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Lorah v. Suntrust Mortgage

February 17, 2009

JAMIE H. & DONNA L. LORAH, PLAINTIFFS,
v.
SUNTRUST MORTGAGE, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Jones, J.

MEMORANDUM

Pending before the Court are Plaintiffs' Motion for Remand due to Lack of Subject Matter Jurisdiction (Doc. No. 5), Defendants' Opposition thereto (Doc. No. 9), and Plaintiffs' Reply (Doc. No. 11). For the reasons stated below, Plaintiffs' Motion for Remand is GRANTED.

Background and Procedural History

On February 8, 2008, Plaintiffs Jamie H. and Donna L. Lorah, on behalf of themselves and a putative class of similarly situated persons, filed suit against SunTrust Mortgage, Inc., ("SunTrust") and Wesley Snyder in the Court of Common Pleas of Berks County, Pennsylvania. Plaintiffs' filed their state court Complaint as an "opt-in" class action under Rule 1711(b) of the Pennsylvania Rules of Civil Procedure. (Compl. 2.) Plaintiffs allege that SunTrust relied upon Snyder and his corporate instrumentalities ("the Snyder Entities") to originate mortgage loans, which SunTrust funded and which are the subject of an alleged Ponzi scheme orchestrated by Snyder. (See, e.g., Compl. ¶¶ 13-22.)

Plaintiffs allege that $33,000 of their $98,000 mortgage loan was an illegal brokerage or service fee to the Synder Entities. (Compl. ¶¶ 57, 59-60.) Their Complaint contains four counts: civil conspiracy, breach of contract, accounting (wherein Plaintiffs seek an equitable accounting of payments made in connection with their mortgage loan), and unjust enrichment. They allege that they individually suffered actual damages in an amount less than $75,000 on each of the civil conspiracy, breach of contract, and unjust enrichment counts. (Compl. ¶¶ 105, 122, 146).*fn1 On those three counts, they seek actual damages, interest, costs, and attorney fees.

The putative class consists of homeowners who, like the named Plaintiffs, obtained "Equity Slide Down" mortgage loans funded by SunTrust through loans originated, processed, and serviced bythe Snyder Entities. (Compl. 3-4, ¶ 70.) Plaintiffs allege that Suntrust made more than 175 loans to members of the putative opt-in class. (Compl. ¶ 66.) Plaintiffs state in their Complaint that these claims are not removable to federal court jurisdiction in that . . . there is no diversity jurisdiction (including because the amount in controversy as to the Plaintiffs cannot be met); and there is no CAFA jurisdiction, including, inter alia, because it is not certain or likely that more than 100 persons will opt-in to the class or that the aggregate amount in dispute in this opt-in class will exceed the $5 million requirement of CAFA. (Compl. ¶ 75.)

On February 13, 2008, SunTrust timely removed the case to this Court pursuant to 28 U.S.C. §§ 1332 and 1441, as amended in part by the Class Action Fairness Act of 2005 ("CAFA") and as authorized by 28 U.S.C. § 1453. Plaintiffs now move this Court to remand the action to the state court, alleging a lack of federal subject matter jurisdiction.

Standard of Review

A civil action may be removed from state court to the federal district court if the district court would have original jurisdiction over the action. 28 U.S.C. § 1441(a) (2008). If the district court lacks subject matter jurisdiction over a removed action, it must be remanded. 28 U.S.C. § 1447(c) (2008).

Discussion

I. Pennsylvania's "Opt-in" Class Action Procedure

Rule 1711 of the Pennsylvania Rules of Civil Procedure provides as follows:

(a) Except as provided in subdivision (b) or as otherwise provided by the court, in certifying a plaintiff class or subclass the court shall state in its order that every member of the class is included unless by a specified date a member files of record a written election to be excluded from the class.

(b) If the court finds that (1) the individual claims are substantial, and the potential members of the class have sufficient resources, experience and sophistication in business affairs to conduct their own litigation; or (2) other special circumstances exist which are described in the order, the court may state in its order that a person shall not be a member of the plaintiff class or subclass unless by a specified date the person files of record a written election to be included in the class or subclass.

Pa. R. C. P. 1711 (2002) (emphasis added). Rule 1711(b) provides for the "opt-in" procedure for class actions in Pennsylvania. As one Pennsylvania court wrote,

Under Rule 1711, all class actions meeting the prerequisites of Pa. R. C. P. 1702, 1708, 1709, are opt-out class actions unless the provisions of Rule 1711(b) apply. An opt-in class action, by contrast, refers to class suits where no one is included in the class unless they file a written election to be included in the class. In short, you're out unless you say you're in.

Katlin v. Tremoglie, 1999 WL 1577980, 43 Pa. D. & C. 4th 373, 413 n.23 (Pa. Com. Pl. 1999). According to the commentary to the rule,

Rule 1711(b) . . . gives the court the option to provide a true opt-in procedure only in certain limited instances, i.e., where (1) the individual claims are substantial and the potential members of the class have sufficient resources, experience and sophistication in business affairs to conduct their own litigation, or (2) other special circumstances exist which are described in the order. The Rule does not attempt to defined these 'other' special circumstances which will vary in each particular case. Equally, this provision is not intended as a blank check to permit unbridled discretion in the court to require members of the class to opt in. The word "other" suggests that these special circumstances must be of the same magnitude and character as in (1). Obviously, the provision may ...


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