Lanham v. Nationstar Mortgage, LLC
169 F. Supp. 3d 658
S.D.W. Va2016Background
- Plaintiffs Lowell and Deborah Lanham sued Nationstar in West Virginia state court alleging Nationstar misapplied payments and charged unlawful late fees in violation of the West Virginia Consumer Credit Protection Act (WVCCPA); they asserted individual and putative class claims.
- Plaintiffs’ putative class was defined in the complaint as West Virginia citizens who "had or have loans serviced by the Defendant" within the limitations period, but the substantive class claims are limited to borrowers who were charged unlawful late fees.
- Nationstar removed under CAFA, asserting minimal diversity, numerosity (100+), and an amount in controversy exceeding $5,000,000, supported primarily by affidavits from its VP of Litigation, A.J. Loll.
- Nationstar relied on (1) the total number of West Virginia loans it serviced (~5,000+), (2) the 836-member Triplett subclass from a prior certified/settled class, and (3) alleged other fee categories (property inspection fees) to meet CAFA thresholds.
- Plaintiffs moved to remand arguing Nationstar failed to prove by a preponderance of the evidence that the proposed class contains 100+ injured members or that the amount in controversy exceeds $5,000,000.
- The district court granted remand: it found Nationstar’s generalized loan counts insufficient, rejected use of the released Triplett subclass members, and declined to read Count IV as encompassing the alternate fees Nationstar relied upon.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does defendant prove numerosity (100+ class members) under CAFA? | Lanham: Complaint limits class to borrowers actually assessed unlawful late fees; Nationstar offered no proof of how many sustained that injury. | Nationstar: Over 5,000 WV loans serviced; a reasonable estimate (e.g., 25%) yields 100+ injured class members. | Held: Nationstar failed to prove numerosity; general loan counts without proof of illegal-fee injuries are insufficient. |
| Does defendant prove amount in controversy > $5,000,000 under CAFA? | Lanham: Without proof of class size or specific injured members, amount in controversy is speculative. | Nationstar: Multiplying potential violations by statutory maximum penalties (or using Triplett numbers) shows > $5M. | Held: Amount-in-controversy not proven by preponderance; speculative calculations and generalized data fail. |
| May the court count Triplett subclass members toward CAFA thresholds despite Triplett settlement release? | Lanham: Triplett class members released their claims; they cannot be included. | Nationstar: Triplett release is an affirmative defense that should not defeat a jurisdictional showing (invoking Zacharia). | Held: Court declines Zacharia bright-line rule; because Triplett members released claims and dismissal was with prejudice, their numbers cannot be counted. |
| Does Count IV (attempt to collect debts/fees not owed) broaden the class to include other fee types (e.g., property inspection fees) for jurisdictional purposes? | Lanham: Count IV incorporates prior allegations and does not identify other fee types; cannot be parsed to expand class. | Nationstar: Count IV is vague and could include other fees; Loll affidavit identifies many inspection-fee assessments. | Held: Court refuses speculative reading of Count IV; it does not independently give rise to CAFA jurisdiction. |
Key Cases Cited
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (removal procedure under CAFA; when amount in controversy disputed, court decides based on the evidence submitted)
- Strawn v. AT&T Mobility LLC, 530 F.3d 293 (4th Cir. 2008) (burden on removing party to establish federal jurisdiction)
- Caufield v. EMC Mortgage Corp., 803 F. Supp. 2d 519 (S.D.W. Va. 2011) (class definition must be read as whole; class limited to those sharing the alleged injury)
- Zacharia v. Harbor Island Spa, Inc., 684 F.2d 199 (2d Cir. 1982) (affirmative-defense rule: court should not consider defenses that would defeat amount-in-controversy when assessing jurisdiction)
- Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744 (11th Cir. 2010) (defendants may submit affidavits and evidence to establish amount in controversy)
- Ibarra v. Manheim Invs., Inc., 775 F.3d 1193 (9th Cir. 2015) (CAFA requires testing jurisdictional assertions with real evidence and reasonable assumptions)