Alert June 17, 2008

Texas Trial Court Denies Class Certification of Wrongful Foreclosure Claim

A trial court in El Paso, Texas recently denied class certification of a wrongful foreclosure claim in which plaintiffs claimed a lender’s notice of intent to accelerate and foreclose violated Texas law. The notice stated that the borrower’s failure to cure “may” result in acceleration and foreclosure. Plaintiffs alleged Texas law required the use of the word “will” instead of “may,” and sought class certification on the ground that each class member received the same notice with the “may” language. The court denied certification because the lender’s liability turned on class member-specific proof concerning the damages of each borrower, if any, resulting from foreclosure, borrower knowledge of defendant’s intent to accelerate and foreclose, and the relevant terms of each borrower’s mortgage contract. The court also denied certification because it would not be the “superior” way to resolve the claims given that plaintiffs’ claim sought to impose “substantial liability” upon the lender “for an alleged technical violation of law under circumstances where the putative class members suffered no actual damage caused by” defendant’s use of the word “may” instead of “will.” Goodwin Procter partners Tom Hefferon and Brooks Brown represented Washington Mutual Bank, as successor to defendant HomeSide Lending, Inc. Click here for a copy of Punzalan v. HomeSide Lending, Inc., No. 2003-1308 (Tex. Cty. Ct. at Law – El Paso May 30, 2008) (Villa, J.).