The Ninth Circuit recently affirmed the dismissal of a class action which alleged that a fully-disclosed fee for “written expedited payoff service” was unfair and deceptive under the Washington Consumer Protection Act. Plaintiff argued that the fee was “unfair and deceptive” because it (1) was presented as an “amount due” to release the mortgage lien; (2) was not disclosed at the inception of the loan; and (3) was mislabeled as “expedited.” Plaintiffs also alleged that the mortgage’s pre-litigation demand requirement worked in tandem with occasional customer service fee-waiving accommodations to moot class actions. The Ninth Circuit held that the fee was not deceptive under the CPA “because the payoff demand statement twice unambiguously disclosed that payment of the payoff service fee was not required to release the mortgage lien.” The Court also found that the fee “was voluntary and extraneous to the mortgage,” so its nondisclosure in the mortgage contract at inception was not deceptive, and rejected plaintiff’s “mislabeling” argument because “the payoff statement was faxed and accompanied by automatic updates, and thus the label ‘expedited’ was, not misleading.” Finally, the Court found the notice requirement in the mortgage and the lender’s occasional fee waiving did not violate the CPA “because these business practices do not prevent plaintiffs who choose to bring suit from doing so, and it is not against public policy to resolve disputes before an action is brought.” Goodwin Procter partners Tom Hefferon and Brooks Brown represented Countrywide in both the District Court and Ninth Circuit. Click here for Beyer v. Countrywide Home Loans Servicing LP, No. 08-35725 (9th Cir. Oct. 8, 2009).
Alert October 20, 2009