EMPIRE ACQUISITION GROUP LLC v. ATLANTIC MORTGAGE COMPANY INC

CHARTER ONE MORTGAGE CORPORATION v. CONDRA

Supreme Court docket of Indiana.

CHARTER ONE MORTGAGE CORPORATION, Appellant (Defendant under), v. Kyle CONDRA, on behalf of himself and others equally located, Appellee (Plaintiff under).

No. 49S05-0612-CV-497.

Determined: Could 02, 2007

David P. Sanders, Michael T. Brody, Chicago, IL, Elizabeth G. Porter, Washington, D.C., David C. Campbell, Karl L. Mulvaney, Indianapolis, IN, Attorneys for Appellant. Daniel P. Stipano, Deputy Chief Counsel, Horace G. Sneed, Director, Ernest Clifford Barrett, III, Senior Counsel, Litigation Division, Workplace of the Comptroller of the Foreign money, Washington, D.C., Susan W. Brooks, United States Lawyer, Southern District of Indiana, Shelese Woods, Assistant United States Lawyer, Indianapolis, IN, Attorneys for Amicus Curiae The Workplace of the Comptroller of the Foreign money. Irwin B. Levin, Richard E. Shevitz, Scott D. Gilchrist, Eric S. Pavlack, Kelley J. Johnson, Indianapolis, IN, Attorneys for Appellee.

On Petition To Switch from the Indiana Court docket of Appeals, No. 49A05-0501-CV-30

 We maintain that the preparation of mortgage paperwork by non-attorneys doesn’t essentially represent the follow of legislation and {that a} lender’s charging a charge for the preparation doesn’t convert it into the unauthorized follow of legislation.

Details and Procedural Historical past

In 2002, Kyle Condra borrowed $89,600 to buy actual property.   His loan from Constitution One Mortgage Company (“Constitution One”) was secured by a mortgage on the property.   In reference to the loan, Constitution One charged Condra a $175 charge for the completion of a deed and mortgage.   These paperwork had been ready by Constitution One’s brokers or staff who weren’t licensed to follow legislation.

In 2003, Condra filed a category motion towards Constitution One.   His grievance for cash had and obtained and unjust enrichment alleged that Constitution One’s doc preparation charge was prohibited below Indiana legislation as a result of charging a charge for paperwork ready by non-lawyers constituted the unauthorized follow of legislation.   Pursuant to Indiana Trial Rule 12(B)(6), Constitution One filed a movement to dismiss the grievance for failure to state a declare upon which aid might be granted.   The trial court docket granted Constitution One’s request to remain all proceedings within the matter, together with class certification, pending its ruling on Constitution One’s movement to dismiss.

Constitution One asserted that it was an working subsidiary of a nationwide financial institution, Constitution One Financial institution, N.A.1  It subsequently was ruled by federal rules promulgated below the Nationwide Financial institution Act by the Workplace of the Comptroller of the Foreign money (“OCC”).   Amongst these rules is a provision that enables nationwide banks and their working subsidiaries to cost incidental charges for authorized providers supplied by non-lawyers within the preparation of actual property loan paperwork.   Constitution One contended that the OCC rules expressly preempt any conflicting state legislation.   The trial court docket denied the movement however licensed its order for interlocutory enchantment.

The Court docket of Appeals affirmed, holding this Court docket’s jurisdiction over the unauthorized follow of legislation is just not preempted by the federal rules at difficulty.  Constitution One Mortgage Corp. v. Condra, 847 N.E.second 207 (Ind.Ct.App.2006).   We granted switch.  860 N.E.second 599 (Ind.2006).

Commonplace of Overview

 A movement to dismiss for failure to state a declare assessments the authorized sufficiency of the declare, not the info supporting it.  Hosler ex rel. Hosler v. Caterpillar, Inc., 710 N.E.second 193, 196 (Ind.Ct.App.1999), trans. denied.   Thus, our overview of a trial court docket’s grant or denial of a movement based mostly on Trial Rule 12(B)(6) is de novo.  Sims v. Beamer, 757 N.E.second 1021, 1024 (Ind.Ct.App.2001).

 When reviewing a movement to dismiss, we view the pleadings within the gentle most favorable to the nonmoving get together, with each cheap inference construed within the nonmovant’s favor.  Metropolis of New Haven v. Reichhart, 748 N.E.second 374, 377 (Ind.2001).   A grievance is probably not dismissed for failure to state a declare upon which aid might be granted except it’s clear on the face of the grievance that the complaining get together is just not entitled to aid.  Id. (citing McQueen v. Fayette County Sch. Corp., 711 N.E.second 62, 65 (Ind.Ct.App.1999), trans. denied ).

Unauthorized Observe of Regulation

Pursuant to the Indiana Structure, this Court docket has authentic jurisdiction over “the unauthorized follow of legislation.”  Ind. Const. artwork. 7, § 4;  see additionally Cincinnati Ins. Co. v. Wills, 717 N.E.second 151, 154 (Ind.1999);  Alvarado v. Nagy, 819 N.E.second 520, 523 (Ind.Ct.App.2004).   It’s the duty of this Court docket to supervise the admission and self-discipline of attorneys and to find out what acts represent the follow of legislation.  Ind. Const. artwork. 7, § 4;  Alvarado, 819 N.E.second at 523.

 The follow of legislation has been described as “the giving of authorized recommendation to a shopper and the putting of oneself within the very delicate relationship” involving “the arrogance of the shopper” and “the administration of his affairs.”   In re Perrello, 270 Ind. 390, 398, 386 N.E.second 174, 179 (1979).   Confining the follow of legislation to licensed attorneys is designed to guard the general public from the possibly extreme penalties of following recommendation on authorized issues from unqualified individuals.   It’s not supposed to order to attorneys actions that will safely be carried out by laypersons.   In Miller v. Vance, 463 N.E.second 250 (Ind.1984), we thought-about whether or not the preparation of a mortgage instrument by a financial institution worker who was not an legal professional constituted the unauthorized follow of legislation.   We concluded that filling in blanks on a kind mortgage instrument didn’t represent the follow of legislation as a result of it “require [d] solely using frequent data relating to the knowledge to be inserted.”  Id. at 251.   This exercise didn’t contain any fiduciary relationship, confidences, or the giving of authorized recommendation.   As defined in Miller, it could be an “unreasonable burden” on the general public to conclude that the completion of such routine paperwork was the follow of legislation reserved to attorneys.  Id. at 253.   That call was in keeping with the vast majority of different jurisdictions that had thought-about the difficulty.  Id.  We did, nevertheless, warning that the “lay financial institution worker could not give recommendation or opinions as to the authorized results of the devices he prepares or the authorized rights of the events” and state that “[t]he financial institution could not make any separate cost for the preparation of the mortgage instrument.”  Id. (citing State v. Ind. Actual Property Ass’n, 244 Ind. 214, 224-25, 191 N.E.second 711, 716-17 (1963)).   Counting on this language from Miller, Condra contended that the $175 charge he was charged for the preparation of mortgage paperwork by non-attorneys constituted the unauthorized follow of legislation.

Constitution One argues that whether or not or not the preparation of mortgage paperwork constitutes the unauthorized follow of legislation below Indiana state legislation, the OCC rules preempt all inconsistent state legal guidelines, together with state court docket guidelines regulating or defining the unauthorized follow of legislation.   Constitution One factors out that OCC rules authorize nationwide banks to cost doc preparation charges and these federal rules expressly purport to preempt any inconsistent state legislation.  12 C.F.R. § 7.4002(a), (d).  The Court docket of Appeals disagreed.   The Court docket of Appeals learn Miller to ban a financial institution from making a separate cost for the preparation of a mortgage instrument by a non-attorney as a result of that motion would represent the unauthorized follow of legislation.  Constitution One, 847 N.E.second at 212-13.   The Court docket of Appeals held that the OCC rules didn’t preempt the legislation as defined in Miller as a result of the state legislation of unauthorized follow was in keeping with the rules.   The Court docket of Appeals defined that Miller didn’t prohibit the gathering of prices for doc preparation by a nationwide financial institution nor did Miller current an impediment to the perceived functions of the OCC rules.  Id. at 216.   Slightly, Miller “merely identifies who-i.e., a licensed legal professional or a non-attorney-may carry out the doc preparation when such separate charges are charged.”  Id.  Accordingly, the Court docket of Appeals affirmed the trial court docket’s denial of Constitution One’s movement to dismiss.  Id. at 219.

We discover it pointless to determine this case on federal preemption grounds.   We expect the language from Miller referring to the gathering of charges for doc preparation was overbroad.   Whether or not an exercise constitutes the follow of legislation is set by the exercise, usually the recommendation given, and never whether or not it’s compensated.   A professional bono lawyer is a lawyer, regardless of the shortage of compensation for the lawyer’s providers.   Equally, cost of compensation doesn’t convert an in any other case correct exercise by a layperson into the follow of legislation.

A number of jurisdictions have thought-about the particular difficulty of whether or not charging a charge for the preparation of mortgage devices by non-attorneys transforms permissible conduct into the unauthorized follow of legislation.   We discover the method of the Supreme Court docket of Michigan instructive.   In Dressel v. Ameribank, 468 Mich. 557, 664 N.W.second 151 (2003), mortgagors introduced a category motion towards a financial institution after the financial institution charged mortgagors a separate charge for the preparation of mortgage paperwork.   Financial institution staff who weren’t licensed to follow legislation accomplished the usual mortgage kinds.  Id. at 157.   The Dressel Court docket first famous that the completion of ordinary mortgage paperwork by non-attorney staff didn’t represent the follow of legislation.  Id.  Just like our reasoning in Miller, the Supreme Court docket of Michigan decided that as a result of “no authorized data or discretion was concerned within the doc’s completion” and since “[t]he financial institution didn’t counsel plaintiffs with regard to the authorized validity of the doc or the prudence of getting into into the transaction” the financial institution didn’t follow legislation.  Id.  As for whether or not the charge had any impact on the permissibility of the conduct, the Dressel Court docket defined, “[i]t is immaterial that [the bank] charged a charge for its providers.   Charging a charge for nonlegal providers doesn’t transmogrify these providers into the follow of legislation.”  Id.

The Supreme Court docket of Washington has held that the preparation of mortgage paperwork by non-attorneys is the “follow of legislation.”  Perkins v. CTX Mortgage Co., 137 Wash.second 93, 969 P.second 93, 95 (1999).   Nonetheless, it’s approved as a result of the non-attorneys don’t train any “authorized discretion.”   Id., 969 P.second at 100.   Just like the Dressel Court docket, the Perkins Court docket held {that a} charge doesn’t change that outcome.  Id., 969 P.second at 96 (“Now we have firmly rejected the notion {that a} lay particular person’s authority to organize authorized devices activates whether or not a charge is charged.”).

The Supreme Court docket of Illinois reached the identical outcome by one other route.   Illinois categorizes the preparation of mortgage kinds by non-attorneys because the follow of legislation, however the conduct is permitted as a result of it falls inside a “professional se” exception.  King v. First Capital Fin. Servs. Corp., 215 Sick.second 1, 293 Sick.Dec. 657, 828 N.E.second 1155, 1163 (2005).   This exception “applies to the preparation of paperwork in conditions the place the get together making ready the authorized paperwork does so for his or her personal profit in a transaction to which the preparer is a celebration.”  Id.  Illinois additionally holds {that a} cost to the borrower is irrelevant.  Id. at 1167 (“[T]he charging of a charge, with out extra, for the preparation of the loan paperwork by the lenders’ staff didn’t rework their [permissible] conduct into the unauthorized follow of legislation.”).   Though people could signify themselves, we’re reluctant to acknowledge a blanket “professional se” exception for workers of a corporation who give authorized recommendation to their employers or in any other case signify their employers.   There may be nonetheless a threat that these staff would interact in unprofessional conduct that might be detrimental to 3rd events.   They subsequently ought to stay topic to self-discipline {and professional} requirements relevant to non-employee attorneys.   We agree, nevertheless, with the Supreme Courts of Michigan, Washington, and Illinois that there isn’t a unauthorized follow of legislation when kind mortgage paperwork are ready by non-attorneys.   We additionally agree that the mere charging of a charge doesn’t rework permissible conduct into the unauthorized follow of legislation.

Constitution One says it prices these charges to get well embedded wage prices and to offset overhead related to the preparation of a mortgage.   Whether or not that is true or not is irrelevant right here.   Condra doesn’t make any declare that Constitution One supplied authorized providers to the general public or indicated that its non-lawyers had been certified to carry out authorized duties.   Condra additionally doesn’t allege that his loan paperwork had been ready incorrectly or that he has suffered any hurt ensuing from the preparation of his loan paperwork.   Many primarily routine duties have some authorized part.   Even telling a driver to decelerate entails data that the legislation imposes velocity limits and, in some sense, is giving authorized recommendation.   Directing or performing on issues of common data, even when data of a rule of legislation, doesn’t represent the follow of legislation.   We expect that these ideas apply right here.   We subsequently reaffirm the holding of Miller that filling within the blanks of ordinary mortgage paperwork is just not the follow of legislation.   The aim of proscribing the follow of legislation to licensed and educated attorneys is to guard the general public from severe hurt from unknowledgeable authorized recommendation.   We don’t imagine that function is effectuated by prohibiting charging charges for mortgage doc preparation by non-attorneys.   If charging a charge subjected this act to regulation because the follow of legislation, both the charges could be eradicated or attorneys could be required to carry out the exercise.   Requiring an legal professional for such a routine activity would produce solely inconvenience and added value to the general public.   See Perkins, 969 P.second at 100.   Eliminating the cost would presumably end in further prices buried in loan charges not tied to the completion of loan paperwork.   Decision of the economics of which are finest left to the legislature or the aggressive forces within the market for loans.

In brief, if the completion of authorized paperwork is ordinarily incident to a lender’s financing actions, it’s typically not the follow of legislation, whether or not or not a charge is charged.   To the extent that Miller suggests in any other case, it’s disapproved.

Conclusion

This case is remanded to the trial court docket with instruction to grant Constitution One’s movement to dismiss for failure to state a declare.

FOOTNOTES

1.   Condra conceded that Constitution One was an working subsidiary of a nationwide financial institution.  Constitution One Mortgage Corp. v. Condra, 847 N.E.second 207, 211 n. 3 (Ind.Ct.App.2006).   For that reason, the Court docket of Appeals didn’t handle whether or not this reality was exterior the pleadings for functions of a 12(B)(6) movement.   We decline to deal with this procedural level for the extra motive that Constitution One’s standing below the Nationwide Financial institution Act is irrelevant to our disposition of the case.

BOEHM, Justice.

SHEPARD, C.J., and DICKSON, SULLIVAN, and RUCKER, JJ., concur.

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