Opinion ID: 2821408
Heading Depth: 4
Heading Rank: 4

Heading: TILA/HOEPA Claims

Text: PNC advances three arguments for why the Plaintiffs’ TILA/HOEPA claims present individualized issues that would predominate at trial and thereby prevent class certification. First, it asserts that those claims will require the class to show that its members paid fees that were not “‘bona fide and reasonable in amount.’” (Opening Br. at 51 (quoting 12 C.F.R. § 226.4(c)(7)).) That showing, PNC contends, would require loan-by-loan and fee-by-fee analysis in the context of every real estate market in which each transaction occurred. The Plaintiffs assert that CBNV improperly excluded certain charges from its APR calculation – improper charges that were added to every loan – that resulted in a 54 materially misstated APR.25 Contrary to what PNC argues, whether the fees were in fact excluded from the APR calculation requires simple arithmetic. Community Bank I, 418 F.3d at 306 (“Whether an individual borrower has a viable TILA or HOEPA claim may be determinable by conducting simple arithmetic computations on certain figures obtained from the face of each loan’s TILA Disclosure Statement.”). And the Plaintiffs contend that whether the fees were bona fide can be resolved by classwide evidence: first, whether CBNV performed independent title abstract or title searches or whether it merely paid a third party entity to perform a perfunctory current-owner search that generated a “property report,” which is not the same thing as performing a 25 The Plaintiffs explain the method employed to calculate the APR as follows (the references to line numbers being to the lines on the HUD-1 forms): The APR is calculated through a mathematical formula derived from the Amount Financed ([i.e.,] funds actually available to the borrower) and [the] Finance Charge ([i.e.,] the costs incidental to the extension of credit). These two numbers are mutually exclusive; a settlement charge is allocated to either one or the other, but not to both. Title related charges like the line 1102 fee, a title search or title abstract fee, or the line 1103 a title examination fee may be excluded from the calculation of the Finance Charge (resulting in a lower APR), but only if those fees are “bona fide and reasonable in amount.” 12 CFR § 226.4(c)(7). (Answering Br. at 46.) 55 bona fide title search; and second, whether CBNV performed a bona fide title examination or whether it paid a title examination company to review the “property report,” which does not constitute a true title examination. The District Court evidently accepted those arguments, and, at this stage and on this record, we see no abuse of discretion in that decision. Second, PNC contends that the Plaintiffs’ TILA/HOEPA claims premised on deficient HOEPA disclosures will require loan-by-loan analysis because the loan documents were not uniform from putative class member to putative class member. But, even assuming that PNC is correct, those possible issues do not affect the principal violations of TILA/HOEPA alleged in the Complaint and so do not undermine the District Court’s decision on predominance. Third, PNC contends that the Plaintiffs’ TILA/HOEPA claims premised on CBNV’s failure to provide HOEPA notices to borrowers three days before closing will also require significant individual inquiry because numerous CBNV files contain the borrower’s signed acknowledgment of timely receipt of the HOEPA notice or an overnight mail receipt demonstrating timely delivery, all of which demonstrates that there was no uniform policy to not provide notices. The Plaintiffs respond that, while their Complaint alleges that CBNV failed to provide timely HOEPA disclosures and that such a failure is grounds for relief under TILA/HOEPA, PNC’s argument is beside the point of their claim. The Plaintiffs say that the primary means by which CBNV violated the advance notice provisions was by including inaccurate – not untimely – information in the 56 HOEPA disclosure, and that the inaccuracy of CBNV’s HOEPA disclosures can be proven with classwide evidence. Therefore, the Plaintiffs argue, PNC’s contention that each class member must testify as to whether he received his HOEPA disclosure in a timely manner misses the mark because the timeliness of the disclosure is not the alleged basis of liability. While the Plaintiffs’ argument downplays the actual language of their pleading – language that does assert the timeliness of the HOEPA disclosures as a basis of liability, completely separate from the accuracy of the disclosures – PNC has failed to demonstrate that the District Court erred in determining that the timeliness issue does not create evidentiary problems that will predominate in the litigation. The timeliness issue might be systematically resolved as to each class member by either consulting CBNV’s files, which contain signed acknowledgements of delivery and mail receipts, or by inspecting mail carriers’ documentation. More importantly, though, even if individualized inquiries predominate this particular TILA/HOEPA basis for liability and thus suggest that it not be handled as a class claim, that does not undermine the predominance of the primary claims of liability for TILA/HOEPA violations, namely, the delivery of inaccurate information.