Opinion
No. 74-012 No. 75-029
Decided December 29, 1977. Rehearing denied January 26, 1978. Certiorari granted May 15, 1978.
In consolidation of two actions, plaintiff's appealed, as being premature, a trial court ruling, premised solely on allegations in complaints, that the claims could not be pursued as class actions.
Affirmed
1. PRACTICE AND PROCEDURE — Class Action Status — Early Determination Preferred — Trial Court — May Consider Affidavits — Authorize Discovery — Hold a Hearing. An early determination as to whether a claim may be pursued as a class action is preferred, and where the complaint lacks sufficient factual material upon which to make a determination, the trial court, in aid of its timely resolution of the issue, may consider affidavits and exhibits, authorize discovery, or hold an evidentiary hearing.
2. Class Action Status — Determination — Discretion of Trial Court — Burden — On Party Seeking — Absent Timely Request — Provide Further Information — May Determine — On Complaint. While the trial court is vested with substantial discretion in determining whether a claim may be pursued as a class action, the burden is on the party seeking class action status (and not the trial court) to establish that the claim should be maintained as such; and, absent a timely request to provide the court with further information in the form of affidavits, discovery, or evidence, the trial court may determine the issue upon allegations of the complaint alone.
3. Action Filed — June 1972 — No Affidavits — No Discovery — Ruling — September 1973 — Not Class Action — Not Premature. Where plaintiffs filed claims they sought to pursue as a class action in June of 1972, but presented no affidavits to the trial court, made no attempt to pursue discovery, nor requested an evidentiary hearing prior to trial court's ruling in September 1973 that the claims could not be so pursued, the trial court's determination was not premature, and it did not abuse its discretion in refusing to allow discovery when that request was made for the first time in plaintiffs' motion for rehearing.
4. APPEAL AND ERROR — No Request — Amend Complaint — Before — Motion to Dismiss — Motion for Rehearing — Issue — Precluded on Appeal. Where plaintiffs failed to request the right to amend their complaint either prior to the trial court's ruling on defendants' motion to dismiss or in the motion for rehearing filed thereafter, they are precluded from raising that issue on appeal.
Appeal from the District Court of the City and County of Denver, Honorable Henry E. Santo, Judge.
Hellerstein Levine, Harry L. Hellerstein, Criswell Patterson, John A. Criswell, for plaintiffs-appellants in 74-012.
Criswell, Patterson Ballantine, John A. Criswell, John N. McNamara, Jr., Lawrence A. Wright, Jr., for plaintiffs-appellants in 75-029.
Kenneth T. Sullivan, for defendant-appellee Empire Savings and Loan Association in No. 75-029.
Calkins, Kramer, Grimshaw Harring, Richard L. Harring, for defendant-appellee Empire Savings and Loan Association in Nos. 74-012 and 75-029.
Fairfield Woods, Charlton H. Carpenter, for defendant-appellee, Midland Federal Savings and Loan Association in Nos. 74-012 and 75-029.
Balaban Lutz, Harlan G. Balaban, for defendant-appellee Mile High Savings and Loan Association in Nos. 74-012 and 75-029.
Mosley, Wells Spence, James H. Mosley, for defendant-appellee Western Federal Savings and Loan Association in Nos. 74-012 and 75-029.
Gorsuch, Kirgis, Campbell, Walker Grover, Robert E. Warren, for defendants-appellee Moore Mortgage Co. in No. 75-029.
Charles J. Hafertepen, for defendant-appellee Columbia Savings and Loan Association in No. 75-029.
Hayden, Ross Sweeney, William G. Ross, for defendant-appellee First Federal Savings and Loan Association in No. 75-029.
Holland Hart, Robert E. Benson, David G. Palmer, for defendants-appellees Central Mortgage and Investment Company, Kassler Co., Midland Mortgage Co., First American Mortgage Company, the D.C. Burns Realty and Trust Company, First of Denver Mortgage Co., and Mortgage Institute Co. in No. 75-029.
Law, Nagel Clark, Robert L. Nagel, for defendant-appellee James B. Nutter and Company in No. 74-012.
Holland Hart, Robert E. Benson, David G. Palmer, for defendant-appellee James B. Nutter and Company in No. 75-029. Atler, Zall Haligman, Jon M. Zall, for defendants-appellees Silver State Savings Loan Association and Van Schaack Co. in No. 75-029.
Davis, Graham Stubbs, L. Richard Freese, Jr., for defendants-appellees Colorado National Bank, Central Bank Trust Co., Colorado National Mortgage Company, Garrett-Bromfield Mortgage Company, and Mountain States Financial Corporation in No. 75-029.
Holme, Roberts Owen, Donald C. McKinlay, for defendant-appellee, Weyerhaeuser Mortgage Co. in No. 75-029.
Hughes Dorsey, Kirk P. Brady, for defendant-appellee First National Bank of Denver in No. 75-029.
Harry M. Williams, for defendant-appellee Capitol Federal Savings Loan Association No. 75-029.
Dawson, Nagel, Sherman Howard, Craig A. Christensen, for defendant-appellee Colorado State Bank in No. 75-029.
These cases have been consolidated for the purposes of this appeal. The sole issue in each case is whether the trial court's ruling that the plaintiffs' claims could not be pursued as a class action was premature. We affirm the ruling in each case. CASE NO. 74-012
In each case the order dismissing the class action allegations was made final pursuant to C.R.C.P. 54(b) in order that an appeal could be taken prior to resolution of the individual claims of the plaintiffs. This procedure was approved in Levine v. Empire Savings and Loan Ass'n, 189 Colo. 64, 536 P.2d 1134 (1975) and Levine v. Empire Savings and Loan Ass'n, 37 Colo. 509, 557 P.2d 386 (1976).
In this case the plaintiffs, Mark L. and Ellen S. Levine, brought suit individually and on behalf of the members of a class to recover "assumption fees" paid for the assumption of loans made to third parties by the defendants, Empire Savings and Loan Association, James B. Nutter Company, Midland Federal Savings and Loan Association, Mile High Savings and Loan Association, and Western Federal Savings and Loan Association.
In their complaint the plaintiffs copied from the provisions of C.R.C.P. 23(a) and (b) in an effort to meet the requirements for a class action. Plaintiffs then alleged that imposition of the assumption fees by the defendants was impermissible based upon ten separate legal theories.
The defendants challenged the complaint by various motions. Insofar as pertinent here, the motion of James B. Nutter Company specifically raised the issue of whether the allegations of the complaint were sufficient to show that the case could be certified as a class action. Following presentation of briefs and oral argument, the trial court dismissed the class action allegations of the complaint.
Plaintiffs do not contend on this appeal that the allegations of the complaint contain sufficient factual material to establish whether this action must be certified as a class action pursuant to C.R.C.P. 23. See generally 3B J. Moore, Federal Practice ¶ 23.02-2 (2d ed.). Rather, plaintiffs contend that the trial court's ruling was premature, since defendants have not yet answered the complaint and no affidavits, information developed through discovery, or evidence has been presented to determine the issue of whether their claims should be certified as a class action. We find this contention unpersuasive.
[1,2] C.R.C.P. 23(c)(1) provides that as soon as practicable after a class action is filed, the trial court must determine "if it is to be so maintained." An early determination is preferred so that, among other reasons, ample notice may be given to members of the class to appear in the action, seek exclusion from the class, or object to the representation by the plaintiffs, and so that, if certification is properly denied, applicable statutes of limitations will not have run. See M. Frankel, "Some Preliminary Observations Concerning Civil Rule 23," 43 F.R.D. 39; Polakoff v. Delaware Steeplechase Race Ass'n, 264 F. Supp. 915 (1966). In aid of its timely determination, and where, as here, the complaint lacks sufficient factual material upon which to make a decision, the trial court may consider affidavits and exhibits, see Hatfield v. Williams, 64 F.R.D. 71 (N.D. Iowa 1974), authorize discovery, see Yaffe v. Powers, 454 F.2d 1362 (1st Cir. 1972), or hold an evidentiary hearing, see Huff v. N. D. Cass Co., 485 F.2d 710 (5th Cir. 1973). See generally, 7A C. Wright A. Miller, Federal Practice and Procedure § 1798. (1972 ed.). While the trial court is vested with substantial discretion in determining whether a claim may be pursued as a class action, the burden is on the party seeking class action status (and not the trial court) to establish that the claim should be maintained as such, Borwick v. Bober, 34 Colo. App. 423, 529 P.2d 1351 (1974); Rossin v. Southern Union Gas Co., 472 F.2d 707 (10th Cir. 1973). And, absent a timely request to provide the court with further information in the form of affidavits, discovery, or evidence, see Huff, supra; Rossin, supra; Wofson v. Solomon, 54 F.R.D. 584 (S.D. N.Y. 1972), we hold that the trial court may determine this issue based upon allegations of the complaint alone. See Cook County College Teachers Union, Local 1600 v. Byrd, 456 F.2d 882 (7th Cir. 1972); Sedlarik v. General Motors Corp., 54 F.R.D. 230 (W.D. Mich. 1971); cf. Gillibeau v. Richmond, 417 F.2d 426 (9th Cir. 1969).
[3] Here, the action was commenced in June of 1972 and dismissed on motion by defendants in September of 1973. As indicated above, the plaintiffs presented no affidavits to the trial court, made no attempt to pursue discovery, or request an evidentiary hearing prior to the trial court's ruling, electing instead to present legal argument. Thus, compelled as it was to determine the issue "as soon as practicable," the trial court's determination was not premature. See Rossin, supra. Further, given the policy considerations which require that the class action status of a case be determined at an early stage of the proceedings, coupled with the fact that a dismissal of the class action allegations does not bar the class members from pursuing their individual claims by proper intervention in this case, see American Pipe Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), we cannot say that the trial court abused its discretion in declining to allow discovery when that request was made for the first time in plaintiffs' motion for rehearing.
[4] Finally, where, as here, the plaintiffs failed to request the right to amend their complaint either prior to the trial court's ruling on defendants' motion to dismiss or in the motion for rehearing filed thereafter, they are precluded from raising that issue on this appeal. Fladung v. Boulder, 165 Colo. 244, 438 P.2d 688 (1968). While the filing of a motion for new trial was not required in this case, see C.R.C.P. 59(h), plaintiffs are limited to the issues raised therein. Fladung, supra. CASE NO. 75-029
In this case the plaintiffs, Ellen S. Levine, et al., brought suit individually and on behalf of the members of a class to recover interest on money paid into escrow accounts by the class members for payment of property taxes and insurance in conjunction with real estate loans made by the defendants.
In their amended complaint the plaintiffs copied the provisions of C.R.C.P. 23(a) and (b) in an effort to meet the requirements for a class action. The plaintiffs then alleged that imposition of escrow payments was impermissible based upon seven separate legal theories.
The original complaint was filed on September 26, 1972, and the amended complaint on August 27, 1973. The amendment consisted only of adding additional plaintiffs and defendants. By order dated August 22, 1973, a stipulation of the parties to defer discovery was approved, and time limits were established for filing motions and briefs relative to the "sufficiency of the complaint." Motions were thereafter filed against the amended complaint challenging the sufficiency of the factual allegations to demonstrate that the action was proper as a class action. In conjunction with legal briefs submitted relative to the motions, plaintiffs requested for the first time that a ruling as to class action status be deferred pending discovery.
Plaintiffs' sole contention in this appeal is that the trial court's ruling was premature. However, for the reasons stated in No. 74-012 we cannot say that the trial court abused its discretion in ruling based upon the amended complaint alone, when plaintiffs were allowed to amend the complaint, initially agreed to defer discovery pending a determination as to the sufficiency of the allegations of the complaint, and at no time submitted affidavits or requested an evidentiary hearing to demonstrate the factual material necessary to establish a class action status. Finally, for the reasons stated in Case No. 74-012, plaintiffs are precluded from asserting now that they must be allowed to again amend their complaint.
By reason of the foregoing, we do not address defendant Colorado State Bank's contention that the issues as between plaintiffs and it are now moot.
Judgment affirmed.
JUDGE COYTE and JUDGE ENOCH concur.