15-1891

Garrido v. Money Store

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED

ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE

PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A

DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN

ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST

SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1 At a stated term of the United States Court of Appeals

2 for the Second Circuit, held at the Thurgood Marshall United

3 States Courthouse, 40 Foley Square, in the City of New York,

on the 23rd 4 day of May, two thousand sixteen.

5

6 PRESENT: AMALYA L. KEARSE,

7 RALPH K. WINTER,

8 DENNIS JACOBS,

9 Circuit Judges.

10

11 - - - - - - - - - - - - - - - - - - - -X

12 LINDA U. GARRIDO and JOHN GARRIDO, on

13 behalf of themselves and all others

14 similarly situated, 

15 Plaintiffs-Appellants,

16

17 RUTH ANN GUTIERREZ and LORI JO

18 VINCENT, on behalf of themselves and

19 all others similarly situated, 

20 Plaintiffs,

21

22 -v.- 15-1891

23

24 THE MONEY STORE, TMS MORTGAGE, INC.,

25 HOMEQ SERVICING CORP., 

26 Defendants-Appellees,

27

1
1 MOSS, CODILIS, STAWIARSKI, MORRIS,

2 SCHNEIDER & PRIOR, LLP, OCWEN LOAN

3 SERVICING, LLC, WELLS FARGO BANK,

4 N.A., BARCLAYS CAPITAL REAL ESTATE,

5 INC., JOHN DOE CORPORATIONS 1-3, as

6 successors in interest to The Money

7 Store, TMS Mortgage, Inc. and HomEq

8 Servicing Corp., 

Defendants.* 9

10 - - - - - - - - - - - - - - - - - - - -X

11

12 FOR APPELLANTS: Paul S. Grobman, The Law Offices

13 of Paul Grobman, New York, New

14 York.

15

16 FOR APPELLEES: Daniel A. Pollack, Edward T.

17 McDermott, Anthony Zaccaria,

18 Minji Kim, McCarter & English,

19 LLP, New York, New York.

20

21 Appeal from a judgment of the United States District

22 Court for the Southern District of New York (Koeltl, J.).

23

24 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

25 AND DECREED that the judgment of the district court be

26 AFFIRMED. 

27

28 Linda and John Garrido (the “Garridos”) appeal the

29 February 2, 2015, denial of their motion for class

30 certification under Fed. R. Civ. P. 23(b)(3), which merged

31 into the judgment of the United States District Court for

32 the Southern District of New York (Koeltl, J.). The

33 judgment dismissed with prejudice the Garridos’ claims

34 against defendants-appellees (the “Money Store

Defendants”).1 35 The Garridos allege common-law fraud in

* The Clerk of Court is directed to amend the official

caption in this case to conform to the listing of the

parties above.

1 The Garridos and Money Store Defendants stipulated to

dismissal of the Garridos’ claims with prejudice and to

entry of final judgment, and agreed that the Garridos would

retain appellate rights limited solely to the denial of

class certification. We treat the so-ordered stipulation of

2
1 connection with the Money Store Defendants’ debt collection

2 practices. We assume the parties’ familiarity with the

3 underlying facts, the procedural history, and the issues

4 presented for review. 

5

6 The Garridos sought to certify a class of all borrowers

7 on loans owned or serviced by the Money Store Defendants who

8 were charged attorneys’ fees and expenses that the Money

Store Defendants had not yet paid to their attorneys2 9 (as

10 indicated by the absence of a date in the “Check Confirmed”

11 field of an invoice processing database used by the Money

12 Store Defendants), from January 2001 to the present; they

13 contend that the Money Store Defendants committed fraud by

14 representing (falsely) to borrowers that such reimbursement

15 was due, before making such remuneration to counsel. The

16 district court determined that the Garridos did not satisfy

17 the commonality requirement of Fed. R. Civ. P. 23(a)(2); the

18 adequacy of representation requirement of Fed. R. Civ. P.

19 23(a)(4); or the predominance requirement of Fed. R. Civ. P.

20 23(b)(3). We review the denial of class certification for

21 abuse of discretion. Myers v. Hertz Corp., 624 F.3d 537,

547 (2d Cir. 2010).3 22 The party seeking class certification

23 must prove by a preponderance of the evidence that each Rule

24 23 requirement is met. Id. (citing Amchem Prods., Inc. v.

25 Windsor, 521 U.S. 591, 614 (1997)).

26

27 The district court did not abuse discretion in

28 determining the Garridos failed to prove that “the questions

29 of law or fact common to class members predominate over any

30 questions affecting only individual members . . . .” Fed.

31 R. Civ. P. 23(b)(3). We therefore do not reach other

32 issues. 

33

dismissal with prejudice as a final judgment. See Fed. R.

Civ. P. 54(a). 

2 The Garridos contend that loan documents required the

Money Store Defendants to pay any attorneys’ fees before

requesting reimbursement from putative class members.

3 Factual findings underlying the district court’s

decision are reviewed for clear error; articulation of the

legal standards is reviewed de novo; and application of the

law to the facts is reviewed for abuse of discretion. In re

IPO Sec. Litig., 471 F.3d 24, 40-41 (2d Cir. 2006).

3
1 “Considering whether ‘questions of law or fact common

2 to class members predominate’ begins, of course, with the

3 elements of the underlying cause of action.” Erica P. John

4 Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179, 2184 (2011). 

5 A New York common law fraud claim requires proof of a

6 representation of material fact, falsity, scienter,

7 reasonable reliance, and injury. Small v. Lorillard Tobacco

8 Co., 720 N.E.2d 892, 898 (N.Y. 1999); Stuart Silver Assocs.,

9 Inc. v. Baco Dev. Corp., 665 N.Y.S.2d 415, 417 (App. Div.

10 1997).

11

12 The district court did not clearly err in ruling that

13 the Garridos failed to show that any uniform representation

14 was made to all putative class members. The Garridos relied

15 on testimony and documentary evidence regarding (i) paper

16 and electronic invoices and (ii) payoff quotes. The

17 district court found that these items were not routinely

18 sent to class members, because invoices were sent by third

19 parties to the Money Store Defendants, not to borrowers; and

20 payoff quotes were prepared and sent to borrowers only when

21 specifically requested.

22

23 Without proof of a uniform representation, the Garridos

24 cannot use class-wide evidence to prove “the central

25 disputed issues in a fraud action”: a material

26 representation; its falsity; and reliance. Moore v.

27 PaineWebber, Inc., 306 F.3d 1247, 1253 (2d Cir. 2002)

28 (“[F]raud claims based on uniform misrepresentations made to

29 all members of the class . . . are appropriate subjects for

30 class certification because the standardized

31 misrepresentations may be established by generalized proof. 

32 Where there are material variations in the nature of the

33 misrepresentations made to each member of the proposed

34 class, however, class certification is improper because

35 plaintiffs will need to submit proof of the statements made

36 to each plaintiff, the nature of the varying material

37 misrepresentations, and the reliance of each plaintiff upon

38 those misrepresentations in order to sustain their

39 claims.”); see also Fed. R. Civ. P. 23(b)(3) advisory

40 committee’s note, 1966 amendment (“[A]lthough having some

41 common core, a fraud case may be unsuited for treatment as a

42 class action if there was material variation in the

43 representations made . . . .”).

44

45 The Garridos contend that (mis)representations may be

46 presumed because members of the putative class paid the

47 alleged fees, and “[t]he conclusion that borrowers might

4
1 have paid such legal fees and expenses without ever being

2 told they were owed would . . . ‘deny human nature, run

3 counter to the traditional presumption in favor of actors

4 operating under rational economic choice, and leave the

5 Court with an absurd conclusion.’” Br. of Appellants 30

6 (quoting Chisolm v. TranSouth Fin. Corp., 194 F.R.D. 538,

7 561 (E.D. Va. 2000) (discussing doctrine of presumed

8 reliance); see also Reply Br. 7 (“It cannot be meaningfully

9 disputed that a party which obtains reimbursement for a

10 purported legal fee or other expense which it never incurred

11 commits fraud–-‘the fraud is in asking [a party] to pay a

12 debt that it does not owe because the debt was never

13 incurred by the [first party].’” (quoting United States ex

14 rel. Westmoreland v. Amgen, Inc., 812 F. Supp. 2d 39, 67 (D.

15 Mass. 2011) (False Claims Act))). 

16

17 However, the claim is not that borrowers were

18 fraudulently charged for attorneys’ fees that the Money

19 Store Defendants did not incur; the claim is that borrowers

20 were fraudulently charged for attorneys’ fees that the Money

21 Store Defendants had not yet paid. It would be speculation

22 to conclude from the fact of payment that a representation

23 was made to all putative class members that the Money Store

24 Defendants had already paid these fees, or even that the

25 fees were currently “owed” pursuant to the borrowers’ loan

26 agreements. Some borrowers may have paid fees after

27 speaking with a representative over the phone. Others may

28 have received payoff quotes. Who knows what was or was not

communicated?4 29 

30

31 The Garridos cite no authority that representations of

32 fact (as opposed to reliance on those representations) can

33 be presumed in a common-law fraud action, and such a

34 presumption is not reasonable under the theory of this case. 

35 Without class-wide proof of what representations were or

36 were not made, these claims cannot be proved on a class-wide

37 basis. Cf. In re U.S. Foodservice Inc. Pricing Litig., 729

38 F.3d 108, 120 (2d Cir. 2013) (holding that, where uniform

39 representations in the form of invoices were sent to all

40 class members, “payment may constitute circumstantial proof

4 The Garridos entered only one payoff quote into

evidence, so there is no evidence even that payoff quotes

were prepared in a uniform manner such that putative class

members who did receive them received uniform

representations.

5
1 of reliance based on the reasonable inference that customers

2 who pay the amount specified in an inflated invoice would

3 not have done so absent the invoice’s implicit

4 representation that the invoiced amount was honestly owed”).

5

6 The Garridos argue that they might be able to prove

7 their fraud case on a class-wide basis through evidence of

8 spoliation, and ask us to take judicial notice of a ruling

9 in a related action, in which the district court found that

10 the Money Store Defendants had failed to preserve their

11 invoice database system in its previously accessible form.

12 See Mazzei v. Money Store, 308 F.R.D. 92, 100-03 (S.D.N.Y.

13 2015). Even if this argument were not waived for failure to

14 raise it below, see Br. of Appellees 45-47, it does not bear

15 on the outcome of this appeal. The Garridos do not argue

16 that the unpreserved database contained evidence of any

17 uniform representation; to the contrary, the database at

18 issue appears to contain the invoices already discussed

supra, which were never sent to borrowers.5 19 

20

21 For the foregoing reasons, and finding no merit in the

22 Garridos’ other arguments, we hereby AFFIRM the judgment of

23 the district court.

24

25 FOR THE COURT:

26 CATHERINE O’HAGAN WOLFE, CLERK

27

5 The district court denied in Mazzei the type of trial

sanctions the Garridos appear to seek here.

6