Alert July 28, 2009

Federal Court Denies Motion for Class Certification and Grants Summary Judgment for Lender in Prepayment Penalty Litigation

The U.S. District Court for the Northern District of Ohio denied class certification of two putative classes of Ohio borrowers alleging that a mortgage lender assessed prepayment penalties, or serviced loans with prepayment penalty clauses, which exceeded the statutory limit under Ohio law. The Court held, among other things, that the predominance of individual issues precluded a damages class action because multiple defenses – including federal preemption of state law, lack of standing, and the voluntary payment doctrine – would require individualized evidence to assess at trial, and because similar individualized inquiries would be needed to ascertain potential damages. The Court also denied certification for declaratory relief because plaintiffs’ request was, in fact, a predicate for damages claims, which could not be tried on a class-wide basis with common evidence. Finally, the Court also granted summary judgment for the lender because the putative class representatives lacked standing to sue. Goodwin Procter partners Tom Hefferon and Joe Yenouskas represented Countrywide. Click here for Gawry v. Countrywide Home Loans, Inc., 2009 WL 1954717 (N. D. Ohio July 6, 2009).