Flow Doc Inc. v. Horton
Decision Date | 17 September 2009 |
Docket Number | No. 09–13.,09–13. |
Citation | 2009 Ark. 411,334 S.W.3d 865 |
Court | Arkansas Supreme Court |
Parties | FLOW DOC, INC.; Royce McNeal, Jr.; & Brent H. McNeal, Appellants,v.Thomas M. HORTON, on behalf of himself and all others similarly situated, Appellee. |
OPINION TEXT STARTS HERE
Friday, Eldredge & Clark, by: William A. Waddell, Jr. and James L. Phillips, Little Rock, for appellants.Thrash Law Firm, Little Rock, by: Thomas P. Thrash; and Kitterman Law Firm, by: Gregory S. Kitterman, Little Rock, for appellee.PAUL E. DANIELSON, Associate Justice.
Appellants Flow Doc, Inc., Brent McNeal, and Royce McNeal, Jr., (hereinafter collectively referred to as “Flow Doc”) bring this interlocutory appeal from the order of the Pulaski County Circuit Court granting class certification. Flow Doc argues that the circuit court erred in granting class certification to appellee Thomas M. Horton on both the Arkansas Deceptive Trade Practices Act claim and the unjust-enrichment claim. We dismiss the appeal as moot in part and affirm in part.
The record reveals the following facts. On or about April 1, 2005, Thomas M. Horton refinanced his mortgage loan on his home with Southern Mortgage Company. In connection with the closing, Flow Doc prepared the loan documents for the loan from Southern Mortgage to Horton. Flow Doc charged and received a “Document Preparation Fee” of $195 from Horton for preparing the loan documents, a fee reported on line 808 of the HUD–1 Settlement Statement. On May 10, 2007, Horton filed a class-action complaint on behalf of himself and all others similarly situated, alleging that Flow Doc engaged in the unauthorized practice of law when it charged a fee for the preparation of loan documents in connection with a closing. The complaint alleged that Flow Doc's actions violated the Arkansas Deceptive Trade Practices Act (ADTPA), codified at Ark.Code Ann. §§ 4–88–101 to –706 (Repl.2001 & Supp.2009). The complaint further alleged that Flow Doc was unjustly enriched by deceptively charging and receiving the document preparation fee and should be required to make restitution. Flow Doc moved to dismiss the complaint on July 6, 2007, based on lack of personal jurisdiction, lack of standing, failure to state facts upon which relief can be granted, and the alleged unconstitutionality of the ADTPA.
Horton then moved for class certification on July 26, 2007, asserting that Flow Doc had routinely charged borrowers involved in loans secured by real estate a document preparation fee for preparing legal documents and that an appropriate class consisted of all persons who were residents of Arkansas and had paid document preparation fees to Flow Doc under those circumstances. Horton argued that this “unauthorized practice of law” raised a single predominate issue of fact and law common to all class members, that issue being whether Flow Doc was entitled to charge a fee for preparing the loan documents for loans secured by real estate in Arkansas and/or filling in the blanks on form loan documents used to consummate a loan secured by real estate in Arkansas. Therefore, Horton argued, the requirements for class certification were met, and class certification was warranted.
Flow Doc responded to the motion and also filed a request for specific findings of fact and conclusions of law with respect to Horton's request for class certification, each element required for class certification contained in Rule 23(a) and (b) of the Arkansas Rules of Civil Procedure, and any order entered by the court granting or denying the class certification. On October 24, 2007, the circuit court held a hearing on Horton's motion for class certification and, on April 1, 2008, issued a letter order informing the parties that it would be granting the motion. Flow Doc then renewed its request for findings of fact and conclusions of law and responded to Horton's proposed findings of fact and conclusions of law with specific objections.
On June 5, 2008, the circuit court granted the motion for class certification. In its order, the circuit court found that Flow Doc prepares loan documents contained in a typical closing package for loans originated by Southern Mortgage by filling in the blanks of form loan documents and then e-mailing the documents to the closing agent to be used in the loan closings in Arkansas. The court found that Flow Doc has filled in the blanks of form loan documents for loans originated by Southern Mortgage and has charged a document preparation fee for filling in the blanks of the form loan documents since at least May 10, 2002. The court further found that Flow Doc has charged and received a document preparation fee paid by the borrowers in over 1,350 loan transactions originated by Southern Mortgage and closed in Arkansas, resulting in over $241,125 in document preparation fees received by Flow Doc since May 10, 2002. The court found that the Flow Doc employee who prepares the Arkansas loan documents, Patricia Alexander, is not an attorney and that part of her job is to determine which loan documents will be used and prepared, which note and mortgage form will be used, what interest rate will be used in preparing the documents, what payments will be required, what information will be disclosed, and who will be required to sign the particular loan documents; the court also found that the terms and provisions of the loan documents are consistent with the terms and conditions of the loan based on information provided by Southern Mortgage.
Additionally, the court determined that all persons who have paid a document preparation fee to Flow Doc involving a loan originated by Southern Mortgage can be identified by the HUD–1 Settlement Statements, which contain the name and address of the borrower and the amount of the document preparation fee charged by Flow Doc. In certifying the class, the court determined that Horton had satisfied each of the requirements of Rule 23. The court found that the class would have at least 1,350 members, so the numerosity requirement had been satisfied. The court also determined that Horton had satisfied the commonality requirement, declaring that there were at least four questions of fact or law common to all members of the class. The court was satisfied that Horton's claims were typical of all class members who paid a document preparation fee to Flow Doc and that the named representative was adequate to represent the class. Finally, the court found that the common issues predominated over any individual questions and that a class action was the superior method for handling the matter. Accordingly, the court certified the class consisting of
On June 16, 2008, Flow Doc filed a motion for additional findings of fact and conclusions of law and for reconsideration of the class-certification order as to Horton's claim under the ADTPA based on a recent decision from this court. Additionally, Flow Doc filed a supplemental motion to dismiss, arguing that, based on that same decision from this court, the ADTPA does not apply to the unauthorized practice of law and, therefore, Horton's claim based on the ADTPA should be dismissed for failure to state facts upon which relief can be granted.1 Flow Doc filed its notice of appeal on July 3, 2008, and, on July 21, 2008, amended the notice of appeal to include the deemed denial of their motion for additional findings and reconsideration. On January 21, 2009, while the appeal of the class-certification order was pending in this court, the circuit court granted Flow Doc's motion to dismiss Horton's ADTPA claim with leave to amend. The record before us was supplemented with the circuit court's order of dismissal. We turn now to the merits of the appeal.
Flow Doc first argues that the class-certification order is moot as to the ADTPA claim. Alternatively, Flow Doc argues that the certified “common questions” concerning the ADTPA claim are beyond the reach of the ADTPA and that the circuit court abused its discretion in ruling that Horton had proved the essential elements of class certification. Horton avers that the circuit court did not err in certifying the ADTPA claim and, further, that the class certification of the ADTPA claim is not moot because, after the dismissal, the claim was re-filed alleging specific violations of the ADTPA.
As a general rule, the appellate courts of this state will not review issues that are moot. See Davis v. Brushy Island Pub. Water Auth. of Ark., 375 Ark. 249, 290 S.W.3d 16 (2008). To do so would be to render advisory opinions and this we will not do. See id. A case becomes moot when any judgment rendered would have no practical legal effect upon a then-existing legal controversy. See id.
As previously noted, after issuing its order granting class certification, the circuit court granted Flow Doc's motion to dismiss Horton's ADTPA claim. Because the ADTPA claim was dismissed by the circuit court, the issue of whether the court erred in granting class certification as to that claim is now moot. While Horton urges this court to rule on the matter because the claim has since been refiled, those documents are not part of the record on appeal, and a ruling would require us to speculate as to what the new claim specifically alleges and if the circuit court would have granted class certification based upon that new claim. We have long held that courts do not sit for the purpose of determining speculative and abstract questions of law or laying down rules for future conduct. See Dodson v....
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