In Visendi v. Bank of America, et al. the Ninth Circuit held that a mass joinder foreclosure suit filed in state court was properly removed to federal court but required dismissal of claims by all but the first named plaintiff.
137 homeowners, including Carla Visendi, sued 25 financial institutions, including Bank of America and Wells Fargo, for deceptive lending and securitization practices. Plaintiffs filed the action in Sacramento County Superior Court, but Bank of America removed to federal court and moved to dismiss.
Plaintiffs filed an amended complaint resulting in 160 named plaintiffs and 15 defendants. Plaintiffs ultimately asserted three state law claims: invalid assignments, mistake, and negligence, based on allegations of deceptive mortgage practices by defendants, including Bank of America’s mismanagement of requests for loan modifications.
The district court held that the court lacked jurisdiction and remanded the action to state court. Defendants appealed to the Ninth Circuit, which reversed and remanded back to the district court for further proceedings.
The Ninth Circuit held that the facts alleged in plaintiffs’ complaint were sufficient to establish jurisdiction under the Class Action Fairness Act (CAFA). The fact that plaintiffs’ claims did not involve common issues of law or fact did not defeat jurisdiction. The district court therefore erred in remanding the case to state court.
However, because the claims did not involve common issues of law or fact, the case could not be tried as a mass joinder action. Plaintiffs’ claims involved more than 100 different transactions with multiple lenders. Their properties were located in different states and some of the properties had been foreclosed already. The court concluded that “[f]actual disparities of the magnitude alleged are too great to support permissive joinder.”
The Ninth Circuit therefore held that all but the first named plaintiff must be dismissed without prejudice. The dismissed plaintiffs are free to file individual suits if they choose.
Although nothing in the opinion indicates that this particular action was part of a scam or fraud on homeowners, it is worth noting that the FTC has issued warnings in the past about scammers talking desperate homeowners into mass joinder foreclosure lawsuits. Unlike class actions, which typically cost plaintiffs nothing, law firms charge thousands of dollars in up front fees for mass joinder suits claiming that they can stop foreclosures, get free houses, or win large damage awards by joining hundreds of disparate foreclosure claims into a single action. Files are often reviewed by sales agents rather than attorneys, and the attorneys may not be licensed to practice law in the homeowner’s state.
For more information about mass joinder foreclosure scams, read this FTC Consumer Alert.
Download the full Ninth Circuit opinion in Visendi from Justia here.Photo by (c) 2013 Enokson under a Creative Commons Attribution 2.0 Generic License.