Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-01265/USCOURTS-azd-2_12-cv-01265-1/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 28:2201 Declaratory Judgment

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Margaret Galas, a single woman,

individually and on behalf of those

similarly situated, 

Plaintiff,

vs.

The Lending Company, Inc., et al.,

Defendants. 

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No. CV-12-01265-PHX-SMM 

MEMORANDUM OF DECISION

AND ORDER

Pending before the Court is Plaintiff Margaret Galas’s (“Plaintiff”) Motion for Class

Certification and Appointment of Class Counsel. (Doc. 102.) Defendants The Lending

Company, Inc. (“TLC”), Mark A. Nickel, Jennifer Nickel, Dave J. Johnson, Lauri SerotaJohnson, RJ Reynolds and Family Housing Resources (“FHR”) (collectively “Defendants”)

filed their Response to Plaintiff’s Motion for Class Certification and Appointment of Class

Counsel. (Doc. 115.) Thereafter, Plaintiff replied in support of her Motion. (Doc. 119.)

After careful consideration of the arguments set forth by the parties, and after hearing oral

argument in this matter (Doc. 123), the Court will deny class certification.

BACKGROUND

Facts

TLC is in the business of providing mortgage lending services to consumers. To

properly understand and place in context TLC’s mortgage loan program at issue, the

following background information is set forth. In a typical mortgage loan, the mortgagee

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1

A yield spread premium (“YSP”) is a payment made by a lender to a mortgage broker

in exchange for that broker’s delivering a mortgage ready for closing that is at an interest rate

above the par value loan being offered by the lender. See Bjustrom, 322 F.3d at 1204 (citing

Schuetz, 292 F.3d at 1007. “The YSP is the difference between the par rate and the actual

rate of the loan; this difference is paid to the broker as a form of bonus. A YSP is typically

a certain percentage of the loan amount; therefore, the higher the loan is above par value, the

higher the YSP paid the mortgage broker. By choosing among various lenders and interest

rates, a broker may, in effect, control his fees and, in that fashion, compete with other

brokers. For example, a loan of 8% and no points where the par rate is 7.50% will command

a greater yield spread premium for the broker than a loan with a par rate of 7.75% and no

points.” Id. (further citation and quotation omitted).

2

“A service release premium (“SRP”) is a payment made by a lender to a mortgage

broker that is based on the amount of the loan referred to the lender to service. A larger loan

has more valuable servicing rights because the total interest paid by the borrower is greater.”

Bjustrom, 322 F.3d at 1204 (further citation omitted).

3

Effective July 21, 2011, administration and enforcement of RESPA changed from the

Department of Housing and Urban Development (“HUD”) to the Consumer Financial

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pays the lender the mortgage amount for the real estate, plus interest and closing or

settlement costs. Generally, a mortgage loan involves not only the lender bank, but also a

mortgage broker, hired by the mortgagee to assemble the entire mortgage loan package and

have the mortgage transaction ready to close by a date certain. The mortgage loan package

consists of a number of settlement services. See Schuetz v. Banc One Mortgage Corp., 292

F.3d 1004, 1007 (9th Cir. 2002) (summarizing settlement services provided by mortgage

brokers such as processing loan application, fees for recording, title examinations, credit

reports, surveys, appraisals, home inspection, etc.). At closing, the mortgagee directly pays

its mortgage broker a traditional 1% mortgage loan origination fee for its services. See

Bjustrom v. Trust One Mortgage Corp., 322 F.3d 1201, 1203-04 (9th Cir. 2003). As part of

other closing costs, the lender, indirectly through the mortgagee, agrees to pay the mortgage

broker for settlement services generally denominated as yield spread premium payments,1

and for larger loans, service release premium payments.2 Id. 

Congress enacted the Real Estate Settlement Procedures Act (“RESPA”) in 1974 to

protect home buyers from inflated prices in the home purchasing process.3

 Schuetz, 292 F.3d

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Protection Bureau (“CFPB”). 

4

HUD is the government agency charged with FHA mortgage loan oversight.

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at 1008. Congress sought to increase the supply of information available to mortgage

consumers about the cost of home loans in advance of settlement, and to eliminate abusive

practices such as kickbacks, referral fees, and unearned fees. Id. RESPA requires lenders

to provide borrowers with a statement identifying all settlement charges on a standardized

form, commonly known as a HUD–1,4

 12 U.S.C. § 2603. Id. Thus, the HUD-1 provides an

accounting of the settlement charges already stated, the amount due from the consumer to the

mortgage broker for loan origination fee, for YSP charges, and for any SRP charge. In

addition, mortgage consumers are provided with an information booklet prepared by HUD

that counsels borrowers on how mortgage transactions work and how to recognize inflated

charges. Id. at 1008-09.

In this case, TLC operated as both the lender and its own mortgage broker in relation

to the mortgage consumer. (Doc. 115 at 3.) In order for a mortgage loan to qualify for

Federal Housing Administration (“FHA”) insurance, the mortgage consumer in addition to

responsibility for settlement charges, must make a down payment to the lender of at least

3.5%. See 12 U.S.C. § 1709(b)(9). In this case, TLC sought to enable borrowers to satisfy

the down payment requirement without providing the full 3.5% by offering consumers a “1%

down” program. (Doc. 45 at 3.) The program required borrowers to provide a 1% down

payment, after which they would receive down payment assistance, a “gift” of the additional

2.5% from a non-profit charitable organization. (Id.) TLC advised borrowers that the

borrowers were not obligated to make any future payments to the non-profit charitable

organization; they were only responsible for their mortgage payments. 

In May 2010, Plaintiff applied for and in June 2010 obtained an FHA insured

mortgage loan from TLC in the amount of $132,554 through its 1% down program. (Doc.

35 at 22; Doc. 35-9 at 2.) Plaintiff provided 1% of the down payment and received a “gift”

of the additional 2.5%, or a total of $3,375, from the charitable organization FHR. (Doc. 45

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at 3.) Plaintiff alleges that TLC charged her a higher interest rate than she would have

obtained had she not participated in the 1% down program. That interest rate, she claims,

was elevated so that her mortgage could be sold as a “premium” mortgage on the secondary

market; TLC then used the additional proceeds from the sale of her loan to repay the charity

for the 2.5% gift and TLC retained the rest of the proceeds as an “administrative fee.” (Doc.

35 at 15-19.) Additionally, FMR gave TLC a tax donation receipt for the monies TLC paid

to FMR after TLC sold Plaintiff’s loan on the secondary loan market. Plaintiff alleges that

while she was promised a “gift,” she and other 1% down borrowers were actually paying for

the “gift” through an inflated mortgage interest rate, and that Defendants misrepresented to

her the terms of her mortgage loan. (Doc. 35 at 22-23.)

Procedural History

Plaintiff filed a class action complaint asking this Court to certify the following

nationwide class action, defined as: “all persons in the United States who applied for and

received an [FHA] loan through TLC’s “1% down” FHA loan program from the start of the

program to the present.” (Doc 35 at 25.) Plaintiff seeks nationwide class action certification

based upon the following causes of action: Claims one and two assert violations of portions

of RESPA. 12 U.S.C. § 2607(a) & (b). Claims three and four allege conspiracy and enterprise

liability violations of the Racketeer Influence and Corrupt Organization Act (“RICO”). 18

U.S.C. § 1962(c) & (d). Claim five alleges a violation of the Arizona Consumer Fraud Act

(“ACFA”), A.R.S. § 44-1522. Claim six alleges common law claims of fraudulent

misrepresentation and omission. (Id. at 28-43.)

Previously, Judge David Campbell dismissed Claim 7, Breach of Contract. (Doc. 91.)

Plaintiff no longer seeks class certification for Claim 8, Declaratory and Injunctive Relief.

(Doc. 102 at 4.) 

Prior to oral argument, Plaintiff submitted an investigative report regarding TLC’s 1%

down program, which was conducted by HUD on behalf of their FHA program. The August

20, 2013 report found that TLC’s gift programs did not comply with HUD requirements

because they contained unallowable gifts. (Doc. 121.) As a result of home mortgage loans

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under the 1% Down Program, HUD reported that the FHA insurance program sustained

losses and seeks indemnity from TLC for those losses. (Id.) 

STANDARD OF REVIEW

Class Certification

Class actions are governed by Fed. R. Civ. P. 23. Rule 23 “give[s] the district court

broad discretion over certification of class actions[.]” Stearns v. Ticketmaster Corp., 655

F.3d 1013, 1019 (9th Cir. 2011). Class certification is “ ‘an exception to the usual rule that

litigation is conducted by and on behalf of the individual named parties only.’ ” Comcast

Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013) (quoting Califano v. Yamasaki, 442 U.S.

682, 700–701 (1979)). “In order to justify a departure from that rule, a class representative

must be part of the class and possess the same interest and suffer the same injury as the class

members.” See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550 (2011).

Rule 23 does not set forth a mere pleading standard. Id. at 2551. According to Rule

23(a), the party seeking class certification must affirmatively set forth facts sufficient to

satisfy the following four prerequisites: (1) numerosity; (2) commonality; (3) typicality; and

(4) adequacy of representation. Fed. R. Civ. P. 23(a); see also Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 613 (1997). Numerosity requires a class “so numerous that joinder

of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). Commonality requires “questions

of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). The purpose of the rigorous

commonality standard is to require that class members’ claims depend upon a common

contention whose truth or falsity will resolve an issue that is central to the validity of each

one of the claims in one stroke. See Dukes, 131 S. Ct. at 2551 (stating further that what

matters is not the raising of common questions but rather the capacity of a classwide

proceeding to generate common answers apt to drive the resolution of the litigation); see also

 id. at 2552 (stating that “without some glue holding [the rationale for the alleged violation]

together, it will be impossible to say that examination of all the class members’ claims for

relief will produce a common answer to the crucial question” of whether there was a

violation); Cal. Rural Legal Assistance, Inc. v. Legal Servs. Corp., 917 F.2d 1171, 1175 (9th

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Cir. 1990) (stating that commonality ensures that claims of individual class members share

a common core of facts “sufficiently parallel to insure a vigorous and full presentation of all

claims for relief”). Typicality ensures that the “claims or defenses of the representative

parties are typical of the claims or defenses of the class” as a whole. Fed. R. Civ. P. 23(a)(3).

Finally, adequacy of representation is necessary to “fairly and adequately protect the

interests of the class.” Fed. R. Civ. P. 23(a)(4).

In addition to meeting the conditions imposed by Rule 23(a), the party seeking class

certification must satisfy through evidentiary proof at least one of the provisions of Rule

23(b). See Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013). Here, Plaintiff moves

for class certification pursuant to Rule 23(b)(3), which requires that the Court find (1) that

“questions of law or fact common to class members predominate over any questions affecting

only individual members,” and (2) that “a class action is superior to other available methods

for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). 

The predominance inquiry “tests whether proposed classes are sufficiently cohesive

to warrant adjudication by representation.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022

(9th Cir. 1998) (citation and internal quotation omitted). “This analysis presumes that the

existence of common issues of fact or law have been established pursuant to Rule 23(a)(2);

thus, the presence of commonality alone is not sufficient to fulfill Rule 23(b)(3).” Id.; see

also Comcast, 133 S. Ct. at 1432 (reiterating that “[i]f anything, Rule 23(b)(3)’s

predominance criterion is even more demanding that Rule 23(a)”). “In contrast to Rule

23(a)(2), Rule 23(b)(3) focuses on the relationship between the common and individual

issues.” Hanlon, “When common questions present a significant aspect of the case and they

can be resolved for all members of the class in a single adjudication, there is clear

justification for handling the dispute on a representative rather than on an individual basis.”

Id. However, under Comcast, it is the court’s duty to take a close look at whether common

questions predominate over individual ones. 133 S. Ct. at 1432; see also In re Hydrogen

Peroxide Antitrust Litig., 552 F.3d 305, 311 (3d Cir. 2008) (“If proof of the essential

elements of the cause of action requires individual treatment, then class certification is

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unsuitable”). The superiority inquiry “requires determination of whether the objectives of

the particular class action procedure will be achieved in the particular case.” Id. at 1023.

“This determination necessarily involves a comparative evaluation of alternative mechanisms

of dispute resolution.” Id.

Although a district court has broad discretion to certify a class, the court must

undertake a “rigorous analysis” to ensure that the prerequisites of Rule 23 have been satisfied

and that class certification is appropriate. See Dukes, 131 S. Ct. at 2551; Hanon v.

Dataproducts Corp., 976 F.2d 497, 509 (9th Cir. 1992). The rigorous analysis that must be

undertaken regarding class certification frequently involves overlap with the merits of the

plaintiff’s underlying claim. See Gen. Tel. Co. of SW. v. Falcon, 457 U.S. 147, 160 (1982)

(stating that “the class determination generally involves considerations that are enmeshed in

the factual and legal issues comprising the plaintiff’s cause of action.”).

Plaintiff asks this Court to certify the following nationwide class action, defined as:

all persons in the United States who applied for and received an FHA loan through TLC’s

“1% down” FHA loan program from the start of the program to the present. (See Doc. 35

at 25.) Plaintiff alleges that Defendants orchestrated a fraudulent loan scheme targeting lowincome, first-time home buyers. Defendants deny these allegations and contend that Plaintiff

cannot meet the requirements for class certification. 

DISCUSSION

The Court evaluates the prerequisites for class action certification pursuant to Federal

Rule of Civil Procedure 23. As part and parcel of that Rule 23 discussion, the Court will first

consider Rule 23(a), the prerequisites for maintaining a class action. Plaintiff must

affirmatively demonstrate her compliance with Rule 23. If Rule 23(a)’s prerequisites are

satisfied, then the Court will analyze Plaintiff’s showing under Rule 23(b), as to whether the

alleged violations are appropriate for class treatment. 

Plaintiff alleges that Defendants orchestrated a fraudulent loan scheme that targeted

low-income, first-time home buyers. Defendants deny these allegations, but only challenge

whether Plaintiff met the requirements for Rule 23(a)(4) and Rule 23(b)(3). Regarding

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Plaintiff’s various causes of action, the parties focus their arguments and analysis on the Rule

23(b)(3) predominance aspect under the assumption that Plaintiff’s certification motion

hinges on whether individual issues predominate this complaint.

The Court will summarily review Rule 23(a)(1) thru (a)(3) as Defendants have not

challenged these prerequisites, and then analyze Defendants’ contentions regarding Rule

23(a)(4) and Rule 23(b)(3). 

I. RULE 23(a)

A. Numerosity

Plaintiff alleges that TLC’s 1% Down Payment loan program resulted in

approximately 800 borrowers receiving mortgages from TLC, which is a sufficiently large

number to satisfy Rule 23(a)(1)’s numerosity requirement. (Doc. 102 at 7.) Defendants do

not contest the numerosity prerequisite. 

The Court’s focus regarding numerosity is whether joinder of all potential plaintiffs

would be impracticable. Rule 23(a)(1). Numerosity requires examination of the facts of each

case and does not impose any absolute limitation. Gen. Tel. Co. of the NW., Inc. v. EEOC,

446 U.S. 318, 330 (1980). While no absolute limits exist, the Supreme Court has suggested

that a class of 15 members is too small to meet the numerosity requirement. Harik v. Cal.

Teachers Ass’n, 326 F.3d 1042, 1051 (9th Cir. 2003) (citing Gen. Tel., 446 U.S. at 330).

Similarly, 40 or more members has been found to satisfy the numerosity requirement. See

Horton v. USAA Cas. Ins. Co., 266 F.R.D. 360, 365 (D. Ariz. 2009).

While the number of Plaintiffs is not the deciding factor for numerosity, courts have

generally held that large numbers of potential claimants is indicative of joinder being

impracticable. See Immigrant Assistance Project of L.A. Cnty. Fed’n of Labor v. I.N.S., 306

F.3d 842, 869 (9th Cir. 2002) (recognizing that courts have certified classes solely on the

basis of the number of class members, even where that number is less than 100). Here, the

Court finds that the number of potential class members would make joinder of plaintiffs

impracticable. Therefore, the Court finds that Plaintiff has satisfied the numerosity

prerequisite in this case. 

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B. Commonality

Plaintiff moves for class certification on the following causes of action: (1) whether

Defendants’ loan program is actionable under RESPA § 8(a) and (b); (2) conspiracy and

enterprise liability allegations under RICO; (3) consumer fraud under the ACFA; and (4)

common law fraudulent misrepresentation and/or omission. (Doc. 102 at 8.) Defendants do

not contest the commonality prerequisite. (Doc. 115 at 7.)

Plaintiffs must show that their claims depend upon a common contention. Dukes, 131

S. Ct. at 2551 (finding that what matters is not the raising of common questions but rather

the capacity of a classwide proceeding to generate common answers apt to drive the

resolution of the litigation); see also id. at 2552 (stating that “without some glue holding [the

rationale for the alleged violation] together, it will be impossible to say that examination of

all the class members’ claims for relief will produce a common answer to the crucial

question” of whether there was a violation). The requirement of a common contention,

moreover, “must be of such a nature that it is capable of classwide resolution — which means

that determination of its truth or falsity will resolve an issue that is central to the validity of

each of the claims in one stroke.” Id.

In support of commonality, Plaintiff alleges that a single loan scheme affected each

member of the class. According to Plaintiff, Defendants’ systematic policies are applied to

all borrowers and there are no specific circumstances unique to any single borrower. Plaintiff

alleges that Defendants’ conduct is actionable under RESPA § 8(a) and (b), RICO, the

ACFA, and as common law misrepresentation and omission because TLC impermissibly

charged class members a high interest rate or “premium price,” and used the excess monies

to directly or indirectly reimburse FHR and because TLC, in exchange for referring

borrowers, received kick-backs from FHR in the form of gift letters and tax donation

receipts.

As Defendants do not contest commonality, the Court finds that Plaintiff has stated

common questions of fact and law. 

///

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C. Typicality

Plaintiff contends that the typicality requirement is satisfied in this case because

Plaintiff and other prospective class members’ “claims are all based on the same highly

standardized loan program.” (Doc. 102 at 9.) While Plaintiff concedes that the class

members’ claims about the amount of “Gift Marketing Fee” will differ, Plaintiff contends

that the alleged misrepresentations and omissions that appear in her loan documents also

appear in the loan documents issued to other prospective class members; therefore, the

typicality requirement is satisfied in this case. (Id.) Again, Defendants do not dispute the

typicality prerequisite. 

“The Ninth Circuit has noted that the commonality and typicality requirements of

Rule 23(a) tend to merge . . . .” Horton, 266 F.R.D. at 365 (quoting Hunt v. Check Recovery

Sys., Inc., 241 F.R.D. 505, 510-11 (N.D. Cal. 2007)). Because “[t]he test of typicality ‘is

whether other members have the same or similar injury, whether the action is based on

conduct which is not unique to the named plaintiffs, and whether other class members have

been injured by the same course of conduct.’” Hanon, 976 F.2d at 508 (quoting Schwartz v.

Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)). Under Rule 23(a)(3)’s permissive standards,

a plaintiff’s claims need not be substantially identical, but only “reasonably co-extensive with

those of absent class members.” Hanlon 150 F.3d at 1020.

In this case, Plaintiff has satisfied the typicality requirement of Rule 23(a) because the

alleged injuries to the named Plaintiff is similar in nature to the alleged injuries to the class

as a whole, and arise from the same course of conduct on the part of Defendants. When the

injury allegedly suffered by the named Plaintiff and the rest of the class arise out of the same

policy or practice by Defendants, the claims are sufficiently “typical” of those of the rest of

the class. See Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1184 (9th Cir. 2007) overruled on

other grounds, 131 S. Ct. 2541 (2011). The principle behind typicality is that “a plaintiff with

typical claims will pursue his or her own self-interest in the litigation, and in so doing, will

advance the interests of the class members.” 1 H. Newberg, Newberg on Class Actions §

3:13, at p. 325 (2d ed. 1985).

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As Defendants do not contest typicality, the Court finds that Plaintiff has stated claims

that similar in nature to the alleged injuries to the class as a whole, and arise from the same

course of conduct on the part of Defendants; therefore, the Rule 23(a)(3) requirement is

satisfied. 

 D. Adequacy

Plaintiff claims that the adequacy requirement is satisfied in this case because (1)

Plaintiff has no conflict of interest with the proposed class; and (2) the proposed class will

be adequately represented by a qualified and competent counsel. (Doc. 102 at 10.)

Defendants, however, argue that Plaintiff is not an adequate representative of the class

because she has “extremely limited knowledge regarding her loan transaction” and had

minimal participation in the loan transaction. (Doc. 112 at 27.) Instead, her ex-husband took

the lead and negotiated the loan with Defendants. (Id.) Defendants contend that Plaintiff was

absent during many of the home loan discussions and even when she was present, Plaintiff

failed to pay attention to the discussions. (Id. at 28.) In her reply, Plaintiff argued that she has

a “reasonable recollection” of events and therefore should not be disqualified as a class

representative. (Doc. 119 at 10.) 

Additionally, Defendants claim that the adequacy requirement is not satisfied in this

case because Plaintiff’s counsel is the driving force behind this lawsuit, and not Plaintiff.

(Doc. 112 at 28.) Defendants allege that Plaintiff’s counsel approached Plaintiff regarding

the possibility of bringing this lawsuit and this approach to litigation “weighs towards a

finding of inadequate representative.” (Id. at 29.) In her reply, Plaintiff states that she

contacted counsel about initiating litigation. (Doc. 119 at 11.) 

Under Rule 23(a)(4), a plaintiff must demonstrate that she “will fairly and adequately

protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). This adequacy requirement

“satisfies due process concerns” in that “absent class members must be afforded adequate

representation before entry of a judgment which binds them.” Parra v. Bashas’, Inc., 291

F.R.D. 360, 387 (D. Ariz. 2013) (quoting Hanlon, 150 F.3d at 1020). This requirement also

raises concerns about the competency of class counsel and conflicts of interest. Id.

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“Adequate representation depends upon, among other factors, an absence of antagonism

between representatives and absentees, and a sharing of interest between representatives and

absentees.” Parra, 291 F.R.D. at 387; see also Ellis v. Costco Wholesale Corp., 657 F.3d

970, 985 (9th Cir. 2011). Consequently, “[t]o determine whether named plaintiffs will

adequately represent a class, courts must resolve two questions: ‘(1) do the named plaintiffs

and their counsel have any conflicts of interest with other class members and (2) will the

named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?’”

Id. (quoting Ellis, 657 F.3d at 985). 

In her deposition, Plaintiff states that her ex-husband was primarily responsible for

gathering all the details for the purchase of the Apache Junction home. (Doc. 112-1 at 18.)

Plaintiff’s admits that her ex-husband did all the ground work for the loan, including

researching the various home loan options available in the market for first time home buyers.

(Doc. 112-1 at 25.) In fact, Plaintiff acknowledges that it was her ex-husband who identified

and recommended TLC and their 1% Down Payment loan program to Plaintiff. (Id.) 

Subsequently, the Court finds that it was Plaintiff’s ex-husband who took the lead on

the loan transaction and negotiated with TLC. (Id.) Plaintiff’s ex-husband was the principal

contact for TLC on the home loan because Plaintiff admits that she was not a party to all the

discussions between TLC personnel and her ex-husband. (Doc. 112-1 at 26-27.) The fact that

neither TLC nor Plaintiff’s ex-husband involved Plaintiff in some of the discussions

regarding the mortgage loan indicate that her opinion was not requisite. Further, during her

deposition, Plaintiff was unable to recall basic details regarding the loan, such as the interest

rate on the loan amount. (Doc. 112-1 at 27.) The Court finds that Plaintiff was also unaware

whether there were any negotiations with TLC regarding the final interest rate. (Id.) Plaintiff

was not hands-on with the loan dealing and her involvement in the transaction was incidental.

Furthermore, Plaintiff’s deposition indicates that Plaintiff’s counsel had to solicit most

of the facts of this case from Plaintiff’s ex-husband instead of Plaintiff. (See Doc. 112-1 at

22.) When counsel called Plaintiff to seek details about her mortgage loan she handed over

the phone to her ex-husband who gave details of the loan and his interactions with TLC.

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(Id.) Thus, Plaintiff was not fully aware of all the details regarding the loan and preferred

that her husband discuss the matter with counsel. 

Based on the foregoing, the Court finds that Plaintiff’s lack of knowledge of facts

creates the likelihood of a conflict of interest with absent class members, creating problems

with her assuming the role of class representative. The Court finds persuasive Siemer v.

Associates First Capital Corp., No. CV 97-281, 2001 WL 35948712, at *17 (D. Ariz. March

30, 2001) (Roll, J., adopting the Magistrate Judge’s Report and Recommendation), a similar

case where the wife appeared not to have had direct involvement with the events underlying

the action, but relied on her husband’s explanation of the events. The court found that the

wife’s lack of direct involvement made her an inadequate class representative because “[a]

class action judgment is subject to attack by absent members of the class on the ground that

their interests were not adequately represented.” Id. “To adequately represent, one would

assume the class representative has direct, active involvement in the underlying events that

are the basis of the action.” Id.; see also, Burkhalter Travel Agency v. MacFarms Intern.,

Inc., 141 F.R.D. 144, 153-54 (N.D. Cal. 1991). In this case, the Court similarly finds that

although Plaintiff signed the loan documents, she was not directly and actively involved in

the loan transaction. Instead, she relied on her ex-husbands expertise and judgment.

Therefore, Plaintiff will not be able to adequately represent the absent members of the class.

No matter how competent counsel is, only the class representative knows the facts and

circumstances surrounding their case. See id. Moreover, unlike in a securities fraud case

which is too complex for most investors and where counsel’s understanding and knowledge

is indispensable, this case involves Plaintiff’s personal and rather direct interaction with her

lender/mortgage broker, TLC. See id. Therefore, Plaintiff must demonstrate fundamental

involvement with the activities at issue in this case. A class counsel may not act “on behalf

of an essentially unknowledgeable client” because it “would risk a denial of due process to

the absent class members.” Burkhalter Travel Agency, 141 F.R.D. at 154. Therefore, even

assuming counsel’s absolute competence, the Court finds that Plaintiff lacks sufficient

knowledge and connection with the underlying facts of the case to act as a class

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representative. Plaintiff has not satisfied the Rule 23(a)(4) prerequisite.

II. Rule 23(b)(3) 

Predominance

A. RESPA § 8(a) Claim

Plaintiff alleges that TLC is in violation of RESPA § 8(a) because pursuant to its 1%

Down Payment loan program TLC referred borrowers to FHR in exchange for “[some]thing

of value”, which consisted of gift letters. (Doc. 102 at 11 (citing 12 U.S.C. § 2607(a)).)

Plaintiff argues that the gift letters were kickbacks in that but for these gift letters from FHR,

TLC would not be able to close the loan and make profit on it. (Id.) Further, by designating

TLC’s payment to FHR as a charitable donation, FHR enabled TLC to receive tax benefits.

(Id.) Therefore, the gift letters and tax donation receipts constitute a “thing of value” under

RESPA. (Id.) Plaintiff claims that questions of law related to Defendants’ liability under

RESPA § 8(a) are common to every class member and the resolution of these legal questions

will decide every class member’s claim. (Id. at 11.) Thus, predominance is satisfied. (Id.)

As to FHR, Plaintiff argues that it did not provide any settlement services, but even assuming

that it did, those settlement services were illegal. (Doc. 102 at 12.)

Defendants contend that the predominance requirement is not satisfied in this case

because individual issues will predominate and therefore class treatment is not appropriate.

(Doc. 115 at 7.) RESPA § 8(c) permits payment of fees for facilities actually furnished or

services actually performed in the making of a loan. See 12 U.S.C. § 2607(c); Schuetz, 292

F.3d at 1005-06. Defendants contend that the “premium pricing” they charged Plaintiff for

her mortgage loan is analogous to YSPs (Doc. 112 at 7), and the Ninth Circuit holds that a

determination of whether allegedly YSPs violate RESPA § 8(a) turns on whether the total

compensation received is reasonably related to the actual services provided, which cannot

be determined on a class-wide basis. Schuetz, 292 F.3d at 1014. Defendants also contend that

TLC provided numerous settlement services to the borrowers as it acted as both the mortgage

lender and its own mortgage broker. TLC worked with FHR in relation to the 1% Down

Payment loan program, including working with its loan officers, sending relevant information

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to FHR for processing the down payment gifts, marketing the loan program and funding the

borrower’s loan. (Doc. 112 at 13.) 

Similarly, Defendants contend that FHR performed significant work in processing and

marketing the down payment gifts, including reviewing each borrower’s documents to

confirm each borrower’s eligibility, keeping records of each down payment gift, drafting and

sending the gift letters, working with TLC to market the 1% Down Payment loan program

in order to educate home buyers about this loan option, consistently communicating with

TLC regarding these issues and providing down payment assistance. (Id. at 15.) Therefore,

the premium pricing was used to compensate TLC and FHR for settlement services actually

provided. (Doc. 112 at 12.) Defendants contend that individualized inquiry into the terms of

each of the loan transactions is necessary in order to determine whether the compensation

provided to TLC and FHR was reasonable in light of the services provided. In support,

Defendants cite to several cases from the Ninth Circuit and other jurisdictions which affirm

that premium pricing or YSP cases are not appropriate for class certification based on the

need to determine individually whether compensable services were provided by the mortgage

broker and whether the total compensation paid is reasonable in light of the circumstances

of each individual loan. 

Finally, Defendants argue that under the 1% Down Payment loan program TLC and

FHR provided a range of services to the borrowers, such as processing the loans, educating

the borrowers about the program, etc. To account for the costs associated with these services,

TLC incorporated a marketing fee into the final interest rate of the loan. Defendants contend

that the amount of this marketing fee differed for every borrower based on the services

provided to such borrower and several other factors, such as, the borrower’s credit, the

borrower’s income, the borrower’s debt-to-income ratio, the borrower’s assets, negotiations

with the borrower, the loan officer’s compensation, and whether closing costs were paid up

front. 

The Court agrees with Defendants that the mortgage loan transactions at issue will

require an individualized analysis and individual issues will predominate the litigation.

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5

The two-part test was set forth in RESPA Statement of Policy 1999-1 Regarding

Lender Payments to Mortgage Brokers, 64 Fed. Reg. 10080 (March 1, 1999), and adopted

by the Ninth Circuit in Schuetz, 292 F.3d at 1014.

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Therefore, class treatment is not appropriate. RESPA § 8(a) prohibits fees for referral. It

provides:

No person shall give and no person shall accept any fee, kickback, or thing of value

pursuant to any agreement or understanding, oral or otherwise, that business incident

to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person. 

12 U.S.C. § 2607(a). RESPA § 8(c) clarifies, however, that payments for actual services

provided are not prohibited. It provides that:

“Nothing in this section shall be construed as prohibiting . . . the payment to any person of a bona fide salary or compensation or other payment for goods or facilities

actually furnished or for services actually performed . . . .” 

Id. § 2607(c)(2). Considering RESPA § 8 as a whole, it can “reasonably be construed as only

prohibiting payments that are for nothing else than referral of business.” Schuetz, 292 F.3d

at 1013. “Yield spread premiums are not illegal per se . . . .” Schuetz, 292 F.3d at 1014. In

determining the propriety of a YSP payment under RESPA § 8(a), the Court analyzes the

following two-prong test: (1) “whether services were actually performed for the total

compensation paid,” and (2) “whether that compensation is reasonably related to the services

provided.” Id.5

 The Schuetz court found that “[t]his necessarily means that individual issues

predominate, and that a class action is not superior.” Id. The Schuetz court further found that

analyzing the two-prong test required individualized inquiry into the services provided and

the total compensation paid for those services; therefore it concluded that common questions

of fact were lacking, and that individual issues predominated over common ones. Id. There

have been a number of cases on the subject of YSPs and all have reached the same result as

in Schuetz. See Bjustrom, 322 F.3d at 1207. “Other circuits have rung in, consistent with [the

Ninth Circuit’s] opinion in Schuetz.” Id.; see Glover v. Std. Fed. Bank, 283 F.3d 953 (8th Cir

2002); Heimmermann v. First Union Mortg. Corp., 305 F.3d 1257 (11th Cir. 2002); cf.

Krzalic v. Republic Title Co., 314 F.3d 875 (7th Cir. 2002); Haug v. Bank of Am., N.A., 317

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F.3d 832 (8th Cir. 2003); O’Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732 (5th

Cir. 2003).

The Court finds that the referring party, TLC, entered into a relationship with FHR,

in which services were exchanged above and beyond referrals. Therefore, the parallels

between this case and Schuetz persuade the Court to utilize HUD test adopted in Schuetz.

Schuetz, 292 F.3d at 2014. However, the Court notes one difference between this case and

Schuetz. The “thing of value” involved in this case is gift letters and tax donation receipts

rather than mortgage broker payments evaluated in Schuetz. The Court concludes that this

difference is immaterial. In this case, TLC allegedly charged borrowers a higher interest rate,

but this increased cost was to compensate FHR for services provided to the borrower. TLC’s

alleged “premium pricing” fees are analogous to YSPs. YSPs are not illegal per se, therefore

whether the “premium pricing” amounts to a prohibited referral turns on whether or not FHR

provided any services to TLC and if yes, whether the YSPs paid by TLC to FHR reasonably

relate to the services provided. See Schuetz, 292 F.3d at 1014. These issues are too factintensive to be resolved on a class-wide basis. See Bjustrom, 322 F.3d at 1207. The Court

also finds persuasive Isara v. Cmty. Lending Inc., No. CV 99-00310, 2000 WL 33680237,

at * 5 (D. Hi. Jan. 20, 2000), in which the court denied certification of RESPA Section 8(a)

kickback claim, citing cases and concluding that “[t]he vast majority of district courts have

held that the two-part test articulated in the Policy Statement requires a fact-based inquiry

into the individual circumstances of each loan transaction.”

As to Plaintiff’s argument regarding illegality, whatever the validity of such claim,

the problem at the class certification stage is that the existence or the amount of the services

and the kickback generally requires an individual analysis of each loan transaction. The

Court will need to analyze whether there were any services provided by Defendants. If yes,

then the Court will need to analyze each borrower’s case to compare the services provided

with the payment made. Therefore, the Court finds that individual issues predominate in this

case and the predominance requirement is not satisfied.

///

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 B. RESPA § 8(b) Claim

Plaintiff claims that common questions predominate under RESPA § 8(b) because the

Court can decide liability by determining that (1) TLC paid FHR a portion of the alleged

“premium price” charged to the borrowers in the 1% Down Payment loan program; and (2)

FHR performed no lawful services to the borrowers. (Doc. 102 at 11-12.) Defendants argue

that the predominance requirement is not satisfied for this claim because individual questions

also dominate this issue. (Doc. 112 at 13.) 

Defendants contend that the two-part Schuetz test should be applied to the allegations

of “premium pricing” under RESPA § 8(b) and since the two-part test requires a fact-based

inquiry into the individual circumstances of each loan transaction, class action treatment is

not appropriate in this case. (Id.) 

Plaintiff replies arguing that TLC’s payment to FHR was not “for services actually

performed” because, first, reimbursement to FHR is unlawful, and second, the payment was

not bona fide compensation given the underlying fraud. (Doc. 119 at 6.) Therefore, while

FHR did provide services to TLC, those services were unlawful and hence not compensable.

(Id.) 

The Court agrees with Defendants that the mortgage loan transactions at issue will

require an individualized analysis and individual issues will predominate the litigation.

Therefore, class treatment is not appropriate. RESPA § 8(b) prohibits fee splitting. It

provides:

No person shall give and no person shall accept any portion, split, or percentage of

any charge made or received for the rendering of a real estate settlement service in

connection with a transaction involving a federally related mortgage loan other than

for services actually performed. 

12 U.S.C. § 2607(b). “The language of Section 8(b) prohibits only the practice of giving or

accepting money where no service whatsoever is performed in exchange for that money.”

Martinez v. Wells Fargo Home Mortg., Inc., 598 F.3d 549, 553 (9th Cir. 2010). “By negative

implication, Section 8(b) cannot be read to prohibit charging fees, excessive or otherwise,

when those fees are for services that were actually performed.” Id.

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Here, Defendants claim that FHR and TLC performed significant work in processing

and marketing the loans under the 1% Down Payment loan program. Defendants claim that

FHR worked towards implementing and marketing the 1% Down Payment loan program and

that FHR reviewed each borrower’s documents to confirm eligibility, kept records of each

down payment gift, drafted and sent gift letters, worked with TLC to educate home buyers

about the 1% Down Payment loan program and consistently communicated with TLC

regarding all these issues. Plaintiff, however, contends that no services were actually

performed by FHR because such services were illegal. 

Plaintiff’s allegation that FHR’s gifts made in 2010 were in violation of HUD’s

regulations is a conclusory statement. Whether FHR’s gifts violate HUD regulations is a

merit-based question that cannot be determined at the class certification stage. Further, the

Court has to foremost determine whether FHR provided any services to the borrowers. If yes,

then the Court will need to analyze whether the total compensation paid to FHR was

reasonably related to the services performed. This will require an individual analysis of each

of the loan transactions. Therefore, liability under RESPA § 8(b) will turn on individualized

factors and cannot be determined on a class-wide basis. 

C. RICO, Fraud and Arizona Consumer Fraud Act

Plaintiff alleges that Defendants violated RICO, 18 U.S.C. § 1962(c) and (d). (Doc.

102 at 12.) In support of her RICO claim, Plaintiff claims that Defendants Messrs. Nickel,

Johnson and Reynolds, TLC’s owners, officers and managers, unlawfully conducted the

affairs of TLC, and that TLC’s business “undisputably” affects interstate commerce. (Doc.

102 at 12-13.) Further, Plaintiff claims that by providing gift letters and tax donation receipts

FHR conspired with TLC in the 1% Down Payment Program. (Id.) Next, Plaintiff claims

that Defendants violated the ACFA and committed common law fraud by their

misrepresentations and omissions regarding the loan program. (Id. at 22.) On the issue of

proximate causation Plaintiff concedes that certification of her civil RICO, common law

fraud and ACFA claims all turn on this issue. (Id. at 12, 22.) 

///

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First Party Proximate Causation

Plaintiff argues that proximate causation can be established on a class-wide basis

using common proof. (Doc. 102 at 13-14.) Plaintiff argues common proof due to the highly

standardized scheme to defraud where the alleged misrepresentations and omissions are

found in uniform documents distributed to every class member. (Id.) Based on those

documents, the class members believed that the down payment assistance from FHR was a

gift. Plaintiff argues that had the class members known about TLC’s unlawful return

payment to FHR, they would not have proceeded with the unlawful loan because their

participation could subject them to penalties for loan fraud. (Id. at 13-19.)

Defendants reject Plaintiff’s argument. (Doc. 115.) Regarding Plaintiff’s first party

common proof argument, Defendants contend that establishing a causal link requires a

showing of individual reliance and thus an examination of each individual class member’s

circumstances, knowledge and understanding of the terms of the transaction and motivations

for deciding to enter into the transaction. (Id. at 17.) Defendants argue that the class members

do not necessarily share the same motivation and that the decision to proceed with a home

loan is a personal decision based on multiple factors, such as economic viability, a close

friend’s association with the bank that financed the loan, recommendations from friends or

family members, eligibility problems with other banks, closing costs required from other

mortgage brokers, increased settlement charges, and so on. (Id. at 18.) Due to such an

individualized inquiry into each loan transaction, Defendants argue that class treatment is

inappropriate. According to Defendants, the Court will need to analyze each class member’s

understanding of the 1% down loan terms, each class member’s motivation for deciding to

proceed with the 1% down loan, and each class member’s actual injury, all of which will

vary significantly across the class. 

Defendants further argue that the Court cannot assume that all class members, having

qualified for down payment assistance, would have refused to proceed with the loan had they

known that their loan included a marketing fee that may have increased their interest rate on

the order of 2/10 of one percent. (Id.) Defendants reject Plaintiff’s argument that increasing

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a YSP to account for marketing costs is illegal loan fraud. (Id. at 20.) On these bases,

Defendants contends that the Court should find that class action certification is inappropriate.

The Court rejects Plaintiff’s request that the Court infer or presume proximate

causation because had the class members known about TLC’s unlawful return of monies to

FHR, they would not have proceeded with the unlawful loan because their participation could

subject them to penalties for loan fraud. Although Plaintiff argues that no class member

would risk the possible penalties for “alleged” loan fraud, the key word is “alleged.” It is

undisputed that Plaintiff Galas’s loan closed in June 2010. (Doc. 102-1 at 2-5.) In June

2010, at the time that Plaintiff’s loan closed, HUD’s August 2013 report had not yet been

issued. (See Doc. 121, according to HUD’s report, the 1% loan program was in violation of

FHA rules.) As of June 2010, Plaintiff’s argument relies on a conclusory legal allegation,

not a fact that has been established. Certainly, in June 2010, Defendants had a different view

of their mortgage loan program, as their briefing reiterates, “Plaintiff’s argument relies on

the incorrect assumption that increasing a yield spread premium to account for marketing

costs is illegal loan fraud.” (Doc. 115 at 20.) Therefore, as of the time at which the events

of the class action complaint occurred, June 2010, the Court will not infer or presume or find

as a fact that class members would not participate in the 1% loan program because it could

subject them to penalties for loan fraud. Rather, at the time of the subject loan transactions,

Defendants would be entitled to offer evidence that an individual class member or members

understood through discussions with TLC’s loan officer or by their own independent review

that the 1% down loan program generally resulted in an incrementally increased interest rate

and still chose to continue with the transaction.

Causation has been identified as the heart of a civil RICO claim. As the Ninth Circuit

explained, 

Lumping claims together in a class action does not diminish or dilute this

requirement. It is well settled that, to maintain a civil RICO claim predicated

on mail fraud, a plaintiff must show that the defendants’ alleged misconduct

proximately caused the injury. . . . [plaintiff] must draw a causal link between

the alleged fraud and the alleged harm. 

Poulos v. Caesars World, Inc., 379 F.3d 654, 664 (9th Cir. 2004) (citing cases). In Poulos,

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plaintiffs had alleged that defendants misrepresented the nature of a video poker game that

simulated the shuffling of a random deck of cards when in fact the machines did not use

cards and did not operate in the manner of the traditional card game. The Poulos court

explained that it was not enough for a plaintiff to say that “I played the game and I lost

money”; rather, in order to establish the causal link, the plaintiff had to show that she was

an ace player in the traditional poker game and was misled to play the video poker game

believing that they functioned similarly and offered the same odds of winning. Id. at 665.

The Poulos court further commented that “gambling is not a context in which we can assume

that potential class members are always similarly situated.” Id. The gamblers did not

necessarily share the same motivation. Id. Some engaged in gambling as a social activity,

some for entertainment. Id. Thus, in Poulos, the court held that in order to prove proximate

causation, an individualized showing of reliance predominated, and therefore class

certification was not appropriate under Rule 23(b)(3). Id.

The Court agrees with Defendants that establishing a causal link in this case requires

a showing of individual reliance and an examination of each individual plaintiff’s

circumstances, knowledge and understanding of the terms of the transaction and motivations

for deciding to enter into the transaction. Thus, for the class members choosing to participate

in the 1% loan program, their reasons for choosing that program are necessarily individual

and not appropriate for class certification. Certainly, some may have questioned Defendants

about the gift letters to ensure that monies were not improperly being given back to the

charity, and certainly, at that time, Defendants would have provided their own rationale for

the legality of the program. 

Overall the motivation for each class member entering into the 1% loan transaction

was individual and such individual motivation would require the Court to evaluate each loan

transaction. As the court stated in Poulos, the class members are not “one motivation fits

all.” See 379 F.3d at 665. The Court finds that the decision to enter into the 1% home loan

program was a personal decision based on multiple factors, such as the class member’s

economic viability, a close friend’s association with the bank that financed the loan,

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recommendations from friends or family members, eligibility problems with other banks,

increased closing costs required from other mortgage brokers, increased settlement charges.

A class member may have decided to proceed with the loan regardless of the increased costs

because they dreamed of owning a home or because they believed that increased costs

throughout the term of the mortgage was worth it given the program’s lowering of their

upfront costs. Individual proof regarding each class member’s motivations for choosing the

1% down loan program is necessary.

Furthermore, the Court does not find that common proof, the common documents

comprising the 1% loan program submitted to the class members, necessarily means that

individual proof will not be necessary. Certainly, individual class members may have

interpreted key terms in standardized documents differently, or that oral discussions

regarding the meaning of those standardized documents also took place. See Buford v. H&R

Block, Inc., 168 F.R.D. 340, 360 (S.D. Ga. 1996) (stating that “whether the advertising

scheme and use of the term ‘Rapid Refund’ induced any of these class members to believe

that this was simply a refund fee rather than a high interest loan is . . . a question that is

individual to each class member. Additionally, the question of whether class members who

were fully informed of the loan arrangement would have still taken the loan remains an

individualized determination.”). 

In summary, the Court rejects Plaintiff’s first party proximate causation argument. The

Court will not infer or presume proximate causation because had the class members known

about TLC’s unlawful return of monies to FHR, they would not have proceeded with the

unlawful loan because their participation could subject them to penalties for loan fraud.

Rather, because individual inquiries regarding each class members reliance on the allegedly

fraudulent scheme would be necessary, individual issues would predominate over common

issues and class treatment is not appropriate on the civil RICO allegations, the common law

fraud allegations, and the ACFA allegations. 

Third Party Proximate Causation

Alternatively, citing Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008),

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Plaintiff argues that third-party reliance sufficiently establishes proximate causation without

individual issues predominating. (Doc. 102 at 19-20.) Plaintiff relies on Bridge because it

permitted a plaintiff directly injured by a fraudulent misrepresentation to recover even though

it was a third party, and not the plaintiff, who relied on the defendant’s misrepresentation.

Bridge, 553 U.S. at 656 (citations omitted). Plaintiff alleges that third-party reliance is

warranted for class members because HUD relied on TLC’s fraudulent misrepresentations

that the class members’ loans were compliant with its regulations, and based on those

misrepresentations TLC was able to sell class members’ FHA loans on the secondary market

without objection from HUD, leading to the class members increased interest rate on the

loan. (Doc. 102 at 19-20.)

As to Plaintiff’s third-party reliance argument, Defendants contend that in order to

prove proximate causation, Bridge still requires that Plaintiff prove that the alleged violation

led directly to Plaintiff’s injuries, which she cannot establish. (Id. at 21-23.) 

The Court rejects Plaintiff’s third-party argument. Under Bridge, third-party reliance

can satisfy the causation requirement of RICO only if there is “some direct relation between

the injury asserted and the injurious conduct alleged.” 553 U.S. at 654 (further citation and

quotation omitted). The Supreme Court characterized this “direct relation” requirement as

a “demand” warranting “particular emphasis.” Id. In Bridge, there was no question but that

the third party relied on a false misrepresentation and that such misrepresentation was

directly related to the plaintiff’s loss. Id. at 658.

Here, during the time frame at issue, it is undisputed that TLC was a non-supervised

lender under HUD and was authorized to originate FHA insured loans without pre-approval.

(See Doc. 121 at 12.) In fact, there was no evidentiary reliance by HUD, the alleged thirdparty, regarding alleged misrepresentations for loans originated under TLC’s 1% down loan

program that are the subject of Plaintiff’s complaint. Furthermore, Plaintiff cannot establish

that any alleged misrepresentation is directly related to a class member’s actual injury. The

sale of a class member’s loan on the secondary market that allegedly increased a class

member’s mortgage interest rate is not directly related to any alleged misrepresentation made

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to HUD. Finally, by arguing throughout their complaint and motion that the class members

relied on Defendants’ alleged misrepresentations and that it was this reliance that caused

them to sustain damages, this is a first-party reliance case. This is not a third-party case like

Bridge where the plaintiffs made no allegation of reliance on defendants’ misrepresentations

that caused them damage; it was the third-party that relied on defendants’ misrepresentation

that caused the plaintiff’s damages. 

In summary regarding the predominance factor, the Court rejects Plaintiff’s third-party

proximate causation argument. The Court finds that this is a first-party reliance case, and

that because individual inquiries regarding each class member’s reliance on the allegedly

fraudulent scheme would be necessary, individual issues would predominate over common

issues and class treatment is not appropriate on the civil RICO allegations, the common law

fraud allegations, and the ACFA allegations. Finally, because the Court has already found

that individual issues will predominate over common issues, the Court need not reach

Plaintiff’s arguments regarding superiority of class-wide litigation or that damages could be

established on a class-wide basis. 

CONCLUSION

Based on the foregoing, the Court finds that Plaintiff failed to establish the Rule

23(a)(4) prerequisite and further finds under Rule 23(b)(3) that questions of law or fact

common to the class members will not predominate over fact questions affecting individual

class members. Rather, individual issues will predominate over common issues and therefore

class treatment is not appropriate on any of Plaintiff’s claims.

Accordingly,

IT IS HEREBY ORDERED denying Plaintiff’s motion to certify class and appoint

class counsel. (Doc. 102.)

DATED this 14th day of August, 2014.

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