LENDERS TITLE COMPANY v. Don CHANDLER, Individually and on Behalf of Other Persons Similarly Situated
02-936
Supreme Court of Arkansas
May 22, 2003
107 S.W.3d 157
Reversed and remanded.
Nichols & Campbell, P.A., by: H. Gregory Campbell; and Morgan & Turner, by: Todd M. Turner and Dan O. Turner, for appellee.
JIM HANNAH, Justice. Appellant Lenders Title Company appeals the order of the Garland County Circuit Court certifying Appellee Don Chandler‘s suit as a class action, pursuant to
The record reflects that Chandler filed suit against Lenders on October 23, 2001. In his complaint, Chandler alleges that on January 3, 2001, he sold property in Hot Springs, for which Lenders acted as the settlement and escrow agent. During that transaction, Lenders charged and received $50 each from Chandler and the buyer, Everett Lawless, for document preparation. Chandler alleges that the document-preparation fees received by Lenders are for documents prepared by Lenders, including legal documents such as deeds, mortgages, and notes. Chandler claims that the act of charging a separate fee for the preparation of legal documents constitutes the unauthorized practice of law. Chandler asserts that Lenders‘s actions violate the Arkansas Deceptive Trade Practices Act (DTPA),
On December 20, 2001, Lenders filed a motion to dismiss for failure to state facts upon which relief may be granted, pursuant to
On March 18, 2002, Chandler filed a motion for class certification. Lenders filed its response in opposition to the motion for certification on April 5. On May 31, Lenders filed a motion for specific findings and conclusions, requesting the trial court to make specific findings of fact and conclusions of law in the order either granting or denying Chandler‘s motion for certification of a class. On June 2, Lenders filed its proposed findings and conclusions.
A hearing was held on the motion for certification on June 3 and 4, 2002. Lenders presented testimony from several witnesses, and both parties offered numerous exhibits. At the conclusion, the trial court announced that it would allow the parties to submit their proposed findings of fact and conclusions of law before the court made a decision. Both sides submitted their proposals on June 14. On July 17, the trial court issued its findings of fact and conclusions of law and sent a letter to the parties defining the class as “all who engaged in a real estate closing handled by the Defendant on or after October 23, 1996 who were charged a document preparation fee.”
Following entry of that order, on August 5, 2002, Lenders filed a motion for a ruling on its proposed findings of fact and conclusions of law and, alternatively, for additional findings and conclusions. The trial court denied that motion on August 13. On August 16, Lenders filed a notice of appeal from the trial court‘s July 17 order and letter; the August 13 order denying the motion for specific findings and conclusions; and the March 21 order denying Lenders’ motion to dismiss. Five days later, on August 21, the trial court entered a final order certifying Chan
Lenders purports to raise two issues on appeal; in reality, however, there are three issues presented for this court‘s resolution. First, Lenders argues that the certification order must be reversed because the trial court failed to make sufficient findings and conclusions on each of the criteria required for class actions. Second, Lenders argues that certification was improper because the record itself does not support any of the six criteria required for class actions. Third, Lenders argues that the trial court erred in denying its motion to dismiss Chandler‘s suit pursuant to
Sufficiency of the Certification Order
Lenders argues that the certification order in this case should be reversed because the trial court failed to make specific findings of fact and conclusions of law on each of the required elements of a class action, as provided in
Chandler contends that the trial court‘s order is sufficient enough and that this court should affirm if it finds that the record supports the trial court‘s conclusion to certify the class. He argues that the trial court is not required to conduct a rigorous analysis for certification or to address every fact or conclusion proposed by Lenders. He contends further that BPS, Inc., does not control this case, because the trial court made some findings and conclusions.
In BPS, Inc., the appellants asserted that the class-certification order should be reversed because the trial court failed to make specific findings of fact and conclusions of law pursuant to
In BPS, Inc., 341 Ark. 834, 20 S.W.3d 403, the appellants had made a timely request for specific findings and conclusions pursuant to
We conclude that this order does not meet the mandatory requirements of
Rule 23 . Specifically, evaluating the trial court‘s order we cannot be certain of: (1) the number of members in the class which the trial court used to determine whether the numerosity requirement was met (estimated size of the class ranged from 100 members to 20,000 members); (2) what the trial court found to be the “common questions of law or fact“; (3) what claims the trial court found to be held by the representative parties which would be “typical” of the claims of the proposed class and whether such claims would be subject to defenses not applicable to all members of the class; (4) why the named plaintiffs’ claims predominate over claims held by individual class members; (5) why the trial court found that the representative parties would fairly and adequately represent the class; or (6) why the trial court found that a class action is “superior to other available methods for a fair and efficient adjudication of all the actual and potential claims.”
Id. at 850, 20 S.W.3d at 411-12. Based on this conclusion, this court held that the trial court abused its discretion in certifying the case as a class action. This court then concluded:
For a class action to serve the purpose of an efficient and fair means of resolving claims arising out of the same circumstances, these issues must be analyzed. Accordingly, we reverse and remand this case to the trial court for analysis and findings as required by
Rule 23 andRule 52 of the Arkansas Rules of Civil Procedure .
Id. at 851, 20 S.W.3d at 412. Relying on a decision from our court of appeals, this court indicated that to satisfy the rule‘s requirements, the trial court need only make “brief, definite, pertinent findings and conclusions upon the contested matters.” Id. at 849, 20 S.W.3d at 411 (quoting McClain v. Giles, 271 Ark. 176, 178 n.1, 607 S.W.2d 416, 417 n.1 (Ark. App. 1980)).
In the present case, prior to the trial court‘s resolution of the certification issue, Lenders filed a motion, pursuant to
The trial court‘s order reflects the following findings of fact and conclusions of law:
- Plaintiff has engaged in several real estate closings which were handled by the Defendant in which the parties were charged for document preparation.
- Defendant has conducted over 35,000 closings during the years from 1997 to 2000 with each transaction involving at least two parties.
- It is typical for the Defendant to charge a document preparation fee in connection with the real estate closings it conducts and, in fact, is its normal practice.
- Consolidation of all potential claims into one action would provide substantial benefit from the standpoints of efficiency and judicial economy.
The issues raised in this case would be present in most, if not all, of the closings in which the Defendant participated. - The Plaintiff has demonstrated knowledge and familiarity with the facts of the case and the legal processes involved and has displayed an active interest in pursuing the case to its ultimate conclusion.
- Counsel for the Plaintiff have engaged successfully in class action cases in the past which were vigorously and competently pursued.
- There is no evidence of any collusion or conflicting interest between the proposed representative and the class.
- The legal requirements of commonality, numerosity, typicality and adequacy have all been clearly and convincingly demonstrated.
- The Plaintiff would be an adequate representative of the Class and Plaintiff‘s attorneys would serve adequately as class counsel.
- The common issues raised in the Plaintiff‘s complaint would predominate throughout the class and a class action is the superior method with which to address the issues raised in this case.
Based on these findings and conclusions, the trial court granted Chandler‘s motion for certification of a class.
Like the order involved in BPS, Inc., 341 Ark. 834, 20 S.W.3d 403, the order in this case falls short of the requirements of
Nor does the order state how or why a class action would be more fair to the parties. Instead, again in a conclusory fashion, the order merely states that there would be substantial benefit through efficiency and judicial economy by consolidating
Before we leave this point, we are compelled to address Chandler‘s argument that our holding in BPS, Inc. conflicts with our holdings refusing to adopt the federal standard, which requires the trial court to conduct a rigorous analysis before certifying a case as a class action. See, e.g., Tay-Tay, 349 Ark. 675, 80 S.W.3d 365; The Money Place v. Barnes, 349 Ark. 518, 78 S.W.3d 730 (2002); Mega Life, 330 Ark. 261, 954 S.W.2d 898.1 In Mega Life, this court rejected the notion that a rigorous analysis was required on the issue of certification:
We also must respond to the dissent‘s contention that the certification order must be reversed because the trial court failed to conduct a “rigorous analysis” of the
Rule 23(b) requirements of predominance and superiority. In support of this argument, the dissent cites Arthur v. Zearley, 320 Ark. 273, 895 S.W.2d 928 (1995). The Arthur opinion, however, is devoid of any language requiring the trial court to conduct a “rigorous analysis.” In fact, we are unable to find any Arkansas case requiring the trial court to conduct a rigorous analysis, or for that matter, any case that describes exactly what such an analysis entails. Instead, we have consistently held that we will reverse a trial court‘s certification order only when the court has abused its discretion. In making this determination, we have consistently reviewed the evidence in the record to determine whether it supports the trial court‘s ultimate conclusion regarding certification. We have not, as argued by the dissent, previously required the court to enter into the record a detailed explanation of why it concluded that certification was proper, and we refuse to impose such a requirement upon the trial court at this time.
Id. at 269, 954 S.W.2d at 901 (citations omitted). We do not retreat from this holding today, nor did we do so in BPS, Inc., 341
Moreover, we maintain that where, as here, a party makes a timely request for specific findings of fact and conclusions of law on the criteria for class certification provided in
Motion to Dismiss
Lenders argues that the trial court erred in denying its motion to dismiss for failure to state facts upon which relief can be granted, pursuant to
Lenders does not dispute this general rule; rather, it argues that the denial of its motion to dismiss is an appealable order because the grounds supporting dismissal are intertwined with the issue of class certification. Lenders asserts that because the class-certification order is appealable, any “underlying orders” are also appealable. It relies on Ark. R. App. P.-Civ. 2(b), which provides in part: “An appeal from any final order also brings up for review any intermediate order involving the merits and necessarily affecting
An order certifying a class action is not a final order; it is an interlocutory order. See Worth v. City of Rogers, 351 Ark. 183, 89 S.W.3d 875 (2002); THE/FRE, Inc., 349 Ark. 507, 78 S.W.3d 723; F&G Fin. Servs., Inc. v. Barnes, 349 Ark. 420, 82 S.W.3d 162 (2002). Such an order is specifically appealable, pursuant to Rule 2(a)(9), as an exception to the final-order requirement. See Ford v. Ford, 347 Ark. 485, 65 S.W.3d 432 (2002) (holding that the exceptions identified in Rule 2 specify circumstances in which an issue is appealable even though the order is not final). This court has recognized that finality principles do not apply to class-certification rulings. Advance America, Cash Advance Ctrs. Of Ark., Inc. v. Garrett, 344 Ark. 75, 40 S.W.3d 239 (2001); Fraley v. Williams Ford Tractor & Equip. Co., 339 Ark. 322, 5 S.W.3d 423 (1999). Indeed,
Moreover, this court has repeatedly refused to delve into the merits of the case or even determine whether the plaintiff has stated a cause of action on review of a class-certification order. See, e.g., Arkansas Blue Cross & Blue Shield v. Hicks, 349 Ark. 269, 78 S.W.3d 58 (2002); BPS, Inc., 341 Ark. 834, 20 S.W.3d 403; Fraley, 339 Ark. 322, 5 S.W.3d 423. As this court explained in Fraley:
We have held that neither the trial court nor the appellate court may delve into the merits of the underlying claim in determining whether the elements of
Rule 23 have been satisfied. In that regard, a trial court may not consider whether the plaintiffs will ultimately prevail, or even whether they have a cause of action.
Id. at 335, 5 S.W.3d at 431 (citations omitted) (emphasis added). See also Mega Life, 330 Ark. 261, 954 S.W.2d 898.
Reversed and remanded in part; dismissed in part.
IMBER, J., concurs.
GLAZE, J., dissents.
CORBIN, J., not participating.
ANNABELLE CLINTON IMBER, Justice, concurring. I concur with the majority that this case must be reversed and remanded in order for the trial court to set out specific findings of fact and conclusions of law pursuant to
Mega Life & Health Ins. Co. v. Jacola, 330 Ark. 261, 954 S.W.2d 898 (1997) points out that
Today‘s majority opinion could be read as implying that all class-certification orders must have specific findings of fact and conclusions of law, based on
TOM GLAZE, Justice, dissenting. The majority court appears to retreat from its earlier decisions that the trial court is not required to conduct a “rigorous analysis” under
Our court has taken this more liberal view in initially certifying a class action at the early stage of litigation because such a certification may be altered or amended before the decision on the merits. Fraley v. Williams Ford Tractor & Equip. Co., 339 Ark.
Rule 23 of the Arkansas Rules of Civil Procedure specifically states that “[a]n order under this section may be conditional and it may be altered or amended before the decision on the merits.”Ark. R. Civ. P. 23 ; See also NEWBERG ON CLASS ACTIONS, supra § 7.47. Class rulings are often reconsidered, and subsequently affirmed, altered, modified, or withdrawn. Id.[A]lthough the court‘s initial decision under
Rule 23(c)(1) that an action is maintainable on a class basis in fact may be the final resolution of the question, it is not irreversible and may be altered or amended at a later date. This power to change the class certification decision has encouraged many courts to be quite liberal in certifying a class when that decision is made at an early stage, noting that the action always can be decertified or the class description altered if later events suggest that it is appropriate to do so. Wright, Miller & Kane: Federal Practice & Procedure 2d § 1785 at pp. 128-31 (2d Ed. 1986) (citations omitted). “The ability of a court to reconsider its initial class rulings... is a vital ingredient in the flexibility of courts to realize the full potential benefits flowing from the judicious use of the class device.” Newberg on Class Actions, supra § 7.47 at pp. 7-416. Class-action certification is necessarily an ongoing process in light ofRule 23 ‘s opt-out and decertification provisions.
The majority court here seems to retreat from our prior holdings set out above, and, while the trial court made findings of fact and conclusions of law, this court holds those findings are insufficient, thus deciding the trial court abused its discretion. The majority opinion relates that the trial court must undertake enough of an analysis to enable this court to conduct a meaningful review of the certification on appeal, and requires more than a cursory mention of the six criteria under
The trial court, however, reviewed Chandler‘s complaint and the record and determined the ultimate common question in the case is the unauthorized practice of law, by charging a preparation fee for the preparation of legal documents in real estate closing transactions. The trial court also found the defendant, Lenders Title Company, had conducted over 35,000 such real estate closings during the years from 1997 to 2000, and it was typical and normal
It is my view that the trial court did all it was required to do in rendering its findings, and if the trial court made an error, it can easily correct that mistake by decertification. I would add mention of BPS, Inc. v. Richardson, 341 Ark. 834, 20 S.W.3d 403 (2000), since the majority seems to rely on that decision in ruling as it does. Undoubtedly, BPS appears to be somewhat restrictive and contrary to many of our precedents, and that holding appears to require a “rigorous analysis” — a feat this court has held is unnecessary. However, there was no mention or comparison of the trial court‘s authority to decertify a class or this court‘s rationale as to why it relies on a liberal view when granting a class action.
For the above reasons, I dissent.
03-450
Jay ABRAMSON v. Michelle ELDRIDGE
Supreme Court of Arkansas
Opinion delivered May 22, 2003
107 S.W.3d 171
