselves) that break the causal chain. In such a situation, both the amount of damages and
whether Empire suffered any damaged are too speculative to support recovery.
11
To recover under RICO for a lost business opportunity, the plaintiff must demonstrate
that it would have received the business in question and must offer a reasonable method for
calculating its lost profits. When plaintiffs fail to do either, courts reject their claims. For
instance, in Strates Shows, Inc. v. Amusements of America, Inc., 379 F. Supp. 2d 817 (E.D.N.C.
2005), the plaintiff alleged that it was not awarded certain government contracts because of the
defendant’s racketeering activity. The court concluded that such a lost business opportunity was
too speculative and dismissed the plaintiff’s RICO claims accordingly. It reasoned that without a
“definite pre-existing contractual right” to obtain the business, the plaintiff’s “expectancy
interest” was not sufficiently concrete to support a RICO claim. Id. at 828.
The Sixth Circuit rejected a similar “lost business opportunity” RICO claim in Grantham
& Mann, Inc. v. American Safety Products, Inc., 831 F.2d 596 (6th Cir. 1987). There, the
plaintiff alleged that the defendant prevented the plaintiff from obtaining an exclusive
distributorship in a new territory, and based its damages calculation on its sales performance in
two other territories. The Sixth Circuit rejected that theory as too speculative. The court
concluded that it was inappropriate to assume that the plaintiff would achieve the same success
in a new territory that it had enjoyed in existing territories, or that it would be successful at all.
Accordingly, the court found the plaintiff’s theory too speculative as to both the amount and the
fact of damages, and dismissed the RICO claim. Id. at 602–03, 605–06.
Empire’s Complaint suffers the same defects. It merely alleges that before FTM began
referring title insurance work to Vista, Empire provided settlement services on approximately ten
to fifteen FTM transactions per month. (Compl. ¶ 50.) But Empire identifies no contractual or
other entitlement that would have required FTM to refer any title or other settlement business to
Empire for the same number of FTM’s transactions each month—or any at all. Moreover,
Empire does not allege any method for determining which transactions it would have received,
12
as opposed to Vista or the myriad other competing title agents. This omission alone merits
dismissal of Empire’s claims. James Cape & Sons Co. v. PCC Constr. Co., 453 F.3d 396, 403–
04 (7th Cir. 2006) (affirming judgment on the pleadings because the plaintiff did not allege what
portion of its decreased market share resulted from the alleged scheme).
Empire’s damages theory is too speculative also because it fails to factor in decisions
made by borrowers, who have the right to determine which entities perform the work necessary
to close their loan transactions. Courts have recognized that when independent actors are present
in the causal chain, damages are too speculative to support recovery. In Association of
Washington Public Hospital Districts v. Philip Morris, Inc., 241 F.3d 696 (9th Cir. 2001),
several hospitals claimed that the defendant tobacco companies concealed nicotine’s harmfulness
from the public, which led to more smoking, which led to unreimbursed expenses for treating
tobacco-related illnesses. The court concluded that the hospitals’ damages “were entirely
speculative in nature” because their claims “would involve proof, ultimately, of how smokers
themselves would have changed their behavior in the absence of the defendants’ wrongdoing.”
Id. at 702; see also Lerner v. Fleet Bank, NA, 318 F.3d 113, 124 (2d Cir. 2003) (damages theory
was too speculative because it depended on the state bar’s disciplining the wrongdoer if the
defendants had not concealed his misdeeds); Dist. Telecomms. v. Dist. Cablevision, Inc., 638 F.
Supp. 418, 422 (D.D.C. 1985) (plaintiff’s claimed harm—losing a bid for a cable franchise—was
speculative because the city council had discretion in awarding the franchise).
Similarly, in this case, FTM’s borrowers represent an independent step in the causal
chain. Borrowers have the right to decide which settlement agents will provide services in
connection with their transactions. While Empire alleges amorphously that no borrowers
received disclosures that RESPA required FTM to provide, Empire can only hypothesize what
the borrowers may have done if they had received the various disclosures or representations
13
Empire believes they should have received. Tellingly, Empire does not allege that any borrowers
would have selected Empire to provide services for their transactions if they had known that
Defendants were allegedly unlawfully referring business to Vista or that Vista was an affiliate of
the Fifth Third Defendants. Instead, it alleges only that the borrowers would not have paid Vista.
(Compl. ¶ 86.) Empire entirely fails to explain how such a refusal would have redounded to its
benefit.
The Complaint thus lacks any method for pinpointing which transactions Empire lost.
Such unspecified “general allegations of lost sales” cannot support a RICO claim when the
plaintiff does not specifically identify any revenue that it lost or, in fact, was entitled to in the
first place. Parker v. Learn Skills Corp., 530 F. Supp. 2d 661, 678 (D. Del. 2008). Accordingly,
the Court should dismiss all of Empire’s RICO claims.
b. Apportioning damages among the putative class is impossible.
It is also impossible to apportion damages among the putative class. As discussed above,
Empire lacks any method for determining which loans it would have performed settlement
services for had FTM not referred the work to Vista. Nor does it offer any method for
apportioning the loans—and thus damages—among the putative class. To place a particular loan
transaction in the putative class’s damages pool, Empire would first have to prove that but for the
alleged RESPA violations, (1) Vista would not have provided title-insurance services for that
transaction; (2) neither would have the “co-operating settlement agent” that closed the
transaction; and (3) neither would have any of the other “co-operating settlement agents.” This
inquiry would entail questioning every borrower to determine whether each would have chosen a
different settlement agent(s) to perform the title-related and other necessary closing services.
Even then, Empire would have no way of determining which class member(s) (i.e., the
alleged non-cooperating agents) would have gotten the business and would therefore be entitled
14
to the damages arising from that transaction. Proceedings would devolve into hundreds, if not
thousands, of “trial[s] within a trial,” as the putative class members fought among themselves to
determine who should have closed each particular loan transaction. See Strates Shows, 379 F.
Supp. 2d at 830. The Complaint offers no proposal for avoiding this problem and should be
dismissed accordingly.
c. Empire’s claims create a stark risk of multiple recoveries.
Empire’s claims also threaten to saddle Defendants with multiple recoveries because a
putative class of consumers, who are the only individuals who have a right to sue if there were in
fact RESPA violations taking place (which there are not), have already sued Defendants. See
Powers, supra; Toldy v. Fifth Third Mortg. Co., N.D. Ohio No. 1:09-cv-00377-LW. These
consumers are quite capable of vindicating their rights to the extent they were abridged and,
indeed, are represented by the same counsel representing Empire in this action. See Holmes, 503
U.S. at 269-70 (“directly injured victims can generally be counted on to vindicate the law as
private attorneys general, without any of the problems attendant upon suits by plaintiffs injured
more remotely”). Cf. Bridge v. Phoenix Bond Indem. Co., 128 S. Ct. 2131, 2144 (2008)
(concluding that plaintiffs had adequately alleged proximate cause because, among other things,
“no more immediate victim is better situated to sue”).
Problematically, the putative classes in Powers and in this case seek the same damages.
Under RESPA, a successful claimant is permitted to recover three times the amount paid for
settlement services. 12 U.S.C. § 2607(d)(2). The Powers putative class seeks a trebled recovery
of all moneys they paid for settlement services in FTM transactions utilizing Vista. In this case,
Empire seeks the amount that Vista and the cooperating settlement agents received for settlement
services (i.e., the amounts that borrowers paid) trebled. See 18 U.S.C. § 1964(c) (providing for
15
treble damages under RICO). This lawsuit thus threatens Defendants with sextuple liability.
Accordingly, Empire’s RICO counts should be dismissed. E.g., Holmes, 503 U.S. at 269.
2. Empire fails to allege that the various RICO violations asserted directly
caused it injury.
Examining Empire’s RICO claims individually bolsters the conclusion that they are too
indirect to support liability. “[T]he central question” in determining whether allegations meet
RICO’s proximate-cause standard, “is whether the alleged [RICO] violation led directly to the
plaintiff’s injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006). Empire cannot
establish proximate cause because none of the alleged RICO violations led directly to its alleged
loss of business.
a. Empire fails to allege that any violation of § 1962(a) directly caused

Empire to lose business.
Counts I and II of the Complaint allege that Defendants violated RICO § 1962(a). That
subsection prohibits using or investing “any income derived, directly or indirectly, from a pattern
of racketeering activity” to acquire or maintain an interest in an enterprise. 18 U.S.C. § 1962(a).
The predicate racketeering activities underlying Empire’s § 1962(a) claims are alleged violations
of the criminal mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343. (Compl. ¶¶ 94, 104.)
Pleading an injury proximately caused by a § 1962(a) violation requires a plaintiff to
identify “a separate and traceable injury” from any harm occasioned by the predicate acts.
Craighead v. E.F. Hutton & Co., 899 F.2d 485, 494 (6th Cir. 1990). That injury must “stem[]
directly from the defendants’ alleged use or investment of their illegally obtained income.” Id.
Here, the Complaint fails to explain how Empire suffered any separate “investment
injury.” Instead, the Complaint rests solely on the conclusory allegation that Empire and the
putative class “have been injured in their property by reason of the operation of the enterprise in
this unlawful manner.” (Compl. ¶¶ 98, 122) But this allegation is no more than a legal
16
conclusion, precisely the type that is “simply too conclusory” to withstand dismissal under Iqbal.
129 S. Ct. at 1949. See also Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co., 981 F.2d
429, 437–38 (9th Cir. 1992) (conclusory allegations that the defendant used the racketeering
proceeds in a way that harmed the plaintiff do not establish proximate cause for a § 1962(a)
violation).
The only injury Empire identifies is being “blacklisted” because it refused to agree “in
advance” to the alleged required referrals to Vista. (Compl. ¶ 6.) But that injury hardly stems
from Defendants’ having invested the alleged racketeering proceeds. Nor is it sufficient to
allege, as Empire may do, that reinvesting the proceeds from the Vista referrals harmed Empire
by allowing the enterprise to continue operating. (¶ 87.) See, e.g., Fogie v. Thorn Americas,
Inc., 190 F.3d 889, 896 (8th Cir. 1999) (rejecting argument that reinvesting profits into an
enterprise constitutes injury sufficient to sustain a § 1962(a) claim); Falise v. Am. Tobacco Co.,
94 F. Supp. 2d 316, 349 (E.D.N.Y. 2000) (same); Standard Chorine of Del. v. Sinibaldi, 821 F.
Supp. 232, 246 (D. Del. 1992) (same).
Because Empire fails to plead any discrete injury stemming directly from Defendants’
investment of alleged racketeering proceeds, it cannot meet RICO’s proximate-cause standard,
and Counts I and II should be dismissed.
b. Empire fails to allege that any violation of § 1962(c) directly caused

Counts III and IV allege that Defendants violated RICO § 1962(c), which prohibits
controlling an enterprise’s affairs through a pattern of racketeering activity. To meet the
proximate-cause standard, the plaintiff must allege injury resulting from the racketeering acts
themselves. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 (1985) (“Any recoverable
17
damages occurring by reason of a violation of § 1962(c) will flow from the commission of the
predicate acts.”); Kramer v. Bachan Aerospace Corp., 912 F.2d 151, 154 (6th Cir. 1990).
To support the § 1962(c) claims, the Complaint alleges racketeering acts of mail and wire
fraud: specifically, sending misleading loan documents to FTM’s borrowers. It further alleges
that, in reliance upon these representations, the borrowers paid the amounts that Vista charged.
(Compl. ¶¶ 72, 86.) But the Complaint never alleges that the predicate acts themselves directly
caused Empire to lose business. Instead, Empire alleges that its injury flowed from (1) its refusal
to refer the title insurance portion of settlement work to Vista, and (2) the Fifth Third
Defendants’ decision to “blacklist” Empire in return. (¶¶ 6, 54.) The alleged harm (i.e., being
“blacklisted”), however, neither was a racketeering act nor is closely related to the alleged acts of
mail and wire fraud against borrowers.
Empire alleges another predicate act in support of its § 1962(c) claims: “multiple
instances of interstate transport of money converted or fraudulently obtained in violation of
18 U.S.C. § 2314.” (¶ 127c.) Yet, Empire alleges no supporting facts whatsoever, contrary to
Iqbal. In Robinson v. Fountainhead Title Group Corp., 252 F.R.D. 275 (D. Md. 2008), a
putative class of borrowers, represented by Empire’s counsel, similarly attempted to base a §
1962(c) claim on the conclusory allegation that the defendants engaged in “[m]ultiple instances
of interstate transport of money converted or fraudulently obtained in violation of 18 U.S.C. §
2314.” The court, however, refused to consider this allegation because the plaintiffs “d[id] not
explain how or where these interstate transports occurred.” Id. at 279 n.4. The same pleading
deficiency exists here.
Because Empire has not alleged facts that directly connect any of the alleged racketeering
activities to its alleged loss of business, it cannot meet RICO’s proximate-cause standard for its
§ 1962(c) claims. Accordingly, the Court should dismiss Counts III and IV.
18
c. Empire fails to allege that any violation of § 1962(d) directly caused

Empire’s final two claims (Counts V and VI) attempt to allege a violation of RICO §
1962(d), which prohibits conspiring to violate one of RICO’s other subsections. Empire alleges
that Defendants conspired to violate subsection (a). (Compl. ¶¶ 140, 147 (alleging that
Defendants conspired “to use or invest income derived from” the racketeering acts of mail and
wire fraud “to operate, maintain control of, and maintain an interest in the enterprise”).)
However, Empire fails to allege that this purported conspiracy proximately caused its injuries.
This is so for at least two reasons.
As shown above, Empire’s claim under subsection (a) fails. Because its § 1962(d) claim
is purely derivative of that claim, the § 1962(d) claim fails as well. Elkins v. Chapman, 36 Fed.
Appx. 543, 544 (6th Cir. 2002) (plaintiff’s RICO-conspiracy claim necessarily fails when his
substantive-RICO claims fail); Grider v. Texas Oil & Gas Corp., 868 F.2d 1147, 1151 (10th Cir.
1989) (same). Moreover, a plaintiff cannot plead a RICO-conspiracy claim unless he was
injured by a racketeering act. Beck v. Prupis, 529 U.S. 494, 495–96 (2000). As discussed above,
Empire’s alleged injuries, if any, resulted from ostensibly being “blacklisted,” which is not a
racketeering act under RICO. For these reasons, Empire cannot establish proximate cause for its
RICO-conspiracy claims, and the Court should dismiss Counts V and VI.
C. Empire’s RICO Claims Fail Because the Complaint Does Not Sufficiently Allege
The Predicate Offenses of Mail and Wire Fraud.
Empire’s RICO claims also fail because the Complaint does not adequately allege
racketeering activity. Under Rule 9(b), “a party must state with particularity the circumstances
constituting fraud or mistake.” Fed. R. Civ. P. 9(b). This requirement applies to RICO claims
predicated on mail and wire fraud. Advocacy Org. for Patients and Providers v. Auto Club Ins.
19
Ass’n, 176 F.3d 315, 322 (6th Cir. 1999); Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th
Cir. 1984); Brutz v. Stillwell, No. 1:09-CV-2564, 2010 WL 1924471 (N.D. Ohio May 12, 2010).
To satisfy Rule 9(b), “a plaintiff must at a minimum allege the time, place, and content of
the misrepresentation,” as well as “the fraudulent scheme; the fraudulent intent of the defendants;
and the injury resulting from the fraud.” Advocacy Org., 176 F.3d at 322. Additionally, the
plaintiff must identify who made the alleged misrepresentations. Ambiguous assertions that
“defendants” did so are insufficient. Bates v. Nw. Human Servs., 466 F. Supp. 2d 69, 90–92
(D.D.C. 2006) (dismissing RICO complaint plagued by “unmitigated vagueness regarding which
defendant played which role in the fraudulent conduct”); see also U.S. ex rel. Bledsoe v. Cmty.
Health Sys., Inc., 342 F.3d 634, 643 (6th Cir. 2003) (dismissing claims under the False Claims
Act because the complaint did not specify which defendants engaged in which complained-of
practices).
Empire’s fraud allegations are too nonspecific to meet this standard. The Complaint
further fails to allege any affirmative misrepresentations or any duty to disclose to borrowers any
of the allegedly concealed information on the only two mortgage forms that Empire identifies.
For these reasons, Empire has not alleged racketeering activity, and the Court should dismiss all
six of its RICO claims.
1. Empire’s fraud allegations do not meet Rule 9(b)’s particularity

requirement.
Rather than plead the specifics of the alleged fraud, Empire offers only three vague
allegations of affirmative misrepresentations:
 Paragraph 44 alleges that “The unearned or excessive fees allocable or payable to

Vista are reflected on false and misleading HUD-1 Settlement Statements.”
 Paragraph 71 alleges that “the Defendants” sent mailings “that fraudulently

misrepresented the relationship between the Co-Conspirators.”
20
 Paragraph 72 alleges that FTM’s customers received packages “from Defendants”

containing “documents falsely characterizing the referral fee paid to Vista as a fee for
services and/or naming Vista as a bona fide entity performing services in the
transaction and charging for those services.”
Empire similarly offers vague allegations of concealment, which are the mirror image of
the alleged misrepresentations. According to Empire, Defendants concealed from borrowers:
 “the affiliation between Fifth Third and Vista” (¶ 41);
 that Vista allegedly paid kickbacks, referral fees, and/or fee splits to the Fifth Third
Defendants and to FTM’s mortgage-loan officers (¶¶ 42, 43, 72, 79);
 that Vista’s charges were disguised referral fees or kickbacks (¶ 72);
 that the referrals to Vista were illegal (¶¶ 48, 72); and
 Vista’s “true nature” (¶¶ 71, 80).
The Complaint alleges Defendants conveyed these misrepresentations or omissions to
borrowers through various documents. These documents ostensibly include HUD-1 Settlement
Statements, Good Faith Estimates, unspecified “title insurance documents,” and “other”
unidentified “loan closing documents” and “correspondence” that Defendants or cooperating
settlement agents mailed, emailed, or faxed to borrowers. (¶¶ 71, 72.)
The shortcomings of these allegations are overwhelming. To start, allegations about
Vista’s “true nature” or the “illegality” of the alleged referrals are vague and conclusory, and
therefore insufficient under Iqbal. Moreover, the Complaint fails to specify the who, when, or
how of the alleged misrepresentations. Empire’s allegations also do not indicate what each
Defendant should have said, let alone in what documents those statements should have appeared.
Most notably, the Complaint does not allege with particularity how any of the alleged
misrepresentations or omissions injured Empire. The Complaint alleges only that if the omitted
information had been disclosed, borrowers “would have refused to conduct business with Vista,
would not have paid the fees required and imposed by Defendants in the name of Vista, and
21
would have sought to secure their rights under the law.” (¶ 86.) How any of these actions would
redound directly to Empire’s benefit remains a mystery.
The Complaint’s many infirmities are perhaps best evidenced in the discussion of the
Powers loan transaction, the only borrower transaction specifically mentioned in the Complaint.
According to Empire, in the course of that transaction, “the [cooperating] settlement agent,
delivered to the Powers a packet of loan documents, including a false and misleading HUD-1
Settlement Statement and other loan documents and disclosures.” (¶ 75.) Empire alleges that the
HUD-1 statement reflected that the Powers paid Vista’s title fees. (¶ 76.) “[Upon information
and belief,” Empire alleges that the Fifth Third Defendants split those fees among themselves
and FTM’s loan officers as kickbacks or referral fees, and concealed that fact from the Powers.
(¶¶ 77, 79.)
The Complaint does not allege the relevant dates or times the various documents were
sent or even that any documents were actually mailed or wired to the Powers. Instead, it simply
alleges that the documents were “delivered” or “provided” to the Powers. (¶¶ 75, 79.)
Moreover, Empire does not allege which Defendant made any of the allegedly misleading
statements or omissions in the HUD-1. Nor does Empire specify how the HUD-1 was
misleading, leaving Defendants to speculate as to what the form should have stated or how
Vista’s charges to the Powers should have been reflected. Empire’s generic reference to “other
documents and disclosures” is simply too amorphous to give Defendants notice of what Empire
is complaining about.
Further, Empire offers no reason to believe that this transaction caused it any injury.
Empire plainly states that “in the usual transaction that was free of affiliated business
arrangements like Vista,” the “settlement agent” would have received the fees that Vista charged.
(¶78.) Yet, affiliated business arrangements are not illegal under RESPA, as Empire itself
22
acknowledges. (¶¶ 37-39.) Moreover, Empire alleges that a different settlement agent—
Centennial Title—provided settlement services for the Powers transaction. (¶ 74.) This
inevitably invites the question: How was Empire harmed when Vista received fees that allegedly
should have gone to Centennial? For all of these reasons, the Complaint cannot satisfy Rule
9(b), and should be dismissed.
2. Empire fails to allege any actual misrepresentations or any duty to disclose

the allegedly concealed information on HUD-1 or GFE Forms.
More fundamentally, Empire’s fraud allegations fail because Empire fails to allege any
actual fraud on the only two documents specifically identified in the Complaint: the HUD-1
form and Good Faith Estimate (“GFE”). When mail and wire fraud allegations are premised on
misrepresentations, there must be actual misrepresentations by the defendant. Am. Dental Ass’n
v. Cigna Corp., 605 F. 3d 1283, 1291–92 (11th Cir. 2010) (affirming dismissal of RICO claims
because the complaint failed to “identify[] any actual fraud”). To the extent a plaintiff premises
his fraud allegations on omissions, the plaintiff must allege a duty to disclose the omitted facts.
United States v. Skellers, 940 F. Supp. 1146, 1149 (N.D. Ohio 1996).
In the analogous case of Robinson, the plaintiff borrowers (represented by Empire’s
counsel) offered similar allegations for their RICO claims against a title company and one of its
affiliates. 252 F.R.D. at 280. Like Empire, the plaintiffs alleged that the defendants sent
“HUD-1[s], correspondence, [and] other loan closing documents” that fraudulently
misrepresented the relationship between [the] conspirators and concealed the true nature of
services provided by [a] sham entity.” Id. Also like Empire, the plaintiffs alleged that the HUD-
1 was “false and misleading.” The court dismissed the RICO claims because the HUD-1
imposes no duty to disclose an affiliated business arrangement. Id. at 281. Nor does it impose a
23
duty to comment on the reasonableness of any payments made by the borrower or on the amount
of work the entity being paid performed. Id. at 281.
Indeed, RESPA’s statutory and regulatory provisions confirm that there is no duty to
disclose any affiliated business relationships on a HUD-1 or GFE. 12 U.S.C. §§ 2603(a),
2604(c); 24 C.F.R. §§ 3500.7(d), 3500.8(b). 4 Nor does RESPA impose any duty to disclose on a
HUD-1 form or GFE any of the other information allegedly concealed by Defendants, including
any purported violations of RESPA’s anti-kickback and referral provisions. See id.; see also
Moll v. US Life Title Ins. Co. of N.Y., 710 F. Supp. 476, 479 (S.D.N.Y. 1989) (dismissing RICO
claims predicated on mail and wire fraud because defendant title company had no duty to
disclose that a portion of the plaintiffs’ title premiums were distributed to attorneys who
allegedly referred the business).
But even if such a duty did exist, RESPA provides no private right of action to enforce its
HUD-1 or GFE disclosure requirements. See, e.g., Robinson v. Fountainhead Title Group Corp.,
447 F. Supp. 2d 478, 492 (D. Md. 2006) (citing Reese v. 1st Metro Mortg. Co., No. 03-2185-
KHV, 2003 WL 22454658 (D. Kan. Oct. 28, 2003)). Given that consumers do not even have a
right of action to enforce these requirements, it is most strained for Empire to suggest that it can
create one for itself under the guise of RICO. See pp. 6-10, supra.
In any event, Section 4 of RESPA, which sets forth the requirements for HUD-1
disclosures, merely provides that the settlement agent shall “itemize all charges imposed upon
the borrower . . . in connection with the settlement.” 12 U.S.C. § 2603(a). Under Section 5, the
4
Rather, RESPA provides that affiliate relationships must be disclosed on a specific form
known as an Affiliated Business Arrangement Disclosure Statement (“ABA Disclosure”). In
fact, FTM provided each of its borrowers with an ABA Disclosure explicitly describing the
relationship between the Fifth Third Defendants and Vista, and notifying borrowers that they
are free to shop around for an alternative provider of title insurance services. See Toldy v.
Fifth Third Mortgage Co., 2010 WL 2639975, *3 (N.D. Ohio June 29, 2010).
24
lender must, before closing, provide the borrower with “the amount or range of charges for
specific settlement services the borrower is likely to incur in connection with the settlement.” Id.
§ 2604(c). Here, the Complaint does not allege that any HUD-1 failed to itemize the borrower’s
settlement charges or that any GFE failed to provide the likely amount or range of charges. Nor
does the Complaint allege that Vista’s stated charges on any HUD-1 were not in fact charged to
the borrower.
Because Defendants misrepresented nothing on any HUD-1 of GFE for which
Defendants were under a duty to disclose, Empire’s allegations—even if true—do not amount to
predicate acts of mail and wire fraud. Accordingly, Empire’s RICO counts should be dismissed.
D. Empire Does Not Allege a Viable Association-in-Fact Enterprise.
The Court should dismiss Counts II, IV, and VI for an additional reason: Empire has not
adequately alleged an association-in-fact enterprise. An association-in-fact enterprise is “a group
of persons associated together for a common purpose of engaging in a course of conduct.”
United States v. Turkette, 452 U.S. 576, 583 (1981). To show an association-in-fact, a plaintiff
must allege “[an] ongoing organization, formal or informal, and . . . that the various associates
function as a continuing unit.” Id. More specifically, an association-in-fact enterprise must have
a structure bearing three features: (1) “a purpose,” (2) “relationships among those associated
with the enterprise,” and (3) “longevity sufficient to permit these associates to pursue the
enterprise's purpose.” Boyle v. United States, 129 S. Ct. 2237, 2244 (2009).
A complaint that merely lists the purported members and then calls them an enterprise is
not sufficient. Conte v. Newsday, Inc., 703 F. Supp. 2d 126, 134 (E.D.N.Y. 2010). Nor is a
complaint that alleges merely that the members engaged in parallel unseemly conduct. In re Ins.
Brokerage Antitrust Litig., 618 F.3d 300, 374 (3d Cir. 2010); Elsevier, Inc. v. W.H.P.R., Inc., 692
25
F. Supp. 2d 297, 306–07 (S.D.N.Y. 2010). Instead, a plaintiff must “allege a separate entity.”
Greenberg v. Blake, No. 09-civ-4347, 2010 WL 2400064, *5–*6 (E.D.N.Y. June 10, 2010).
Empire fails to meet this standard. Empire alleges that the Defendants and the “co-
operating settlement agents” formed an association-in-fact enterprise “[t]hrough the agreements
between and among [FTF, FTM, FTM]’s individual loan officers, and the settlement agents.”
(¶ 69.) But Empire does not identify the so-called cooperating settlement agents, much less
describe their relationships with Defendants or even the specific Defendant(s) with which they
allegedly associated.
Empire merely alleges that FTM adopted a policy regarding the referral of settlement
services and some settlement agents agreed to comply with it. Such business arrangements—
even if they led to parallel behavior—do not constitute a “separate entity” and thus cannot
amount to an association-in-fact enterprise. Greenberg, 2010 WL 2400064, at *5–*6.
Accordingly, the Court should dismiss Counts II, IV, and VI.
26
V. CONCLUSION
For the above reasons, Defendants respectfully request that their motion to dismiss be
granted.
Dated: December 3, 2010 Respectfully submitted,

Brett A. Wall (0070277)
Michael E. Mumford (0073931)
BAKER & HOSTETLER LLP
PNC Center
1900 East Ninth Street, Suite 3200
Cleveland, Ohio 44114-3482
Telephone: 216.621.0200
Facsimile: 216.696.0740
Irene C. Freidel (pro hac vice)

Jennifer J. Nagle (pro hac vice)
Brian R. Vaughn Martel (pro hac vice)
K&L GATES LLP
State Street Financial Center
One Lincoln Street
Boston, MA 02111-2950
Telephone: 617.261.3100
Facsimile: 617.261.3175
27
CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1(f)
Pursuant to Local Rule 7.1(f), the undersigned counsel for Defendants hereby certifies
that as of December 3, 2010 this case has not yet been assigned to a case track. Although the
Court has yet to issue a track assignment, the parties have proposed that this case be placed on a
complex track. Accordingly, Defendants have adhered to the 30-page limitation requirement for
dispositive motions filed in complex cases. In the event the Court assigns this case a standard
track, Defendants respectfully request leave to file the foregoing brief in excess of the 20-page
limitation.

One of the Attorneys for Defendants
28
CERTIFICATE OF SERVICE
I hereby certify that on December 3, 2010, a copy of the foregoing Defendants’ Motion to
Dismiss Plaintiff’s Complaint was filed electronically. Notice of this filing will be sent to
counsel for all parties by operation of the Court’s electronic filing system. Parties may access
this filing through the Court’s system.

One of the Attorneys for Defendants
503128560
29

Fifth Third Bank's Motion To Dismiss The Empire Title Complaint

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Fifth Third Bank's Motion To Dismiss The Empire Title Complaint

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Case: 1:10-cv-02208-PAG Doc #: 13 Filed: 12/03/10 1 of 37.

UNITED STATES DISTRICT COURT

EMPIRE TITLE SERVICES, INC., CASE NO. 1:10-CV-02208-PAG

FIFTH THIRD MORTGAGE CO., et al.,

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S COMPLAINT

Defendants’ supporting memorandum is attached.

/s/ Michael E. Mumford

Attorneys for Defendants

UNITED STATES DISTRICT COURT

EMPIRE TITLE SERVICES, INC., CASE NO. 1:10-CV-02208-PAG

FIFTH THIRD MORTGAGE CO., et al.,

MEMORANDUM IN SUPPORT OF DEFENDANTS’

Brett A. Wall (0070277)

Irene C. Freidel (pro hac vice)

Attorneys for Defendants

II. THE COMPLAINT’S RELEVANT ALLEGATIONS ..................................................... 3

III. LEGAL STANDARD........................................................................................................ 6

A. Empire Cannot Transform Alleged RESPA Violations, Which It Has No

1. Empire alleges RESPA claims dressed up as RICO claims ...................... 6

2. Empire cannot use RICO to avoid Congressionally-imposed

a. Empire’s damages theory is too speculative................................ 11

b. Apportioning damages among the putative class is

c. Empire’s claims create a stark risk of multiple recoveries .......... 15

2. Empire fails to allege that the various RICO violations asserted

a. Empire fails to allege that any violation of § 1962(a)

b. Empire fails to allege that any violation of § 1962(c)

c. Empire fails to allege that any violation of § 1962(d)

1. Empire’s fraud allegations do not meet Rule 9(b)’s particularity

2. Empire fails to allege any actual misrepresentations or any duty to

D. Empire Does Not Allege a Viable Association-in-Fact Enterprise ..................... 25

Am. Dental Ass’n v. Cigna Corp.,

Anza v. Ideal Steel Supply Corp.,

Ass’n of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc.,

Ayers v. General Motors Corp.,

Bates v. Nw. Human Servs.,

Bell Atl. Corp. v. Twombly,

Bender v. Southland Corp.,

Boyle v. United States,

Bridge v. Phoenix Bond Indem. Co.,

Brown v. First Tennessee National Bank Ass’n,

City of Cleveland v. Ameriquest Mortg. Secs., Inc.,

Conte v. Newsday, Inc.,

Craighead v. E.F. Hutton & Co.,

Dist. Telecomms. v. Dist. Cablevision, Inc.,

Elsevier, Inc. v. W.H.P.R., Inc.,

Falise v. Am. Tobacco Co.,

Fogie v. Thorn Americas, Inc.,

Grantham & Mann, Inc. v. Am. Safety Products, Inc.,

Grider v. Texas Oil & Gas Corp.,

Hemi Group, LLC v. City of New York,

Holmes v. Secs. Inv. Prot. Corp.,

In re Ins. Brokerage Antitrust Litig.,

James Cape & Sons Co. v. PCC Constr. Co.,

Kramer v. Bachan Aerospace Corp.,

Lerner v. Fleet Bank, NA,

Moll v. US Life Title Ins. Co. of N.Y.,

Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co.,

Parker v. Learn Skills Corp.,

Powers v. Fifth Third Mortg. Co.,

Reese v. 1st Metro Mortg. Co.,

Robinson v. Fountainhead Title Group Corp.,

Robinson v. Fountainhead Title Group Corp.,

Sedima, S.P.R.L. v. Imrex Co.,

regulations. Id. at 4–5, 11–12.