Madison County Associate Judge Clarence Harrison on July 21 certified a class action over charges on partial mortgage payments in a case against AAMG.
Borrower Cassandra Williams, represented by Stephen Tillery, sued AAMG over an $18.49 charge
Harrison estimated the ranks of the class in the thousands.
He had expressed his intention to certify a class action at a hearing in April.
"I'm not overly impressed at how factually intensive this case is," he said then.
AAMG, now a unit of Citi Mortgage, claims it properly charged five percent of a full monthly payment upon receiving partial payment.
Williams claims AAMG should have charged five percent of the unpaid portion.
At the hearing, Tillery offered an example of a borrower with a $500 note who sends in $400.
"Our position is that the late charge must be calculated as five percent of one hundred dollars, that portion of the full monthly payment that is overdue," he said.
For AAMG, Sarah Wolff of Chicago said, "Their definition of payment is a transfer of any amount of money. The definition of a payment is payment of the principal and interest due for the month."
Harrison said, "Regardless of the merits of your argument, isn't it the same argument with regard to all the members of the class?"
Wolff said yes.
Harrison said he would certify the class, and he followed with an order finding the facts essentially undisputed and common to all.
"By definition, all members of plaintiff's proposed class have notes with identical late charge provisions that require the note holder to calculate late charges as a percentage of the borrower's overdue payment," he wrote.
"Also by definition, all members of plaintiff's proposed class submitted a timely partial payment on which AAMG assessed a late charge," he wrote.
He wrote that if Williams interprets the contract correctly, the class can recover under breach of contract or unjust enrichment.
"If plaintiff's contract interpretation is incorrect, plaintiff concedes that both theories necessarily fail and the lawsuit ends," he wrote.
He branded as implausible AAMG's claim that differences among individual mortgages under laws of 50 states created ambiguity.
"When taken to its logical conclusion, the entire mortgage industry collapses, as each individual transaction becomes a 'tailored suit' that is unique to each borrower despite
millions of loans with the same language used in the same manner nationwide," he wrote.
"The court finds that the late payment provision is not ambiguous and must have the same consistent and objective meaning that does not vary by state or contract," he wrote.
Harrison rejected AAMG's bid to block class action by invoking the voluntary payment defense.
He wrote that if the defense applies, it applies in the same manner to all.
He appointed Tillery and Michael Klenov, also of Korein Tillery, as class counsel.
He directed them and AAMG's counsel to propose schedules for briefs and discovery.
He had stayed AAMG's discovery on Williams pending his decision on class certification.
On July 27, Harrison said it was the first class he certified in a contested case.
He said he might have certified other classes in the process of approving settlements.