Minter v. Wells Fargo Bank, N.A. et al

Filing 332

MEMORANDUM. Signed by Judge William M Nickerson on 3/14/12. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
DENISE MINTER et al.

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* Civil Action WMN-07-3442
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v.
WELLS FARGO BANK, N.A. et al.
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MEMORANDUM
Plaintiffs have filed a Motion to Modify Class
Certification Definition for RICO1 Claims, ECF No. 311, in which
they request that the Court amend the class period so that it
will include all civil RICO claims that fall within the statute
of limitations.

The motion is fully briefed and ripe for

decision.2
The Court has broad authority to alter an order granting
class certification pursuant to Federal Rule of Civil Procedure
23(c)(1)(C), which states that “[a]n order that grants or denies
class certification may be altered or amended before final
judgment.”

The Notes from the Advisory Committee further

explain that “[a] determination once made can be altered or
amended . . . if, upon fuller development of the facts, the
1

RICO is the acronym for the “Racketeer Influenced and Corrupt
Organizations Act,” which is codified at 18 U.S.C. § 1961, et
seq. Plaintiffs have filed claims under several provisions of
RICO Section 1962.
2

The details of Plaintiffs’ allegations have been outlined in
prior opinions of this Court and will not be repeated here. See
ECF Nos. 88, 253, and 307.

original determination appears unsound.”

Notes of Advisory

Comm., Subdivision (c)(1) (1966); see also Zenith Labs., Inc. v.
Carter-Wallace, Inc., 530 F.2d 508, 512 (3d Cir. 1976) (quoting
same in support of decision to alter order because, among other
reasons, Judge relied on “erroneous assumption” when making
original determination regarding class certification); Gutierrez
v. Johnson & Johnson, 269 F.R.D. 430, 434 (D.N.J. 2010) noting
that a court may revisit prior certification decision to cure
defects).
The current class definition for RICO claims, certified in
this Court’s order dated May 3, 2011, is:
All consumers who have obtained a federally related
mortgage loan originated by Prosperity Mortgage Company
that was funded by transfers from a line of credit at Wells
Fargo Bank, any of its subsidiaries or any of their
predecessors, on or after December 26, 2006.
ECF No. 254.3

Plaintiffs argue that in order to accommodate the

four year statute of limitations for the civil RICO claims plead
in the original complaint, the Court should modify the current
class definition for RICO claimants to include those borrowers
whose loans closed on or after December 26, 2003, four years
before the original complaint was filed.

The Court agrees.

It is clear that four years is the appropriate statute of
limitations for civil RICO claims, see Agency Holding Corp. v.
3

This is also the class definition for claims timely brought
under Sections 8(a), 8(c) and 8(c)(4) of the Real Estate
Settlement Procedures Act (RESPA), located at 12 U.S.C. § 2607.
2

Malley-Duff & Associates, Inc., 483 U.S. 143, 156 (1987), and
Defendants do not appear to contest this assertion.4

Therefore,

any borrower who meets the class criteria and closed on a
mortgage on or after December 26, 2003, has a timely RICO claim.5
Under the current class definition, however, if a borrower
closed on his loan, for example, in 2004, that borrower would
not be eligible to join the RICO class despite having a timely
RICO claim.

Thus, in order to avoid excluding borrowers with

timely RICO claims that meet all other class criteria, the Court
will amend the class certification definition for the civil RICO
claims to include borrowers who closed on loans after December
26, 2003.
Defendants argue that modification of the current class
definition is inappropriate for two reasons: (1) the Court has
already expressly limited the RICO class to include only those
borrowers whose claims closed after December 26, 2006, and (2)
amending the certification as requested would create yet another
sub-class of claims, increasing the unmanageability of the
4

In fact, in earlier briefing on other issues Defendants
expressly acknowledged that the statute of limitations for civil
RICO claims is four years. See ECF No. 199 at 4; ECF No. 274 at
38.
5

Defendant has also conceded this point in prior briefing. See
ECF No. 274 at 38 (acknowledging that though Named Plaintiff
Binks’ closing date makes her claim untimely under RESPA, it is
still within the RICO statute of limitations and so she is,
therefore, “a member of the Timely Class as to her RICO . . .
claims.”)
3

litigation and thus defeating the superiority prerequisite for
certification under Rule 23(b)(3).
Defendants’ first argument mischaracterizes this Court’s
analysis in its original certification decision as the analysis,
guided by briefing from the parties, focused primarily on
RESPA’s one year statute of limitations and gave no explicit
consideration to the fact that the RICO claims carried a longer
statute of limitations.

See ECF No. 253.

The Court recognized

that borrowers whose claims fell outside the RESPA limitations
period would have to prove that their claims could be equitably
tolled before pursuing a claim under RESPA, a fact that raised
“potentially dispositive differences” among the two sets of
class members.
“Timely Class”

ECF No. 253 at 53.
6

The Court thus created a

with a December 23, 2006 cut-off date, leaving

open the possibility of creating a “Tolling Class” for borrowers
who closed on their loans prior to this date.7

It is true that

the Court noted the statute of limitations date also coincided
with the time period in which there were marked changes to
Prosperity’s operations, a fact that further supported the
6

Even the name “Timely Class” illustrates the Court’s reliance
on RESPA when creating the class period, as a RICO claim brought
outside the time period for this class could still be timely
under the RICO statute of limitations.
7

The Court notes that it has since granted class certification
for a Tolling Class for RESPA claims going back to 1993, when
Prosperity was created. See ECF NO. 307.
4

decision to split the class, but the Court specifically stated
that the change in operations by itself is “likely insufficient
to justify splitting the class.”

ECF No. 253 at n. 24.

This is

because, even though there was a discrete period of change,
there are several factors that are especially relevant to
Prosperity’s status as a bona fide lender that were present for
its entire lifespan, i.e. its designation as Wells Fargo’s
“Region 91” and its manner of funding its loans.
253 at 54-55.

See ECF No.

Therefore, enlarging the class period for RICO

claims by three years to encompass the RICO limitations period
is consistent with the Court’s previous decision to limit the
period for timely RESPA claims to the one year RESPA limitations
period.
Furthermore, Defendants’ concern that enlarging the RICO
class period will render the litigation unmanageable and thus
defeat the superiority8 requirement of class certification is
unfounded.

The enlargement of the RICO subclass does not open

the door to new theories or sets of proof that were not already
part of the case: the case has always included RICO claims and
the existence of the Tolling Class will potentially require
inquiry into operations during the entire lifespan of

8

Per Federal Rule of Civil Procedure 23(b)(3), superiority
requires that “a class action is superior to other available
methods for fairly and efficiently adjudicating the
controversy.”
5

Prosperity.

Nor does the enlargement of the case bring new

class members into the case: a borrower who closed on a loan
during the enlarged period would already be involved in the case
as part of the Tolling Class.9

The enlargement of the RICO

subclass does not sufficiently change the landscape so that this
Court need revise its prior decision regarding the superiority
of class treatment for this case.
The Court is confident that, if and when the time comes,
the parties and the Court will work together and be able to
devise an efficient method for trying this case.

As suggested

by Plaintiffs, bifurcation of the case into liability and
damages phases is one potential solution, particularly because
much of the liability phase will be subject to class-wide proof.
Then, if Plaintiffs are able to win the liability phase, it
should be reasonably easy for Plaintiffs to offer proof of
damages according to the applicable time periods, tracking which
borrowers fall into which time period via their closing dates.
For the foregoing reasons, the Court will grant Plaintiffs’
Motion to Modify Class Certification Definition for RICO Claims.
The Court will certify the following class definition for claims
brought under the civil RICO statute:

9

The only time this will not be true is for a borrower whose
transaction involved a property located in Washington, D.C. as
these borrowers have been specifically excluded from the Tolling
Class. See ECF No. 308.
6

All consumers who have obtained a federally related
mortgage loan originated by Prosperity Mortgage Company
that was funded by transfers from a line of credit at Wells
Fargo Bank, any of its subsidiaries or any of their
predecessors, on or after December 26, 2003.
The Court will issue a separate Order to this effect.

/s/
William M. Nickerson
Senior United States District Judge
March 14, 2012

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