In Abraham v. American Home Mortgage Servicing, Inc., Brooklyn Federal Judge William F. Kuntz II of the Eastern District of New York ruled against several hundred current and former homeowners rejecting their mass action attempt, finding that they were joined improperly. The defendants were several dozen mortgage originators and servicers including MERSCORP Holdings Inc. Plaintiffs alleged that the defendants induced them to enter into mortgages based on inflated appraisals; purposefully avoided local recordation statutes, thereby clouding the plaintiffs’ titles; transferred, bundled, packaged and sold their mortgages to investors simultaneously betting against those mortgages; and failed to use Troubled Asset Relief Program, or TARP, funds to help the plaintiffs, as required under law. The suit originated in New York Supreme Court, Kings County, in May 2012 but one of the defendants had the case removed to the federal court under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(11)(A)
Judge Kuntz rejected the
mass action attempt by the plaintiffs, finding that they were joined
improperly. A “mass action” is defined as any civil action in which monetary
relief claims of 100 or more persons are proposed to be tried together on the
grounds that the plaintiffs’ claims involve common question of law or fact. “According
to the allegations in the complaint, Plaintiffs engaged in separate loan
transactions with different lenders in different offices in different states
over a nine-year period. It is well established that separate loan transactions
by different lenders do not constitute a single transaction or occurrence and
claims by plaintiffs who engaged in those separate transactions generally
cannot be joined in a single action,” Kuntz wrote. “Indeed, even claims by
plaintiffs who engaged in separate loan transactions by the same lender cannot
be joined in a single action.
Judge Kuntz also ruled
that the plaintiffs failed to plead “sufficient factual matter” to state a
claim to relief that is “plausible on its face.” “Plaintiffs appear to argue
that their claims arise out of a common series of transactions because
‘Defendants were involved in a common scheme and plan,’” Kuntz wrote.
“Plaintiffs have not provided any factual allegations supporting these
contentions, such as evidence that Plaintiffs’ individual mortgages were based
on inflated appraisals or specific omissions by particular employees
responsible for issuing Plaintiffs’ mortgages.
See Brooklyn Law School Library's copy of A Practitioner's Guide to Class Actions by Marcy Greer ( Call #KF8896.P735.2010) for more on the subject of class actions. This comprehensive guide provides practitioners with an understanding of the intracacies of the class action lawsuit.