Cach, LLC v. Young
| Decision Date | 17 December 2021 |
| Docket Number | 15 MA 0177,15 MA 0176 |
| Citation | 2021 Ohio 4638 |
| Court | Ohio Court of Appeals |
| Parties | CACH, LLC, et al., Counterclaim Defendants-Appellants v. VICKI YOUNG, et al., Counterclaim Plaintiffs-Appellees. |
Civil Appeal from the Court of Common Pleas of Mahoning County Ohio Case No. 09 CV 1674.
Atty Daniel A. Friedlander, for Plaintiffs and Counterclaim Defendants-Appellees and Plaintiff Counterclaim Defendants-Appellants.
Atty Anand N. Misra, The Misra Law Firm, LLC, and Atty. Robert S Belovich, Robert S. Belovich Attorney LLC, and Atty. Boyd Gentry, Atty. Zachary Elliott, Law Office of Boyd W. Gentry, LLC
Atty. Manuel Newburger, Barron & Newburger, P.C., for Defendants and Counterclaim Plaintiffs-Appellant & Defendant and Counterclaim Plaintiff-Appellees and Atty. Lori Brown
Atty. Richard Rezie, Gallagher Sharp LLP, Atty. Danielle Cullen, Weltman, WeinberG & Reis Co., for Appellant/Counterclaim Defendant Weltman, Weinberg & Reis Co., LPA
BEFORE: Carol Ann Robb, Gene Donofrio, Cheryl L. Waite, Judges.
OPINION AND JUDGMENT ENTRY
{¶1} This is the appeal of the Mahoning County Common Pleas Court's decision granting the class certification motion filed by Appellee Vicki L. Young in her action asserting claims under the Fair Debt Collection Practices Act (FDCPA) and the Ohio Consumer Sales Practices Act (OCSPA). Appellant Weltman, Weinberg & Reis Co., LPA et al. argues Appellee failed to prove the seven class certification elements in Civ.R. 23 and failed to demonstrate the additional statutory element for OCSPA claims.
{¶2} We initially find problems with the first "implicit" element in Civ.R. 23, requiring the class members to be readily identifiable and the class to be unambiguously defined without utilizing a fail-safe definition. The Usury Class and the Pre-Judgment Interest Class can be redefined to avoid these problems. Although this shifts additional issues to the seventh element, Civ.R. 23(B)(3) was met as to the interest classes. The class certification of the interest classes as redefined is affirmed.
{¶3} However, the Time-Bar Class is not readily identifiable due to the number of individual inquires required to determine membership. Even if the class could be redefined, the individual inquiries would be shifted to the seventh element where the common questions would not predominate over questions affecting individual class members, and a class action was not shown to be the superior method of disposition. The certification of the Time-Bar Class is reversed.
{¶4} As to the OCSPA claims, Appellee failed to demonstrate the existence of a relevant attorney general rule or state court decision characterizing the specific act as a violation. The decision allowing the OCSPA claims to proceed as a class action is reversed. The case is remanded for further proceedings.
{¶5} On May 7, 2009, CACH filed suit against Appellee, alleging she owed $8, 011.01 with interest at a rate of 27.99% per annum from the July 2, 2005 due date reflected in an attached credit card statement from Chase Bank. Also attached to the complaint was a card member agreement referring to a variable interest rate. Appellee made her last payment on the account on November 5, 2004, and the account was "charged-off" by Chase Bank on June 30, 2005. CACH purchased Appellee's debt through a Credit Card Account Purchase Agreement on November 11, 2005 (with a December 23 2005 closing date). The corresponding Affidavit of Sale and Bill of Sale were attached to the complaint. The complaint was amended to seek "interest at the rate provided for in the Agreement in conformity with applicable law."
{¶6} Appellee filed a class action counterclaim under the FDCPA and the OCSPA for filing time-barred debt collection lawsuits, making false representations as to agreements, and demanding improper interest amounts. She also set forth common law claims including abuse of process, defamation, and civil conspiracy. Appellee's counterclaim named CACH as a defendant as well SquareTwo Financial Corporation (the parent company of CACH) and Weltman, Weinberg & Reis Co., LPA (the law firm representing CACH in the debt collection proceedings).
{¶7} Motions to dismiss the counterclaim and for judgment on the pleadings were overruled. On January 25, 2012, CACH was permitted to dismiss its complaint without prejudice. The case was moved to federal court but remanded back on March 18, 2013. The trial court ordered the parties to brief the issue of class certification.
{¶8} On May 1, 2014, Appellee filed a 37-page motion for class certification reviewing the requirements for class certification in Civ.R. 23(A) and claiming the action fell under (B)(2) and (3). Exhibits were attached with data collected in discovery relevant to prior lawsuits filed against the putative class members. Appellee identified a common class with three subclasses: the Time-Bar Class, the Usury Class, and the Pre-Judgment Interest Class. Appellant filed a 46-page opposition to Appellee's class certification motion. A reply and surreply were also filed.[1]
{¶9} On September 4, 2015, the trial court granted class certification. The trial court recognized it was to conduct a rigorous analysis to determine whether the movant met its burden to show by a preponderance of the evidence each requirement for class certification, and the court analyzed the requirements.[2] The court concluded Appellee demonstrated class certification of the common class and three subclasses. The common class required each member to be: (1) an individual, (2) against whom CACH filed a lawsuit in Ohio, (3) to collect a debt incurred on or related to a credit card, (4) issued by bank subject to federal law, (5) issued to a natural person for consumer credit purposes, and (6) the lawsuit was filed on or after January 9, 2008[3].
{¶10} The trial court then said the member must fall into one of three subclasses: (1) Time-Bar Class, where the ; (2) Usury Class, where "in said lawsuits, the interest rate claimed exceeds the rate permitted under O.R.C. 1343"; and (3) PreJudgment Interest Class, where the members "are individuals from whom the Defendants sought or claimed interest on balances due, during a time which Defendants were not rightfully permitted to claim such interest on the accounts." (9/4/15 J.E.).
{¶11} The trial court implemented the class certification order by appointing Appellee as the class representative and her attorneys, Robert S. Belovich and Anand N. Misra, as class counsel. (10/1/15 J.E.). On October 2, 2015, timely notices of appeal were filed. See R.C. 2505.02(B)(5) ("An order that determines that an action may or may not be maintained as a class action" is a final, appealable order). CACH and SquareTwo filed a notice of appeal resulting in 15 MA 0176, and the law firm filed a notice of appeal resulting in 15 MA 0177. The appeals were consolidated.
{¶12} Before briefing, this court granted Appellant's request to hold the appeal in abeyance pending a decision by the Ohio Supreme Court in Taylor. (11/17/15 J.E.). The stay was lifted after the Supreme Court's decision was released. Briefing was completed in December 2016. The parties filed 50-page briefs. A March 2017 notice of bankruptcy as to CACH and SquareTwo caused a stay of this appeal. In May 2021, Appellee provided notice of the closing of the bankruptcy and termination of the stay.
{¶13} Also in May 2021, Appellant moved to stay the appeal and remand based on an anticipated amendment of the borrowing statute (effective June 16, 2021) to remove contract actions from its application. This court denied the motion. (7/13/21 J.E.). The amendment to R.C. 2305.03(B) changed "civil action" to "tort action." Uncodified law in section 3(B) states: "Division (B) of section 2305.03 of the Revised Code, as amended by this act, applies retroactively to April 7, 2005, the effective date of S.B. 80 of the 125th General Assembly." At the time suits were filed against the putative class members, the borrowing statute was not limited to tort actions as it applied to any "civil action."
{¶14} Appellant's motion suggests the 2021 amendment means the prior actions it filed against debtors will no longer be considered time-barred, even if they would have been considered time-barred when filed. Nevertheless, the amendment was not in existence at the time the trial court ruled. Moreover, the trial court's decision related to class certification, and Appellant elsewhere considers the issue of whether time-barred actions to collect debt are a merit issue.
{¶15} A court "cannot decide the case on the merits at the certification stage." Stammco LLC v. United Tel. Co. of Ohio, 136 Ohio St.3d 231, 2013-Ohio-3019, 994 N.E.2d 408, ¶ 43-44 (Stammco II). The ability to use this 2021 statute to retroactively eliminate a prior action's status as time-barred would be an issue for summary judgment where Appellee could respond with arguments on unconstitutional retroactivity. In fact, Appellant's May 2021 motion acknowledges it is an issue for the trial court in the first instance.
{¶16} As to the Ohio Supreme Court's Taylor case which Appellant asserted warranted a stay of this appeal (prior to the bankruptcy stay), the Court addressed various issues arising under the FDCPA and the OCSPA during the collection of purchased credit card debt. Taylor v. First Resolution Invest. Corp., 148 Ohio St.3d 627,...
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