In this action, the District Court declined to exercise jurisdiction under CAFA because the plaintiffs could not show that all of their claims were a result of the same transaction, occurrence, or series of transactions or occurrences.
One hundred and twenty-one plaintiffs joined together in this action against the defendants, OneWest Bank, FSB, and various mortgage servicers, trustees, and an appraiser, in Los Angeles County Superior Court. Plaintiffs filed various claims alleging that the defendants were no longer acting as conventional money lenders, but instead morphed in to an enterprise engaged in systematic fraud upon its borrowers. The defendants removed the action to federal court invoking mass action jurisdiction under CAFA.
The District Court issued an Order to Show Cause requiring the plaintiffs to address whether they were properly joined together under Rule 20(a), which requires that plaintiffs’ claims arise from the same transaction, occurrence or series of transactions or occurrences – referring to the similarity in the factual background of the claims – in order for the cases to be tried in a single proceeding.
In response to the courts charge, the plaintiffs argued that all of their claims resulted from the same allegedly unlawful scheme, policy, or practice implemented by defendants, which included price-fixing, manipulating home values though residential appraisals, and placing plaintiffs in dangerous loan products. On the other hand, the defendants argued that the plaintiffs could not join their claims together because they resulted from discrete real-estate loan transactions.
The District Court cited the Ninth Circuit decision Coughlin v. Rogers, 130 F.3d 1348 (9th Cir. 1997) in its reasoning. In Coughlin, the plaintiffs argued that their claims bore a logical relationship because they arose from the same allegedly unlawful scheme in which defendants manipulated home values through residential appraisals and dangerous loan terms. The defendants, however, cited to the Ninth Circuit’s decision in Visendi v. Bank of America, 733 F.3d 870 (9th Cir. 2013). In Visendi, 137 named plaintiffs sued 25 financial institutions in California state court. The plaintiffs alleged that the defendants’ deceptive mortgage lending and securitization practices decreased the value of their homes and otherwise caused them injury. In Visendi, the court held that plaintiffs may not join together in one action to sue common defendants based on discrete real-estate loan transactions.
The District Court found that this action was virtually identical to Visendi. Here, the plaintiffs had each entered into different mortgages, on different properties, with different terms and representations. The District Court acknowledged that the evocation of the alleged scheme did not transcend the reality that each Plaintiff’s transaction was discrete, unique, and based on plaintiff-specific facts and circumstances. The District Court further noted that the factual disparities of the magnitude alleged were too great to support permissive joinder and would result in defendants having to prepare to adjudicate 121 mini-trials.
Accordingly, the District Court found that the plaintiffs failed to satisfy Rule 20(a), and all but the first plaintiff’s claims were dismissed.