NINTH CIRCUIT DENIES CLASS CERTIFICATION TO BORROWERS IN LOAN MODIFICATION CASE

By: Louise Bowes

In Hanna Bernard, et al. v. CitiMortgage Inc., the Ninth Circuit held that a purported class of borrowers was not eligible for class certification in an action against CitiMortgage Inc. (“Citi”) because the individual issues related to their loan modification reviews were too numerous to justify certification under Fed. R. Civ. P. 23(b)(3). No. 13-57158 (Ninth Cir. March 2, 2016). The Plaintiffs’ brought claims for breach of contract and breach of good faith and fair dealing, wherein they claimed that Citi failed to provide timely decisions regarding permanent loan modifications to borrowers who had completed three-month trial modifications under the Home Affordable Modification Program, and also failed to honor promises to provide permanent modifications after the trial plans were completed.

The Court affirmed the United States District Court for the Central District of California’s decision that the individual issues outweighed the common issues in the purported class’ cases. Specifically, determining whether Citi’s loan modification decisions were untimely would require an inquiry into the specific facts of each borrower’s situation, including changes in income or incomplete documentation. The district court also determined that the Plaintiffs failed to provide sufficient support for their claim that class certification was justified in this case as required by Fed. R. Civ. P. 23(b)(1) because the Plaintiffs failed to adequately explain why the cases they cited supported their position that the cases could not be adjudicated individually. The Plaintiffs attempted to characterize their action as seeking declaratory relief for the first time on appeal, but the Court held that the Plaintiffs waived this issue by failing to raise it before the district court.  The Court’s decision constitutes a significant setback for the Plaintiffs, as the costs of litigating their individual cases may outweigh the amounts they could potentially recover.

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