Vincent Howard and our Claremont foreclosure defense lawyers wrote with interest in January about a federal appeals case involving claims filed by the Arizona state attorney general against Bank of America. The state brought the case on behalf of its people, but the bank challenged the case on the grounds that it was really a class action lawsuit involving numerous homeowners, and thus should be removed to federal court. The Arizona district court rejected this argument and the Ninth U.S. Circuit Court of Appeals declined to hear an appeal, but a dissent from that case suggested taking it and consolidating with a very similar Nevada case. Now, the Ninth Circuit has decided the Nevada case, and in the same way -- it sent the case back to state court. In State of Nevada v. Bank of America Corp. et al, the court established that "mass actions" cannot be removed as class actions.
Nevada attorney general Catherine Cortez Masto sued multiple Bank of America entities, alleging they misled Nevada consumers about loan modification practices. The state made a familiar set of complaints, including failure to act on loan modification requests, dual track foreclosures, lying about a delinquency requirement, denying loan modifications for false reasons and making false delinquency reports to credit agencies. The state also alleged violations of the consent judgment, via dual track foreclosures and refusal to modify loans, between the bank and the state stemming from allegations of fraud and predatory lending in the Countrywide Financial subsidiaries Bank of America bought. Bank of America removed the case to federal court in early 2011, alleging bankruptcy jurisdiction, federal question jurisdiction and that it was a class action or a mass action under the federal Class Action Fairness Act. Nevada moved to remand, but the district court refused, finding the suit was a class action but not a mass action. Nevada appealed.
The Ninth Circuit took the case after resolving a similar case from Washington state, 2011's Washington v. Chimei Innolux Corp., which found that attorney general enforcement actions, called parens patriae actions, are not removable under CAFA. The Seventh and Fourth Circuits have made similar rulings. Thus, it found that this case should not have been removed to federal court as a class action. The Ninth also dismissed arguments that the case is a mass action, in which 100 or more plaintiffs seek monetary relief based on the same facts. The Ninth sided with a previous Seventh Circuit case in finding that the state was the party in interest, and thus there was no mass action. The State of Nevada has a compelling interest in the case on its own, the court said, in part because it was hit so hard by the foreclosure crisis.
Finally, the Ninth rejected the district court's alternative claim that it had federal question jurisdiction because resolving the HAMP-related claims would necessarily require construing federal law. The complaint alleges exclusively state-law claims, the court noted, and the mere presence of a federal issue cannot confer federal jurisdiction by itself. Thus, it reversed and sent the case back to Nevada state court.
The Orange foreclosure defense attorneys at Howard Law, P.C., are pleased to see the Ninth Circuit reinforce its previous decisions on this issue. Judging by the cases it cited, business interests have tried to use CAFA to avoid all kinds of legal actions by attorneys general -- not just mortgage cases. We agree with the Ninth (and the Seventh) that this is stretching the definition of "class action." But in mortgage cases, lawsuits by states may be exceptionally useful, because lawsuits by homeowners frequently founder on specific facts or because homeowners don't have the money and legal expertise to fight the cases to higher levels. By bringing the case on behalf of the state, attorneys general can also draw attention to patterns and practices that may not be important in any individual homeowner's lawsuit. Vincent Howard and our Torrance foreclosure defense lawyers look forward to hearing more about Nevada and Arizona's cases.
If you're in danger of foreclosure and you have gotten nothing but excuses and errors from your mortgage lender, you should call Vincent Howard and the team at Howard Law. You can reach us through our website or call 1-800-872-5925.