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Fournigault v. Independence One Mortgage Corp.

February 21, 2006

DAVID E. FOURNIGAULT, JOSEPHINE H. MERLO, ARMANDO MEDINA, ROSA MEDINA, WANDA G. FREEMAN, DEBORAH E. MILLER, MARK F. KLEEMEIER, DEANNA J. KLEEMEIER, RICHARD W. BAIER, AND DIANE L. JUDGE JAMES B. ZAGEL BAIER, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
INDEPENDENCE ONE MORTGAGE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: James B. Zagel United States 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. At 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 loans.

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were paid off before September 30, 1994, other than to say that Plaintiffs' pending motion for class certification was withdrawn.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 class.

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, I denied class certification for both the "open" and "closed" loans and invited Plaintiffs to file for certification of narrower classes. Plaintiffs subsequently brought a renewed motion to certify a statewide class in New York, and were granted leave to file Third, Fourth and Fifth Amended Complaints, adding class representatives for the Illinois, Florida, Michigan, New Jersey, Ohio, South Carolina and Texas subclasses. Plaintiffs now move to certify all seven subclasses.

Analysis

In considering Plaintiffs' motion for class certification, I may not conduct a preliminary inquiry into the merits of the underlying claims. Eisen v. Carlisle & Jacqueline, 417 U.S. 156, 177-178 (1974). However, I may look beyond the pleadings to determine whether the requirements of Rule 23 are met. Szabo v. Bridgeport Mach., Inc., 249 F.3d 672, 677 (7th Cir. 2001). In order to proceed as a class action, the Plaintiffs must prove their action meets the four requirements of Rule 23(a) and the requirements of at least one subsection of Rule 23(b). Eisen v. Carlisle & Jacqueline, 417 U.S. at 163; See also Calkins v. Fidelity Bond & Mortgage Co., No. 94 C 5971, 1998 U.S. Dist. LEXIS 16144, at *2 (N.D. Ill. Oct. 8, 1998).

In addition to the four express requirements of Rule 23(a), there are two implied requirements: (1) that an identifiable class exists ("definiteness"), and (2) that the named representatives are members of the class. LeClercq v. Lockformer Co., No. 00 C 7164, 2001 U.S. Dist. LEXIS 2115, at *5 (N.D. Ill. Feb. 23, 2001). A class can be properly identified so long as it is defined by objective criteria. Id. at *5-6. This criteria must make it administratively feasible for the court to determine whether a particular individual is a class member. Curtis v. Voss, 73 F.R.D. 580, 582 (N.D. Ill. 1976); See also 7A Charles A. Wright, Arthur R. Miller, Federal Practice and Procedure, §1760, at 120-121 (1972).

IOMC first claims Plaintiffs have not adequately set forth identifiable subclasses. In particular, IOMC argues that the subclasses are not definite because they include persons that could not assert a contract claim. All of the descriptions include borrowers "who had their escrow deposits calculated in the same manner as was used in the case of plaintiffs." However, this description does not relate to whether IOMC actually breached its contracts with those borrowers. In response, Plaintiffs have changed the contested definition.

For each state, the subclass representing that state now consists of persons: (1) whose claims are within the statute of limitations for that state;*fn1 (2) that were obligated on or owned real property within that state, secured by a real estate mortgage providing for an escrow for taxes and insurance; (3) that had a mortgage escrow account with the defendant; (4) whose escrow balances were maintained at levels above those mandated by contract or by law; and (5) whose escrow balances having been disclosed as overages were maintained in their accounts rather than being returned or credited to them. In addition to persons owning real property within the state, the New York sub-class also includes persons that were obligated on or owned shares of stock in a cooperative apartment corporation and the proprietary lease appurtenant thereto in respect to a cooperative apartment located in the State of New York (a "cooperative apartment"). These subclass definitions now meet the standard of objective criteria that make it administratively feasible for me to determine who is a member.

Next, IOMC claims that the subclasses are not definite because it will not be possible to ascertain the class members. IOMC points to the fact that it does not maintain copies of its former customers' mortgages, and Plaintiffs have not tried to obtain the records from Norwest. This is not relevant to a showing of definiteness. "The parties should not have to delve into the merits of the case to determine membership in the class." LeClercq, 2001 LEXIS 2115, at *6. At this point, investigating whether or not certain prospective class members will fit the criteria goes too far in the direction of judging the merits. I do not yet need to address the issue of whether specific class members will be able to prove their membership, I am only concerned with having the proper criteria to evaluate them by when the time comes. This criteria is objective enough for me to use when deciding whether or not a potential class member qualifies.

It is clear that the named Plaintiffs are all members of their respective subclasses. Therefore, I find Plaintiffs have met the implied requirements for class certification.

Rule 23(a) Requirements

The four requirements of Rule 23(a) the Plaintiffs must prove to proceed as a class are, in short: numerosity, ...


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