Cruz-Alvarez_FFeatured Expert Contributor — Civil Justice/Class Actions

Frank Cruz-Alvarez, a Partner in the Miami, FL office of  Shook, Hardy & Bacon L.L.P. with Rachel Forman, an Associate with the firm.

On July 15, 2016, the U.S. Court of Appeals for the Second Circuit in Mazzei v. Money Store (2016 U.S. App. LEXIS 12994) affirmed a district court’s decision, issued after a jury verdict for the plaintiff, to decertify the underlying class action. Based on its analysis of Federal Rule of Civil Procedure 23’s plain language and the Seventh Amendment, the Second Circuit confirmed that so long as final judgment has not been entered, district courts have the authority to decertify a class post-verdict.  Id. at *3.

The plaintiff had entered into a loan agreement with The Money Store and defaulted on the loan, causing the defendant servicer to accelerate the loan, and commence foreclosure proceedings.  Id. at *4.  Ultimately, the plaintiff paid the balance of the loan and certain fees, including fees incurred after acceleration.  Id. at *4–5.  The plaintiff subsequently sued the defendants, purporting to represent a putative class of borrowers, for breach of contract based on the defendants’ alleged violation of the mortgage agreement by imposing post-acceleration late fees.  Id. at *5.  The district court certified a class that included “all borrowers who signed form loan agreements on loans which were owned or serviced by the defendants and who … were charged … (A) late fees after the borrower’s loan was accelerated, and where the accelerated loan was paid off.”  Id. at *5–6.