McLean v. First Horizon Home Loan, Corp.
2012 Mo. App. LEXIS 864
Mo. Ct. App.2012Background
- McLean filed a class action against First Horizon in Missouri circuit court in 2000 alleging violations of the Missouri Second Mortgage Loans Act.
- The case was certified as a class action and a comprehensive settlement was approved by final judgment on June 7, 2007.
- Settlement administrative process allowed First Horizon to challenge 1,588 of about 2,600 submitted claims; challenges were to be in good faith with explanations and resolved by Special Masters.
- Special Masters ruled in FH’s favor on 62 challenges; the rest were denied, prompting post-judgment interpretation disputes.
- On December 4, 2009 FH moved for entry of satisfaction; plaintiffs sought sanctions and fees for alleged bad faith in filing challenges.
- Circuit court denied FH’s satisfaction motion but awarded Class Counsel $462,038.12 in fees and expenses, later affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court could deny satisfaction and award sanctions despite fulfilled judgments | McLean argued bad faith in FH’s challenges warranted sanctions against FH. | FH contends the judgment was satisfied and sanctions were improper or outside jurisdiction. | Sanctions affirmed; inherent power used to sanction bad faith. |
| Whether the trial court had jurisdiction to award fees after judgment under Rule 75.01 | Class Counsel contends post-judgment sanctions were permissible under inherent power. | FH argues post-judgment awards were outside Rule 75.01 and time limits. | Trial court had authority to sanction under inherent power; timely under the circumstances. |
| Whether class counsel had standing to seek sanctions on their own behalf | Class counsel claimed they had a sufficient interest as party to the settlement agreement to pursue sanctions. | FH contends counsel, as non-parties, lacked standing to pursue sanctions. | Counsel had standing given their party status through the settlement agreement and damages suffered. |
| Whether the sanctions violated the settlement’s cap or the Special Masters’ authority | Sanctions were permissible despite settlement language and did not infringe Special Masters’ role. | FH asserts the sanctions encroached on the judgment’s cap and the Special Masters’ exclusive authority. | Sanctions properly imposed under the court’s inherent power; not barred by the settlement cap or Masters’ authority. |
Key Cases Cited
- McLean v. First Horizon Home Loan Corp., 277 S.W.3d 872 (Mo.App. W.D.2009) (remanded for lack of jurisdiction to interpret settlement; Rule 75.01 guidance cited)
- Siemens Building Technologies, Inc. v. St. John’s Reg. Med. Ctr., 124 S.W.3d 3 (Mo.App. S.D.2004) (timing of fee awards tied to jurisdiction over judgment)
- Chambers v. NASCO, Inc., 501 U.S. 32 (U.S. 1991) (inherent power to sanction bad-faith conduct; due process cautions)
- Mitalovich v. Toomey, 217 S.W.3d 338 (Mo.App. E.D.2007) (sanctions may be imposed for bad faith; inherent power basis)
- Lorenzini v. Short, 312 S.W.3d 467 (Mo.App. E.D.2010) (wording requirement for sanctions; clear indication required)
- Asmus v. Capital Region Family Practice, 115 S.W.3d 427 (Mo.App. W.D.2003) (sanctions presumed when motion explicitly seeks to sanction)
- McPherson v. U.S. Physician Mut. Risk Retention Grp., 99 S.W.3d 462 (Mo.App. W.D.2003) (sanctions may be imposed under inherent power for bad-faith conduct)
- White River Development Co. v. Meco Sys., Inc., 837 S.W.2d 327 (Mo.App. S.D.1992) (appellate review of Rule 74.11(c) orders)