232 Cal. App. 4th 238
Cal. Ct. App.2014Background
- 965 plaintiffs joined in the third amended complaint, which is 3,142 pages long, alleging a single lender (Countrywide) via related entities engaged in a two-pronged scheme to inflate appraisals and induce unaffordable loans for securitization.
- Court dismissed all but one plaintiff for misjoinder under CCP §378; on appeal, majority reversed to permit mass action with remand guidance for subclaims and subclasses.
- Mass action framed as a permissive joinder under CCP §378, with the court noting liberal construction to promote judicial economy, and potential CAFA considerations reserved for remand.
- The operative theory centers on Countrywide’s alleged conduct: inflated appraisals through Landsafe and borrower misrepresentations to push high-debt loans into securitized pools.
- The opinion emphasizes procedural management tools and subclassing to organize claims, while denying any determination on the merits of misrepresentation or unfair competition claims.
- The dissent argues the joinder is impermissible because each loan transaction is distinct, liability cannot be proven on common proof, and the action is not a class action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CCP §378 permits joinder of 818 borrowers. | Appealing Plaintiffs rely on same-series-of-transactions. | Defendants contend distinct loans preclude joinder. | Joinder permissible given common liability questions. |
| Do the claims share common questions of law or fact to support mass action. | Common misrepresentation and fraud theories apply across plaintiffs. | Liability facts vary per loan; no uniform misrepresentations. | Yes, common liability questions exist; damages individualized. |
| Is the mass action joinder compatible with CAFA removal risk. | Mass action fits CAFA framework if removed. | CAFA removal not decided on remand; stay undecided. | Remanded with CAFA issue left without prejudice. |
| Can California courts manage such a large mass action with subclaims/subclasses. | Management feasible with centralized phases. | Risk of unmanageable proceedings; misjoinder invalid. | Trial court may structure into subclaims/subclasses on remand. |
| Should the case be treated as a class action or mass action for procedural purposes. | Not a class action; decisions should not imply subclassing. | Mass action mechanics resemble class-action treatment for efficiency. | Decision does not convert into class action; focus on joinder merits. |
Key Cases Cited
- State Farm Fire & Casualty Co. v. Superior Court, 45 Cal.App.4th 1093 (Cal. App. 1996) (joinder permitted for mass claims with common issues)
- Anaya v. Superior Court, 160 Cal.App.3d 228 (Cal. App. 1984) (upheld broad joinder for common liability despite damages variation)
- Moe v. Anderson, 207 Cal.App.4th 826 (Cal. App. 2012) (joinder permissible when same employer shared liability basis)
- Adams v. Albany, 124 Cal.App.2d 639 (Cal. App. 1954) (joinder allowed where common business plan; damages vary)
- Visendi v. Bank of America, N.A., 733 F.3d 863 (9th Cir. 2013) (mass action misjoinder across many loan transactions)
- Padron v. OneWest Bank, 2014 U.S. Dist. Lexis 47947 (C.D. Cal. 2014) (mass action with numerous borrowers; joinder rejected)