Opinion
29282-2003.
Decided September 24, 2008.
Leland L. Greene, Esq., New York.
M. Scott Barrett, Esq., Illinois.
Irwin Popkin, Esq., New York, Attorney for Plaintiffs.
Stephanie Gooptu, Esq., New York.
Brooks R. Brown, Esq. Goodwin Proctor, LLP, California, Attorneys for Defendant.
ORDERED , that the motion (motion sequence number 009) by plaintiff for an Order pursuant to CPLR § 902 determining that the above entitled action may be maintained as a class action and delineating the membership of the class is granted; and it is further
ORDERED , that a status conference is scheduled for October 23, 2008 at 9:30 a.m. before the undersigned.
PROCEDURAL HISTORY
Plaintiff commenced this action against defendant, asserting violations of Real Property Law § 274-a and General Business Law § 349, by the filing of a Summons and Verified Complaint on or about December 4, 2003. Plaintiff served an Amended Complaint on or about October 5, 2004. Although the parties familiarity with the facts is assumed, in sum, plaintiff alleges that defendant violated RPL § 274-a and GBL § 349 by charging plaintiff, and others, certain fees for providing mortgage related documents. The Amended Complaint also asserted causes of action sounding in fraud, breach of contract, unjust enrichment, money had and received and conversion. Defendants moved to dismiss the Amended Complaint and by Order (EMERSON, J.) dated March 23, 2005, the Court dismissed the quasi-contractual claims sounding in unjust enrichment, money had and received, conversion and fraud. Both sides appealed, and the Appellate Division modified the Court's Order and reinstated the cause of action for money had and received, stating:
Pursuant to Real Property Law § 274-a(2), the defendant was prohibited from charging the plaintiff for providing mortgage-related documents. Those documents include a payoff statement. Neither the assertion that the plaintiff voluntarily agreed to pay those fees nor the absence of allegations of a written demand for the payoff statement constitutes a defense. . . . The complaint also sufficiently alleged causes of action to recover damages for violations of General Business Law § 349(a), and for money had and received.
Dowd v. Alliance Mortgage Co. , 32 AD3d 894, 822 NYS2d 558 (2d Dept. 2006) (internal citations omitted.
Subsequently, plaintiff moved to certify this action as a class action, and such motion was denied by Order (EMERSON, J.) dated March 31, 2006. The Court found that plaintiff failed to satisfy her burden of meeting the criteria of CPLR § 901; specifically that plaintiff failed to establish the numerosity of the class and failed to provide the Court with any concrete information regarding the other purported members of the class. Thus, the Court denied the motion finding that "without such information, it is impossible for the court to determine whether joinder of all members is impracticable, whether the plaintiff's claim is typical of the class, whether the plaintiff will fairly and adequately protect the interests of the class, and whether a class action is the superior method for adjudication of the controversy."
By further Order (EMERSON, J.) dated June 20, 2007, the Court granted plaintiff's motion to compel discovery and the March 31, 2006 Order was amended to specify that the motion for class certification was denied without prejudice to plaintiff's rights to move again for class certification. Defendant was compelled to comply with certain discovery demands limited to the period January 1, 2003 through December 31, 2003, to determine whether there were additional parties that could allege similar complaints against defendant.
THE MOTION FOR CLASS CERTIFICATION
Plaintiff now moves again pursuant to CPLR Article 9 for an Order certifying this action as a class action. Plaintiff seeks to define the class as "those owners within the State of New York of owner occupied one to six family residential structures or condominiums who within six years from the date of the commencement of this action have entered into a written contract to convey such property or who have received a written commitment to make a mortgage loan upon such real property or any interest therein, and who were charged illegal and unwarranted fees such as, but not limited to, a first request for a payoff statement and were charged a priority handling fee or fax fee, by Alliance for the delivery of mortgage related documents in connection with the satisfaction of a mortgage held by Alliance or were charged more than $20.00 for the delivery of second and subsequent payoff statements." Affirmation of Leland L. Greene, Esq., at ¶ 21.
In subsequent papers submitted to the Court, plaintiff amended its definition of the putative class to be those persons who at any time between December 4, 1997 and December 31, 2003, were New York State residents who were owner occupiers of one-to-six family residential structures or residential condominium units whose mortgage loans were serviced by defendant and paid a fee (however denominated) to defendant for providing a payoff statement where the payoff statement was not a second or subsequent payoff statement. Defendant had the opportunity to respond to the revised definistion.
It is well settled that CPLR Article 9, which authorizes class actions is to be liberally construed and the determination whether to grant class certification rests in the discretion of the trial court. Beller v. William Penn Life Insurance Co. , 37 AD3d 747, 830 NYS2d 759 (2d Dept. 2007). CPLR §§ 901 and 902 provide the prerequisites for a class action. Section 901 provides that:
a.One or more members of a class may sue or be sued as representative parties on behalf of all if:
1.the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
2.there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
3.the claims or defenses of the representative parties are typical of the claims or defenses of the class;
4.the representative parties will fairly and adequately protect the interests of the class; and
5.a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Section 902 provides considerations for the Court in determining whether the action may proceed as a class action. Those considerations are:
1.The interest of members of the class in individually controlling the prosecution or defense of separate actions;
2.The impracticability or inefficiency of prosecuting or defending separate actions;
3.The extent and nature of any litigation concerning the controversy already commenced by or against members of the class;
4.The desirability or undesirability of concentrating the litigation of the claim in the particular forum;
5.The difficulties likely to be encountered in the management of a class action.
Numerosity
The Court initially denied plaintiff's motion for class certification on the ground that plaintiff failed to establish the numerosity of the class. Now, upon some discovery taking place after the denial of the motion for certification, plaintiff has established, at a minimum that there were more than 1800 loans with charges for a priority handling fee or fax in the year 2003 alone. Contrary to the arguments of defendant, plaintiff has not merely repeated the conclusory allegations of her earlier motion for class certification. Rather, she has demonstrated, by the documents provided during discovery, that there are almost 2,000 members of the putative class. This evidence was not available upon the earlier motion, and the Court notes that plaintiff only obtained such proof upon bringing a motion to compel discovery. Moreover, since the discovery to date has been limited to the year 2003, further discovery could logically bear out that there are several thousand more potential class members. Additionally, Michael Koster, President and Chief Operating Officer of defendant, has admitted that defendant charged a priority handling fee for faxed payoff statements. Thus, in light of the foregoing, the Court finds that plaintiff meets the numerosity requirement of CPLR § 901(a)(1). See, e.g., Friar v. Vanguard Holding Corp. , 78 AD2d 83, 434 NYS2d 698 (2d Dept. 1980).
Common Questions of Law and Fact and Typicality
With regard to the issue of common questions of law or fact and similarity of claims, the Court agrees with plaintiff that the central question, which is common to all members of the proposed class, is whether defendant violated the provisions of RPL § 274-a and GBL § 349 by charging each proposed class member fax fees and/or priority handling fees for the delivery of mortgage related documents in connection with the satisfaction of a mortgage held by defendant. Although defendant argues that individual claims overwhelm the common issues, "the predominance of questions of fact or law over questions affecting only individual members is the test which must be met, not a nice inspection of the claims of each class member." Weinberg v. Hertz Corp. , 116 AD2d 1, 499 NYS2d 693 (1st Dept. 1986) (holding inter alia, that the fact that plaintiff cannot show individual "reliance" as to a GBL § 349 claim is not a basis to deny class action status). Here, a review of the Amended Complaint demonstrates that the only distinction among the putative class members may be the amounts or designation of the fees charged and to the extent it becomes necessary, the Court could carve out subclasses without destroying the action as a class action. Id., citing, Friar, supra . Likewise, the claims of plaintiff are typical of the class she proposes to represent. Defendant's arguments to the contrary notwithstanding, "it is not necessary that the claims of the named plaintiff be identical to those of the class, and, should it prove necessary, the option of creating subclasses remains". Super Glue Corp. v. Avis Rent A Car System, 132 AD2d 604, 517 NYS2d 764 (2d Dept. 1987). The proposed putative class, as amended by plaintiff in her Reply papers, clearly defines those individual owners, who, like plaintiff, were allegedly illegally charged a fee for the provision of mortgage related pay-off documents. Thus, plaintiff's claims, are typical of the class she seeks to represent.
A Fair and Adequate Representative of the Putative Class
The Court also agrees that plaintiff and her counsel will fairly and adequately protect the interests of the putative class. The submissions reflect that there is essentially no possible conflict that could arise among the members, no special benefit any member could derive against another and the attorneys are experienced in complex commercial litigation and class actions relating to mortgage related issues. Plaintiff's counsel have annexed to the motion papers affidavits demonstrating their experience in litigating cases such as the one at bar and the Court finds defendant's attempts to persuade the Court that counsel are inadequate because of one of plaintiff's counsel may be a fact witness, unavailing.
Nevertheless, should defendant so choose, at a later date, to move to disqualify said counsel, nothing herein shall be deemed to limit this right.
Superiority of the Class Action
Finally, plaintiff has adequately demonstrated to the Court that as a result of the small amount of money involved in the claims of the members individually, it is inconceivable that any member of the Class would have an interest in controlling the litigation on their own. That is, the class action is superior to other methods for a fair and efficient determination because the same sort of conduct on the part of the defendant has affected the plaintiff and each person she seeks to represent. Since the case involves relatively small amounts of money arguably owed to potentially thousands of people, the class action is the only feasible method as prosecution of separate actions would unnecessarily consume judicial resources and create a risk of inconsistent adjudications. Moreover, the Court perceives no difficulties in the utilization of the class action method and that the determination of the precise number and identity of the members of the class is ascertainable from defendant's records. The Court rejects defendant's arguments that the certification of this action as a class action must be denied because it would involve too exhaustive a search of their records. Taken to its logical conclusion, such argument would render a mortgage essentially insulated from the requirement of compliance with Real Property Law § 274-a(2). Thus, plaintiff has met the superiority requirement of CPL § 901(a).
See, CPLR § 902(1) .
As the Court recognized in Weinberg, supra , "it is notable that in determining whether a class action is superior to other viable methods, it is clear that most of the individuals having claims less than $31 would have no realistic day in court if a class action were not available." See also, CPLR § 902(2).
See, CPLR § 902(5) .
Based on the foregoing, the motion for class certification is granted. In reaching this determination, the Court notes, that defendant goes to exhaustive lengths to challenge the underlying merits of plaintiff's RPL § 274-a and GBL § 349 claims as a basis for the Court's denial of the motion for class certification. However, the Second Department has already ruled on the efficacy of the Amended Complaint and sustained plaintiff's causes of action for violations of RPL § 274-a and GBL § 349 and money had and received in its earlier determination. See also, MacDonnell v. PHH Mortgage Corp. , 45 AD3d 537, 846 NYS2d 223 (2d Dept. 2007); Dougherty v. North Fork Bank , 301 AD2d 491, 753 NYS2d 130 (2d Dept. 2003).
Thus, this action is certified as a class action, with the putative class being defined as: borrowers of owner-occupied residences upon whose loans a first payoff statement was "demanded" by an "authorized individual" as defined in RPL § 274-a, for the purpose of completing a transaction reasonably expected to result in the payoff of that loan. Additionally, the class is limited to borrowers who actually paid a fee (however denominated) and is limited to the period between January 1, 2002 and December 31, 2003.
Counsel are reminded that a compliance conference is scheduled for October 23, 2008 at 9:30 a.m. before the undersigned.
This constitutes the DECISION and ORDER of the Court.