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ORDER

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

CAMERON PIERCE and PATRICIA

PIERCE, husband and wife; KAREN KIRBY,

a single woman; GREGORY SHERMAN and

PAULA SHERMAN, husband and wife,

MICHAEL LEPAGE and GERTRUDE

LEPAGE, husband and wife; on behalf of

themselves and a class of similarly situated

individuals,

Plaintiffs,

v.

NOVASTAR MORTGAGE, INC., a foreign

corporation,

Defendant.

CASE NO. C05-5835RJB

ORDER DENYING

DEFENDANT NOVASTAR

MORTGAGE INC.’S MOTION

FOR RECONSIDERATION

This matter comes before the Court on Defendant NovaStar Mortgage, Inc.’s Motion for

Reconsideration (Dkt. 196). The Court has considered the motion and the remainder of the file

herein.

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ORDER

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I. FACTUAL AND PROCEDURAL BACKGROUND

The class plaintiffs are all borrowers who engaged in loan transactions with NovaStar

Mortgage, Inc. (“NovaStar Mortgage”) and claim to have been deceived by NovaStar Mortgage’s

failure to adequately disclose its payment to brokers on good faith estimates. The plaintiffs

brought suit alleging that the failure to provide written disclosure of these payments resulted in

higher interest rates on their loans and violated Washington’s Consumer Protection Act (“CPA”),

19.86 et seq.

On March 27, 2007, the Court held that “the LePage loan constitutes a secondary market

transaction to which RESPA does not apply.” Dkt. 140 at 8. The Court further held that summary

judgment as to the LePage loan was improper because “the plaintiffs may indeed be able to

establish that NovaStar committed an unfair or deceptive act or practice with respect to the

LePage loan despite that loan not being subject to RESPA.” Id. The Court allowed the parties to

submit supplemental briefing to address “whether the Court should dismiss the LePages without

prejudice so that the case may proceed as a class action or deny summary judgment as to the

LePages and decertify or redefine the class.” Id. at 8-9 (emphasis added). 

As invited by the Court, the parties submitted supplemental briefing. Based upon that

briefing, the Court denied summary judgment as to the LePages and redefined the class to include

secondary market transactions. Dkt. 177 at 5. NovaStar moves for reconsideration of that Order. 

 II. DISCUSSION

Local Rule CR 7(h) provides as follows:

Motions for reconsideration are disfavored. The court will ordinarily deny such motions in

the absence of a showing of manifest error in the prior ruling or a showing of new facts or

legal authority which could not have been brought to its attention earlier with reasonable

diligence. 

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ORDER

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Local Rule CR 7(h). NovaStar Mortgage contends that the Court’s Order Denying Defendant

NovaStar’s Motion for Summary Judgment, Granting Plaintiffs’ Renewed Motion to Approve

Class Notice and Class Distribution Plan, and Amending Class Definition (Dkt. 177) constitutes

manifest error in two respects. See Dkt. 196 at 2.

First, NovaStar Mortgage contends that “the Court erred both in failing to rule on the

purely legal issue of whether the CPA applies to secondary market transactions and in concluding

that NovaStar somehow waived its right to challenge that phantom ruling.” Dkt. 196 at 7. 

NovaStar Mortgage apparently misunderstands the Court’s March 27, 2007, ruling and

invitation for supplemental briefing. See Dkt. 140. NovaStar Mortgage construes the Court’s

Order amending the class definition as based on the “apparent belief that (1) [the Court] issued a

ruling that plaintiffs had in fact actually stated a claim under the CPA in the absence of a RESPA

violation; and (2) NovaStar waived it[s] right to challenge that ruling by failing to ask the Court

to reconsider it.” Dkt. 196 at 7. 

The Court held that summary judgment should be denied as to the plaintiffs’ claim that the

LePage loan violated the CPA. Dkt. 140 at 8. The Court invited supplemental briefing as to

whether to (1) dismiss the LePages or (2) deny summary judgment as to the LePages and

decertify or redefine the class. Id. at 8-9. Having determined that summary judgment should be

denied as to the LePages, the Court did not invite supplemental briefing as to whether summary

should be granted as to the LePages. See id. 

Both parties nevertheless provided such briefing, but the Court declined to revisit its

ruling. The Court addressed the supplemental briefing on this point as follows: 

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ORDER

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This issue was fully briefed before the Court invited supplemental briefing and was not a

subject upon which the Court sought additional briefing. See Dkt. 125 at 19-21 (response

addressing whether the LePage loan supports a CPA violation independent from RESPA

disclosure requirements); Dkt. 130 at 9-10 (reply addressing same). The Court ruled,

“Because it appears that the plaintiffs may indeed be able to establish that NovaStar

committed an unfair or deceptive act or practice with respect to the LePage loan despite

that loan not being subject to RESPA, the Court should deny the motion as to the

LePages.” Dkt. 140 at 8. NovaStar Mortgage has not sought reconsideration of this

ruling, and the ruling stands. Whether the LePage loan and similar class loans support a

violation of the CPA independent from statutory disclosure requirements is an issue for

trial.

Dkt. 177 at 8. NovaStar Mortgage fails to demonstrate that the question of whether the LePage

loan violates the CPA was an issue before the Court or that the Court committed manifest error

by not modifying its prior ruling on the basis of the parties’ supplemental briefing. 

Second, NovaStar Mortgage contends that “the Court erred as a matter of law when it

redefined the class to include secondary market transactions . . . because (1) such loans are not

subject to RESPA’s disclosure requirements; (2) plaintiffs have not – and cannot – articulate any

other legal obligation by NovaStar to make the type of disclosures demanded by plaintiffs; and (3)

in the absence of such an obligation, plaintiffs may not properly invoke the CPA as a basis for

liability against NovaStar.” Id. NovaStar Mortgage contends that the Court erred in redefining the

class because including secondary market transactions in the class is inconsistent with the Court’s

prior rulings. See Dkt. 61 (Plaintiffs contending that “[t]he class does not include secondary

market transactions because the written disclosure requirements for such loans are different.”);

Dkt. 74 at 10 (“In determining whether particular loans fall within or outside the class, secondary

market transactions must be excluded.”). 

The Court’s “prior rulings” were issued under a different class definition. Before the class

was redefined, both parties agreed that the class did not include secondary market transactions.

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ORDER

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See Dkt. 74 at 9. The parties were afforded an opportunity to address whether the class should be

redefined. See Dkt. 140 at 10. Rather than address the plaintiffs’ proposed redefinition, NovaStar

Mortgage argued that summary judgment should be granted as to the LePage loan. See Dkt. 172

at 10-14. Absent evidence that modifying the class definition to include such transactions would

be improper, the Court redefined the class. NovaStar Mortgage fails to demonstrate that

redefining the class, despite the fact that secondary market transactions did not fall within the

previous class definition, constitutes manifest error. While the plaintiffs may or may not succeed

on their claim that secondary market transactions similar to the LePage loan were unfair and

deceptive under the CPA, NovaStar Mortgage failed to demonstrate that this claims should not be

litigated as a class claim. The Court should therefore deny the motion. 

III. ORDER

Therefore, it is hereby 

ORDERED that Defendant NovaStar Mortgage, Inc.’s Motion for Reconsideration (Dkt. 196)

is DENIED.

 The Clerk of the Court is instructed to send uncertified copies of this Order to all counsel of

record and to any party appearing pro se at said party’s last known address. 

DATED this 7th day of May, 2007.

AROBERT J. BRYAN

United States District Judge

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