Kahn v. Option One Mortgage Corp., No. 05-5268, 2006 WL 156942 (E.D. Pa. Jan. 18, 2006).
The Eastern District of Pennsylvania recently addressed an arbitration motion in a class action suit filed in federal court pursuant to the Class Action Fairness Act. Rather than file in state court and face a possible remand battle, the plaintiffs instead initially filed their putative class action in federal court, alleging minimal diversity of citizenship and more than $5 million in controversy. Among the myriad of claims, the plaintiffs asserted state law claims for breach of contract and unfair trade practices arising out of the fees charged by Option One when class members paid off their mortgage loans post foreclosure. Option One chose not challenge the validity of federal jurisdiction over the claims asserted by the plaintiffs, so the Court merely observed in a footnote that there was no jurisdictional challenge.
After paying lip service to CAFA, U. S. District Judge Michael M. Baylson addressed the merits of Option One’s motion to compel arbitration, and concluded that the plaintiffs’ claims were covered by the arbitration clause at issue. Accordingly, the Court granted Option One’s motion to compel arbitration and dismissed the case, ordering the plaintiffs to proceed to resolve their claims by arbitration.