UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


DEBERRY, LILLIE MAY

v.

FIRST GOVT MTGE


97-7211a

D.C. Cir. 1999


*	*	*


Wald, Circuit Judge: Lillie May DeBerry appeals the  order and judgment
of the district court granting summary  judgment to First Government
Mortgage and Investors Cor- poration ("First Government"). Ms. DeBerry
brought an  action alleging that First Government had violated the
Dis- trict of Columbia Consumer Protection Procedures Act  ("CPPA"),
D.C. Code s 28-3904(r), by financing and refinanc- ing her home with
four mortgage loans containing unconscio- nable terms or provisions.1
The district court granted sum- mary judgment to First Government
based solely on its  finding that D.C. Code s 28-3904(r) did not apply
to real  estate mortgage finance transactions. Ms. DeBerry contests 
this finding, arguing that D.C. Code s 28-3904(r) does in fact  apply
to these transactions. Although neither of the parties  requested
certification of this issue of statutory interpretation  to the
District of Columbia Court of Appeals, see D.C. Code  s 11-723,
because of its importance to local commerce and  because there is no
decision by the highest court in the  District of Columbia precisely
on point, we have decided to  certify it to that court. Ms. DeBerry
also challenges the  district court's dismissal--as barred by the
statute of limita- tions--of two of her claims based on loans made in
1991 and  1992. We agree that such dismissal was improper and rein-
state these two claims contingent on a positive response by  the
District of Columbia Court of Appeals to the question  certified here.
Ms. DeBerry also challenges the grant of  summary judgment to First
Government with respect to her  claim for common law infliction of
emotional distress. Again,  we agree with Ms. DeBerry that this grant
was improper and  accordingly reinstate the claim. Lastly, Ms. DeBerry
argues  that the district court improperly denied as moot her motion 
for attorneys' fees ordered by a magistrate judge to compen- sate Ms.
DeBerry for the necessity of filing a motion to  compel discovery. We




__________

n 1 The district court had jurisdiction over this diversity action 
based on 28 U.S.C. s 1332. Ms. DeBerry is a citizen of the District 
of Columbia; First Government is a Virginia corporation with its 
principal place of business in Maryland; and the amount in contro-
versy exceeds $75,000.


failing to rule on the question of attorneys' fees before  disposing
of the case and accordingly remand for further  consideration.


I. Background


Ms. DeBerry inherited her home in 1981. In April of 1991,  she borrowed
$10,000 from First Government, secured by a  deed of trust on her
home. In August of 1992, First Govern- ment refinanced the debt on Ms.
DeBerry's home, loaning her  $16,500. On April 13, 1995, Ms. DeBerry
again refinanced  her home by borrowing $21,000 from First Government.
On  April 27, 1995, Ms. DeBerry borrowed $27,500 from another  lender,
Bankers First Mortgage Company, Inc. ("Bankers  First").2 On May 31,
1995, Ms. DeBerry entered into still  another loan transaction with
Bankers First for $39,000. In  December of 1995, First Government made
a final loan to Ms.  DeBerry for $45,000.


On April 15, 1996, Ms. DeBerry filed this action against  First
Government.3 Ms. DeBerry alleged that in financing  the four loans,
First Government had violated the Consumer  Protection Procedures Act,
D.C. Code ss 28-3901 to -3909.  Specifically, Ms. DeBerry alleged a
violation of D.C. Code  s 28-3904(r)(1) and s 28-3904(r)(5). D.C. Code
s 28-3904  is entitled "Unlawful trade practices." D.C. Code  s
28-3904(r)(1) and s 28-3904(r)(5) provide that it is a viola- tion of


(r) make or enforce unconscionable terms or provisions  of sales or
leases; in applying this subsection, consider- ation shall be given to
the following, and other factors:


(1) knowledge by the person at the time credit sales  are consummated
that there was no reasonable proba-




__________

n 2 Bankers First was also a defendant below, but was dismissed  from
the suit pursuant to a settlement agreement.


3 Ms. DeBerry also sued six other defendants. Five of these  defendants
were dismissed from the suit pursuant to settlement  agreements; one
was dismissed on substantive grounds.


bility of payment in full of the obligation by the  consumer;


...


(5) that the person has knowingly taken advantage of  the inability of
the consumer reasonably to protect his  interests by reasons of age,
physical or mental infirmi- ties, ignorance, illiteracy, or inability
to understand the  language of the agreement.... 


Ms. DeBerry claims that for each of these loans, she was  charged a
large percentage of the amount borrowed in points  and other fees. For
example, with respect to the 1991 loan,  Ms. DeBerry claims that she
was charged $2,540 to borrow  $10,000. Ms. DeBerry alleges that the
loans made by First  Government were unconscionable in that they
constituted a  pattern and practice of reverse redlining which she
defines as  "a predatory lending practice of making high cost loans to
 unsophisticated homeowners who have little money but do  have
substantial equity in their homes." Appellant's Br. at 3.


On July 1, 1996, First Government filed a motion to dis- miss. After
hearing arguments on the motion, the district  court dismissed Ms.
DeBerry's claims relating to the loans  made by First Government in
1991 and 1992 because the  loans were made more than three years
before she filed her  complaint and, hence, were barred by the
relevant statute of  limitations. The court declined to dismiss the


On July 9, 1997, the court assigned discovery matters to a  magistrate
judge. On July 31, 1997, Ms. DeBerry filed a  motion to compel
discovery and to grant sanctions. After a  hearing on September 5,
1997, the magistrate judge issued an  order directing First Government
to respond to certain dis- covery requests and to pay attorneys' fees
and expenses  associated with Ms. DeBerry's motion to compel. On Sep-
tember 23, 1997, First Government filed objections to the 
magistrate's order. Ms. DeBerry opposed the objections and 
subsequently filed a motion to set attorneys' fees.


On October 29, 1997, the district court held a hearing on a  summary
judgment motion filed by First Government. The  court thereafter
issued an order granting summary judgment  to First Government with
respect to Ms. DeBerry's claim  under the CPPA and dismissing all
other pending motions as  moot. The court also granted summary
judgment to First  Government with respect to Ms. DeBerry's claim for
common  law infliction of emotional distress, finding that the claim
was  dependent on the CPPA claims.


The district court's decision to grant summary judgment  with respect
to Ms. DeBerry's CPPA claims was based solely  on its finding that the
CPPA did not apply to real estate  mortgage finance transactions,
which in turn relied heavily on  a decision by the District of
Columbia Court of Appeals,  Owens v. Curtis, 432 A.2d 737 (D.C. 1981),
where the court  held that the CPPA did not apply to the sale of real
estate.  The district court found that Owens controlled this case and 
reasoned that if the CPPA did not apply to the sale of real  estate, a
fortiori it did not apply to real estate mortgage  finance
transactions. In granting summary judgment, the  district court made
clear that the sole and exclusive basis for  its ruling was that the
CPPA did not apply and that otherwise  there were a number of disputed
facts deserving of a trial.4


II. Discussion


A.Applicability of D.C. Code s 28-3904(r)


The issue of whether D.C. Code s 28-3904(r) applies to  mortgage
finance transactions has not been the subject of a  ruling by the
District of Columbia Court of Appeals, to whom  we would ordinarily
look for guidance on its construction.  See Schleier v. Kaiser Found.
Health Plan of the Mid- Atlantic States, Inc., 876 F.2d 174, 180 (D.C.
Cir. 1989) (per  curiam). That court has, however, applied without




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n 4 Because the district court specifically found that the case would 
be deserving of trial if the CPPA did in fact apply to mortgage 
finance transactions, we do not address First Government's efforts  on
appeal to argue the merits of Ms. DeBerry's claims.


another subsection of D.C. Code s 28-3904, (e), to a mort- gage finance
transaction and in the same case rejected a  claim under D.C. Code s
28-3904(r) on the sole ground that  the facts in the case did not
support the claim (or, in other  words, not because D.C. Code s
28-3904(r) did not apply).  See Osbourne v. Capital City Mortgage
Corp., 667 A.2d 1321,  1330 & 1331 n.13 (D.C. 1995). However, First
Government  argues that while real estate mortgage finance
transactions  may be covered under D.C. Code s 28-3904(e), which pro-
vides that it is an unlawful trade practice to "misrepresent as  to a
material fact which has a tendency to mislead," they are  not covered
under D.C. Code s 28-3904(r), which provides  that it is an unlawful
trade practice to "make or enforce  unconscionable terms or provisions
of sales or leases...."  First Government makes this argument on the
basis of the  "sales or leases" language which appears in D.C. Code  s
28-3904(r). Specifically, First Government argues that one  cannot
sell or lease a mortgage finance and, accordingly, that  such
transactions are not contemplated under D.C. Code  s 28-3904(r).


To assess the quality of this argument, we look to the text  and
structure of the CPPA as a whole. The CPPA is, as the  District of
Columbia Court of Appeals has noted, "to say the  least, an ambitious
piece of legislation which seeks to prohibit  a long list of 'unlawful
trade practices.' " Howard v. Riggs  National Bank, 432 A.2d 701, 708
(D.C. 1981). Two sections  of the CPPA, in particular, are relevant to
our inquiry. The  first is entitled "Definitions and purposes." D.C.
Code  s 28-3901. This section indicates that it applies to the entire 
CPPA, see D.C. Code s 28-3901(a), and provides, inter alia,  the
following. A "trade practice" is defined as "any act which  does or
would create, alter, repair, furnish, make available,  provide
information about, or, directly or indirectly, solicit or  offer for
or effectuate a sale, lease or transfer, of consumer  goods or
services." D.C. Code s 28-3901(a)(6). "Goods and  services" is defined
as "any and all parts of the economic  output of society, at any stage
or related or necessary point in  the economic process, and includes


es, business opportunities, real estate transactions, and con- sumer
services of all types." D.C. Code s 28-3901(a)(7).


The second section relevant to our inquiry is entitled  "Unlawful trade
practices." D.C. Code s 28-3904. Under  this section are listed a
number of occurrences that constitute  unlawful trade practices. For
example, it is an unlawful  trade practice to represent that goods are
original or new if  in fact they are used, see D.C. Code s 28-3904(c);
to falsely  state the reasons for offering or supplying goods or
services  at sale or discount prices, see D.C. Code s 28-3904(l ); to 
harass or threaten a consumer with any act other than legal  process,
see D.C. Code s 28-3904(m); to misrepresent the  authority of a
salesman, representative or agent to negotiate  the final terms of a
transaction, see D.C. Code s 28-3904(v);  and so forth. As mentioned
above, two other unlawful trade  practices listed under D.C. Code s
28-3904 are to misrepre- sent as to a material fact which has a
tendency to mislead, see  D.C. Code s 28-3904(e), and to make or
enforce unconsciona- ble terms or provisions of sales or leases, see
D.C. Code  s 28-3904(r). First Government would have us draw a dis-
tinction between the unlawful trade practice listed in D.C.  Code s
28-3904(e), which the District of Columbia Court of  Appeals has
applied to a real estate mortgage transaction,  and the unlawful trade
practice listed in D.C. Code  s 28-3904(r), as to which it has not yet
ruled regarding real  estate mortgage transactions, solely because of
the "sales or  leases" language that appears in D.C. Code s


Of course, the reason given by the district court for con- cluding that
D.C. Code s 28-3904(r) did not apply to real  estate mortgage finance
transactions was that the local courts  had construed D.C. Code s
28-3904 as not applying to sale of  real estate and that a fortiori it
did not apply to mortgage  finance transactions. However, the district
court was mistak- en as to the state of local law with respect to real
estate. In  Owens v. Curtis, 432 A.2d 737, 739 (D.C. 1981), the court
held  that the CPPA did not apply to the sale of real estate. In 
response to this decision, the Council of the District of  Columbia
("D.C. Council") amended the definitional section of  the CPPA
explicitly to include "real estate transactions" as an 


example of a "good or service." See Report of the Council of  the
District of Columbia, Committee on Consumer and Regu- latory Affairs,
on Bill 8-111 and Bill 8-271, at 3-4 (1990)  ("1990 Report") (noting
that the Committee was expanding  the definition of " 'goods and
services' to cover the holding in  the matter of Owen[s]"); see also
Schiff v. American Ass'n of  Retired Persons, 697 A.2d 1193, 1197 &
n.10 (1997) (noting  that the 1990 Amendment was "adopted with the
express  purpose of reversing the holding" of Owens).


The district court below was under the misapprehension  that Owens was
still good law; its denial of Ms. DeBerry's  claim on that basis is
accordingly unpersuasive. Despite the  foregoing, however, First
Government argues that while D.C.  Code s 28-3904(r) may
now--post-Owens--apply to the sale  of real estate, it still does not
apply to a real estate mortgage  finance transaction because one
cannot "sell" or "lease" a  mortgage refinance and D.C. Code s
28-3904(r) specifically  mentions "sales or leases."


Ms. DeBerry in turn argues that a careful reading of the  statute
reveals serious impediments to the success of First  Government's
argument. D.C. Code s 28-3904(r) provides  that it is an unlawful
trade practice to "make or enforce  unconscionable terms or provisions
of sales or leases." To  determine whether real estate mortgages are
covered under  this provision, a reader asks, "sale or lease of what?"
D.C.  Code s 28-3904(r) does not itself provide the answer to this 
question, but the reader may go back to the definitional 
section--which applies to all of the subsections in D.C. Code  s
28-3904--to seek guidance. Under the definition of a  "trade
practice," it provides that a trade practice is any act  relating to
the "sale, lease or transfer, of consumer goods or  services." D.C.
Code s 28-3901(a)(6) (emphasis added); see  also id. s 28-3901(a)(2)
(defining "consumer" to include a  "person who does or would purchase,
lease (from), or receive  consumer goods or services" (emphasis
added); id.  s 28-3901(a)(3) (defining a "merchant" as a "person who
does  or would sell, lease (to), or transfer, either directly or indi-
rectly, consumer goods or services, or a person who does or  would
supply the goods or services which are or would be the 


subject matter of a trade practice" (emphasis added). The  reader may
ask, "well, what does goods and services include?"  "Goods and
services" is defined in the very next subsection:  "goods and
services" means "any and all parts of the econom- ic output of
society, at any stage or related or necessary point  in the economic
process, and includes consumer credit, fran- chises, business
opportunities, real estate transactions, and  consumer services of all
types." D.C. Code s 28-3901(a)(7)  (emphases added).5 Considering that
a mortgage finance  constitutes a sale of consumer credit and consumer
services  as well as qualifying as a real estate transaction, the
reader,  turning back to D.C. Code s 28-3904(r), may conclude that it 
is an unlawful trade practice to make or enforce unconsciona- ble
terms or provisions of sales or leases of goods and  services,
including consumer credit, consumer services, and  real estate
transactions; or, in other words, that D.C. Code  s 28-3904(r) applies




__________

n 5 This interpretive approach is consistent with that employed by  the
District of Columbia Court of Appeals. In Owens v. Curtis, 432  A.2d
737 (D.C. 1981), the court interpreted the applicable scope of  D.C.
Code ss 28-3904(e) and (f). Although neither section men- tioned the
words "trade practice" or "goods and services"--just as  D.C. Code s
28-3904(r) does not use those words--the Court  nonetheless determined
the applicable scope of those provisions  with reference to the
definitions of those terms found in D.C. Code  s 28-3901. In
particular, it read the definitions contained D.C.  Code ss
28-3901(a)(6) and (7) in tandem. See id. at 738-39 & n.2.  (As
previously noted, Owens was overruled by statute for other 


6 Apart from the text and structure of the CPPA, the legislative 
history provides only general background for interpretation of D.C. 
Code s 28-3904(r). There is nothing in the general history to  suggest
that D.C. Code s 28-3904(r) was intended to operate any  differently
than any other unfair trade practice under D.C. Code  s 28-3904, and
the specific history of (r) indicates only that its  purpose was to
ensure that "all merchants do not ... (r) make  contracts so unfair as
to be 'unconscionable.' " Report of the  Council of the District of
Columbia, Committee on Public Services  and Consumer Affairs, on Bill
1-253, at 14, 17-18 (1976) ("1976  Report") (emphasis added).


However, First Government would limit "sale," as it ap- pears in D.C.
Code s 28-3904(r), to its most narrow and  traditional of senses, that
is, X pays Y a certain amount to  purchase a certain good. First
Government thus argues that  because it did not sell the property
which was the basis of the  mortgage refinance, it did not in fact
"sell" anything to Ms.  DeBerry at all. Ms. DeBerry replies that such
is an oversim- plification, as consumer transactions are often more
complex  than X paying Y for a certain good. Take as an example the 
common situation where X buys a good from Y but ultimately  pays Z who
has financed the deal and has security in the  chattel in case of
default. Has Z "sold" anything to X in this  scenario? Ms. DeBerry
argues that the CPPA assumes that  Z has sold a good or service to X
by extending consumer  credit and hence that the transaction between Z
and X would  be covered by D.C. Code s 28-3904(r).7 See Jackson v. 
Culinary School of Washington, 788 F. Supp. 1233, 1253  (D.D.C. 1992)
(applying D.C. Code s 28-3904(r) to extension  of consumer credit,
holding that a "merchant includes one  who sells consumer credit as
well as those entities which take  an assignment of the credit account
and continue the exten- sion of credit to the consumer"); rev'd on
other grounds 27  F.3d 573 (D.C. Cir. 1994); Lawson v. Nationwide
Mortgage  Corp., 628 F. Supp. 804, 807 (D.D.C. 1986) (holding that 
mortgage refinancing transaction was covered by the CPPA 




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n 7 The legislative history of the 1990 Amendment bears out this 
thesis.


The definition of "goods and services" is amended to include all 
residential real estate transactions. This amendment was ex- panded to
address problems that have arisen in recent years.  Given their
complexity, it is hard to discern when a real estate  transaction may
be considered a sale. It is the Committee's  belief that the inclusion
of the term "transaction" will give the  court sufficient range to
discern whether a transaction is a sale  or a lease arrangement.
Furthermore, as the statute presently  prohibits application to
landlord-tenant issues, it is felt that the  use of the term
"transaction" has been given specific parame- ters for court


1990 Report, at 3.


because the CPPA "specifically encompasses such 'consumer  credit'
transactions").8


Ms. DeBerry's interpretation of D.C. Code s 28-3904(r), in  light of
the text and structure of the CPPA as a whole, does  not lack
persuasive force, but because the local courts have  not ruled
directly on this issue and because the answer will  have significant
effects on District of Columbia mortgage  finance practice, we have
decided to save the issue for the  District of Columbia Court of
Appeals. According, we certify  the following question pursuant to


Does D.C. Code s 28-3904(r) apply to real estate  mortgage finance
transactions?


Appended to this certification are the briefs and portions of  the
trial court record provided by the parties to this appeal.  In
addition, we shall provide the District of Columbia Court  of Appeals
with any other portion of the trial court record it  might desire to
have in order to answer the certified question.


B.Statute of Limitations


Ms. DeBerry argues that the district court erred in dis- missing her
claims relating to loans made in 1991 and 1992.  Ms. DeBerry filed her
complaint in 1996 and, hence, these  loans, if considered separately,
are on their faces barred by  the relevant statute of limitations. See
D.C. Code  s 12-301(8) (limitation is three years where not otherwise 
specifically prescribed). However, Ms. DeBerry argues that  the
district court ought not to have dismissed these claims  based solely
on the pleadings, that is, before she had an  opportunity to conduct
discovery. While it might be difficult  for Ms. DeBerry to demonstrate
that the 1991 and 1992 loans  are not to be viewed as separate
incidents vulnerable to the  statute of limitations, she should have
been afforded an 




__________

n 8 See also 1976 Report, at 13-14 (defining "goods and services" as 
"the subject matter of any trade practice, including any action 
normally considered only incidental to the supply of goods and 
services to consumers") (emphasis added).


opportunity to do so.9 Accordingly, we find that the district  court
erred in dismissing the claims before appropriate dis- covery could be
conducted. The reinstatement of these  claims will of course be held
in abeyance until the question of  whether D.C. Code s 28-3904(r)
applies to real estate mort- gage transactions has been resolved by
the District of Colum- bia Court of Appeals.


C. Claim for Infliction of Emotional Distress


Ms. DeBerry challenges the grant of summary judgment  for First
Government with respect to her claim for common  law infliction of
emotional distress. The only reason the  district court gave for its
dismissal was that the claim was  dependent on the CPPA claims and
that the dismissal of the  latter therefore required the dismissal of
the former. Dis- missal on this ground was incorrect. See Saunders v.
Nema- ti, 580 A.2d 660, 661 (D.C. 1990). Accordingly, we reinstate 
Ms. DeBerry's claim for common law infliction of emotional  distress
and remand it for reconsideration by the district  court.




__________

n 9 For example, Ms. DeBerry may be able to demonstrate that she  only
realized First Government's alleged scheme to strip equity  from her
home after a number of the loans had been made and  hence that the
1991 and 1992 loans were not barred pursuant to the  "discovery rule."
See Farris v. Compton, 652 A.2d 49 (D.C. 1994).  However, a second
argument against dismissal based on a "continu- ing tort" theory
appears to be unavailable. Ms. DeBerry relied on  this court's
decision in Page v. United States, 729 F.2d 818, 821  (D.C. Cir. 1984)
("It is well-settled that '[w]hen a tort involves  continuing injury,
the cause of action accrues ... at the time the  tortious conduct
ceases' ") (footnote omitted), to argue that First  Government's
actions constituted a continuing tort and hence that  the 1991 and
1992 loans were not untimely. However, the District  of Columbia Court
of Appeals has specifically rejected the reason- ing in Page, see
National R.R. Passenger Corp. v. Krouse, 627 A.2d  489, 497-98 (D.C.
1993), and has held that "the policy disfavoring  stale claims makes
application of the 'continuous tort' doctrine  inappropriate." Wallace
v. Skadden, Arps, Slate, Meagher & Flom,  715 A.2d 873, 883 (D.C.
1998). Accordingly, the "continuing tort"  argument appears to be
unavailable under District of Columbia law.


D.Attorneys' Fees


Finally, Ms. DeBerry argues that a court order to pay  attorneys' fees
with respect to discovery issues is independent  of the merits of the
underlying case and, hence, that the  district court erred in failing
to rule on the magistrate's order  of fees before disposing of the
case. We agree and, accord- ingly, remand the issue of attorneys' fees
with instructions  that the district court rule on the issue
irrespective of the  outcome of the case on the merits.


III. Conclusion


For the foregoing reasons, we reverse the district court's  dismissal
of Ms. DeBerry's claim for common law infliction of  emotional
distress and remand for further consideration; we  reinstate Ms.
DeBerry's claims relating to loans made in 1991  and 1992, contingent
on the District of Columbia Court of  Appeals' affirmative response to
the question certified; and  we reverse the district court's dismissal
of the order of  attorneys' fees and remand with instructions to rule
on the  order irrespective of the outcome of the case on the merits. 
Finally, we certify the question of whether D.C. Code  s 28-3904(r)
applies to real estate mortgage finance transac- tions to the District
of Columbia Court of Appeals for resolu- tion.


So ordered.