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No. 127564
Kristine Cowles, |
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John E. Anding |
Plaintiff-Appellee, |
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and |
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| Karen B. Paxson, |
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Intervening Plaintiff-Appellee, |
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vs (Appeal from Ct of Appeals)
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(Kent - Johnston, D.) |
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| Bank West, f/k/a Bank West FSB, |
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John J. Bursch |
| Defendant-Appellant. |
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| _________________________________________ |
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Plaintiff-Appellee's Brief on Appeal>>
Defendant-Appellant's Brief on Appeal>>
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Background
Kristine Cowles was charged a $250 document preparation fee for a residential loan she obtained from Bank West in early 1997. On July 1, 1998, Cowles sued Bank West, alleging several state claims related to the document preparation fee. The complaint was filed on Cowles’ behalf and on behalf of a class of consumers who paid the document preparation fee between 1992 and 1998. On February 16, 1999, Cowles filed a second amended complaint, claiming that Bank West’s failure to disclose the document preparation fee violated the federal Truth in Lending Act (TILA). The trial court certified the class described in Cowles’ second amended complaint. Bank West asked the court to dismiss Cowles’ TILA claim, arguing that it was barred by the one-year statute of limitations. Accordingly, Cowles could not represent the consumer class, Bank West maintained. The trial court then allowed Karen Paxson to intervene and replace Cowles as the class representative for the TILA claim. Like Cowles, Paxson was charged a $250 document preparation fee when she obtained a residential loan from Bank West on February 9, 1998. Paxson filed a complaint in July 1999. The trial court ruled that Paxson’s TILA claim was barred by the statute of limitations because it accrued more than one year before Cowles added the TILA claim in the second amended complaint. The plaintiffs appealed, arguing that, because Cowles’ first complaint was filed only five months after Paxson paid the document preparation fee, Paxson’s TILA claim was timely because it “related back” to the initial complaint. In a published 2-1 opinion, the Court of Appeals agreed with the plaintiffs that the trial court had erred. A majority of the panel held the second amended complaint related back to the original complaint, which tolled the statute of limitations. The majority also held that there was a question of fact as to whether the $250 fee was “bona fide and reasonable” under the applicable federal regulations, and that this issue turned on West Bank’s disposition of the fee. The dissent argued against the application of the relation-back doctrine to Paxson’s TILA claim. The dissent also would have held that the $250 fee was bona fide because it was for a service actually performed, and reasonable because it was similar to the prevailing cost for such services in the relevant market. The Court of Appeals remanded the case to the trial court for further proceedings. Bank West appeals.
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