United States District Court, D. Colorado
RICHARD GEORGE, STEVEN LEAVITT, SANDRA LEAVITT, DARRELL DALTON, and all others similarly situated, Plaintiffs,
URBAN SETTLEMENT SERVICES, d/b/a Urban Lending Solutions, and BANK OF AMERICA, N.A., Defendants.
A. BRIMMER, UNITED STATES DISTRICT JUDGE.
matter is before the Court on the Motion of Defendant Bank of
America, N.A. to Strike Class Allegations [Docket No. 69]
filed by defendant Bank of America, N.A. (“BOA”).
This Court has subject matter jurisdiction pursuant to 28
U.S.C. § 1331 and § 1332(d).
background of this case is discussed in the Court's order
dismissing plaintiff's claims [Docket No. 42] and the
Tenth Circuit's decision vacating that order and
remanding the case to this Court. George v. Urban
Settlement Servs., 833 F.3d 1242, 1246-47 (10th Cir.
requests that the Court issue an order “requir[ing]
that the pleadings be amended to eliminate allegations about
representation of absent persons and that the action proceed
accordingly.” Fed.R.Civ.P. 23(d)(1)(D). Specifically,
BOA argues that all of plaintiffs' class-action
allegations should be stricken because plaintiffs will not be
able to establish that class certification is appropriate.
Docket No. 69 at 3. If such relief is denied, BOA asks that
the Court strike plaintiffs' class-action promissory
estoppel claims brought under the law of states in which the
named plaintiffs do not reside because the named plaintiffs
lack standing to bring such claims. Id. at 11.
admits that the standard for striking class allegations prior
to plaintiffs filing a class certification motion is high.
Id. at 3. To succeed, BOA must show that
“‘it will be impossible to certify the
classes alleged by the plaintiffs regardless of the facts the
plaintiffs may be able to prove.'” Francis v.
Mead Johnson & Co., No. 10-cv-00701-JLK, 2010 WL
3733023, at *1 (D. Colo. Sept. 16, 2010) (quoting Bryant
v. Food Lion, Inc., 774 F.Supp. 1484, 1495 (D.S.C.
1991)) (emphasis added in Francis); see also
Wornicki v. Brokerpriceopinion.com, Inc., No.
13-cv-03258-PAB-KMT, 2015 WL 1403814, at *4 (D. Colo. Mar.
23, 2015) (“Consistent with these opinions, the Court
will only [strike class allegations] if [defendants] are able
to show conclusively that plaintiffs will be unable to
establish facts that would make class treatment
argues that plaintiffs will be unable to certify a class
because “Plaintiffs must also prove they took specific
actions in reliance on Defendants' statements,
which is a formal element of their promissory-estoppel claims
and a de facto element of their RICO claims.” Docket
No. 69 at 7 (footnote omitted) (emphasis original). BOA cites
CGC Holding Co. v. Broad & Cassel, 773 F.3d
1076, 1089 (10th Cir. 2014), for the proposition that
“in [RICO] cases arising from fraud, a plaintiff's
ability to show a causal connection between defendants'
misrepresentation and his or her injury will be predicated on
plaintiff's alleged reliance on that
misrepresentation.” While acknowledging that
CGC found it appropriate to draw an “inference
of reliance, ” id. at 1089-90, BOA argues that
such an inference is not possible under these facts. BOA is
correct that the circumstances leading to the inference of
reliance in CGC do not exist here. But other
circumstances may enable the plaintiffs to define subclasses
that avoid individualized issues. Id. at 1089
(“[W]here circumstantial evidence of reliance can be
found through generalized, classwide proof, then common
questions will predominate and class treatment is valuable in
order to take advantage of the efficiencies essential to
class actions.”) (citations omitted). In this case, the
Tenth Circuit found that plaintiffs had sufficiently alleged
detrimental reliance by alleging that “[b]ecause BOA
never permanently modified their loans, the plaintiffs allege
the lower payments they made in reliance on BOA's promise
and in compliance with their obligations under” their
agreements with BOA - Trial Period Plans or TPPs -
“resulted in longer payoff times, higher principal
balances, increased accrued interest, and additional charges
and fees related to delinquency and default.”
George, 833 F.3d at 1261. Further, the court held
“that the language in BOA's TPP documents clearly
and unambiguously promises to provide permanent HAMP loan
modifications to borrowers who comply with the terms”
even though such documents varied in terminology and
presentation. Id. at 1260. The court even discounted
“distinctions” between the allegations of
plaintiff Darrell Dalton, who received different TPP
documents and alleged different interactions with BOA than
the other plaintiffs, and specified that the court's
“analysis and conclusions regarding the promissory
estoppel claim apply equally to all of the plaintiffs.”
Id. at 1261 n.9. Thus, the court found that
plaintiffs sufficiently pled allegations that, in spite of
the variability of the plaintiffs' individual
allegations, could lead to an inference of detrimental
reliance based on plaintiffs making payments pursuant to
their TTPs that “left plaintiffs in worse financial
positions relative to their mortgages.” Id. at
1262; see also CGC, 773 F.3d at 1090 (discussing
In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d
108, 119 (2d Cir. 2013), where the Second Circuit found
“circumstantial proof of classwide reliance in the fact
that class members made payments pursuant to the
agreements”). Thus, while individualized differences
may prevent certification on particular issues, BOA has not
shown that it is impossible that plaintiffs will be able to
define subclasses to avoid a predominance of individualized
also argues that the Court should apply principles of comity
to In re Bank of Am. Home Affordable Modification Program
(HAMP) Contract Litig., 2013 WL 4759649 (D. Mass. Sept.
4, 2013) (“HAMP”), where BOA claims that
the plaintiffs' counsel “unsuccessfully sought to
certify a class of allegedly aggrieved loan-modification
seekers.” Docket No. 69 at 3. However, although both
this case and HAMP involve a promissory estoppel
claim, the claims are otherwise different. See HAMP,
2013 WL 4759649, at *1; Docket No. 12. The HAMP
plaintiffs sought to certify classes on all issues related to
liability. HAMP, 2013 WL 4759649, at *1. BOA notes
that “whether each plaintiff fulfilled his obligations
under his TPP” is the issue that the HAMP
court found precluded class certification because it
“depends on a nearly endless series of individual
questions.” 2013 WL 4759649, at *10. By contrast,
plaintiffs here state that they intend to use subclasses to
seek class certification on a subset of the issues in the
case pursuant to Fed.R.Civ.P. 23(c)(4). Docket No. 74 at 5.
It is possible that plaintiffs will, in defining subclasses,
minimize individualized issues by relying on defendants'
actions to determine whether plaintiffs fulfilled their
obligations under their TPPs. See George, 833 F.3d
at 1261 (“BOA eventually sent permanent loan
modification offers to the Leavitts and George. According to
the plaintiffs, this indicates BOA determined that (1) the
plaintiffs were eligible for permanent modifications and (2)
they complied with the terms of their respective
TPPs.”). Once again, BOA has not shown that it is
impossible that plaintiffs will be able to define subclasses
to avoid a predominance of individualized issues.
respect to BOA's fallback position - that the Court
should dismiss the plaintiffs' promissory estoppel claims
for the states where the named plaintiffs do not reside for
want of standing - plaintiffs argue that the Court should
wait until after discovery to resolve the issue. Docket No.
74 at 12-13. However, in every case and at every stage of the
proceeding, a federal court must satisfy itself as to its own
jurisdiction. Citizens Concerned for Separation of Church
& State v. City & County of Denver, 628 F.2d
1289, 1297 (10th Cir. 1980). Whether plaintiffs have standing
is an issue of subject matter jurisdiction. Colorado
Outfitters Ass'n v. Hickenlooper, 823 F.3d 537, 544
(10th Cir. 2016). Absent an assurance that jurisdiction
exists, a court may not proceed in a case. See Cunningham
v. BHP Petroleum Great Britain PLC, 427 F.3d 1238, 1245
(10th Cir. 2005). The Supreme Court has recognized that in
limited instances class certification issues are
“logically antecedent to Article III concerns, ”
but plaintiffs do not argue that this is such a case.
Ortiz v. Fibreboard Corp., 527 U.S. 815, 831 (1999)
(internal quotation marks omitted). Thus, the Court takes up
the issue at this time.
are divided on the issue of whether named plaintiffs in a
putative class action have standing to bring claims under the
law of states where the named plaintiffs do not reside.
Compare Smith v. Pizza Hut, Inc., No.
09-cv-01632-CMA-BNB, 2011 WL 2791331, at *10 (D. Colo. July
14, 2011) (“Plaintiff lacks standing to bring claims
under state laws to which Plaintiff has never been subjected
and the class action claim must therefore be dismissed for
lack of standing.”) with Dragoslavic v. Ace
Hardware Corp., 2017 WL 3500019, at *4 (E.D. Tex. Aug.
16, 2017) (“[T]his Court is not persuaded that where a
plaintiff resides or suffers an injury has anything to do
with Article III standing.”). The Court agrees with
courts that have held that where a named plaintiff resides or
suffers an injury is not determinative of whether they have
Article III standing. As the Seventh Circuit explained,
“[p]laintiffs have standing if they have been injured,
the defendants caused that injury, and the injury can be
redressed by a judicial decision.” Morrison v. YTB
Int'l, Inc., 649 F.3d 533, 536 (7th Cir. 2011)
(citing Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83, 102-04 (1998)). Plaintiffs
sufficiently allege that their reasonable reliance on
defendants' promises led to financial losses and that
such losses were caused by defendants. George, 833
F.3d at 1262. Accordingly, because plaintiffs have
demonstrated a case or controversy with defendants that can
be redressed by a judicial decision, plaintiffs have shown
that they have Article III standing. Morrison, 649
F.3d at 536. Whether plaintiffs have a valid cause of action
under the laws of any particular state is a separate matter,
but one that is not at issue here. Steel Co., 523
U.S. at 89 (“It is firmly established in our cases that
the absence of a valid (as opposed to arguable) cause of
action does not implicate subject-matter jurisdiction, i.e.,
the courts' statutory or constitutional power to
adjudicate the case.” (emphasis in original) (citing 5A
Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1350, at 196, n.8 (2d
ed.1990))); see also Bell v. Hood, 327 U.S. 678, 682
(1946) (“[I]t is well settled that the failure to state
a proper cause of action calls for a judgment on the merits
and not for a dismissal for want of jurisdiction.”).
Therefore, the Court will not dismiss plaintiffs'
promissory estoppel claims brought under the law of states
where the named plaintiffs do not reside.
foregoing reasons, it is
that the Motion of Defendant Bank of America, N.A. to Strike