## Facts

- Linwood and Jean Cowen refinanced two existing home mortgages into a single loan from Bank United of Texas, FSB.
- A title insurance company handled the closing and arranged delivery of the lender’s payoff checks to the prior mortgagees.
- The title company hired an overnight courier and charged the Cowens a $14 courier fee on the closing statement.
- The Cowens alleged the $14 fee was a “finance charge” under TILA because it was imposed indirectly by the lender as an incident to the loan and was not disclosed as such.
- Bank United denied that it required or imposed the courier service or received any portion of the fee.

## Issues

1. Whether a $14 overnight courier fee charged by a third-party closing agent is a TILA “finance charge” imposed directly or indirectly by the lender, requiring disclosure under 15 U.S.C. § 1605(a) and Regulation Z.
2. Whether a district court may grant summary judgment on the merits before deciding class certification under Federal Rule of Civil Procedure 23.

## Decision

- The Seventh Circuit affirmed summary judgment for Bank United.
- The court held the $14 courier fee was not a TILA finance charge on this record.
- The court held it was not error to resolve summary judgment before ruling on class certification where the merits issue was dispositive for the named plaintiffs and any putative class.

## Legal Principles

- Under TILA, a finance charge includes charges payable by the borrower and imposed by the lender, directly or indirectly, as an incident to or condition of the extension of credit.
- A fee assessed in connection with closing is not a finance charge merely because it relates to the transaction; the key inquiry is whether the lender required the service or used the charge to shift lender-borne costs into undisclosed credit charges.
- When a third-party closing agent selects a service provider and passes through the cost, and the lender neither requires the service nor benefits from the fee, the charge is generally not “imposed” by the lender for TILA finance-charge purposes.
- Rule 23(c)(1) directs class certification “as soon as practicable,” but does not mandate certification be decided before a merits ruling; a court may grant summary judgment first when appropriate.

## Conclusion

The court concluded that a courier fee arranged and charged by an independent closing agent was not a TILA finance charge absent evidence the lender required or indirectly imposed it, and it approved deciding summary judgment before class certification when the dispositive merits issue is common to the proposed class.


Cowen v. Bank United of Tex., FSB, 70 F.3d 937 (7th Cir. 1995)