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King v. Homeward Residential, Inc.

United States District Court, E.D. Arkansas, Jonesboro Division

July 27, 2017

SAVOIL KING and DOROTHY KING, for themselves and all Arkansas residents similarly situated PLAINTIFFS
v.
HOMEWARD RESIDENTIAL, INC. and OCWEN LOAN SERVICING, LLC DEFENDANTS

          ORDER

         The motion to certify class [Doc. No. 114] is denied because the proposed class definition does not satisfy Federal Rule of Civil Procedure 23.

         I. BACKGROUND

         Plaintiffs Dorothy and Savoil King first filed this class action complaint on July 28, 2014, asserting claims under the Arkansas Deceptive Trade Practices Act (“ADTPA”) and unjust enrichment. On May 9, 2017, notice of Savoil King's death was filed [Doc. No. 147], and so plaintiff Dorothy King is henceforth referred to in the singular. King claims she purchased a home in 1994, her mortgage was serviced by Homeward Residential Inc. (“Homeward”) and Ocwen Loan Servicing, LLC (“Ocwen”), and the mortgage contract expressly gave her servicer the right to purchase insurance for King's home and charge her for (“force place”) it if she allowed the insurance on the home to lapse or become inadequate. Second Amended Class Action Complaint ¶ 2, Doc. No. 110. King claims that, despite having insurance coverage on her home, the defendants wrongfully force placed insurance on her home twice, once for a period of approximately two years. Id. ¶¶ 35, 44, 45.

         In essence, King brings two entirely distinct claims. First, defendants knew that she did not let her insurance lapse, so she should not have been “double-billed” for insurance. Id. ¶¶ 20, 45. Second, the force place insurance premiums were “excessively high” as a result of collusive and anti competitive practices on the part of the defendants, who were motivated by kickbacks. Id. ¶¶ 19, 27, 45. In support of the second claim, King has consistently represented that “the claims here are not that the rates are excessively high, ” see, e.g., Doc. No. 126, at 2, but instead that she is merely challenging Homeward's decision to purchase insurance from QBE when the premiums charged by QBE were excessively higher than the premiums charged by other insurers. See, e.g., Doc. No. 138 at 1-2; see also Doc. No. 35, at 5 (holding that, King is “not challenging insurance rates”). But, King's complaint clearly claims that she was charged an “excessively high premium.” Second Amended Class Action Complaint ¶ 45.

         King's claims under the ADTPA and for unjust enrichment were dismissed. Ultimately, the Kings amended their class action complaint [Doc. No 49] to assert a claim for breach of contract, and that claim was dismissed as well [Doc. No. 56]. The Kings appealed. The only issue on appeal was whether their claim for unjust enrichment was properly dismissed, see Doc. No. 75, at 1, and the Eighth Circuit Court of Appeals vacated the dismissal of the unjust enrichment claim and remanded. Id. at 3.

         On remand, King is proceeding on theories of unjust enrichment and conversion based on the allegations in her second amended class action complaint, and she moves for class certification [Doc. No. 114]. She wants an injunction, restitution, and punitive damages. King admits that defendants have returned her force place insurance premiums to her but appears to be requesting the payment of interest on those payments. See Doc. No. 138, at 3 (“Defendants only returned the money it had taken from Dr. King after wrongfully force-placing insurance on her on two separate occasions, and after she was forced to file this lawsuit against them to get them to stop.”).

         II. LEGAL STANDARD

         “The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only. To come within the exception, a party seeking to maintain a class action must affirmatively demonstrate his compliance with Rule 23.” Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013) (internal quotations omitted). Thus, class certification is only appropriate when the four threshold requirements of Rule 23(a) are satisfied. Wal Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349 (2011). These requirements- numerosity, commonality, typicality, and adequate representation- “effectively limit the class claims to those fairly encompassed by the named plaintiff's claims.” Id. (internal quotations omitted). The proposed class must also fit within one of the three subsections of Rule 23(b). Comcast Corp., 133 S.Ct. at 1432.

         III. DISCUSSION

         King's proposed class includes all citizens of Arkansas who a) had a mortgage or deed of trust securing a loan on real estate within the state of Arkansas, b) where the loan was serviced by Homeward, c) where Homeward force placed insurance on such property and demanded the premiums be paid to it, and d) who, from June 5, 2009, through the date of entry of an order certifying the class, paid or who still owe premiums for the force place insurance secured by Homeward. Motion to Certify Class, Doc. No. 114, at 2. The proposed class excludes anyone who has filed a claim in court for damages based upon similar allegations, anyone employed by any defendant, and the presiding judge over this action and his immediate family members. Id. Essentially, the proposed class includes anyone who had insurance force placed by Homeward since June 5, 2009, regardless of whether his or her insurance policy had lapsed and regardless of what type of real estate the mortgage or deed of trust secured. King says as many as 3, 900 class members fitting this class definition have been identified.

         A. Rule 23(a)

         Numerosity is not a contested issue and it does not likely pose a problem for King's proposed class. Numerosity requires that “the class is so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). Classes containing as few as 25 and 35 members have been certified. Dirks v. Clayton Brokerage Co. of St. Louis, Inc., 105 F.R.D. 125, 131 (D. Minn. 1985).

         Commonality, typicality, and adequacy, however, do present problems for King's proposed class. See Dukes, 564 U.S. at 376 n. 5 (discussing that commonality, typicality, and adequacy requirements tend to merge); Pipes v. Life Inv'rs Ins. Co. of Am., 254 F.R.D. 544, 549 (E.D. Ark. 2008) (typicality has a qualitative aspect related to commonality and adequacy that requires a named representative to be a member of the class she seeks to represent). In addition to requiring “questions of law or fact common to the class, ” Fed.R.Civ.P. 23(a)(2), commonality is interpreted to require that “the plaintiff demonstrate that the class members have suffered the same injury.” See Dukes, 564 U.S. at 349-50 (internal quotations omitted). The class members' claims “must depend upon a common contention” the truth or falsity of which “will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. at 350. “In general, typicality is established if the claims of all the class members arise from the same event or course of conduct, or are based on the same legal theory.” Haney v. Recall Center, 282 F.R.D. 436, 440 (W.D. Ark. 2012). Because adequacy merges with the requirement that a class representative possess the same interest and suffer the same injury as the class members, a representative that fails commonality and typicality also fails adequacy. See Nelson v. Wal-Mart Stores, Inc., 245 F.R.D. 358, 371 (E.D. Ark 2007).

         King has maintained from the beginning of this litigation that Homeward wrongfully forced insurance on her and other potential class members who did not allow their insurance to lapse, which resulted in her being “double-billed” for insurance. See, e.g., Second Amended Class Action Complaint ¶ 35 (“Defendants force this insurance in disregard of the fact that the Kings and other members of the Class have homeowners's insurance in place.”). Even if this common contention is resolved in favor of King, it may only demonstrate that she is entitled to recover the entirety of the premiums wrongfully charged and perhaps the interest on those wrongfully charged premiums. The resolution of that issue would settle nothing in regard to members of the proposed class whose insurance lapsed and who had insurance forced on them as a result, as permitted under their contracts with defendants. Id. ¶ 2. This latter category of class members who were not “double-billed” may only be entitled to a portion of the premium paid, if ...


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