Mitchell v. Residential Funding Corp.
334 S.W.3d 477
| Mo. Ct. App. | 2011Background
- Mitchells obtained a Missouri second mortgage from MCR in 1999, with HUD-1A showing $3,433 in closing fees rolled into the loan.
- Residential, Homecomings, Household, and Wachovia purchased or financed the loans and did not independently verify state-law compliance.
- MSMLA restricted fees on second mortgages; after 1998 rates could exceed usury limits if fees complied with MSMLA; the act permits certain enumerated closing costs and prohibits others.
- Plaintiffs sued in a certified class alleging MSMLA violations, seeking damages including past/future interest, plus prejudgment interest and attorney fees.
- Trial split liability and damages: liability for MSMLA violations found; compensatory damages awarded; punitive damages later sought and partially reversed; post-trial motions and appeals followed.
- Key issue at stake included whether assignees could be liable under MSMLA or HOEPA, and whether prejudgment interest on past interest should be awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of assignee defendants | Mitchells injured by MSMLA violations; class action proper. | Mitchells lacked injury against Household/Wachovia; no standing. | Standing found; class action allowed against assignees. |
| Class certification typicality | Claims arise from common scheme; typical of class. | Numerous individualized issues defeat typicality. | Typicality satisfied; class certified. |
| MSMLA fee restrictions and HUD-1A conclusive evidence | HUD-1As show unlawful fees; 408.233 excludes these. | Some fees could be bona fide third-party costs; evidence should be allowed. | MSMLA expressly restricts fees; HUD-1As conclusive; unlawful. |
| Common-law assignee liability | Assignees liable under common law for MCR's MSMLA violations. | No common-law assignee liability; only HOEPA or direct MSMLA violations. | Common-law assignee liability rejected; HOEPA-based or direct MSMLA liability required. |
| Prejudgment interest on past interest | Plaintiffs entitled to prejudgment interest on past interest under 408.020. | Prejudgment interest only on unlawful fees; past interest not recoverable. | Plaintiffs entitled to prejudgment interest on past interest; remand for exact amount. |
Key Cases Cited
- Avila v. Cmty. Bank of Va., 143 S.W.3d 1 (Mo. App. W.D. 2003) (MSMLA framework and constraints on usury and fees)
- Adkison v. First Plus Bank, 143 S.W.3d 29 (Mo. App. W.D. 2004) (MSMLA pre-1998/1998 changes; interstate considerations)
- Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002) (class certification principle: jurisdictional priority of certification)