Summary
finding that loan and loan-related appraisal services are not two products because "[t]here is no legitimate consumer demand by a borrower to purchase loan-related appraisal services separate from the purchase of the loan itself"
Summary of this case from S N Eqpt. Co. v. Casa Grande Cotton Fin. Co.Opinion
No. 84-8923. Non-Argument Calendar.
May 28, 1985.
William H. Glover, Jr., Brunswick, Ga., Herbert P. Schlanger, Atlanta, Ga., for plaintiff-appellant.
John E. Bumgartner, Brunswick, Ga., for defendant-appellee.
Appeal from the United States District Court for the Southern District of Georgia.
Before RONEY, FAY and JOHNSON, Circuit Judges.
Plaintiff, Jack P. McGee, a real estate appraiser in Brunswick, Georgia, appeals the dismissal of his antitrust claim that defendant, First Federal Savings Loan Association of Brunswick, violated antitrust laws by setting up an arrangement whereby First Federal would refer the appraisal required for real estate loans to a wholly owned subsidiary. Alleging the procedure constituted an illegal tying arrangement, plaintiff claimed conspiracy in restraint of trade ( 15 U.S.C.A. § 1), an attempted monopolization ( 15 U.S.C.A. § 2), an illegal tying agreement ( 12 U.S.C.A. § 1972), and a RICO violation ( 18 U.S.C.A. § 1962). For the reasons set out in the district court's opinion, we affirm.
Aside from the facts, two legal principles were central to the grant of summary judgment. First, in light of Copperweld Corp. v. Independence Tube Corp., ___ U.S. ___, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), a parent corporation and its subsidiary are incapable of engaging in the concerted activity required for a violation of section 1 of the Sherman Act, even though a separate corporation is required for independent appraisal purposes.
Second, to support a claim of an illegal tying arrangement, the law requires a showing of two distinct products: a tying product, in the market for which defendant has economic power, and a tied product, which defendant forces on consumers wishing to purchase the tying product. Jefferson Parish Hospital District No. 2 v. Hyde, ___ U.S. ___, ___, 104 S.Ct. 1551, 1565, 80 L.Ed.2d 2, 21 (1984). There are not two distinct products involved in the alleged situation. An appraisal is performed for the benefit of the lending institution. It is the "consumer" of the appraisal product. There is no legitimate consumer demand by a borrower to purchase loan-related appraisal services separate from the purchase of the loan itself. Federal regulation requires the lending institution to commission the appraisal. See 12 C.F.R. § 545.32(b)(1) (1984). The appraisal's cost is simply passed on to the borrower as a business cost. See 24 C.F.R. § 3500.7. Plaintiff failed to demonstrate that the pre-loan appraisal is provided to the borrower as a product separate from the loan itself.
AFFIRMED.