Lorah v SunTrust Mortgage, Inc., No. 08-703 (E.D. Penn. Feb. 17, 2009).

In the post subprime meltdown, SunTrust is such a great name for a lender funding loans through mortgage brokers. However, the plaintiffs in this suit did not think so, and they sued SunTrust for generating illegal fees. 

The sum and substance of the decision is that after removal to federal court and denial of their motion to remand, the plaintiffs will litigate their trust issues in federal court.   If you are in the Third Circuit, pay attention!

On February 8, 2008, the plaintiffs, Jamie and Donna Lorah, brought suit against SunTrust Mortgage in the Court of Common Pleas of Berks County, Pennsylvania for a putative opt-in class of individuals on 175 loans made by SunTrust. The plaintiffs alleged that SunTrust relied on a mortgage broker to originate loans which SunTrust funded and that the mortgage broker and SunTrust were involved in an alleged Ponzi scheme. Watch out Madoff! The plaintiffs alleged that $33,000 of their $98,000 loan was an illegal brokerage fee.

The complaint contained four counts requesting damages of less than $75,000 on each count and stating “there is no CAFA jurisdiction…because it is not certain or likely that more than 100 persons will opt-in to the class or that the aggregate amount in dispute in this opt-in class will exceed the five million dollar requirement of CAFA.” 

The case was removed to the United States District Court for the Eastern District of Pennsylvania on February 13, 2008 by SunTrust. 

United States District Judge C. Darnell Jones II began his memorandum opinion by discussing CAFA jurisdiction and then burden of proof to demonstrating the presence or absence of diversity jurisdiction. 

The judge pointed to two different Third Circuit opinions, Samuel-Bassett and Morgan. (Editors’ Note: This is a Third Circuit case very similar to the Raspa case. Check out our post about that case. Also, take a look at the analysis of the Morgan case posted on January 19, 2007). 

As we know, Samuel-Bassett applies to cases in which the plaintiff has not specifically averred in the complaint that the amount in controversy is less than the jurisdictional minimum. There, the case must be remanded if it appears to a legal certainty that the plaintiff can not recover the jurisdictional amount. Morgan applies to cases in which the complaint specifically avers that the amount sought is less than the jurisdictional minimum. There, a defendant seeking removal must prove to a legal certainty that the plaintiff can cover the jurisdictional amount.

Judge Jones found that the wording of the Lorahs’ class action complaint was “sufficiently equivocal” to make it subject to the Samuel-Bassett standard. Under the Samuel-Bassett standard, the Judge examined both the allegations of the complaint and the notice of removal by SunTrust. 

The Judge held that the plaintiffs did not meet their burden to demonstrate that subject matter jurisdiction was absent because the court was not satisfied to a legal certainty that the class size could not reach 100 persons or could recover five million dollars. The Judge pointed specifically to the fact that the complaint limited damages on each count to less than $75,000, but did not limit the damages to less than $75,000 on all counts. As the court estimated $98,000 per plaintiff, it would only take 51 plaintiffs to meet CAFA’s jurisdictional mark. 

The Plaintiffs motion to remand was denied.