United States District Court, N.D. Illinois
April 15, 2004.
THOMAS BRADFORD and GRACE BRADFORD, on behalf of themselves and all other similarly situated individuals, Plaintiffs,
INDEPENDENCE ONE MORTGAGE CORPORATION, Defendant
The opinion of the court was delivered by: JAMES ZAGEL, District Judge
MEMORANDUM OPINION AND ORDER
This case first arrived on my docket in February of 1994 after being
transferred from the U.S, District Court for the Western District of New
York for consolidation with other similar cases. It is one of the few
cases of its type that remains. Al the time the original Complaint was
filed, Independence One Mortgage Corporation (IOMC) serviced
approximately 155,000 mortgages on properties located in all 50 states and
the District of Columbia, In 1994, IOMC sold its assets to Norwest,
including the servicing rights to approximately 120,000 loans. The
records associated with IOMC's loans were also transferred to Norwest.
Since that time, IOMC has not been in the business of servicing mortgage
In September of 1996, the Plaintiffs moved for certification of a
nationwide class. An agreed upon order was entered by this Court on
September 18, 1997 certifying Five subclasses all of which included only
those mortgages being serviced by IOMC as of September 30, 1994. The date
was important because it limited the class to loans which were "open,"
i.e. being serviced at the time IOMC transferred its loans to Norwest. The order did not
address the status of those potential class members with "closed" loans,
loans that were paid off before September 30, 1994, other than to say
that Plaintiffs' pending motion for class certification was withdrawn, In
March of 2000, Plaintiffs moved for certification of the remainder of the
During supplemental briefing on the issue, the Seventh Circuit handed
down its decision in In re Bridgestone/Firestone, Inc, Tires Prods,
Liab. Litig., 288 F.3d 1012 (7th Cir. 2002), In re Bridgestone/Firestone
made certification of a nationwide class inappropriate where the
litigants' cases were governed by differing state laws, Thereafter, on
October 7, 2003, l denied class certification for both the "open" and
"closed" loans and invited Plaintiffs to file for certification of
narrower classes. Ten days later, Plaintiffs brought a renewed motion lo
certify a statewide class in New York.
Plaintiffs have subsequently brought two motions seeking to amend their
original Complaint to add the following class representatives from
various states: Josephine H. Merlo for Illinois, Armando and Rosa Medina
for Florida, Andrea Bianchi for New Jersey, and Wanda G. Freeman for
South Carolina, *fn1 Federal Rule of Civil Procedure 15(a) provides that
where a responsive pleading has already been served, a party may amend
its pleading "only by leave of the court" and that "leave shall be freely
given when justice so requires." Fed.R.Civ.P. 15(a). However, "leave
to amend need not be given if there is an apparent reason not to do so,
such as `undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, [or] futility."
Chavez v. III. State Police, 251 F.3d 612, 632 (7th Cir. 2001), quoting
Payne v. Churchich, 161 F.3d 1030, 1036 (7th Cir. 1998).
Additionally, the burden rests upon the plaintiff to show a valid
reason for delay in seeking leave to amend. Ameritech v. Computer,
188 F.R.D. 280, 286 (N.D. Ill. 1999) citing Saders v. Venture Stares,
56 F.3d 771, 775 (7th Cir. 1995). A denial of the motion is warranted
when a party fails to "provide an explanation as to why the amendment did
not take place sooner" and its delay is burdensome to the opposing
party. Hindo v. University of Health Sciences, 65 F.3d 608, 615 (7th Cir.
IOMC objects to the amendment on grounds that (1) it would be fufile,
(2) it would unduly prejudice IOMC, (3) it would unduly delay these
proceedings, and (4) the Plaintiffs have not presented any justification
for their delay in seeking to amend.
IOMC argues that the amendment would be fufile because the statute of
limitations has expired as to some, if not all, of the newly named
plaintiffs, Ms. Merlo and possibly some of the other newly named
plaintiffs had loans that were "closed" before 1994 and were not part of
the original class certified by this court on September 18, 1997. IOMC
claims that the September 18th order, which called for the withdrawal of
Plaintiffs' motion for certification of a broader class, started the
clock for statute of limitations purposes, making the newly named
plaintiffs' claims untimely.
As a rule, putative class members' individual claims are tolled at all
times during the pendency of a class action up to and until class
certification is actually denied, American Pipe & Constr. Co. v. Utah. 414 U.S, 538 (1974); See Also Crown, Cork & Seal
Co. v. Parker, 462 U.S, 345 (1983). Tolling is appropriate and necessary
because "[w]e want the class members to rely on the filing of the class
action rather than to clutter the courts with a multitude of separate
suits" filed merely to prevent the statute of limitation from running.
Elmore v. Henderson, 227 F.3d 1009, 1012 (7th Cir. 2000).
IOMC argues that Plaintiffs' withdrawal should be treated as a denial,
I disagree and find the two are fundamentally different. Tolling is done
to prevent potential class members from filing independently until the
class's scope is defined. Unlike a denial, a withdrawal does not
permanently define or limit class membership. It leaves open the potential
for subsequent requests for certification of a broader class, such as the
one filed by Plaintiffs in March, 2000. Thus, a withdrawal is
insufficient to start the time running. Since time was tolled until the
motion for class certification was denied on October 7, 2003, the claims
of potential class members with "closed" loans fall well within the
statutory period and are not time barred.
IOMC also argues that amending the complaint to include newly named
plaintiffs who will ultimately represent state classes is wasteful because
such statewide classes are barred by the Seventh Circuit's Decision in In
re Bridgestone/Firestone, In that decision, the Court reversed the
district court's certification of a nationwide class because the
differences in state tort law destroyed predominance of common issues of
law within the class. The Court went on to address the possibility of
statewide classes stating that "[l]est we soon see a Rule 23(f) petition
to review the certification of 50 state classes, we add that this
litigation is not manageable as a class action even on a statewide
basis." In re Bridgeston/Firestone, 288 F.3d at 1018, IOMC argues, on the basis of this statement, that In re
Bridgestone/Firestone barred statewide class actions in cases where the
law differs between states and that this bar prevents me iron) certifying
state classes in this case. However, IOMC's reading of In re
Bridgestone/Firestone is divorced of its proper context. The Seventh
Circuit's prohibition against statewide classes was based primarily on
the factual differences that existed between individual class members,
which could not be resolved by segregation into states. Id, at
1018-1019. Given the Court's reliance on these factual differences, I
find that In re Bridgestone/Firestone does not create an outright bar
against certification of statewide classes in cases such as this one, and
T leave the question of whether statewide class certifications would work
here for another day.
IOMC argues that allowing Plaintiffs to amend their complaint will
cause it undue prejudice because it no longer has all the evidence
necessary to defend itself in cases where the loans were "closed."*fn2
One reason that IOMC agreed to certify a class consisting of persons
whose loans were "open" at the time its assets were transferred lo
Norwest was because it had retained those records. IOMC did not,
however, maintain full records of "closed" loans, Some evidence
pertaining to the mortgage accounts serviced by IOMC does exist on
microfiche and can be searched manually. The limitations of this
information combined with the rather arduous process of accessing it will
certainly make investigation of the class members' claims more difficult. However, this difficulty will be born by both parties.
Limitations associated with the currently available data will not only
affect IOMC's ability to defend itself but will also affect Plaintiffs'
ability to prove their case. So much evidence may have been lost that
moving forward renders the determination of liability or damages
unreliable but that is not a judgment that ought to be made in the
abstract. The Plaintiffs ought to be given a chance to make their case.
Time will tell whether doing so is too difficult or too costly. Thus, I
find any prejudice caused to IOMC is balanced out by prejudice caused to
3. Undue Delay of the Litigation
IOMC argues that allowing Plaintiffs to amend their Complaint will
unduly delay the resolution of this case. IOMC contends that Plaintiffs'
pending motion for certification of a New York class could be fully
briefed and decided by this court in a relatively short period of time,
allowing this case to proceed toward trial and resolution. Allowing this
amendment, IOMC argues, will drastically slow down the resolution of the
New York class's claims. However, resolution of the New York class's
claims will not bring this litigation to an end. The New York class
members are only a subsection of the national class Plaintiffs originally
sought to certify. If l deny this motion, Plaintiffs will undoubtedly
file individual suits across multiple states. U is likely, although not
altogether certain, that these cases would ultimately be transferred back
to me. This potential filing and transferring creates the possibility
that the majority of this litigation could be dragged out even longer
than if I allowed these amendments. Since the prospect of undue delay
exists whether or not I grant this motion, it does not create sufficient
grounds for denial of the proposed amendments. 4.Unjustified Delay
Finally, IOMC argues that the amendments should not be allowed because
Plaintiffs' delay in Filing such amendments is unjustified. IOMC claims
that counsel have known about those class members they wish to add since
the inception of this litigation over ten years ago and should have added
them earlier. Plaintiffs are now seeking to amend their complaint to name
plaintiffs who can represent classes from individual states. Plaintiffs
argue and I agree that they had no need to do so until nationwide class
certification was denied on October 7, 2003. After that denial.
Plaintiffs moved reasonably quickly to amend their Complaint.
For the foregoing reasons, Plaintiffs' Motion for Leave to File a Third
Amended Complaint is GRANTED.