Nakamura v. Countrywide Home Loans, Inc.

225 P.3d 680, 122 Haw. 238, 2010 Haw. App. LEXIS 35
Hawaii Intermediate Court of Appeals·Decided February 8, 2010·No. 27993·Published

Opinion

Opinion of the Court by

FOLEY, J.

This is an interlocutory appeal by Defendant-Appellant Countrywide Home Loans, Inc. (Countrywide) from the “Order Granting Plaintiffs Motion For (A) Class Certification and (B) to Approve Notice of Pendency of Class Action Filed on January 27, 2006” (Certification Order) filed on May 22, 2006 in the Circuit Court of the First Circuit (circuit court). 2

On appeal, 3 Countrywide contends the circuit court abused its discretion by

(1) certifying the class of mortgagors who were charged a fee by Countrywide for paying off their mortgages (Class) without conducting the rigorous analysis required under Hawai'i Rules of Civil Procedure (HRCP) Rule 23 (Rule 23) to determine whether Plaintiff-Appellee Cynthia Nakamura (Naka-mura), the Class representative seeking certification, carried her burden of proving compliance;

(2) holding that common issues predominate over individual issues and that a class action is the superior method for the adjudication of this controversy;

(3) holding that Nakamura met the typicality and adequacy requirements because she was subject to materially different statement fee practices than the majority of the absent Class members;

(4) holding that Nakamura and Class counsel met the adequacy requirement despite a conflict of interest; and

(5) directing Countrywide to identify Class members to Nakamura.

I. BACKGROUND

Countrywide is a mortgage loan servicing company. Countrywide performs such tasks as ’ maintaining escrow accounts, collecting and processing monthly loan payments, and performing administrative services incident to the handling of a mortgage loan payment.

On or about July 13, 1993, Nakamura and her husband obtained a mortgage loan, whieh was assigned to Countrywide on that date. The mortgage contained a release clause, *242 which provided as follows: “Upon payment of all sums secured by this Security Instrument, Lender shall release this Security Instrument without charge to Borrower, Borrower shall pay any recordation costs.” In August 2002, Nakamura sought to pay off the mortgage held by Countrywide and refinance the loan. Nakamura’s escrow officer requested a payoff statement from Countrywide that listed the total amount due from Nakamura to release her mortgage. On August 12, 2002, Countrywide sent a payoff statement to Nakamura’s escrow officer that included the principal and interest due on the mortgage; the county recording fee; a subtotal consisting of the principal, interest, and recording fee; a “Statement Fee—Due From Closing Agent” of $60.00 (Statement Fee); and the “Total Due,” which was comprised of the subtotal amount and the Statement Fee amount. Based on the HUD-1 Uniform Settlement Statement (“HUD-1”) prepared by her escrow officer for the transaction, Naka-mura paid the “Total Due” amount, which covered her mortgage, recording fee, and the Statement Fee.

On October 7, 2004, Nakamura and Janet Haole, both individually and on behalf of all others similarly situated, filed a complaint against Countrywide. Janet Haole was dismissed as a plaintiff by stipulation of the parties on October 3, 2005.

On November 17, 2005, Nakamura, individually and on behalf of all others similarly situated, filed a First Amended Complaint. In the class-action lawsuit, Nakamura stated that she “represents a class of mortgagors who have been damaged by [Countrywide’s] unlawful and deceptive trade practices.” Specifically, Nakamura alleged that Countrywide had no right to charge Statement Fees, in addition to principal and interest, before releasing its mortgages. She further alleged that Countrywide falsely implied to Nakamu-ra and the Class that (1) the Statement Fee was secured by the mortgage, (2) the consumer had to pay the Statement Fee to have the mortgage released, and (3) Countrywide was authorized to charge the Statement Fee.

On appeal, Nakamura contends that Countrywide knew the Statement Fee was a sham because Countrywide had a secret policy of waiving the Statement Fee upon request, and she argues that Countrywide’s charging of the Statement Fee amounts to an unfair or deceptive trade practice, in violation of Hawaii Revised Statutes (HRS) § 480-2 (1993).

On January 27, 2006, Nakamura filed a Motion for (A) Class Certification and (B) to Approve Notice of Pendency of Class Action (Certification Motion). On May 22, 2006, the circuit court entered the Certification Order granting Nakamura’s motion. In the Certification Order, the circuit court, inter alia, (1) granted Class certification, (2) appointed Na-kamura as Class representative, and (3) ordered Countrywide to provide Nakamura with a list of Class members’ names and addresses.

On June 6, 2006, Countrywide filed an application to file an interlocutory appeal of the Certification Order. The circuit court granted Countrywide’s application on June 20, 2006, and Countrywide timely filed its notice of appeal.

II. STANDARD OF REVIEW

“The trial court is vested with broad discretion in deciding whether to certify a class and discretionary authority is normally undisturbed on review.” Levi v. Univ. of Hawai'i 67 Haw. 90, 92, 679 P.2d 129, 131 (1984). An abuse of discretion occurs if the trial court has “clearly exceeded the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of a party litigant.” Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 114, 839 P.2d 10, 26 (1992).

In Life of the Land v. Land Use Commission of Hawai'i, 63 Haw. 166, 623 P.2d 431 (1981), the Hawaii Supreme Court stated that “[t'jhe party who seeks to utilize a class action must establish his right to do so.” Id. at 180, 623 P.2d at 443. The court further stated that the party seeking class certification assumes a burden of establishing the four prerequisites for class certification delineated in Rule 23(a) and further demonstrating the presence of a suitable situation for the maintenance of a class action under the criteria set forth in at least one of the subdivisions of Rule 23(b). Id. A failure to *243 satisfy the burden in any respect can result in a denial of the necessary certification. Id. at 181, 623 P.2d at 443 (footnotes omitted; emphasis added).

III. DISCUSSION

A. CLASS CERTIFICATION

“A trial court is vested with broad discretion in deciding whether to certify a class, and discretionary authority is normally undisturbed on review,” unless the record discloses a possible “misapprehension or misapplication of Rule 23’s criteria.” Id. at 180, 623 P.2d at 443 (internal quotation marks and citation omitted).

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Nakamura v. Countrywide Home Loans, Inc., 225 P.3d 680, 122 Haw. 238, 2010 Haw. App. LEXIS 35 (hawapp 2010).

225 P.3d 680 (Nakamura v. Countrywide Home Loans, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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