Cowles v. Bank West

Wеst v Bank Cowles WEST COWLES BANK Rapids. May 5, Decided Grand No. Submitted Docket 229516. August 5, at 9:05 A.M. Kent brought Circuit a class action Kristine Cowles engaged in the West, alleging against that the defendant Bank prepared loan practice residential of law when unauthorized complaint plaintiffs added first amended for a fee. The documents alleging the document violated a claim that court, A. Lending The Donald 15 USC 1638. Truth In Act (tila), Johnston, J., granted summary disposition on for the defendant plaintiff The then filed a second amended tea claim. complaint alleging The the class tea claim. court certified another plaintiff representative. filed a Defendant made basis that reconsideration on the new tila claim the motion for limitations, by applicable it also it was barred sought summary Before disposition on the merits claim. TEA Paxson, motions, B. Karen member the court ruled class, representative for act as allowed to intervene and granted The then the defendant’s motion the tea claim. court reconsideration, period ruling run on that limitаtions had claim, summary granted disposition plaintiff and it Cowles’s tea except plaintiffs’ plaintiff Paxson’s tea on all other claims separately plaintiff moved for sum- claim. Defendant and mary disposition held on the TEA claim. expired the claim of limitations had on Paxson’s claim because tea plaintiff pleaded year it in accrued more than one before complaint, relate and that did not her second amended original plaintiff Plain- pleading filed Cowles. back to the appeal granted the Court of application leave to tiffs’ abeyance pending Appeals held Court’s but ruling Ameribank, 468 Mich 557 decision in Dressel v practice law plaintiffs’ resolved the unauthorized that case claim, Appeals then the Court of dismissed. which Appeals held: The Court exempt mortgage from the are 1. loan transactions Residential 445.904(l)(a). Michigan Act. MCL Consumer Protection 3.501(F)(1) provides 2. MCR the statute of persons tolled for all within the described class on the commence- ment of the class Plaintiff Paxson wаs a action. member of the original complaint by plaintiff class described Cowles. Therefore, the statute limitations was tolled with plaintiff Paxson. general, 3. Reference be made to the must civil rules of whether, procedure question action, in to the a answer class the by plaintiff second amended filed Cowlesrelates back to original pleading the that tolled the statute of limitations. MCR 2.118(D) precedent pleading and allow an for amended that raises new facts and same claims based the conduct to relate back to original pleading by applicable the and not be barred the statute of prejudiced by limitations. The defendant is not this result because certified, the class is limitations continues to be persons original tolled for all within the class described in the complaint, pleading the initial notified defendant that the docu- preparation ment the manner of disclosure were the subject suit, given and the defendant was notice the size prospective original complaint. ofthе as in described This prevents negation efficiency also result which for litigation designed members, action was because class for whom period may expire of limitations while a motion to amend to pending, a protect add new claim is will not be forced to their by rights intervening individually filing separate or actions to maintain their claims event that amendment is denied or is period expires ordered after of limitations on their individual Moreover, disadvantage claims. this result not does class action defendants because no new class members wdllbe added nor they would benefit from relation-back doctrine. by 4. Plaintiff Paxson’s tila claim is not barred the statute of complaint, limitations because Cowles’s second amended which claim, original pleading raised the tila relates back to the where, statutory period within the on Paxson’s claim, put individual the defendant was on notice Cowles’s original complaint seeking damages that class members were payment fee, preparation related to the of the document and the original in complaints claims asserted and second amended setting. from arose the same transactional 5. The statute of limitations on the tila tolled even though plaintiff expired Cowles’s limitations had on her Although TILA claim. Cowlescould serve as class claims, on the there are like other Paxson who are described in the certified class and have valid tila claims and the Cowles v Bank West any appropriate permit class member allowed representative. substitute as class disposition plaintiff Summary Paxson’s the merits 6. tila 1605(a), claim, premised improper. 15 USC claim was tila allegation the docu- the defendant failed to disclose on the charge, part preparation fee in violation the finance ment 1605(e) 226.4(c)(7). exempts Z, Regulation from 12 CFR USC charge prepa- computation fees for in of the finance inclusion 226.4(c)(7) instructs of loan-related documents. Section ration are preparation for of loan-related documents excluded that fеes they charge from the finance if are bona fide reasonable executive officers testified that amount. The defendant’s defray charged preparation the defendant’s fee was document taking preparing loan costs in documents associated secondary closing selling market application the loan in question keeping This of material fact it. evidence raises However, regarding no fee was bona fide. there is whether the question $250 that a document fee was reasonable comparison Michigan approach. western under relevant market part, part, and remanded further Affirmed reversed proceedings. J., dissenting, deci- would affirm trial court’s O’Connell, Paxson, plaintiffs, Cowles and sion that the claims of both tila Furthermore, applicable of limitations. were barred statute fide document fee was both bona and reasonable. is that the The threshold consideration for class certification Plaintiff be a member of the class. Cowles of the class when she filed thе second could not be a member complaint alleging the tila claim because the amended expired original that claim she filed the limitations had before alleging engaged complaint that the defendant unautho- any tolling practice Consequently, law. could not be rized there claim, even under the of the statute of limitations on the filing original majority’s erroneous conclusion that the of the complaint for class members on tolled statute any arising from the same of conduct. Plaintiff new claims course had viable tila claim and the trial court erred no when Moreover, representative. and made her class certified the class expired applicable period claim of limitations on Paxson’s tila complaint alleged the second amended certified before Cowles’s filing original, claim. Because the of Cowles’s tila class action limitations, legally complaint infirm did not toll the both representing be the class. and Cowles should barred from only should toll the statute of limitations Cеrtification of class Mich Opinion of the Court originally Any properly claims that receive certification. new separate need claims would certification and benefit from the tolling separately rules until a trial court certified the claims as worthy status, including eligibility repre- of class of the class sentative. — — — Complaints

Limitation of Amended Actions Class Statute Action Tolling — — Limitations Relation-Back Doctrine. procedure permit The rules of civil the relation back of adding amendments new arise out the same course alleged original actions; pleading apply of conduct in an to class original complaint, where within the statute of limita- tions, alleges complaint a claim and an amended adds another setting claim based on the same transactional involved in the original complaint, the amended relates back to the filing original complaint of the and the statute of limitations applicable to the new claim is treated as tolled as of the (MCR 2.118[D]). original complaint Drew, Cоoper (by & E. Anding John Anding and Christopher Hastings) plaintiffs. G. for the (by

Warner Norcross & Judd LLP K. William Holmes McFarlane) Molly E. for the defendant. GAGE, EJ., Before: and O’CONNELL JJ. ZAHRA, appeal by PJ. Flaintiffs leave granted GAGE, trial 24, 2000, court’s March summarily order dismiss- ing intervening plaintiff Karen B. Faxson’s claim under Truth in Act Lending 1601 seq., USC et (TILA), applicable barred statute of limitations. Sum- mary disposition previously granted to defendant on plaintiffs’ other pleaded claims. affirm in part, We in part, reverse and remand for further proceedings consistent with opinion. this

Flaintiff Kristine Cowles received a residential real estate mortgage defendant, loan from which loan closed on February 7, 1997. Cowles was a charged docu- $250 fee, ment and fee preparation was disclosed on Line Bank West Cowles the Court Housing Department United States her (HUD-1), statement settlement Development Urban loan in real estate form residential used standardized closings. alleging 1998, 1, Cowles July

On preparation the document related to several claims behalf and filed on her own complaint was fee. The wronged by the similarly class of consumers that fee. preparation of the document payment obtained real include all consumers who was defined to from defendant and who were Michigan estate loans financed, the document with, charged paid before date six-year fee preparation alleged specifically Cowles complaint. documents and preparing that defendant’s conduct constituted unautho- a fee for the service charging of the alleged of law. also violations practice rized She (MCPA), MCL Protection Act Michigan Consumer replevin, unjust enrich- 445.901 and claims seq., et ment, negligent mis- misrepresentation, innocent representation. 20, 1998, her complaint

On Cowles amended August charged document allegation prepa- to add an that the 1638, USC ration fee violated because TILA, identified on preparation improperly document fee “paid your form a fee to others the TILA disclosure retained the bank and actually behalf.” The fee alleged also docu- paid not to others. Cowles of actual prepa- ment exceeded cost motion papers.” ration “final Defendant’s legal granted. the TILA claim was summary disposition ruling. appealed Plaintiffs have filed a February On second violation, complaint, alleging another amended failure to disclose docu- specifically that defendant’s 263 MICH Opinion op the Court 1605(a) preparation ment violated 15 USC 226.4(c)(7). Z, 12 CFR Regulation The trial court subsequently certified class as in described Cowles’s second amended complaint with Cowles all acting representative for reconsideration, claims. Defendant moved for arguing that Cowles’s individual TILA claim was time-barred the statute of repre- limitations thus she could not sent the class with that claim. Defendant also summary disposition moved the merits of the TILA claim. Paxson thereafter moved to in intervene the action and serve as the class for the TILA claim. obtained residential refinancing loan from February 9, 1998, defendant on and was charged the document $250 fee. Paxson’s motion to granted, intervene was and she filed complaint intervеntion. The trial court later granted summary disposition to defendant claim, on Cowles’s TILA finding the statute of limitations barred her claim. The for a claim is one year from TILA 1640(e). the date of alleged violation. 15 USC Cowles filed complaint 1,1998, her initial July more year than one closing after the on her loan. Her TILA claim was time-barred before she her initial com- plaint. 10, 2000,

On January the trial granted sum- mary disposition to plaintiffs’ defendant on all of re- maining exception of Paxson’s TILA Thereafter, claim. both defendant sepa- and Paxson rately moved for summary disposition on the TILA claim. The trial court eventually ruled that TILA claim Paxson’s but meritorious was barred the applicable stat- ute It determined limitations. that the claim accrued more than year one before the pleaded claim was v Bank West op the Court Thus, the claim complaint. second amended Cowles’s court did not relate second untimely. The trial back amendment initial complaint. granted application leave plaintiffs’

This Court pending appеal abeyance then held the appeal and Ameribank, Court’s resolution Dressel Dressel, In 664 NW2d 151 engage does in the unautho- Court held that bank it completes of standard mort- rized law when practice Id. at for that service. 569. gage charges forms of practice unauthorized ruling plaintiffs’ ‍‌‌‌‌​‌‌‌‌​​‌‌‌​​​​​‌‌‌‌​​​​‌‌​‌​​​‌​‌​‌‌​‌‌‌​​‌‌‍This resolved of issue, by then dismissed order this law which was remaining allegations plaintiffs’ Court. now address We of error.

I trial argue Plaintiffs first that court erred summary disposition on MCPA claims. We granting West, App In v 262 Mich disagree. Newton Bank (2004), recently we held that defen- 686 NW2d ex- transactions were mortgage dant’s residential loan 445.904(l)(a). of MCL empt by from the MCPA virtue provi- exempt are Because the transactions summary disposition on those claims sions of the MCPA, was appropriate.

II challenges next the trial court’s Plaintiff Paxson on her TILA to defendant grant summary disposition of nor the Michigan Appeals claim. Neither the decided whether Supreme Court has Michigan to add new complaint of a class action amendment filing relates liability back theories Mich Opinion of the Court complaint initial purрoses computing the expira- period Thus, tion of the of limitations. whether Pax- TILA cause of son’s action was barred first an impression limitations involves an issue of law, issue of which is de reviewed novo. Collins Bank, 628, 631; Comerica 664 NW2d 713 formally The TILA claim pleaded Cowles’s second amended which was on complaint, February argues 1999. Defendant of limita- statute tions for Paxson all other class members tolled on claim that date. When the filed, second amended complaint was more than one year had passed since Paxson’s claim accrued on Febru- ary 9, Therefore, 1998. argues defendant that Paxson’s claim is barred the statute of disagree. limitations. We 3.501(F)(1)

MCR provides that the statute of limita- tions is tolled with respect to all persons within the class described the commencement anof 3.501(F)(2) asserting a class action. MCR delin- eates several in which circumstances running against members, resumes specifically, a notice of the certification; failure to move for class twenty-eight days after entry, amendment, notice the or revocation of an order of certification the eliminating person as a member class; of the entry of an order denying certification of the action; action as a class submission of an election to be class; excluded from the or final disposition of the action. Paxson was original member class described in the complaint on the commencement of Cowles’s original class action. The ultimately class was certified 3.501(F)(2) and none of the circumstances of MCR occurred that could have the period caused of limita- tions to running against resume any Paxson or other v Bank West the Court of limi- Thus, find the statute members. we question to Paxson. The was tolled with tations complaint, amendments arises then whether transaction, conduct, or arising out of adding claims back complaint, relate original alleged occurrence the initial when to the date of tolled. limitations was governing rules court initially observe

We actions, 3.500 subchapter set forth in as representative Rules, comprehensive. are not Court Michigan must court rules general, procedure civil Thus, specific rules supplement necessarily be applied actions. pertaining gov- authority or is rule particular There no action amendments back of the relation erning general 2.118(D), however, provides MCR lawsuits. adding relates back to an a claim rule that amendment claim asserted original if the pleading date of the conduct, arose out of the pleadings amended to be transaction, forth, attempted or occurrence set plead- An amended original pleading. set forth facts, theories, or even a new may introduce new ing the amendment long as different cause forth in the transaction set from the same arises 241 Mich Doyle Hosp, v Hutzel pleading. original (2000), LaBar v citing 206, 212-213; 615 NW2d 137 NW2d 136 Cooper, de- thirty years ago, More than rulings old strictures of its parted from the arising “out of the con- amendments determined that attempted transaction, forth or duct, or occurrence set permit- were pleading” the original forth in be set longer no LaBar, [] “The test at 407-408. ted. supra action, cause of states a new an amendment whether conduct, transaction, out of whether it arises but is of Court alleged or occurrence original sought pleading be amended.” Id. Michigan consistently courts have adhered the aforementioned of Amend- rule law. ments forth setting legal new theories are not barred applicable if statutes limitations derived from the same setting. transactional at 219- Doyle, supra 220. procedure

The federal rules of civil and prior United States Court decisions also provide that amend ments relate back to the initial filing purposes statute of Co, limitations. C Tiller Atlantic L R 323 US 574, 581; Tiller, 65 S Ct 89 L Ed 465 In plaintiff originally sued under one federal act and later amended to add new theory liability under another federal act. Id. at 575. The amendment was made after the period of had expired limitations newly asserted claim. Id. 580. The Supreme Court held that both liability theories of related to the same general conduct, transaction, or occurrence. Id. at 581. “The now, cause was in as it beginning, same—it is a suit to damages recover alleged wrongful death the deceased.” Id. apply

There is no reason to when, here, respondent has notice had from the beginning petitioner trying to enforce a claim against it leading up because of the events death respondent’s the deceased yard. [railroad] [Id.] case, In this the cause always of action was to recover damages related to the document preparation fee charged connection with the residential mortgage loans. additional theory under the which was TILA, through added the second complaint, amended related to the same conduct or pleaded transaction as original complaint. v Bank West Opinion of ruling Pipe disagree & in American that the

We Utah, 756; L Ed 2d 414 94 S Ct 38 US Constr Co disregard general (1974), compels of the rule us to repre- a the action is doctrine when relation-back the one. The Court not an individual one and sentative Pipe in a an amendment did not address American address the relation and did not action lawsuit case, individuals In that several of amendments. back govern- by companies States the United were sued and violating Act the them from Sherman ment to restrain Clayton Act, and False Claims of the and violations 16(b), Clayton Act, 15 USC at 540. The Act. Id. by proceeding provided instituted the that, when running laws, of antitrust the to enforce United States every private respect of of limitations “in the statute right arising laws,” under and based of action said any complained proceeding, of in the is sus- matter during pendency proceeding pended the year year one after after. Id. at 541-542. Within one litigation judgment entered between entities, the state of United States the several damages against a class action for Utah commenced Pipe companies aon Sher- American and other based man Act violation. Id. at 541. The defendants moved declaring not be for an order suit could action. Id. at 542-543. maintained as granted, was de- motion was class certification sixty Eight days parties, later, who nied. more than originаl class, moved described as members of were at action. Id. to intervene as Utah’s by denied the district Their motions were 543-544. indi- limitations on the court because 16(b), Id. claims, had run. as tolled 15 USC vidual action did not toll 544. The Utah’s class at Circuit Id. The Ninth Court of limitations. Mich the Court reversed, Appeals Supreme and the later granted certiorari issue. Id. tolling consider at 541-545. Court, noting a federal class action

is truly designed suit to avoid repeti- filings, tious determined that commencement the state of Utah satisfied the purpose provision limitation might to all those who suit, subsequently participate well as named plaintiffs. Pipe, American supra 550-551. Until the issue of decided, class certification was statute of limitations was tolled: designed 23 is not represen-

Rule to afford class action only participants tation to those active who are in or even proceedings prior aware the of in the suit order that proceed the suit or shall During shall not as a class action. pendency the of the District Court’s determination in this regard, practicable is to which be made “аs soon as after action,” the potential commencement of an class members passive are mere of brought beneficiaries the action in their until behalf. Not the and existence limits of the class have been membership established and notice of has been sent duty any does a class member have to take of the suit note any responsibility respect to exercise to it in order profit to from the eventual outcome of the It case. follows that as even to ‍‌‌‌‌​‌‌‌‌​​‌‌‌​​​​​‌‌‌‌​​​​‌‌​‌​​​‌​‌​‌‌​‌‌‌​​‌‌‍asserted class members who were unaware proceedings of brought the their interest or demon- who strably rely not did on the proceedings, institution of those running applicable the later statute of limitations participation does bar not in the class its judgment. [Id. 552.] ultimate The Supreme Court unequivocally held that “the com- mencement of a suspends class action applicable statute of limitations with to all asserted mem- bers of the class who would have been parties had the suit been to permitted continue as а class action.” Id. at v Bank West the Court of ruling its additionally discussed The Court 554. a operation of with the functional not inconsistent Id. of statute limitations.. periods “designed promote

[Statutory are to limitation through the revival of justice preventing surprises until evidence to slumber that have been allowed faded, lost, have have and witnesses has memories been just theory if one has claim is that even disappeared. adversary unjust on notice to defend put to it is not right that the to be free period of limitation and within right prevail over the of stale claims time comes ” ensuring prosecute policies essential them. The fairness of slept barring plaintiff who “has and of defendants ” here, when, plaintiff a named rights, his are satisfied a class commences suit who is to be found only thereby the substan- notifies defendants them, being brought against but also tive claims generic potential who number and identities of period set may participate judgment. Within the limitations, have the essential defendants subject both matter necessary to detеrmine information litigation, actual prospective whether the size of action, joint as a trial is conducted in the form a suit, [Id. interveners. principal or as a suit with additional added).] (citations omitted; emphasis at 554-555 interpret defendant and the trial court Both spe- ruling Pipe require in American notification of limitations cific causes of action before Pipe the American expires. those claims Given of amend- the relation back addressing Court was not in language ments, interpret we decline to the class Pipe, Unlike the class in American manner. certified, of limi- and the statute case was instant to within persons to be tolled “as all tations continued 3.501(F). By complaint.” MCR the class described put on notice the initial defendant was way pleading, suit, the docu- subject specifically of the of the matter Opinion of the Court ment fee and the manner in it which was disclosed and handled. Defendant also put notice of the of the prospective size class as outlined in the complaint. initial Crown, Parker,

In 345; Cork & Co v Seal US (1983), Ct 76 L Ed S 2d 628 the Court revisited its ruling in Again, however, American Pipe. Court was not called on to address the back relation of amend- Crown, litigation. ments class action In class certifi- cation was denied in an employment discrimination action. Id. at ninety days 347-348. Within of the denial certification, of class respondent filed a separate alleging action his claim for employment discrimina- tion. Id. 348. trial court dismissed the action on ground timely not filed. Id. The Fourth Circuit reversed, Court of Appeals Supreme and the granted certiorari. Id. at 348-349. The Court ruled that filing of class action tolls the statute of all limitations for asserted class members and just those who subsequently intervene in the named plaintiffs’ action. Id. at 350. If of the class action did not toll limitations, the statute of members would not able rely be on the existence of to protect suit their rights. “Only Id. by intervening taking other prior running they statute of limitations would be able to ensure their rights would not be lost the event that class certifi- cation was denied.” Id. Court noted that there would be needless multiplicity every actions if member, who was fearful that class certification might denied, be took steps file their own action. Id. at 350-351.

In this case, other members of the potential class were rely entitled to on the existence the class action and tolling attendant provisions v Bank West Opinion of the Court arising to claims rights respect their protect fee. Cowles of the document charging adding the complaint, file second amended to her moved TILA claim, expired of limitations period before claim. permitted If Paxson were not Paxson’s individual her tolling protect to provisions on the rely to compelled to of the class would be claim, every member without separate claims and assert their intervene litigation the class action to determine how waiting class members for importantly, More develop. would may while a expire of limitations period whom the pending, could the new claim is to amend add motion intervening sepa- rights by their only protect in the event that to maintain those claims rate actions ordered after the denied or is amendment is claims. re- on their individual expires negate effi- of actions would sulting multiplicity designed. is litigation for which class action ciency unfairly disadvantage class ac- does not ruling Our Applicable govern rules tion defendants. Thus, would be plaintiffs amendment of pleadings. of action without add theories or causes able to new “approach that this allows The dissent states stricture.1 phantom with countless suit, brimming a massive from its own ashes like a plaintiffs, repeatedly rise defendant Phoenix until a vexed and exhausted litigious to haunt someone else.” enough money finally pays not, however, resurrect- 240. case about Post at This a new class of manufacturing a new claim with ing or that, ruling in the an unfounded concern without The dissent raises conjure legal suggested, issues and will continue manner disregards completely complaint. trial their amend This'assertion amending complaints. MCR courts have discretion with 2.118(A)(2). not have unfettered Plaintiffs in class action lawsuits will they amending a cause of keep until find discretion prevail. they which can action on plaintiffs, but is about protecting claims of class members who relied the class action.

Moreover, defendant herein is not disadvantaged any more than if each plaintiff in the class had filed separate suits at the outset or separate TILA claims before on period expired their individual claims. If Paxson had filed an individual lawsuit July on 1998, 1, alleging practice law, the unauthorized later to claim, moved amend to add the TILA there is no question that the claim would relate back to the date of her original pleading regardless of whether of limitations on the TILA expired. claim had MCR 2.118(D). If the truly class action is a representative suit, then Paxson should not differently be treated because she was merely a member aof in a representative action and not a named plaintiff an independent action. We find reason, no nor do we find any controlling authority, that requires departure from general rule of the relation-back doctrine when the action is а representative one and not an individual one.

In the dissent, conclusion of his Judge O’CONNELL indicates that he “would also hold that certification of a only tolls the statute of limitations for claims that originally and properly received certification.” Post at proposition 240. This is not supported citation to authority analogy any authority, to ignores and it the purpose litigation. of class If class members cannot rely on the named to plaintiff toll the period of limita- claims, tions their each class member will re- be quired separately bring all his own name on the chance that representative plaintiff will later be found an have invalid claim and that the benefit of tolling will not apply. before, As is noted if Paxson had filed an individual lawsuit and later moved amend to claim, add the there no question that the claim 229 Bank Cowles v West original pleading date of her would relate back 2.118(D). does not address The dissent under MCR change the situation where why this result should initially an and Paxson was a class suit involves new class that no repeаting It bears plaintiff. unnamed the relation- will will added or members be benefit from back doctrine. disadvantage unfairly not

Further, ruling does our of class members. to the number defendant with the addi apply does not doctrine The relation-back Ctr, Inc, Food 220 v Michael’s parties. new Hurt tion of (1996); Yudashkin v 660 169, 179; 559 NW2d Mich (On 642, Remand), Mich App Holden F2d Ramsey, In Arneil NW2d (CA 1977), that, because ruled 782-783 originally asserted were not members to save their claims. class, they rely tolling could put in Arneil did not of the initial and number of notice of the existence the defendant on the of the class found outside definition plaintiffs argues Id. herein pleading. the initial Defendant within the expanded class complaint amended that the second way of the by added Any case. class members this however, parties, are new complaint, amended second of as the dissent claims. plaintiffs not a “fresh class” of relation-back may not avail themselves They The time-barred. may to be doctrine save claims of the size of complaint defendant initial advised dealing. with which was class “piggy- tried to where Paxson This is not a situation against “piggybacking” rule class back” actions. to opportunity argue preclude plaintiffs operates by filing certification of class reargue question Orr, 851 F2d actions. Andrews v repetitive class new but (CA Hunt, 827 F2d citing Korwek 6, 1988), 149 146, App 230 263 MICH 213 (CA 1987). “pendency previously of a does toll the statute of limitations period by putative additional class actions members case, original asserted Id. In this class.” there was only one class action. new, repetitive There were no actions filed any the class. statutory Within the period, put defendant was notice that members of the class were seeking monetary damages payment related legal document fee. Because the theo- ries asserted in the initial complaint and the second amended complaint were derived from the same trans- actional setting of which notice, defendant had amendments back relate initial filing, and Pax- son’s TILA claim not barred the statute of limita- tions. Doyle, supra 219-220. conclusion, reaching reject

In our wе the argument that the statute of limitations never tolled the TILA claims because expired before and, thus, Cowles’s was filed she was never valid class for that claim. It is well- settled a plaintiff who cannot maintain the cause action as an individual qualified is not to represent proposed class. A & M Co v Supply Corp, Microsoft 580, 598; Mich However, NW2d 572 when the class case, was certified in this there were plaintiffs like Paxson in the class who had valid claims and could have as served the class representative for those claims.2 The court could have allowed any interesting incorrectly find it We that the dissent refers to party” original a “new to the action. Paxson awas member of the plaintiffs. plaintiff intervene, She was an unnamed until she moved class of was defined at outset. Our courts have recognized nonrepresentative parties that members aof class are to litigation. Co, App Warren Consolidated Schools v W R Grace & 205 Mich y Bank West 231 op the Court ‍‌‌‌‌​‌‌‌‌​​‌‌‌​​​​​‌‌‌‌​​​​‌‌​‌​​​‌​‌​‌‌​‌‌‌​​‌‌‍as the class class member to substitute

appropriate Bank, 526 Pittsburgh In Haas v Nat’l representative. (CA never 1083, 3, 1975), the class should 1095 F2d for representative Haas as the been certified with have standing particular defendant. Haas’s against for the particular remain as the class to was certified. Id. after the class challenged claims was to plaintiff be added court nominal The ordered claims. Id. particular for the represent change the class action effectu only 1095-1096. plaintiff of a nominal the addition ated the order was Id. at 1097. The plaintiff named newly standing. class at the time and described in existence Id. Class Haas. complaint initially representatives on their rely a right members have DaLesio, Brink v 667 rules otherwise. until court (CA 1981). 4, and other class Paxson F2d 428 rely on Cowles as right had members as a Allowing to intervene representative. only by adding class action affected the plaintiff named added prosecute properly plaintiff a named claim.3 the relation-back doctrine conclude that sum,

In we TILA claim and the claim was im- Paxson’s applies summary disposition. for on motion properly dismissed Wayne 585; (1994); Pressley Sheriff, Mich v Co NW2d (1971). importantly, 300, 318; the United States More 186 NW2d 412 nonrepresentative recently or mem that unnamed ruled procedural parties to the action various of a class action are bers example, tolling of limitations and purposes; Scardelletti, 1, 9-11; judgments. 536 US appealing Devlin settlements L 2d 27 122 S Ct 153 Ed apply, doctrine did not trial ruled that relation-back nothing certification order. The to do with the class decision had allowing inexplicably Paxson to intervene on the decision focuses dissent intervention, appeal and no was taken this and file her decision. Opinion of the Court III our Given decision that Paxson’s TILA claim was improperly dismissed on statute limitations grounds, we need to address defendant’s argument alternative that summary disposition was nevertheless warranted 2.116(C)(10). aas matter of law. MCR A motion under 2.116(0(10) MCR tests the factual support plain- for a tiffs claim. Murad v & Admin Union Professional Local 239 Mich App 541; 609 NW2d 588 (2000). The pleadings, affidavits, depositions, admis- sions, and documentary other evidence is considered in the light most favorable the nonmoving party to determine whether there a genuine exists issue of material fact for trial. Id.

Paxson pleaded violation of the TILA based on defen- dant’s failure to include the document preparation fee as part of the annual percentage on Truth in Lending 1605(a) disclosure statement. 15 USC provides: Except provided section, as otherwise in this the amount charge any the finance in connection with consumer credit transaction shall be determined as the sum of all charges, payable directly indirectly by person or extended, whom the imposed directly credit indirectly by the creditor as an incident to the extension of charge credit. finance charges does not include of a type payable comparable in a cash transaction. The finance charge shall imposed not include fees and amounts third party closing agents (including agents, settlement attor- neys, and companies) escrow and title if the creditor does require imposition charges of thе or the services provided charges. and does not retain the 1605(a) 1 through Subsections of6 15 USC set forth a list of examples charges that are included 1605(e) charge. finance Additionally, 15 USC provides a list of items that shall not be included in the computa- v Bank West Opinion of of those items is “fees charge. One of the finance tion 15 USC documents.” of loan-related preparation 1605(e)(2). that defen- additionally pleaded the document dant’s failure disclose of the charge the itemization finance part Z, 12 CFR Regulation amount financed violated preparing fees for instructs 226.4(c)(7), which deeds, documents, mortgages, such as loan-related documents, are excluded reconveyance or settlement they are bona fide and charge if the finance from amount. reasonable interpretation of of the issue involves

A resolution regu and construing federal statutes federal law. When decisions of lations, governed by authoritative we are Co, & I R Rapids v Grand the federal courts. Bement (1916). no 65-66; 160 424 Where Mich NW rendered issue has been particular decision on a Court, adopt we are free to United States if we find their federal courts decisions of lower and persuasive appropriate and analysis conclusions Corp, v 469 Mich Abela Gen Motors jurisprudence. our (2004). 603, 606-607; 677 NW2d 325 Co, F3d 601 Huntington Mortgage In Brannam (CA 6, 2002), plaintiffs argued that docu- $250 fide and reasonable preparation ment fee was not bona charge. finance that it could be excluded such exempts the TILA fees for acknowledged The court that compu- from the of loan-related documents preparation Id. at 603. The Sixth charge. tation of the finance the $250 considered whether Appeals Circuit Court bona fide and reasonable. Id. 603-604. fee was anything covered did not that the fee support evidence Thus, there was costs. preparation more than document fide” that the fee was “bona support evidence to no respect Id. at 606. With Regulation under Z. MICH 213 Opinion op the Court charge, reasonableness of the the court determinеd $250 a actually fee is reasonable if is service performed prevailing reasonable in comparison practices industry in the relevant market. Id. The supported evidence reasonable docu- $250 ment fee for Michigan. western Id. case,

In Brannam, this unlike in question there is a material fact with to whether the fee was “bona term fide,” fide.” The “bona in Regulation Z, used 226.2(b)(3) that, not defined. 12 CFR provides unless term is specifically Regulation Z, defined in “the words the meanings given used have to them by state law contract.” We construe undefined words used in statutes according their plain ordinary meanings. vCox Flint Mgrs, Bd Hosp 651 NW2d 356 (2002). dictionary Resort to acceptable definitions is in determining useful ordinary meaning. Id. term “bona good faith, fide” means made or done in without deception or fraud, authentic, genuine, real. Random House College Webster’s Dictionary The purpose is to a meaningful assure disclosure of credit terms so may compare consumers various credit terms allow them to avoid uninformed uses of credit. 15 USC 1601(a); Inge v Rock Financial Corp, F3d (CA 2002). that purpose mind, With using ordinary fide,” definition of “bona prepara- document fee fide, authentic, tion not is bona or genuine, if it charges includes for items other than document prepa- ration.

There was evidence this case to support that the document preparation charge was not “bona fide.” Paul Sydloski, president, defendant’s testified that he be- lieved that ‍‌‌‌‌​‌‌‌‌​​‌‌‌​​​​​‌‌‌‌​​​​‌‌​‌​​​‌​‌​‌‌​‌‌‌​​‌‌‍the document preparation fee was charged to cover or defray defendant’s expenses, specifically the costs associated taking “with a loan through entire Bank West Cowles v

Opinion of the Court closing” through the application sequence keep- market or selling secondary it to the subsequently manage- senior that defendant’s Sydloski it. believed ing He was unsure held the same view. ment employees a document any difference between whether there was Koessel, fee. James processing and loan fee preparation officer, that the docu- testified lending chief the bank’s at initially fеe instituted $100 ment was preparation docu- preparing of the incurred “defray costs” some however, that the document admitted, ments. Koessel eventually by a “loan- replaced preparation part fee,” disclosed properly which is processing presents ques- the evidence charge. finance We believe the fee was respect fact to whether tion material with the loan from necessary to take variety for a of services beyond. genu- Because a through closing application respect with whether ine issue of material fact exists on merits fide, summary disposition the fee was bona is inappropriate. of the TILAclaim however, is material note, question that there no We agree to reasonableness. We with fact with by is measured Court reasonableness Brannam and we note that the market looking marketplace, dictio- compatible ordinary comparison approach is “reasonable,” which include of the term nary definitions reаson, exceeding prescribed the limit logical, not College Webster’s excessive, moderate. Random House determined that The Brannam Court Dictionary fee in west document a reasonable $250 failed offer evidence Paxson has Michigan. Id. Michigan for reasonable in west dispute that $250 preparation. document

IV that, if this finds argues appeal also statute of limita- barred that her TILAclaim was 263 MICH 213 by Dissenting Opinion O’Connell, J. tions, should hold that the trial court abused its refusing discretion in to allow Sandra and Robert to representatives Glasser intervene and act as class that claim. need not address light We this issue our ruling Nevertheless, Paxson’s claim. we find that the trial court did not its in denying abuse discretion Glassers’ motion intervene. Class members have a intervene, right “subject to the authority of regulate orderly course of action.” MCR 3.501(A)(4). In general, permissive motions to intervene are light considered in of whether intervention will delay result undue prejudice to the rights of the 2.209(B). original parties. MCR The trial deter- court’s mination that would intervention interfere orderly action, action, course of delay and would supported by the record before us.

Affirmed in part, part, reversed and remanded for further proceedings opinion. consistent with this We do jurisdiction. not retain J., concurred.

ZAHRA, J. I (dissenting). respectfully I dissent. O’CONNELL, concur with trial court that both Truth in Lending Act 15 USC 1601 seq.; et claims of plaintiffs (TILA), Kristine Cowles and Karen by B. Paxson are barred applicable statute limitations. Since both are barred limitations, the statute of I would affirm the decision of the trial court. In addition the statute of issue, charged $250 was “bona fide and reasonable.”1 Co, Brannam Huntington Mortgage original complaint illegally The essence of the banks practiced they charged preparing mortgage $250 law when fee for closing Unfortunately plaintiffs, documents. while this lawsuit was pending, charge Court ruled that banks could a fee for this Ameribank, 557, 568; service. Dressel v 664 NW2d 151 Bank West Cowles v Dissenting O’Connell, J. (CA 2002). Therefore, plaintiffs’ 601, 606 F3d 287 only further remand would and TILA claim is meritless I judicial resources. would limited waste the state’s trial court. decision of the affirm the at the cоrrect eventually arrived the trial court While case, it initially granted erred when in this it decision TILA claim allowed plaintiff Cowles’s class status of limitations period the class. represent Cowles to her claim she filed before had run on Cowles’s TILA her of she accused bank in which original complaint, law. Once the practice of illegally engaging run, it cannot be of limitations has applicable period amending a com- by filing new later tolled Therefore, court Cowles as the the trial certified plaint. of that was litigants for a class she representative 3.501(A)(1). from MCR legally representing. barred class, not the the eligible represent Because she certifying prohibited the trial court expressly rules 3.501(A)(1)(d). “The threshold consid- the MCR class. the proposed that eration for class action is certification A class. must be member representative as an cannot maintain cause plaintiff who qualified represent proposed individual allege $250 that the unreason Cowles amended the However, and, therefоre, Circuit Court a violation of tila. the Sixth able recently Appeals held a “bona fide and that this same fee was 1605(e)(2) charge 15 USC document under reasonable” 226.4(c)(7), computation it in its 12 so bank need not include CFR Brannam, Therefore, assuming charge. supra. even that the finance complaint, the period had TILA claim of limitations not run on Cowles’s summary disposition. legal Bran In lacks sufficient merit to withstand nam, supra “the fee be that should Sixth Circuit ruled actually performed and if for a service considered reasonable it was industry prevailing practices comparison of the reasonable found the fee reasonable under market.” Sixth Circuit the relevant standard, exact same issue as we and we face an identical fee plaintiffs’ validity claim. I affirm on this basis would review the tila alone. App 263 Mich Dissenting Opinion by O’Connell, J. 261, 287; Zine v Chrysler Corp, class.” (1999) added). (emphasis NW2d Because original complaint already never tolled the limitations, expired Cowles had no viable claim, and the court clearly trial errеd when it certified the class.

Later, recognizing erroneously had certified representative, the class and its the trial at- to cure error all tempted properly dismissing however, claims, claims. Before it dismissed the attorneys for the improperly certified class found an- (Paxson) plaintiff ostensibly other who could fit bill on the TILA claim. When issues regarding eligibility, arose Paxson’s the attorneys prof- fered two more representatives. alternative The trial court properly dismissed the anyway. case

Plaintiffs argue now that the trial court should not have dismissed their TILA merely claim because the court erroneously certified the class and the of limitations had run on Paxson’s claim. I disagree. The applicable period of limitations on Paxson’s TILA claim February 9, ran on 1998. The second com- amended plaint alleging the TILA claim not filed until Febru- ary 1998. I Because would hold that the of original, Cowles’s infirm legally does toll limitations, the statute of both Paxson and Cowles be should barred from representing the class we affirm should the trial court’s dismissal. majority goes astray

The opinion when it fails to acknowledge that neither the original claim nor the claim of illegal practice law ever had a legitimate Deciding disregard detail, basis law. this the majority litigate allows Paxson to the stale TILA claim as the though legal fiction of class status can somehow it. up resurrect its Propping legal reasoning on the Bank West Cowles v Dissenting O’Connell, J. status, allows majority class erroneously granted as emerge anonymity, replace from Paxson advance a cause of new representative, herself.2 legitimately Cowles could not assert that and parties majority permits substitution fit own failure to within glossing over Paxson’s Stretching of limitations. restraints the statute time rending far its beyond fiction of class status legal previously that the unknown majority holds point, class, had Paxson, as a silent member of ill-founded time of asserted the new claim actually majority correctly deemed complaint. If the original claim new fail for party,3 a new would Ctr, Inc, Food Hurt v Michaels’ tardiness. (1996).

169, 179; 559 NW2d 660 contrary holding has more insidious majority’s limi- the statute of hyper-extending than ramifications- It group litigants. on one claim for one tations litigants ignore statutes completely permits fresh as can continue to muster long they stem- causes of action plausible “class” alleged general from the same circumstances ming legal If lacks a court finds one claim complaint. noting disposed this case that the trial court could have It bears grounds original illegitimate complaint solely never claim, totally provided possibility that the new based on notice legal grounds, might Pipe & Constr Co v later arise. American different Utah, 554-555; L 414 US 94 S Ct 38 Ed 2d 713 majority fails the vital a member to draw distinction between party litigation. While class members have the class and 3.501(A)(4), right party, and become a MCE conditional intervene they naturally party plaintiffs. they new Intervention do so become when procedure by party by “a third is allowed to become definition is the which (7th ed) (emphasis litigation.” Dictionary party Black’s Law added). essentially, intervening, party new Pаxson became a So apply involving parties plaintiff, the case and court rules new and law here. Opinion by Dissenting O’Connell, J.

support, attorneys may the class’s simply conjure an- issue, other amend legal complaint it, to include avoid the running any period relating claim back to their original, defeated com- If plaint. the representative did not suffer the new harm alleged legally it, or is barred from asserting the class may ‍‌‌‌‌​‌‌‌‌​​‌‌‌​​​​​‌‌‌‌​​​​‌‌​‌​​​‌​‌​‌‌​‌‌‌​​‌‌‍simply conjure one of imaginary its participants him put at the class’s helm. This approach allows a suit, massive brimming with phantom countless plain- tiffs, to rise repeatedly its own ashes like a litigious Phoenix until a vexed and exhausted defendant finally pays it enough money to haunt someone else.4

I would simply hold that the trial clearly erred class, when certified this so dismissal was proper. As measure, a preemptive I would also hold that certifica- tion of a only tolls the statute of limitations for claims that originally properly received certifica- Any tion. new claims would need separаte class certifi- cation and would not benefit from tolling rules until the trial court separately certified them as worthy of status, including the eligibility of representa- 3.501(F) tive. This holding would not contradict MCR and would prevent promotion farcical of dormant parties for the sole purpose of circumventing traditional relation-back and tolling principles. majori- Because the ty’s result enables litigants to abuse class action proce- dures and the present claim ultimately doomed on its merits, I would affirm the decision of the trial court. example An pharmaceutical well within the extreme would he a case where a newborn Hypothetically, was made a member of the class. majority opinion year would allow the class to wait a after the child turns eighteen to amend completely its and add a new cause of 600.5851(1). delay action. MCL perpetuate could then itself if the open class remained ended and descrip new infants fell within the class tion at they the time of amendment. Fictions fail when fail to assist justice. Delays litigants and, encouraged, cause real harm to if erode the integrity judicial system.

Case Details

Case Name: Cowles v. Bank West

Court Name: Michigan Court of Appeals

Date Published: Oct 13, 2004

Citation: 687 N.W.2d 603

Docket Number: Docket 229516

Court Abbreviation: Mich. Ct. App.