Lenders Title Co. v. Chandler

• Court: Arkansas Supreme Court
• Writing for the Court: Donald L. Corbin
• Citation: Lenders Title Co. v. Chandler, 186 S.W.3d 695, 358 Ark. 66 (Ark. 2004)
• Decision Date: 17 June 2004
• Docket Number: No. 04-41.,04-41.
• Parties: LENDERS TITLE COMPANY v. Don CHANDLER, Individually and On Behalf of All Other Persons Similarly Situated.

Page 695

186 S.W.3d 695

LENDERS TITLE COMPANY v. Don CHANDLER, Individually and On Behalf of All Other Persons Similarly Situated.

No. 04-41.

Supreme Court of Arkansas.

June 17, 2004.

COPYRIGHT MATERIAL OMITTED

Friday, Eldredge & Clark, LLP, by: Robert S. Shafer and William A. Waddell, Jr., Little Rock; and Wood, Smith, Schnipper & Clay, by: Don M. Schnipper, Hot Springs, for appellant.

Nichols & Campbell, P.A., by: H. Gregory Campbell, Little Rock; and Todd Turner, Arkadelphia, for appellee.

DONALD L. CORBIN, Justice.

Appellant Lenders Title Company has appealed the order of the Garland County Circuit Court certifying Appellee Don Chandler's lawsuit as a class action, pursuant to Ark. R. Civ. P. 23. This is the second such interlocutory appeal. In the first appeal, we reversed the certification on the ground that the trial court's order was insufficient, and we remanded the matter to the trial court for further analysis of the factors set out in Rule 23. See Lenders Title Co. v. Chandler, 353 Ark. 339, 107 S.W.3d 157 (2003) (Lenders I). Pursuant to our remand, the trial court entered a more detailed order, again granting certification as a class action, and this appeal followed. Our jurisdiction of this appeal is thus pursuant to Ark. Sup. Ct. R. 1-2(a)(7). For reversal, Lenders argues that (1) the trial court lacked subject-matter jurisdiction; (2) the trial court abused its discretion in certifying a class whose members cannot be identified without a manual review of more than 50,000 closing files; and (3) the trial court's conclusions of law regarding predominance and superiority are inadequate and fail to comply with this court's mandate in Lenders I. We affirm.

The facts and procedural history of this case were set out at length in Lenders I, and we will not repeat them here. It will suffice to say that in January 2001, Chandler sold some Hot Springs property to Everett Lawless. Lenders acted as the settlement and escrow agent. During that transaction, Lenders charged and received $50 each from Chandler and Lawless for document preparation. In October 2001, Chandler filed suit, on behalf of himself and others similarly situated, against Lenders, alleging that the document-preparation fees received by Lenders are for documents prepared by Lenders, including legal documents such as deeds, mortgages, and notes. Chandler alleges that the legal documents were not prepared by attorneys and, thus, that Lenders's act of charging a separate fee for the preparation of legal documents constitutes the unauthorized practice of law. Chandler asserts that Lenders's actions violate the Arkansas Deceptive Trade Practices Act, Ark.Code Ann. § 4-88-101 to -115 (Repl.2001). He further asserts a cause of action for negligence, claiming that by failing to communicate to him that the fee charged was unlawful and illegal, and by charging such an unlawful and illegal fee, Lenders breached the standard of care owed to Chandler and others similarly situated.

In March 2002, Chandler filed a motion for class certification. A hearing was held on June 3 and 4, 2002, during which Lenders presented testimony from several witnesses, and both parties offered numerous exhibits. On July 17, the trial court issued its findings of fact and conclusions of law on the class-certification criteria. Thereafter, on August 21, the trial court entered an order certifying the case as a class action.

Lenders appealed the trial court's 2002 class-certification order to this court, and we reversed and remanded for lack of sufficient findings in the order. See Lenders I, 353 Ark. 339, 107 S.W.3d 157. On remand, the parties submitted new proposed factual findings and legal conclusions, but no further testimony or evidence was received. On September 25, 2003, the trial court entered a new order certifying the class action. The order defined the class as "All persons who paid Lenders Title Company a document preparation fee in any transaction after October 23, 1997." Lenders now appeals from this certification order.

Before addressing the points on appeal, we note that the certification of a lawsuit as a class action is governed by Ark. R. Civ. P. 23. The determination that the class-certification criteria have been satisfied is a matter within the broad discretion of the trial court, and this court will not reverse the trial court's decision absent an abuse of that discretion. Arkansas Blue Cross & Blue Shield v. Hicks, 349 Ark. 269, 78 S.W.3d 58 (2002); USA Check Cashers of Little Rock, Inc. v. Island, 349 Ark. 71, 76 S.W.3d 243 (2002). In reviewing a class-certification order, this court focuses on the evidence in the record to determine whether it supports the trial court's conclusion regarding certification. Arkansas Blue Cross, 349 Ark. 269, 78 S.W.3d 58. However, this court will not delve into the merits of the underlying claims when deciding whether the Rule 23 requirements have been met. Id.

I. Jurisdiction

For its first point on appeal, Lenders argues that the certification order is void and of no effect because the trial court is without jurisdiction to determine whether Lenders's practice of filling in the blanks on standardized documents constitutes the unauthorized practice of law. It asserts that jurisdiction to decide such an issue lies exclusively with our Supreme Court Committee on the Unauthorized Practice of Law. This issue was raised and rejected in the companion case of American Abstract & Title Co. v. Rice, 358 Ark. 1, ___ S.W.3d ___ (2004), and our decision in that case is controlling of the issue in this case. Accordingly, we deem it unnecessary to reiterate in the instant case what has been said on this issue in the companion case, and we adopt and incorporate herein by reference the reasoning set forth in that case. See Tay-Tay, Inc. v. Young, 349 Ark. 369, 78 S.W.3d 721 (2002); Loghry v. Rogers Group, Inc., 348 Ark. 369, 72 S.W.3d 499 (2002).

II. Identity of the Class

For its second point on appeal, Lenders argues that the trial court abused its discretion in certifying a class because the members cannot be identified without a manual review of more than 50,000 of its real-estate closing files. Lenders argues that such a manual review is not an administratively feasible way of identifying the class members. Thus, it asserts that the trial court erred in concluding that the class met the criterion of numerosity. In a related argument, Lenders contends that the class definition is imprecise and overbroad. We disagree with both arguments.

A. Numerosity

As we observed in Lenders I, six criteria must be met before a suit may be certified as a class action under Rule 23: (1) numerosity; (2) commonality; (3) typicality; (4) adequacy; (5) predominance; and (6) superiority. The first criterion, numerosity, requires that "the class is so numerous that joinder of all members is impracticable." Ark. R. Civ. P. 23(a)(1). The exact size of the proposed class and the identity of the class members need not be established to certify a class; instead, the numerosity requirement may be supported by common sense. See BPS, Inc. v. Richardson, 341 Ark. 834, 20 S.W.3d 403 (2000); Mega Life & Health Ins. Co. v. Jacola, 330 Ark. 261, 954 S.W.2d 898 (1997); Cheqnet Systems, Inc. v. Montgomery, 322 Ark. 742, 911 S.W.2d 956 (1995). Thus, there is no bright-line rule for determining how many class members are required to meet the numerosity factor. Mega Life, 330 Ark. 261, 954 S.W.2d 898. Suffice it to say that "[w]here the numerosity question is a close one, the balance should be struck in favor of a finding of numerosity in light of the trial court's option to later decertify." Fraley v. Williams Ford Tractor & Equip. Co., 339 Ark. 322, 344, 5 S.W.3d 423, 437 (1999) (citing Evans v. U.S. Pipe & Foundry Co., 696 F.2d 925 (11th Cir.1983); Foster v. Bechtel Power Corp., 89 F.R.D. 624 (E.D.Ark.1981)).

In the present case, the trial court concluded that the requirement of numerosity was met based on the facts that (1) Lenders has closed more than 50,000 real estate transactions between 1997 and 2001; (2) the evidence showed that Lenders routinely, or "more often than not," charges a document-preparation fee in such transactions; (3) the issues raised in this case would be present in most of the closings in which Lenders participated; and (4) the act complained of by Chandler, namely the charging of a document-preparation fee, would be typical of Lenders's actions in other closings. These findings support the trial court's conclusion that the class met the numerosity requirement.

B. Class Definition

In a related argument, Lenders challenges the sufficiency of the class definition set out by the trial court: "All persons who paid Lenders Title Company a document preparation fee in any transaction after October 23, 1997." Lenders asserts that this definition is too broad and thus impermissibly requires the trial court to inquire into the facts of each individual case in order to determine whether the person is a class member. It also asserts that there is no administratively feasible way of identifying the class members, because that would require a manual review of more than 50,000 of its closing files. To support its position, Lenders relies on this court's holdings in State Farm Fire & Cas. Co. v. Ledbetter, 355 Ark. 28, 129 S.W.3d 815 (2003), and Ferguson v. The Kroger Co., 343 Ark. 627, 37 S.W.3d 590 (2001). Those cases are distinguishable.

In Ledbetter, 355 Ark. 28, 36, 129 S.W.3d 815, 820-21, the class was defined as "[A]ll those insureds of Defendant under Form FP7955 who have a property damage claim or who have had an unpaid property damage claim under said policy that involves a common question of law or fact with the Plaintiff[.]" (Emphasis added.) In that case, the insurer, State Farm, argued that it would be impossible to prove whether or not a policyholder has a "common question of law or fact" with Ledbetter, unless each of the...