Reyes v. Julia Place Condominiums Homeowners Association, Inc. et al
Filing
778
ORDER & REASONS re 551 MOTION To Amend the Usury Class Definition and to Grant Summary Judgment in Favor of Carondelet Place Condominiums Owners Association, Inc. is GRANTED. The usury class definition is hereby AMENDED to exclud e those who own condominiums at Carondelet Place. It is FURTHER ORDERED that the remaining claims for violations of Louisiana usury law against Defendant Carondelet Place Condominiums Owners Association, Inc. are hereby DISMISSED WITHOUT PREJUDICE. Signed by Judge Carl Barbier.(Reference: 12-2043)(gec)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
NICOLE REYES, ET AL.
CIVIL ACTION
VERSUS
NO: 12-2043
JULIA PLACE CONDOMINIUMS
HOMEOWNERS ASSOCIATION,
INC., ET AL.
SECTION: “J”(3)
ORDER & REASONS
Before
the
Court
is
a
Motion
to
Amend
the
Usury
Class
Definition and to Grant Summary Judgment in Favor of Carondelet
Place Condominiums Owners Association (Rec. Doc. 551) filed by
Defendant, Carondelet Place Condominiums Homeowners Association,
Inc. (Carondelet Place), and an opposition thereto (Rec. Doc. 555)
filed
by
Plaintiff.
Having
considered
the
motion
and
legal
memoranda, the record, and the applicable law, the Court finds
that the motion should be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
The facts of this case are set forth in detail in previously
issued Orders and Reasons (see, e.g., Rec. Doc. 464); therefore,
the Court will only briefly recount them here. This is a class
action lawsuit brought by Plaintiffs Nicole Reyes and Mike Sobel
on behalf of themselves and other condominium owners at various
properties
throughout
New
Orleans
against
their
respective
condominium associations, as well as Steeg Law, LLC (Steeg).
Plaintiff Patrick Andras was also added to this lawsuit after class
1
certification. 1 Plaintiffs allege that the Defendants have engaged
in debt collection practices that violate state and federal law.
On May 23, 2014, Plaintiffs filed a motion to certify three
classes of condominium owners. (Rec. Doc. 351.) The first class
consists of condominium owners who were subjected to alleged
violations of the Fair Debt Collection Practices Act (FDCPA).
Plaintiffs allege that Steeg utilizes a standard form collection
letter that violates the FDCPA on its face by demanding payment of
unpaid assessments within seven days, and that Steeg violated the
FDCPA by filing excessive liens on condominium owners’ properties.
The second class consists of condominium owners who were charged
excessive late fees and interest rates for delinquent payment of
assessments that allegedly violated Louisiana’s usury laws. The
third class consists of those who were charged late fees allegedly
in violation of the Louisiana Condominium Act (LCA).
On December 18, 2014, the Court certified a FDCPA class
limited to claims for monetary relief against Steeg. The Court
narrowly defined the FDCPA monetary relief class as “consisting of
unit
owners
who
received
letters
identical
or
substantially
similar to those attached as Exhibits “A” and “D” of the original
complaint during the year prior to the filing of the action.” (Rec.
Doc. 464 at 16.) The Court denied certification of a FDCPA class
1
After the usury class was certified on August 20, 2015, Plaintiffs were granted
leave to file their fourth amended complaint. (R. Doc. 553.) This fourth amended
complaint added Mr. Andras as a named defendant.
2
for
injunctive
relief
and
denied
certification
of
the
FDCPA
monetary relief class for claims against the various condominium
associations. Id. at 6, 15. The Court also denied certification of
the LCA class and deferred ruling on whether certification was
appropriate for the proposed usury class because a portion of the
proposed class had not actually paid the late fees that had been
charged to them.
On August 20, 2015, the Court certified a narrowed version of
the usury class, divided into two subclasses. Specifically, the
Court certified “a class of past and present condominium owners
who have paid allegedly usurious late fees. The class shall be
divided into two subclasses, one seeking monetary relief and
another seeking injunctive relief for purported violations of the
usury law.” (Rec. Doc. 529, at 16.) The Court did not reach whether
members who had not actually paid late fees possess standing
because it held that the usury class “must exclude those who did
not
actually
make
payments
on
late
fees
because
they
lack
commonality with the other members of the proposed class.” Id. at
6, 9-10. Discussing the typicality requirement for Rule 23 class
certification,
the
Court
explained
that
“the
juridical
link
doctrine may be applicable after Rule 23 certification because
plaintiffs have alleged that the ‘condominium associations have
engaged in a scheme or conspired with Steeg and [Margaret Glass]
to
set
their
respective
Condominium
3
Declarations
to
charge
usurious interest upon its members’ and ‘for Steeg and [Margaret
Glass] to send form collection letters on behalf of Rotunda and
other named condominium associations.’” (Rec. Doc. 529 at 11.) As
to Carondelet Place, this Court went further and explained that
“if Carondelet Place did not use Steeg’s services in drafting its
declarations
and
bylaws,
then
those
who
own
condominiums
at
Carondelet Place must be excluded from the proposed [usury] class.
If such a showing can be made, then the class will be winnowed
accordingly.” Id. at 12.
On November 11, 2015, Defendant Carondelet Place filed this
Motion
to
Amend
the
Usury
Class
Definition
and
for
Summary
Judgment. (Rec. Doc. 529.) In short, Carondelet Place argues that
it did not use Steeg to draft its declarations and bylaws and that
no late fees or interest were ever paid by any unit owner. Id. at
3.
Consequently,
Carondelet
Place
argues
that
it
should
be
dismissed from this lawsuit. Id. at 4. Plaintiffs argue that
factual issues are still present which preclude summary judgment.
(Rec. Doc. 555.) Carondelet Place’s motion is now before the Court
on the briefs.
PARTIES’ ARGUMENTS
Carondelet Place asks this Court to amend the usury class
definition to exclude any past or present condominium owners and
to dismiss it from this lawsuit without prejudice. Carondelet Place
argues that neither Nicole Reyes, Patrick Andras, nor Mike Sobel
4
have asserted direct causes of action against Carondelet Place,
but rather they rely on the “juridical link exception” to Rule
23’s typicality and adequacy requirements. (Rec. Doc. 551-1 at 4.)
Carondelet Place argues that this Court has already explained that
“if Carondelet Place did not use Steeg’s services in drafting its
declarations
and
bylaws,
then
those
who
own
condominiums
at
Carondelet Place must be excluded from the proposed class. If such
a
showing
can
be
made,
then
the
class
will
be
winnowed
accordingly.” Id. at 2. Carondelet Place now argues that it has
evidence,
through
the
affidavits
of
Chad
B.
Ham
and
Randy
Opotowsky, that Steeg did not draft its declarations and bylaws.
Id. Carondelet Place argues that “[w]ithout the benefit of a
certified
class
against
Carondelet
Place,
Plaintiffs’
claims
against Carondelet Place [are] nothing more than attempts to assert
the injuries of others and therefore must be dismissed for lack of
standing.” Id. at 6. Consequently, Carondelet Place argues that
this Court lacks subject matter jurisdiction and therefore should
dismiss Plaintiffs’ claims without prejudice. Id.
Plaintiffs
raise
several
arguments
in
opposition
to
Carondelet Place’s motion to dismiss. First, Plaintiffs argue that
the motion is premature because it is brought before the end of
the discovery deadline. (Rec. Doc. 555 at 1.) Second, Plaintiffs
argue that Defendant’s motion “overlooks the fact that the Steeg
Law firm was involved in debt collection activities on behalf of
5
Carondelet Place.” Id. But Plaintiffs concede that Carondelet
Place’s declarations and bylaws were not drafted by Steeg. Id.
Nevertheless, Plaintiffs argue that Carondelet Place and Steeg
participated in an illegal scheme to coerce unit owners into paying
disputed
assessments
and
attorney’s
fees
by
threatening
terminate access to common services. Id. at 2-3.
to
Plaintiffs
further argue that while Carondelet Place maintains that no late
fees or interest were ever paid by unit owners, Carondelet Place
collected usurious fees “couched as ‘attorney’s fees.’” Id. at 5.
Accordingly,
Plaintiffs
argue
that
the
evidence
presented
satisfies the requirement for typicality and the motion to amend
the class definition and dismiss Carondelet Place should be denied.
Id. at 15.
LEGAL STANDARD
Rule 23(a) of the Federal Rules of Civil Procedure presents
four requirements in order for one or members of a class to sue,
or be sued: (1) the class must be so numerous that joinder of all
members is impracticable; (2) there must be questions of law or
fact common to the class; (3) the claims or defenses of the
representative parties must be typical of the claims or defenses
of the class; and (4) the representative parties will fairly and
adequately protect the interests of the class. Fed. R. Civ. Pro.
23(a). The Fifth Circuit has explained that:
6
The test for typicality is not demanding. It focuses on
the similarity between the named plaintiffs’ legal and
remedial theories of those whom they purport to
represent. Typicality does not require a complete
identity of claims. Rather, the critical inquiry is
whether the class representative’s claims have the same
essential characteristics of those of the putative
class. If the claims arise from a similar course of
conduct and share the same legal theory, factual
differences will not defeat typicality.
Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th. Cir. 2002) (quoting
James v. City of Dallas, 254 F.3d 551, 571 (5th Cir. 2001)).
LEGAL STANDARD
1.
Rule 23 of the Federal Rules of Civil Procedure
Rule 23(a) of the Federal Rules of Civil Procedure presents
four requirements in order for one or members of a class to sue,
or be sued: (1) the class must be so numerous that joinder of all
members is impracticable; (2) there must be questions of law or
fact common to the class; (3) the claims or defenses of the
representative parties must be typical of the claims or defenses
of the class; and (4) the representative parties will fairly and
adequately protect the interests of the class. Fed. R. Civ. P.
23(a). The Fifth Circuit has explained that:
The test for typicality is not demanding. It focuses on
the similarity between the named plaintiffs’ legal and
remedial theories of those whom they purport to
represent. Typicality does not require a complete
identity of claims. Rather, the critical inquiry is
whether the class representative’s claims have the same
essential characteristics of those of the putative
class. If the claims arise from a similar course of
conduct and share the same legal theory, factual
differences will not defeat typicality.
7
Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th. Cir. 2002) (quoting
James v. City of Dallas, 254 F.3d 551, 571 (5th Cir. 2001)). Prior
to a final judgment, a court may alter or amend its order granting
class certification. Fed. R. Civ. P. 23(c)(1)(c).
2.
Article III Standing
“Article III of the Constitution limits the jurisdiction of
federal courts to ‘Cases’ and ‘Controversies.’” Susan B. Anthony
List v. Driehaus, 134 S.Ct. 2334, 2341 (2014) (citing U.S. Const.
art.
III,
§
2).
“‘One
element
of
the
case-or-controversy
requirement’ is that plaintiffs ‘must establish that they have
standing to sue.’” Clapper v. Amnesty Int’l USA, 133 S.Ct. 1138,
1146 (2013) (quoting Raines v. Byrd, 521 U.S. 811, 818 (1997)).
Standing is the determination of whether a specific person is the
proper party to bring a matter to the court for adjudication. The
United States Supreme Court has declared that “[i]n essence the
question of standing is whether the litigant is entitled to have
the court decide the merits of the dispute or of particular
issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975).
In
its
constitutional
dimension,
standing
concerns
justiciability. “As an aspect of justiciability, the standing
question is whether the plaintiff has ‘alleged such a personal
stake
in
the
outcome
of
the
controversy’
as
to
warrant
his
invocation of federal-court jurisdiction and to justify exercise
of the court’s remedial powers on his behalf.” Id. at 498–99. A
8
federal court’s jurisdiction can be invoked only when the plaintiff
himself has suffered “some threatened or actual injury resulting
from the putatively illegal action.” Id. at 499. “To establish
Article III standing, a plaintiff must show (1) an ‘injury in
fact,’ (2) a sufficient ‘causal connection between the injury and
the conduct complained of,’ and (3) a ‘likel[ihood]’ that the
injury ‘will be redressed by a favorable decision.’” Susan B.
Anthony List, 134 S.Ct. at 2341 (quoting Lujan v. Defenders of
Wildlife,
504
U.S.
555,
560–61
(1992)).
The
injury-in-fact
requirement helps to ensure that the plaintiff has a “personal
stake in the outcome of the controversy.” Id. (quoting Warth, 422
U.S. at 498). An injury sufficient to satisfy Article III must be
“concrete
and
particularized”
and
“actual
or
imminent,
not
‘conjectural’ or ‘hypothetical.’” Id. (quoting Lujan, 504 U.S. at
560). Article III standing is a threshold question in every federal
court
case.
As
the
party
invoking
federal
jurisdiction,
the
plaintiff bears the burden of establishing standing. See Lujan,
504 U.S. at 561.
DISCUSSION
This
Court
denied
certification
of
a
FDCPA
class
for
injunctive relief and denied certification of the FDCPA monetary
relief
class
associations.
for
(Rec.
claims
Doc.
against
464.)
the
This
various
Court
condominium
also
denied
certification of the LCA class altogether. Id. The only claim
9
Plaintiffs have against Carondelet Place is for alleged violations
of Louisiana usury laws. None of the named Plaintiffs, Nicole
Reyes, Patrick Andras, and Mike Sobel, have asserted direct causes
of action against Carondelet Place. (Rec. Doc. 551-1 at 4.) Ms.
Reyes, Mr. Andras, and Mr. Sobel have not and cannot allege direct
causes of action against Carondelet Place, because they have never
been owners nor members at Carondelet Place. 2 Rather, the named
Plaintiffs rely on the juridical link doctrine for their claim
against Carondelet Place.
This Court’s August 20, 2015 Order, in addressing the Rule 23
typicality requirement and the juridical link doctrine, clearly
explained that “if Carondelet Place did not use Steeg’s services
in
drafting
its
declarations
and
bylaws,
then
those
who
own
condominiums at Carondelet Place must be excluded from the proposed
[usury] class. If such a showing can be made, then the class will
be winnowed accordingly.” (Rec. Doc. 529 at 12.) Since that time,
Carondelet
Place
has
produced
evidence
in
the
form
of
two
affidavits. First is the affidavit of Chad B. Ham which states
that “[f]rom 2005 to 2006, [Mr. Ham] assisted 2222 Carondelet, LLC
in preparing the declaration, bylaws, articles of incorporation,
and
initial
report
for
Carondelet
2
Place
Condominium
Owners
Ms. Reyes was or is a condominium owner at the Julia Place Condominium complex.
(Rec. Doc. 100-1 at 1-2.) Mr. Sobel was or is a condominium owner at The Lofts
Condominiums complex. (Rec. Doc. 127-1 at 1.) Mr. Andras was or is a condominium
owner at Magazine Place Condominiums complex. (Rec. Doc. 127-2 at 1.)
10
Association, Inc. . . . The Steeg Law Firm did not participate in
any way in the preparation [of these documents.]” (Rec. Doc. 5513 at 1.) Second is the affidavit of Randy Opotowsky, a lawyer at
Steeg,
which
states
“Steeg
law
also
did
not
draft,
prepare,
participate or assist with the preparation of Carondelet Place
Condominium’s” declarations or bylaws. (Rec. Doc. 551-2.)
Plaintiffs argue that “[w]hile Steeg did not prepare the
initial
declarations,
Incorporation
it
prepared
Re-Instatement
and
the
named
necessary
itself
Articles
the
of
registered
agent” of Carondelet Place. (Rec. Doc. 555 at 5.) Plaintiffs have
not shown that Carondelet used Steeg’s services in drafting its
declarations and bylaws. Judge Berrigan’s August 20, 2015 Order
was clear: “[I]f Carondelet Place did not use Steeg’s services in
drafting
its
declarations
or
bylaws,
then
those
who
own
condominiums at Carondelet Place must be excluded from the proposed
class.” (Rec. Doc. 529 at 12.) In fact, Plaintiffs admit that
“Carondelet Place is correct that its declarations [were] drafted
by someone other than Steeg. . . .” Id. at 1. Consequently, the
class
definition
must
be
amended
to
exclude
those
who
own
condominiums at Carondelet Place.
As mentioned, the named Plaintiffs have not and cannot allege
direct causes of action against Carondelet Place, because they
have
never
been
owners
or
members
at
Carondelet
Place.
In
accordance with Judge Berrigan’s Order, because those who own
11
condominiums at Carondelet Place must be excluded from the usury
class and there are no remaining Plaintiffs with a direct cause of
action against Carondelet Place, there is no longer a “juridical
link” between Carondelet Place and the other Defendants. See id.
Thus, the named Plaintiffs cannot avail themselves of the juridical
link doctrine as a means of asserting claims on behalf of those
who could allege a direct cause of action against Carondelet Place
(i.e., those who own or owned a condominium at Carondelet Place).
Accordingly, the claims by the named Plaintiffs and the remaining
class members against Carondelet Place are nothing more than
attempts to assert the injuries of others and therefore must be
dismissed. See Audler v. CBC Innovis Inc., 519 F.3d 239, 249-50
(5th Cir. 2008) (dismissing named plaintiff for lack of standing
where defendants had no dealings with the named plaintiff); In re
FEMA Trailer Formaldehyde Products Liab. Litig., 570 F. Supp. 2d
851, 853 (E.D. La. 2008) (dismissing plaintiffs’ claims where no
added plaintiffs had any dealings with defendants); See Matte v.
Sunshine Mobile Homes, Inc., 270 F. Supp. 2d 805, 820-28 (W.D. La.
2003)
(finding
the
juridical
link
inapplicable
where
no
plaintiffs, named or within the class, were able to assert a direct
cause of action against the defendants).
12
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Amend the
Usury Class Definition and to Grant Summary Judgment in Favor of
Carondelet Place (Rec. Doc. 551) is GRANTED. The usury class
definition is hereby AMENDED to exclude those who own condominiums
at Carondelet Place.
IT IS FURTHER ORDERED that the remaining claims for violations
of
Louisiana
usury
law
against
Defendant
Carondelet
Place
Condominiums Owners Association, Inc. are hereby DISMISSED WITHOUT
PREJUDICE.
New Orleans, Louisiana this 29th day of September, 2016.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
13
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