DISPOSITION:  [*1]  Plaintiff's Motion for Class Certification [44-1] DENIED.

 

CASE SUMMARY:

 

 

PROCEDURAL POSTURE: With respect to plaintiff's action alleging that defendant bank, her mortgage lender, violated the Real Estate Settlement Procedures Act, 12 U.S.C.S. §  2601 et seq., by paying her mortgage broker fee or kickback in the form of a yield spread premium, plaintiff moved for class certification.

 

OVERVIEW: Plaintiff moved for class certification in her action alleging that defendant bank, plaintiff's mortgage lender, violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.S. §  2601 et seq. by paying her mortgage broker a referral fee or kickback in the form of a yield spread premium. Plaintiff's motion was denied. In support of its ruling, the court held that a plaintiff who wished to certify a class must have shown that the questions of law or fact common to the members of the class predominated over any questions affecting only individual members, and that a class action was superior to other available methods for the fair and efficient adjudication of the controversy. The court further held that that yield spreads were not per se violations of RESPA, and the inquiry of whether a yield spread premium violated RESPA was highly dependent upon the facts of the transaction. Accordingly, due to the case-specific, fact -intensive nature of the analysis the court concluded that individual issues of fact predominated over those common to the class.

 

OUTCOME: Plaintiff's motion for class certification was denied, as plaintiff failed to show that the common issues of fact predominated over any questions affecting only individual members.

 

LexisNexis(R) Headnotes

 

 

Civil Procedure > Class Actions > Prerequisites

[HN1] A plaintiff who wishes to certify a class must show that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Fed. R. Civ. P. 23(b)(3).

 

COUNSEL: For JUDITH LOUANN MEDLOCK, plaintiff: W. Ray Persons, Bobby Chan Caudell, Swift Currie McGhee & Hiers, Atlanta, GA.

 

For JUDITH LOUANN MEDLOCK, plaintiff: Charles Neal Pope, Teresa Pike Tomlinson, Pope McGlamry Kilpatrick & Morrison, Samuel W. Oates, Jr., Office of Samuel W. Oates, Jr., Columbus, GA.

 

For CHASE MANHATTAN MORTGAGE CORPORATION, defendant: Joseph L. Waldrep, Hatcher Stubbs Land Hollis & Rothschild, Columbus, GA.

 

For CHASE MANHATTAN MORTGAGE CORPORATION, defendant: Robert B. Remar, Rogers & Hardin, Atlanta, GA.

 

For CHASE MANHATTAN MORTGAGE CORPORATION, defendant: Michael J. Agoglia, phv, James F. McCabe, phv, Morrison & Foerster, San Francisco, CA.

 

For CHASE MANHATTAN MORTGAGE CORPORATION, defendant: Andrew N. Keen, phv, Patricia M. Kelly, phv, Chase Manhattan Legal Department, New York, NY.

 

JUDGES: RICHARD W. STORY, United States District Judge.

 

OPINIONBY: RICHARD W. STORY

 

OPINION:

ORDER

Plaintiff Judith Medlock alleges in her Complaint that Defendant Chase Manhattan Mortgage Corporation ("Chase"), her mortgage lender, violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §  2601 [*2]  et seq. by paying her mortgage broker a referral fee or kickback in the form of a yield spread premium. Before the Court is Plaintiff's Motion for Class Certification [44-1]. Plaintiff described the class she seeks to certify as follows:

 

All persons residing in the United States and its territories who, during the period of January 15, 1997, forward, obtained a mortgage loan from a mortgage broker where the loan was funded and owned by Defendant Chase Manhattan, where the loan was a federally related mortgage loan, where a loan origination fee or other compensation was paid to the mortgage broker, and where the HUD-1 or HUD-1A form or other mortgage loan documentation shows a yield spread premium, par rates plus premium, premium pricing fee or service release premium, however denominated, was paid the mortgage broker by the lender, Defendant Chase Manhattan.

 

(Pl.'s Mot. for Class Cert. at 1.) [HN1] A plaintiff who wishes to certify a class must show that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient [*3]  adjudication of the controversy." Fed. R. Civ. Pro. 23(b)(3). For the reasons expressed below, the Court concludes that Plaintiff has failed to make such a showing.

Yield spread premiums are not per se violations of RESPA.  Culpepper v. Inland Mortgage Corp., 144 F.3d 717, 718 (11th Cir. 1998) ("Culpepper II"). Instead, whether a yield spread premium violates RESPA "is highly dependent upon the facts of [the] financial transaction." Culpepper v. Inland Mortgage Corp., 132 F.3d 692 at 697 n.5 (11th Cir. 1998). As the Honorable William C. O'Kelley noted in a January 19, 1999 Order denying certification of a similar proposed RESPA class:

 

 

To determine whether the payments are illegal under RESPA, it must be determined whether any goods or services were actually provided and, if so, whether the payment was reasonably charged. Regardless of defendant's purported use of standardized forms and procedures, whether a RESPA violation occurred cannot be decided without analyzing the specific facts of each loan transaction.

 

 

 Dierker v. Cimarron Mortgage Co., 1999 U.S. Dist. LEXIS 20591, No. 2:98-CV-30-WCO (Jan. 19, 1999 N.D. Ga.) (citations omitted). The Department of Housing [*4]  and Urban Development ("HUD") recently agreed, concluding that courts should consider these same two factors in determining whether yield spread premiums violate RESPA. Real Estate Procedures Act (RESPA) Statement of Policy 1999-1 Regarding Lender Payments to Mortgage Brokers, 64 Fed. Reg. 10080, 10084 (1999).

Due to the case-specific, fact-intensive nature of the analysis, this Court--like the vast majority of courts before it--concludes that individual issues of fact predominate over those common to the class, rendering a class action suit an inefficient and unfair method for adjudicating this controversy. See, e.g.  Paul v. National City Mortgage Co., 1999 U.S. Dist. LEXIS 20512, No. 1:98-CV-216-WBH (N.D. Ga. March 11, 1999); Latimer v. NF Investments, Inc., 1999 U.S. Dist. LEXIS 20514, 1:98-CV-220-ODE (N.D. Ga. Jan. 7, 1999); Taylor v. Flagstar Bank, 181 F.R.D. 509 (M.D. Ala. 1998); Conomos v. Chase Manhattan Corp., 1998 U.S. Dist. LEXIS 3135, No. 97-CV-0909(PKL), 1998 WL 118154 (S.D. N.Y. March 17, 1998); Moniz v. Crossland Mortgage Corp., 175 F.R.D. 1 (D. Mass. 1997). But see Dujanovic v. Mortgage America, Inc., 185 F.R.D. 660, 1999 WL 170475 (N.D. Ala. 1999).  [*5]  Plaintiff's Motion for Class Certification [44-1] is therefore DENIED.

SO ORDERED, this 16th day of April, 1999.

RICHARD W. STORY

United States District Judge