Class action removed after complaint is amended

By Steve Gonzalez | Jul 12, 2006

Troy Bozarth

Stephen Tillery

WMC Mortgage Company removed a class action case that was filed one day before enactment of the Class Action Fairness Act to federal court after plaintiffs filed a dramatically different amended complaint.

Defense attorney Troy Bozarth of the Burroughs firm argues that federal jurisdiction applies to the class action case because plaintiffs Fred and Victoria Crook now allege WMC is liable for actions taken by different independent companies.

The Crooks filed their original complaint on Feb. 17, 2005, in Madison County Circuit Court, claiming WMC misapplied their mortgage payments which increased their charges, fees and interest on their debt. The amended complaint was filed June 26.

"By broadening WMC's potential liability to include acts done by other companies, plaintiffs' recommenced this action within the last 30 days for purposes of the Class Action Fairness Act (CAFA). CAFA now applies to this suit and confers federal jurisdiction," Bozarth wrote in his July 7 removal notice.

The Class Action Fairness Act was signed into law by President Bush on Feb. 18, 2005.

The Crooks, who are seeking damages for breech of contract and unjust enrichment, borrowed $46,400 from WMC on May 22, 1998, for a home on Troy Road in Edwardsville by securing a promissory note secured by a mortgage.

In the Crooks' original complaint, they alleged WMC failed to apply their payments to prepayment charges, escrow charges, interest, principal and/or late charges.

They also alleged that WMC refrained from paying their interest on unapplied funds, failed to reduce their debt and imposed late charges in violation of the agreement.

"Nothing in the original complaint sought to hold WMC responsible for anyone's actions but its own," Bozarth writes.

Bozarth also claims that the allegations against his client are "demonstrably false" claiming no employee, agent, affiliate, subsidiary or representative did any of the things the Crooks alleged.

Bozarth claims shortly after the Crooks signed their note, WMC sold its entire interest on the Crook note and fully transferred the note out of their loan portfolio by Dec. 16, 2004.

He also writes, "Contrary to the Crooks' allegation that WMC did not apply their payments towards reducing their debts, WMC applied each payment toward reducing principal and interest on the debt."

For his basis of removing the complaint under CAFA, Bozarth claims this suit was commenced on June 26, the day the Crooks expanded the scope of WMC's liability to include actions of third parties.

Bozarth also points out the Seventh Circuit Court of Appeals recently ruled that when a plaintiff expands the potential for liability in a manner that does not relate to the original claims, CAFA would apply.

Bozarth also claims that there is a diversity issue because WMC is not a resident of Illinois and that there is a potential for more than 100 class members. He also states that the case value exceeds $5 million.

The Crooks are represented by Steve Tillery and Lisa Kernan of Korein Tillery and Kenneth Brennan of SimmonsCooper.

The case has been assigned to District Judge James Foreman and Magistrate Judge Donald Wilkerson.

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