Wednesday, October 15, 2008
Panel Orders Predatory Lending Claims Consolidated
By SHERRI M. OKAMOTO, Staff Writer
The Federal Judicial Panel on Multidistrict Litigation announced yesterday that all lawsuits against Calabasas-based Countrywide Financial Corporation alleging predatory lending practices will be consolidated and heard in the U.S. District Court for the Southern District of California.
The litigation presently consists of two actions in that district, three actions in this district, one action in the Northern District of Illinois and one action in the Western District of Kentucky, all of which will now go to U.S. District Judge Dana M. Sabraw for coordinated or consolidated pretrial proceedings.
Countrywide moved for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407 in this district, which the attorneys general of California and Illinois and the city attorney of San Diego opposed.
After the California and Illinois attorneys general settled claims in their actions against Countrywide, the lender sought to withdraw its Sec. 1407 motion insofar as it related to the California and Illinois actions.
In an opinion authored by panel chairman John G. Heyburn II, the panel found that all of the actions in the litigation involved common questions of fact, and that centralization was appropriate because it would eliminate duplicative discovery, eliminate the risk of inconsistent pretrial rulings, and conserve resources.
“The sufficiency of class allegations is an overarching issue in the putative nationwide class actions,” Heyburn noted, which shared factual questions regarding whether Countrywide had originated or serviced residential mortgages in an unlawful, unfair or deceptive fashion, misrepresented or concealed the terms, risk, or suitability of the loans, or placed borrowers in loans they could not afford.
The panel also denied Countrywide’s motion to withdraw the California and Illinois attorneys general’s actions from centralization because the actions shared factual questions with the remaining claims.
Even though the California and Illinois attorneys general and San Diego city attorney opposed inclusion of their actions in the centralized proceedings and contested federal jurisdiction over their claims, the panel ruled that their objections should be presented to Sabraw in the interest of economy and efficacy, and urged Sabraw to consider their claims expeditiously.
Heyburn explained that the panel selected the Southern District because two of the seven actions were pending there, Countrywide’s principal place of business is in California, several parties, witnesses and documents could be found within the state, and the district had the capacity to handle the litigation.
Panel members J. Frederick Motz, Kathryn H. Vratil, W. Royal Furgeson Jr., Robert L. Miller Jr., and David R. Hansen joined Heyburn in his opinion.
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