jonathon rowles v. chase home finance, llc response to petition for tro

8/8/2019 Jonathon Rowles v. Chase Home Finance, LLC Response to Petition for TRO

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rights, is precisely what this Court should prohibit .

In the end, without ever saying it directly, the only harm to which plaintiff alludes is

the prospect that the refund will make class members whole. There is nothing abusive, coercive,

or in any other sense wrong, with that outcome. This lawsuit, and the procedural device of class

actions, are not ends in and of themselves. They properly exist to vindicate substantive rights.

For the most obvious of reasons, our jurisprudence does not allow plaintiffs or the prospect of a

putative class action to stand in the way of making individuals whole, just so that they might

later participate in litigation.

For all the reasons explained below, plaintiffs Petition and Motion fail to meet theexacting and heavy burden for the extraordinary relief he seeks, either in the form of a

preliminary injunction or the regulation of communication with putative class members under

Rule 23(d).

FACTUAL BACKGROUND

Chase was initially contacted by the United States Attorneys Office about SCRA

concerns arising out of plaintiffs mortgage loan account, and was asked to provide information.

(Exhibit 1, Declaration of Michael J. Agoglia 2 (Agoglia Decl.).) In addition to providing

information to the United States Attorneys Office, Chase initiated a broader review of the

mortgage and home equity loans that Chase services where there was some indication that the

borrowers may have been entitled to the protections afforded under the SCRA, 50 U.S.C. Appx.

501, et seq. ( Id .) The scope of that review extended to loans which were active from

January 1, 2005. (Exhibit 2, Declaration of Laura DeAtley 2 (DeAtley Decl.).) This lawsuit

was filed in July 2010, after the internal review began. ( See Docket Entry 7.)

Chase committed significant resources to this review, including the development of a

project team involving a great number of Chase personnel, and months of transaction-by-

9:10-cv-01756-MBS Date Filed 12/30/10 Entry Number 17 Page 3 of 24


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transaction analysis of every implicated loan by subject matter experts. (DeAtley Decl. 2.) In

November 2010, the review progressed to the stage where Chase identified the potential

discrepancies in the accounts under review. ( Id .)

In early December, Chase approached plaintiff through counsel to inform him of the

internal review and planned refunds. (Agoglia Decl. 3.) Chase provided plaintiffs counsel

specific information regarding the nature and scope of the internal review, the amounts to be

refunded and the number of individuals who would receive a refund. ( Id .) Chase also provided

a draft of the proposed refund cover letter, which was revised to include mention of the SCRA in

an unsuccessful attempt to address plaintiffs concerns. ( Id . 3-4.) It reads simply as follows:Dear [name],

Chase recently conducted a review of accounts where borrowers may have been entitledto the benefits of the Servicemembers Civil Relief Act. We are issuing a refund ininstances where our review noted a possible discrepancy. The enclosed refund check toyou contains interest at 7.25% from the date of any funds at issue collected.

Should you have questions, please call (XXX) XXX-XXXX.

(See Petition, Exh. A (Docket Entry 10-1).)

The toll-free number is included because, based on its considerable experience in

processing refunds and handling similar borrower communications, Chase expects that without it

a certain number of borrowers will call a general customer service number, where the operator

will not have background information. (DeAtley Decl. 4.) To avoid that, Chase proposes to

use a dedicated toll-free number where the customer service representatives will have the

following scripted Frequently Asked Questions and responses:



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1. Why did I receive a check/refund?

Chase conducted a review of accounts where borrowers may have been entitled to thebenefits of the Servicemembers Civil Relief Act (SCRA). We issued a refund ininstances where our review noted a possible discrepancy. The amount refunded also

included interest.

2. Do I continue to have SCRA protection from here forward?

Our review included both borrowers who were previously protected under the SCRA, andthose who are currently protected under the SCRA. The refund will not affect the periodin which you are entitled to SCRA protection. If you have questions regarding yourcurrent SCRA status, please contact [name/department] at [phone number]. 1

3. What are the tax implications of this refund?

Chase cannot provide tax advice, and any tax implications are dependent on yourparticular financial circumstances. Please speak with your personal tax adviser regardingany tax implications of this refund.

(Agoglia Decl. 3, Exh. A.) Contrary to the speculation in the Petition and Motion, the

customer service representatives will adhere strictly to this information. (DeAtley Decl. 4)

They will not have any information about the lawsuit, and they will not engage in any

discussions about the litigation, its claims, or seek in any way borrowers waiver or release. ( Id .)

As explained to plaintiffs counsel, Chase does not provide these refunds in exchange for a

waiver or release of class or individual claims. Neither the refund cover letter, nor the

Frequently Asked Questions, references the litigation, a release or waiver of claims in the

litigation (or any other matter), or a borrowers rights under the SCRA. Chase does not

condition the refund on a release or on opting out of the putative class, nor will it make any

1 The final FAQs will identify in this section the group with the responsibility at Chasefor correctly determining the periods of SCRA protection for affected borrowers. (DeAtleyDecl. 5.) This is the group to whom inquiries about SCRA protection periods are routed in theordinary course of business. ( Id .) They will not provide, or be in a position to provide, anyinformation about the lawsuit, its claims, or reading and interpreting military orders and relatedmaterials. ( Id .)



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representation to borrowers about their rights under the litigation or the SCRA.

As Chase further explained to plaintiffs counsel, the refunds are necessarily broader in

time, scope, and amount than a likely class recovery could achieve. There remains a threshold

question of whether a private right of action exists under the SCRA for the claims in this lawsuit.

(See Consent Motion to Stay, Docket Entry 6.) Even were such a right available to plaintiff, the

statute of limitations will at most be no longer than four years. See 28 U.S.C. 1658 (rights of

action created after 1990, and with no express statute of limitation, subject to four-year catch-

all). Plaintiffs complaint was filed in July 2010 (Docket Entry 1), thereby limiting any class to

borrowers with active loans as of July 2006. Chases refund would repay potential overchargesto borrowers with active loans as far back as January 2005, at least 15 months longer than the

most expansive class period would likely extend.

The refund is also broader in many respects than the statutory liability. For example, the

refund returns all fees paid during the period of SCRA protection, not just those which if paid

would cause the loan payments to exceed the 6% interest cap created by the statute. (DeAtley

Decl. 3). See 50 U.S.C. Appx. 527 (capping SCRA-protected mortgage loans at 6% interest

rate, and defining interest as including certain fees and charges). Chase also provided

borrowers with the most expansive SCRA protection period, by triggering SCRA protection as of

the order date (the date of the written communication calling a servicemember to duty), rather

than the actual active duty start date (DeAtley Decl. 3), which courts have held to be the SCRA

protection start date. See Rodriguez v. Am. Express, et al. , No. 03-5949, 2006 U.S. Dist. LEXIS

17727, at *18 (E.D. Cal. Apr. 7, 2006) (interest rate cap applies as of the date of entry into



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active duty). 2 Moreover, the refund amount also includes interest on the amount of the refund

at 7.25% (DeAtley Decl. 3), though such interest is also likely beyond Chases strict legal

requirements. See Rodriguez , 2006 U.S. Dist. LEXIS 17727, at *24 (refund of charges in excess

of 6% rate limitation sufficient to make borrower whole); Fourte v. Countrywide Home Loans,

Inc. , No. 07-1363, 2009 U.S. Dist. LEXIS 84146, at *20-21 (D.N.J. Sept. 15, 2009) (crediting

account for SCRA-related overcharge would satisfy claim).

ARGUMENT

I. THERE IS NO BASIS TO LIMIT OR ALTER CHASES REFUNDCOMMUNICATIONS HERE.

Plaintiff argues, incorrectly, that Gulf Oil Co. v. Bernard , 452 U.S. 89 (1981), warrants

the Courts restriction of Chases refund here. A careful examination of the case leads to the

opposite conclusion. Gulf Oil involved a pre-certification communication with putative class

members that offered backpay in exchange for a full release of pending discrimination claims.

452 U.S. at 92. The district court ordered a complete ban on all communications concerning the

pending action, with an exception for communications in the regular course of business. Id . at

95. The Fifth Circuit affirmed the district court opinion, with a dissenting opinion arguing that

the order limiting communications was not appropriate because the court did not make any

finding of actual or imminent abuse. Id . at 98. The Supreme Court agreed with the dissent, and

remanded, holding that the mere possibility of abuses does not justify routine adoption of a

communications ban, and in many cases there will be no problem [with putative class

communications] requiring remedies at all. Id . at 104.

2 Pursuant to LCR 7.05(4), DSC, copies of all out-of-region court decisions, decisions inthe Federal Rules Decisions reporter, and unpublished decisions are attached hereto collectivelyas Exhibit C.



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Courts since Gulf Oil have held true to the directive that, [a]bsent any specific evidence

that the communication is abusive, a limitation is inappropriate. Kay Co., LLC v. Equitable

Prod. Co. , 246 F.R.D. 260, 263 (S.D. W. Va. 2007). Abusive communications have been

defined as those that contain false, misleading, or confusing statements or those intended to

coerce prospective class members into excluding themselves from the suit. Id . at 261-63. The

court in Kay permitted communication with putative class members over the plaintiff counsels

objection because [t]he plaintiffs have not directed the court to any evidence which indicates

that the defendants have attempted to coerce putative members into excluding themselves from

the class or undermined cooperation with or confidence in the plaintiffs counsel. Id . at 263;see also , Webb v. Discover Prop. & Cas. Ins. Co. , No. 3:08cv1607, 2008 U.S. Dist. LEXIS

95431at *7-9 (M.D. Pa. Nov. 24, 2008) (denying plaintiffs motion to restrict defendants

contact with prospective class members . . . in order to prevent defendants from [] initiating any

unfairly prejudicial, one-sided communications with these individuals that may misrepresent the

status and/or purpose of th[e] litigation because there is no clear record of abuseor even

allegations of abusefrom which [the court] can make specific findings with regard to the

defendants contact with the putative class members) (citation omitted).

The situation is no different in this case: plaintiff has not demonstrated any specific

evidence of abuse or coercion. The refund here is materially identical to the communication

approved in Rankin v. Board of Education Wichita Public Schools , 174 F.R.D. 695 (D. Kan.

1997). In Rankin , the plaintiffs claimed that the defendant school district had failed to provide

services to disabled children. Id . at 697. After the lawsuit was filed, and prior to class

certification, the school district sent letters to students, offering to provide make-up services. Id .

The letters did not mention the pending class action, nor did they seek to extinguish the students



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rights under the pending suit in exchange for the make-up sessions. Id . Recognizing that such

letters were necessary for ongoing services, the court rejected the plaintiffs claim that the letters

were abusive, since they made no reference to the litigation and did not attempt to discourage

potential class members from participating in the suit. Id . (Any prospective member of the

class could choose to take advantage of [the] defendants offer and still choose to participate in

this action should the class be certified. The court finds absolutely no merit in plaintiffs

contention that any curative notice is required because of the . . . letter.). See also Payne v. The

Goodyear Tire & Rubber Co. , 207 F.R.D. 16, 21 (D. Mass. 2002) (permitting home inspections

of and communications with putative class members where there was no evidence that therewas any discussion of litigation at all with the homeowners, or any attempt to obtain a release or

any type of waiver from the homeowners).

Unlike in Gulf Oil , and the cases where Gulf Oil has been used to limit communications

with putative class members, the refund at issue here does not seek a waiver or release of any

claims. As Chase endeavors to do in the normal course of business when it discovers a possible

account discrepancy, Chase seeks here only to provide money to SCRA borrowers for whom it

has identified a potential overcharge. (DeAtley 3.) Consistent with those cases approving

defendants class communications, the actual communication at issue here does not purport to tie

the refund or related activity to the pending litigation. That is precisely the approach Chase

intends to take with this refund.

A. Courts Routinely Permit Refunds of This Kind.

Courts routinely permit refunds of this kind. For example, in Boulas v. J.P. Morgan

Chase & Co., et al. , No. 1:09-cv-00348-PAG, filed in the Northern District of Ohio, the court

rejected a similar request for a temporary restraining order and preliminary injunction in

connection with a Chase refund of a credit card fee challenged by the plaintiff in the litigation.



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Id ., Opp. to Mtn for Prelim. Inj. at 3 (N.D. Ohio Apr. 8, 2009) ( Boulas Docket Entry 16). While

the action was pending, a state Attorney General investigated the same practice. Id . at 5-6. After

further review, Chase decided to issue refunds of the fee in question to putative class members

through a process similar to the one at issue here, with no waiver or release sought in return. Id .

at 5. The plaintiff tried to enjoin Chase from refunding the fee to putative class members, but the

only arguable prejudice identified was that class counsels contingency fee might suffer if class

members were made whole through such a refund. Id ., Order at 1-2 (N.D. Ohio April 9, 2009)

( Boulas Docket Entry 17). The court denied the motion and permitted the refunds to go forward,

finding that possible limitations on what class counsel might recover in the litigation clearly didnot qualify as grounds to limit Chases planned refund. Id .

Courts have permitted refunds even where accepting such refunds would release claims,

so long as those consequences were clearly communicated to putative class members. For

instance, Cox Nuclear Medicine v. Gold Cup Coffee Services., Inc. , 214 F.R.D. 696 (S.D. Ala.

2003), a case cited by plaintiff, also involved and permitted refunds to putative class members,

over the objection of the plaintiffs counsel. In Cox , the defendant issued letters informing

putative class members that they had received boxes with 35 packets of coffee in each box,

though the label said each box carried 42 packets. Id . at 698. The defendant enclosed a check to

each customer for the difference in value between 35 and 42 packs, and explained in the

accompanying letter that cashing or other endorsement of the check releases the defendant from

further liability. Id . The court denied the plaintiffs petition for sanctions, holding that the

letter was not misrepresentative and that the refund made the customers whole. Id . at 698-99.

See also Arriola v. Time Ins. Co. , 751 N.E. 2d 221, 230-31 (Ill. App. 2001) (permitting refund to

putative class members in exchange for release of claims). Though Chase does not seek a



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release, these cases illustrate that, as here, where refunds are presented in good faith and without

any misrepresentation, courts have permitted them without a need for intervention.

Indeed, the few cases discussing SCRA-related claims have held that refunding amounts

owed under the SCRA is both a routine and favored approach. See, e.g., Rodriguez , 2006 U.S.

Dist. LEXIS 17727, at *24 (claim satisfied because Citibank and American Express credited

plaintiffs account with all interest charges accrued in excess of 6% from the date of entry into

active service); Fourte , 2009 U.S. Dist. LEXIS 84146, at *20-21 (summary judgment denied

only because issues of fact regarding whether Countrywide previously credited plaintiffs

account with the amount of alleged SCRA overcharge).B. Plaintiff Has Not Identified Any Case Limiting Communication with

Putative Class Members in These Circumstances.

Plaintiff does not provide any caselaw to support his claim that refunds seeking no

release and making no mention of the pending class action are in some way misleading or

coercive. The cases cited by plaintiff involve communications with certified class members, or

communications that seek a release, neither of which is at issue here. See Kleiner v. First Natl

Bank of Atlanta , 751 F.2d 1193 (11th Cir. 1985) (defendant in a certified class action prohibited

from engaging in secret telephone campaign to solicit waivers in violation of district court order

barring contact with class members); In re Sch. Asbestos Litig. , 842 F.2d 671, 684 (3d Cir. 1988)

(holding that the district court lacked a proper basis under Rule 23(d) to issue [an order limiting

communications with a certified class]); Cobell v. Norton , 212 F.R.D. 14 (D.D.C. 2002)

(defendant in a certified class action prohibited from distributing accounting statements that

included notice that a failure to object to the accuracy of the statements would extinguish class

members rights to contest them in the future); Hampton Hardware, Inc. v. Cotter and Co., Inc .,

156 F.R.D. 630 (N.D. Tex. 1994) (pre-certification, defendant prohibited from mailing letters to



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putative class urging them to opt out of class action).

The facts of Chases refund and analogous caselaw support Chases contention that its

refunds are permissible, not misleading, and in fact benefit the putative class. Accordingly, there

is no need for court intervention or regulation of the proposed communication with putative class

members.

C. Plaintiffs Proposed Revisions to Chases Communication Serve Only toConfuse and Mislead Borrowers.

Interestingly, plaintiffs concern is not so much that Chase will communicate with

putative class members, but that the communication does not mention plaintiffs counsel or the

litigation. In Cram v. Electronic Data Systems Corp. , No. 07cv1842-LAB (NLS), 2008 U.S.

Dist. LEXIS 3669 (S.D. Cal. Jan. 17, 2008), a district court was faced with this exact request

not outright limitation of the defendants communication with putative class members, but,

rather, a communication that named the pending litigation and discussed the relevant claims. At

issue in Cram was backpay allegedly owed under state law. Id . at *1. The defendant had

internally reviewed putative class members pay, determined under federal law the amount owed,

and provided those amounts in a check with an accompanying letter that did not mention the

litigation and did not seek a release of any claims. Id . at *2-3. The plaintiff sought a curative

communication mentioning the litigation and ones rights under state law, arguing that

recipients of the refund may believe their claims to be settled or that the defendant would use

such pay as an affirmative defense against the claims for backpay. Id . at *3-4. The court refused

to compel follow-up communications in a manner helpful to the advancement of plaintiffs

position in this litigation. Id . at *5. Citing to the defendants argument that the plaintiff was

attempting to leapfrog the certification phase [] and proceed directly to class notification, and

noting that the communication did not seek a release of claims, the court held that the plaintiffs



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mere speculation of potential confusion was simply not enough to warrant the plaintiffs

requested communication. Id . at *6-7. Similarly, plaintiffs proposed communication here

would amount to improper pre-certification notice under Fed. R. Civ. P. 23(d), unsupported by

more than plaintiffs speculation of confusion and prejudice. On the contrary, it is plaintiffs

proposed communication that would prejudice putative class members.

1. Plaintiffs Proposed Revisions to Chases Communication

Prior to the filing of his Petition, plaintiff proposed that the letter accompanying the

refunds inform recipients that:

The loan-level review was the result of the present action;

The refund is for all SCRA-related overcharges;

The refund is not a settlement of any rights under the SCRA;

The present action is pending in South Carolina federal court (and providing the

caption for such action); and

Recipients should contact plaintiffs counsel with questions regarding . . . rights under

the SCRA or the pending action (providing counsels name and telephone number).

(Agoglia Decl. 4, Exh. B.)

2. The Extraordinary Step of Pre-Certification Notice Is Not Warranted

Plaintiffs proposed revisions would create a confusing and incomplete pre-certification

notice, thereby corrupting the notice requirements of Rule 23(d). Rule 23(d)(1)(B)(i) permits

pre-certification notice only in the truly rare situation where the facts of the case show that lack

of notice would unduly prejudice the ability of absent class members to bring independent

actions on their claims, either by limiting the right of absent class members to recover in a

subsequent suit, or by encouraging continued reliance by unnamed class members on the activity



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of named class members on their behalf. Sanft v. Winnebago Indus., Inc. , 216 F.R.D. 453, 460

(N.D. Iowa 2003); Schultzen v. Woodbury Cent. Cmty. Sch. Dist. , 217 F.R.D. 469, 473 (N.D.

Iowa 2003) ([I]f there is . . . no evidence of any prejudice to absent class members, then courts

have consistently found that notice to the absent class members is not required.) (citation

omitted). 3 Finding that the statute of limitations would soon run, the court in Sanft required pre-

certification notice of the dismissal of class claims so as not to prejudice putative class members

from asserting claims on their own behalf. Id . 216 F.R.D. at 460. In contrast, a dismissal is not

at issue here, and the proposed refund neither limits the rights of absent class members, nor does

it induce reliance on the activity of named class members. As discussed in detail above, Chase does not seek a waiver or release from refund

recipients, nor are the refunds in any way meant to be an offer of settlement. Nevertheless,

plaintiff argues that cashing the check still has some bearing on class claims. Plaintiffs

argument seems to be that, at worst, putative class members could be made whole with the

refunds. First, if, as plaintiff argues, consequential and punitive damages are available under the

SCRA (which Chase disputes), the fact that a borrower cashed a check for his potential actual

damages neither waives his request for other damages, nor determines the total amount of such

damages. Second, plaintiff has cited nothing to support the notion that making a plaintiff or

putative class member whole voluntarily and without a release before the conclusion of pending

litigation constitutes legally cognizable prejudice. In fact, courts have time and again held that

3 Pre-certification notice is rare, indeed, as both Rule 23(d) and comments thereto notethat notice is intended for members of the class, without any mention of notice prior to classcertification. See Fed. R. Civ. P. 23(d)(1)(B) (a court may issue orders that requireto protectclass members and fairly conduct the actiongiving appropriate notice to some or all classmembers ) (emphasis added); Fed. R. Civ. P. 23 advisory committee notes to 1966 amends.,subdiv. (d)(2) (discussing notice to members of the class ) (emphasis added).



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making a plaintiff or putative class member whole prior to class certification is permissible. See

Susman v. Lincoln Am. Corp. , 587 F.2d 866, 870 (7th Cir. 1978) (holding that tender of full

amount of damages to plaintiff is permissible and that such tender does not alone moot a pending

motion for class certification); Arriola v. Time Ins. Co. , 751 N.E. 2d 221 (Ill. App. 2001) ([I]t is

permissible for defendants to tender full amount of recovery to named plaintiffs and putative

members of the class prior to the filing of a motion for class certification.) (citing cases in

accord).

From a practical perspective, even more outlandish is the notion that an individual would

benefit from delaying a full refund so that he may participate in a lawsuit seeking the samerecovery. If the argument is that the funds provided could make the borrower whole regarding

his SCRA claims, then the potential for a class action is of no matter. From the perspective of

the borrower, it does not matter whether his substantive rights are vindicated as part of a class

action, or on an individual basis. The only potential difference in those scenarios is attorneys

fees. As in Boulas , this Court should reject the notion that harm to the fee recovery for counsel

would remotely justify the relief sought here. See e.g. , Boulas , supra , Order at 2 (Quite simply,

the Court does not look to whether the attorneys will be irreparably harmed.) (emphasis in

original).

Understanding that there is no risk of prejudice to putative class claims, the next inquiry

is whether a lack of notice would prejudice putative class members by encouraging continued

reliance . . . on the activity of named class members on their behalf. Sanft , 216 F.R.D. at 460.

In fact, it is plaintiffs proposed noticenot Chases refundthat would prejudice putative class

members by inducing their misplaced reliance on the pending action. Not only are plaintiffs

proposed representations factually inaccurate (Chases internal review was not initiated as a



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result of plaintiffs lawsuit, for one), but expressly linking the refund to the lawsuit is likely to

cause at least some individuals not to cash their refund checks because of a misplaced

assumption that their rights will be limited by cashing the check, even when as a matter of law

they would not be. That would be especially improper because there is no guarantee that any

private right of action will be found under the SCRA, that any refund recipient will ever be part

of a certified class, or that the class will succeed on the merits. In fact, because of the broader

time and substantive scope of the refund, the parties know for certain that a portion of those

individuals receiving the refunds would not be part of a class under any scenario. 4 Yet, plaintiff

would have those individuals apprised of the pending lawsuit and the availability of plaintiffscounsel, and at Chases expense when the cost of class notice typically rests with the plaintiff.

See Eisen v. Carlisle , 417 U.S. 156, 177 (1974) ([T]he petitioner must bear the cost of notice to

the members of his class.); Sanft , 216 F.R.D. at 460 (holding that cost of mailing notice shall be

borne by plaintiff).

Even further misleading and prejudicial, borrowers could read plaintiffs proposed letter

to mean that, if they do not cash the check, they have affirmatively opted in or otherwise acted

on their behalf in the pending litigation, when that is not the case. Plaintiffs letter would also

convey the impression that if borrowers do not cash the check, they are guaranteed to receive in

the future at least the amount enclosed. That is untrue, of course, as the lawsuit may never

proceed past the dismissal stage, and the exact amount to be paid remains to be litigated.

4 Nor does (or could) plaintiff suggest a method short of the very detailed loan-by-loananalysis by which he, the Court, or even Chase could segregate the putative class members fromthe rest of the refund recipients. Indeed, it was precisely because of those enormouslytime-consuming and costly impediments that Chase chose to make refunds in the mannerproposed (e.g., the broadest possible protection period, all fees instead of only those violating the6% SCRA cap, etc.).



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Borrowers could also believe themselves to be represented by counsel, when they are not yet

represented, and some borrowers may never be as a result of statutes of limitations or lack of

damages. Even more alarming, putative class members could believe that court-ordered

pre-certification notice amounts to court endorsement of the validity of the underlying claims,

when there is no guarantee that plaintiff could ever be meritorious here. The court in Cherner

denied pre-certification notice for this very reason: [T]he normal consequence [of such notice]

would be that many persons would incorrectly infer that this Court regarded the plaintiffs

complaint as prima facie well-founded and had required a prompt notice to all who had been

victimized so that they might not be [sic] delay or inaction lose valuable rights. Cherner v.Transitron Elec. Corp. , 201. F. Supp. 934, 936 (D. Mass. 1962).

Plaintiffs proposed Proper Order, premised on Bublitz v. E.I. duPont de Nemours &

Co. , 196 F.R.D. 545, 549 (S.D. Iowa 2000), is not any less prejudicial than his proposed

revisions to the refund letter. (Rule 23(d) Motion at 11-12.) First, Bublitz itself is inapposite.

Bublitz involved a communication between an employer/defendant and employee/putative class

members, wherein the employer sought release of class claims in exchange for certain benefits.

Id . at 547. Significantly, the court held that the at-will employment relationship between the

defendant and putative class members produces a strong potential for coercion and thus justifies

minimal protections. Id . There is no analogous particularly high risk of coercion here, as

there was in Bublitz . Id . at 548. Nor is there an offer of settlement, which the Bublitz court

carefully noted was the reason for plaintiffs counsel to be involved with communications to

putative class members. Id . at 549 (Plaintiffs counsel are concerned about not being able to

participate in the presentation of the settlement proposal and related communications, and not

being able to analyze the settlement proposal before it was presented to the putative class



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members.). Not only would providing notice under Bublitz misleadingly induce borrowers

reliance for the same reasons provided above, but, in addition, plaintiffs suggestion that the facts

at issue here are analogous to those in Bublitz raises the concern that plaintiffs counsel would

themselves confuse borrowers. Plaintiff argues that the customer service hotline, the extent of

what will be said to callers is included in the attached FAQs, may confuse borrowers, when it is

more likely that plaintiffs counsels communications with borrowers may themselves

misrepresent and obfuscate the nature of the refunds, such as by potentially representing that

Chases refund is an offer of settlement, or that it has some bearing on class claims, which it does

not.Since there are no rights at risk of prejudice, and attorneys fees alone are insufficient to

warrant pre-certification notice, the only other purpose notice could serve is to solicit clients.

This not only contravenes express court precedent, but also undermines the purpose of Rule 23.

The Advisory Committee Notes to Rule 23(d), not only support the view that notice is

overwhelmingly reserved for certified classes, but also caution that any notice to an uncertified

class should not be used merely as a device for the undesirable solicitation of claims. See Fed.

R. Civ. P. 23 advisory committee notes to 1966 amends., subdiv. (d)(2). As a result, courts have

routinely denied such class notices which act as client solicitations. See e.g. , Cherner , 201 F.

Supp. at 936 (Rule 23 should not be used as a device to enable client solicitation[.]) (citation

omitted); Marian Bank v. Elec. Payment Servs. Inc. , No. 95-614-SLR, 1999 U.S. Dist. LEXIS

3097, at * 2-3 (D. Del. Mar. 12, 1999) (highlighting courts repeated warnings against using pre-

certification notice to encourage solicitation of lawsuits and rejecting plaintiffs motion to issue

notice of denial of certification). Plaintiffs request for a general FYI about the lawsuit to

putative class members is materially identical to that denied in Pan Am World Airways, Inc. v.



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United States Dist. Ct. , 523 F.2d 1073 (9th Cir. 1975). There, the appellate court overturned the

district courts order permitting notice of the existence of the lawsuit to hundreds of putative

class members. Id . The appellate court reasoned that pre-certification notice would undermine

the purpose of Rule 23 certification and instead encourage joinder of multiple claims in cases

where certification could not be achieved. Id at 1079. Plaintiffs proposed notice attempts to get

around class certification requirements in a number of ways, not least of which is by purporting

to represent putative class members that are not yet represented by counsel and communicating

with borrowers who even plaintiff would have to admit could never be members of a SCRA class

or represented by class counsel, and as a result should be denied by the Court for this additionalreason.

Ripe for confusion and misuse, it is understandable why class notice requires rigorous

court review to ensure that it meaningfully and accurately presents the parties views and class

member options, including the consequence of opting out or choosing to remain in the class. See

e.g. , Fed. R. Civ. P. 23(c)(2); In re Serzone Prods. Liab. Litig. , 231 F.R.D. 221, 231 (S.D. W.

Va. 2005) (noting that class notice must inform potential class members (1) that they have an

opportunity to opt out; (2) that the judgment will bind all class members who do not opt out; (3)

and that any member who does not opt out may appear through counsel). Plaintiffs partial and

inaccurate revisions to the proposed refund letter fall far short of meaningful notice and only

serve to obfuscate the refunds purpose and putative class members rights, making clear that

pre-certification notice is not required or helpful in this instance.

Finally, if the case were to proceed, and if the court were later to certify some class, it

would at that point have a full opportunity to decide what the content of a full, fair and adequate

class notice would be, including any information about the impacts, if any, of the prior refund



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by Chase.

II. PLAINTIFF HAS NOT MET HIS BURDEN FOR A PRELIMINARYINJUNCTION

For the reasons stated above, plaintiffs Petition also fails to meet the four mandatory

elements required for this Court to enjoin Chase from issuing the refunds. Because preliminary

injunctions are an extraordinary remedy, a moving party must clearly establish 1) that he is

likely to succeed on the merits, 2) that he is likely to suffer irreparable harm in the absence of

preliminary relief, 3) that the balance of equities tips in his favor, and 4) that an injunction is in

the public interest. Real Truth About Obama, Inc. v. F.E.C. , 575 F.3d 342, 346 (4th Cir. 2009)

(citing Winter v. Natural Resources Defense Council, Inc. , 555 U.S. 7, 24 (2008)), vacated , 130

S. Ct. 2371, reaffd in part , 607 F.3d 355 (4th Cir. 2010).

A. Plaintiff Is Not Likely to Succeed on the Merits.

Plaintiffs Petition does not address whether plaintiff is likely to succeed on the merits of

the underlying claim, the first basic requirement of a request for preliminary injunction. Plaintiff

erroneously attempts to collapse both the Rule 23(d) Motion and the Petition into one by arguing

that his likelihood of prevailing on the Rule 23(d) Motion warrants the granting of his Petition.

Plaintiffs conflation of the two ignores the longstanding requirement for a preliminary

injunction that the movant show the likelihood of winning on the merits of the underlying action .

Real Truth About Obama, Inc. , 575 F.3d at 346.

Chase submits that plaintiff is not likely to do so. First, there remains the significant

threshold question of whether there is a private right of action under the SCRA. 5 Second, it

5 The recent amendment to the SCRA, expressly adding a private right of action, is likelyto weigh heavily against finding that a private right of action existed prior to its addition. See 50U.S.C. Appx. 802 (added by P.L. 111-285, Oct. 13, 2010). The Fourth Circuit seems to haveacknowledged as much, by ordering supplemental briefing in Gordon v. Petes Auto on the issue

(Footnote continues on next page.)



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remains far from clear whether plaintiff would succeed on his substantive claims, or whether a

class could be certified. Chase has not located a single instance where a court certified a class

under Section 518 or 527 of the SCRA, under which plaintiff brings his claims. Making matters

worse, plaintiff appears intent on arguing that he is entitled to seek emotional distress and

punitive damages under the SCRA, claims for which courts routinely deny class certification

because they are unavoidably individualized. See, e.g. , Gunnells v. Healthplan Services, Inc. ,

348 F.3d 417, 429 (4th Cir. 2003) (Plaintiffs other damages claimsthose relating to injury to

credit, time lost, and loss of enjoyment of lifemay require individualized inquiry.); Doe v.

Chao , 306 F.3d 170, 183 (4th Cir. 2002) (emotional distress damages require fact-specificinquiries); Williams v. Telespectrum, Inc. , No. 3:05cv853, 2007 U.S. Dist. LEXIS 78415, at

*17-18 (E.D. Va. Jun. 4, 2007) ([T]he issue of [defendants] liability for punitive damages to

each individual class member would overshadow the common issues that would be litigated.);

Nelson v. Wal-Mart Stores, Inc. , 245 F.R.D. 358, 376 (E.D. Ark. 2007) ([A]n award of punitive

damages often must include an inquiry into each plaintiffs individual circumstances in order to

determine the amount of punitive damages awardable to that plaintiff.). 6

For the reasons discussed at length above, even if this Court were to consider the merits

of plaintiffs Rule 23(d) Motion, it is evident that he would not prevail.

(Footnote continued from previous page.)

of whether the newly-added private right of action is retroactive. Gordon v. Petes Auto , OrderRequesting Supplemental Briefing, No. 09-2393 (4th Cir. Oct. 26, 2010).

6 Damages aside, an additional hurdle to class certification is the unique, fact-specificdefense provided by Section 527 of the SCRA, which protects creditors from applying the 6%interest rate cap if a servicemembers ability to pay is not materially affected by reason of theservicemembers military service. 50 U.S.C. Appx. 527(c).



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B. Plaintiff Fails to Meet the Additional Requirements of a PreliminaryInjunction.

In addition to showing a likelihood of prevailing on the underlying merits, plaintiff must

show clear evidence: 1) of irreparable harm to the moving party, 2) that weighing of harm

balances in favor of his Petition, and 3) that a preliminary injunction would further the public

interest. Real Truth About Obama, Inc. , 575 F.3d at 346.

Plaintiffs claim that recipients face an extreme likelihood of irreparable harm because

acceptance may compromise their rights is not supported by the facts. (Petition at 9.) As

explained above, the refunds will benefit putative class members, without risk of any irreparable

harm. As demonstrated by a plain reading of the refund letter and FAQs, recipients face no

decision regarding their rights under the class action. (Docket Entry 10-1; Agoglia Decl., Ex. A.)

In fact, based on the uncertainty of the justiciability of the class action, immediate receipt of a

refund will benefit putative class members by guaranteeing them payment now.

As a result, there is no harm to plaintiff or putative class members to balance against

harm to Chase. On the other hand, there is likely to be harm to Chases normal course of

business, were it restricted from sending such refunds. ( See DeAtley Decl. 3 (stating that

Chases normal course of business is to provide refunds to borrowers promptly once it receives

notice of any overcharges).)

Finally, Chases proposed refunds further the public interest and the intent of the SCRA.

Plaintiff argues that the refunds thrust[] before the servicemembers the decision to accept or

reject a refund based on little or no knowledge of their rights pertaining to that refund[,] and

therefore run[] contrary to the Acts purpose to enable such persons to devote their entire

energy to the defense needs of the Nation. (Petition at 11 (citations omitted).) Plaintiffs

concern is premised on a mischaracterization of the refunds. A borrowers decision to accept the



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CONCLUSION

For the foregoing reasons, plaintiffs Petition and Motion should be denied.

Dated: December 30, 2010 By: s/ James Y. Becker Steve A. Matthews (Fed. ID No. 3689)[email protected] Y. Becker (Fed. ID No. 5733)[email protected] SINKLER BOYD, P.A.1201 Main Street, 22nd FloorColumbia, South Carolina 29201-3232Telephone: 803.540.7706Facsimile: 803.765.1243

Michael J. Agoglia ( Pro Hac Pending )[email protected] & FOERSTER LLP 425 Market StreetSan Francisco, California 94105-2482Telephone: 415.268.7000Facsimile: 415.268.7522

Attorneys for Defendant Chase Home Finance,LLC



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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

BEAUFORT DIVISION

JONATHON ROWLES, individually and asa class representative of others similarlysituated,

Plaintiff,v.

CHASE HOME FINANCE, LLC,

Defendant.

Civil No. 9:10-cv-01756-MBSHon. Margaret B. Seymour

DECLARATION OF MICHAEL J.AGOGLIA IN SUPPORT OF CHASEHOME FINANCE, LLCS RESPONSE TOPETITION FOR TEMPORARYRESTRAINING ORDER AND MOTIONFOR PRELIMINARY INJUNCTION ANDMOTION FOR ORDER GOVERNINGPARTIES CONTACT WITH PUTATIVECLASS MEMBERS

I, Michael J. Agoglia, declare as follows:

1. I am a partner in the law firm of Morrison & Foerster LLP, counsel of record ( pro

hac vice motion pending) for Defendant Chase Home Finance, LLC (Chase). I have personal

knowledge of the matters set forth herein, and, if called as a witness, could and would

competently testify as follows:

2. In the Summer of 2010, Chase was contacted by the United States Attorneys

Office about Servicemembers Civil Relief Act (SCRA) concerns arising out of plaintiffs

mortgage loan account, and was asked to provide information. In addition to providing

information to the United States Attorneys Office, Chase engaged us to conduct immediately a

broader review of the mortgage and home equity loans Chase serviced where there was some

indication that the borrowers may have been entitled to the protections afforded under the SCRA.

That review began approximately one month before this lawsuit was filed in July, 2010.

3. Beginning on December 9, 2010, I approached plaintiff through counsel on behalf

of Chase in an attempt to resolve this matter. In the course of those discussions, I informed

9:10-cv-01756-MBS Date Filed 12/30/10 Entry Number 17-1 Page 1 of 2


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- 2 -

counsel about the internal review and Chases intention to refund any discrepancies identified as

a result of that review. I provided plaintiffs counsel with information regarding the nature and

scope of the internal review, the amounts to be refunded and the number of individuals who

would receive a refund. I also provided plaintiffs counsel a draft of the proposed refund cover

letter, as well as Frequently Asked Questions and responses thereto. A true and correct copy of

the email communicating the Frequently Asked Questions is attached as Exhibit A to this

declaration.

4. To address concerns raised by plaintiffs counsel, Chase agreed to revise the

cover letter to include mention of the SCRA. A true and correct copy of the revised letter was

attached to Plaintiffs Petition, as Exhibit A. (D.E. 10-1.) Plaintiff rejected these revisions, andinstead proposed the letter attached as a true and correct copy as Exhibit B to this declaration.

I declare under penalty of perjury that the foregoing is true and correct.

Executed this 30th day of December, 2010, at Truckee, California.

/s/ Michael J. AgogliaMichael J. Agoglia

2937293



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1

Agoglia, Michael J.

From: Agoglia, Michael J.Sent: December 22, 2010 7:00 AMTo: Richard A. Harpootlian ([email protected])Subject: Chase Refund

Dick,

Here are the responses prepared or the customer service representatives who will be answering any calls on the toll freenumber provided in the refund cover letter.

1. Why did I receive a check/refund?

Chase conducted a review of accounts where borrower may have been entitled to the benefits of theServicemembers Civil Relief Act (SCRA). We issued a refund in instances where our review noted a

possible discrepancy. The amount refunded also included interest.

2. Do I continue to have SCRA protection from here forward?

Our review included both borrowers who were previously protected under the SCRA, and those who arecurrently protected under the SCRA. The refund will not affect the period in which your are entitled toSCRA protection. If you have questions regarding your current SCRA status, please contact[name/department] at [phone number].

3. What are the tax implications of this refund?

Chase cannot provide tax advice, and any tax implications are dependent on your particular financialcircumstances. Please speak with your personal tax adviser regarding any tax implications of thisrefund.



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EXHIBIT B TO DECLARATION OF MICHAEL J. AGOGLIADATED DECEMBER 30, 2010



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From: Dick Harpootlian [[email protected]]Sent: Tuesday, December 21, 2010 10:57 AMTo: Agoglia, Michael J.

Subject: FW: Rowles

Page 1 of 1Rowles

12/30/2010

As a result of an action recently filed in the South Carolina Federal Court, Chase has conducted a review of allaccounts that involve adjustments made per the Servicemember s Civil Relief Act (SCRA). We are sending youthe enclosed check as a refund for overcharges that were discovered on your account. This refund containsinterest at 7.25% from the date of any funds at issue collected . This is a refund, and is not a settlement of anyrights you may have under the SCRA . If you have questions regarding the amount of the refund, please call(XXX) XXX- XXXX (Chase number). If you have questions regarding your rights under the SCRA or the pendingaction, please contact Plaintiff s Counsel: Dick Harpootlian, Esquire (803) 252 - 4848 or William Harvey, Esquire(843) - 524 - 3109.

The action is entitled:Jonathan Rowles, individually and as class representative of others similarly situated VS. Chase Home FinanceLLC, Civil Action #9:10- cv- 01756 - MBS



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LEXSEE 2006 U.S. DIST. LEXIS 17727

OSCAR RODRIGUEZ JR. dba PACIFIC CONSTRUCTION CONCEPTS,Plaintiff, v. AMERICAN EXPRESS, ADVANTA, BANK ONE, BANK OF

AMERICA, CITIBANK, DISCOVER, FORD CREDIT, HOME DEPOT, LOWESCOMPANIES, INC., INTERNAL REVENUE SERVICE, NEXTEL

COMMUNICATIONS, PINE MOUNTAIN LAKE, U.S. BANKCORP, VALLEYFIRST CREDIT UNION, WELLS FARGO BANK, NBMA, and DOES 1-100,

INCLUSIVE, Defendants

CV F 03-5949 AWI LJO

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OFCALIFORNIA

2006 U.S. Dist. LEXIS 17727

April 7, 2006, DecidedApril 7, 2006, Filed

SUBSEQUENT HISTORY: Summary judgmentgranted by Rodriguez v. Am. Express, 2006 U.S. Dist. LEXIS 41780 (E.D. Cal., June 8, 2006)

PRIOR HISTORY: Rodriguez v. Am. Express, 2005U.S. Dist. LEXIS 27126 (E.D. Cal., Nov. 8, 2005)

COUNSEL: [*1] Oscar Rodriguez, Jr, dba PacificConstruction Concepts Doing business as PacificConstruction Concepts, Petitioner, Pro se, Modesto, CA.

For American Express Travel Related Services, Inc.,Defendant: Robert Lenz Meylan, Virginia Muntean,Greenberg Traurig, LLP, Santa Monica, CA.

For Bank One, Defendant: George G Weickhardt, RopersMajeski Kohn and Bentley, San Francisco, CA.

For Bank of America, Defendant: Gwen HeatherVecchio, Wright, Finlay & Zak, LLP, Newport Beach,CA.

For Citibank, Defendant: Michael D. Schulman, LawOffices of Michael D. Schulman, Woodland Hills, CA.

For Ford Credit, Defendant: Regina J McClendon,Severson and Werson, San Francisco, CA.

For Home Depot, Lowes Companies Inc, GE CapitalFinancial, Inc, Defendants: Tara Leigh Jones, Sedgwick Detert Moran and Arnold, San Francisco, CA.

For US Bank, Defendant: Holly A Hayes, Ivanjack andLambirth LLP, Los Angeles, CA.

For Valley First Credit Union, Defendant: Ted M Cabral,Law Offices of Ted M. Cabral, Modesto, CA.

For Lowe's Hiw, Inc, Respondent: Tara Leigh Jones,Sedgwick Detert Moran and Arnold, San Francisco, CA.

For Ford Credit, Counter Claimant: Regina J McClendon,[*2] Severson and Werson, San Francisco, CA.

Oscar Rodriguez, Jr, Counter Defendant, Pro se,Modesto, CA.

For Citibank, Cross Claimant: Michael D. Schulman,Law Offices of Michael D. Schulman, Woodland Hills,CA.

Page 1



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Oscar Rodriguez, Jr, Cross Defendant, Pro se, Modesto,CA.

JUDGES: Anthony W. Ishii, UNITED STATESDISTRICT JUDGE.

OPINION BY: Anthony W. Ishii

OPINION

MEMORANDUM OPINION AND ORDERGRANTING IN PART AND DENYING IN PARTDEFENDANTS' MOTIONS FOR SUMMARYJUDGMENT

Document Numbers: 84, 151, 154, 157, and 158

This is an action by plaintiff Oscar Rodriguez("Plaintiff") pursuant to the Soldier's and Sailor's ActCivil Relief Act, renamed pursuant to 2003 amendmentsthe Servicemembers Civil Relief Act ("SCRA"), fordamages and injunctive relief. Of the defendants namedin the original complaint, four remain. Those areCitiBank USA, ("Citibank"), Bank of America, AmericanExpress Travel Related Services ("American Express"),and Valley First Credit Union ("Valley First")(collectively, "Defendants"). Now before the court aremotions for summary judgment on all claims for relief alleged by Plaintiff by each Defendant. Federal question jurisdiction exists pursuant to 28 U.S.C. 1331 [*3] .Venue is proper in this court.

PROCEDURAL HISTORY

The original complaint in this case was filed on July11, 2003. The complaint was amended three times tospecifically name additional defendants. The lastamendment was filed on December 24, 2003. However,the allegations set forth in the original complaint have notbeen altered in the amendments. Reference hereinafter tothe "complaint" is to the original complaint as

subsequently modified to name new plaintiffs. Thecomplaint originally named some 18 defendants.Between December 2003 and March 17, 2005, alldefendant parties except the above-listed Defendantswere voluntarily dismissed or dismissed by stipulation.On August 2, 2005, defendant Bank of America filed itsmotion for summary judgment. Citibank filed its motionfor summary judgment on August 11, 2005, followed bydefendants Valley First, and American Express on

August 26, 2005. On September 13, 2005, the deadlinefor opposition to the motions for summary judgment wascontinued at Plaintiff's request. On September 19, 2005,the dates for jury trial and pretrial hearing were vacatedpending resolution of the motions for summary judgment.Filing dates were again continued [*4] upon Plaintiff'srequest on October 24, 2005, and again on December 15,2005. Further stay of proceedings was denied onFebruary 7, 2006, and a final briefing schedule was set.Plaintiff's opposition to the motions for summary judgment was filed on March 10, 2006. Defendants' replybriefs were filed between March 16, 2006, and March 22,2006.

UNDISPUTED MATERIAL FACTS

Each of the Defendant moving parties have

submitted their statements of undisputed facts. Plaintiff'sopposition to the motions for summary judgment doesnot include any response to Defendants' statements of undisputed facts, nor has he submitted anything thatcould be termed a statement of disputed facts. See LocalRule No. 56-260. Consequently, the court takes asestablished the factual allegations of the moving parties.

The following facts are undisputed and common toall Defendants:

Plaintiff is a member of the active United States AirForce Reserve who entered into active duty within themeaning of the SCRA beginning on February 13, 2002,and continuing through and including February 12, 2003.Plaintiff is sole proprietor of a company called PacificConstruction Concepts, and is solely liable for the [*5]debts of that company. Defendants are financialinstitutions who extended to Plaintiff or to PacificConstruction Concepts either secured or unsecured credit,and to whom Plaintiff was indebted at the time of hisentry into active duty.

Plaintiff's complaint makes four claims for relief, butdoes not consistently specify which claims are being

asserted against which Defendants. The court construesthe complaint as alleging each of the four claims for relief against each of the Defendants. First, Plaintiff allegesDefendants failed to reduce the interest rate on debtsoutstanding to Defendants as required by the SCRA.Plaintiff's complaint makes no specific allegations in thisregard; it merely states that some Defendants did lowertheir interest rates and others did not. Plaintiff seeksrefunds of any interest charges paid in excess of the

Page 22006 U.S. Dist. LEXIS 17727, *2



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statutory maximum to any of the Defendants. Second,Plaintiff alleges the Defendants submitted unfavorablecredit reports that were retaliatory or otherwise actionableunder the SCRA. Plaintiff's complaint requests injunctiverelief to require each Defendant to withdraw and/or repairthe negative credit reports. Third, Plaintiff's complaintcontends [*6] that Plaintiff is entitled, pursuant to theSCRA, to stay the enforcement of the contracts requiringhim to repay accrued debts, and to restructure his debtsfor a period of one year. Specifically, the complaint seeksto require each Defendant to restructure Plaintiff'spayments so that he may make his monthly payments atthe rate of one-tenth the current monthly payment for aperiod of one year. Fourth and last, Plaintiff seeks generaldamages for harms that resulted from Defendants' allegedviolations of the SCRA.

Defendants each allege the undisputed material factsof this case do not support any of the first three of Plaintiffs claims for relief. Further, Defendants eachallege the SCRA does not authorize recovery for generaldamages.

Undisputed material facts that are pertinent toindividual Defendants' motions for summary judgmentwill be set forth in the discussion that follows.

LEGAL STANDARD

Summary judgment is appropriate when it isdemonstrated that there exists no genuine issue as to anymaterial fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c) ; Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct.1598, 26 L. Ed. 2d 142 (1970) ; [*7] Poller v. Columbia Broadcast System, 368 U.S. 464, 467, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962) ; Jung v. FMC Corp., 755 F.2d 708,710 (9th Cir. 1985) ; Loehr v. Ventura County CommunityCollege Dist., 743 F.2d 1310, 1313 (9th Cir. 1984) .

Under summary judgment practice, themoving party always bears the initial

responsibility of informing the districtcourt of the basis for its motion, andidentifying those portions of "thepleadings, depositions, answers tointerrogatories, and admissions on file,together with the affidavits, if any," whichit believes demonstrate the absence of agenuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct.2548, 91 L. Ed. 2d 265 (1986) . When the moving partyhas the burden of proof at trial, that party must carry itsinitial burden at summary judgment by presentingevidence affirmatively showing, for all essential elementsof its case, that no reasonable jury could find for thenon-moving party. United States v. Four Parcels of RealProperty, 941 F.2d 1428, 1438 (11th Cir.1991) (en banc);Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986) ; see also E.E.O.C. v. Union Independiente De La Autoridad De Acueductos Y Alcantarillados De Puerto Rico, 279 F.3d 49, 55 (1st Cir. 2002) [*8] (stating that if "party moving for summary judgment bears the burden of proof on an issue, he cannot prevail unless the evidencethat he provides on that issue is conclusive.")

If the moving party meets its initial responsibility,

the burden then shifts to the opposing party to establishthat a genuine issue as to any material fact actually doesexist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538(1986) ; First Nat'l Bank of Arizona v. Cities Serv. Co.,391 U.S. 253, 288-89, 88 S. Ct. 1575, 20 L. Ed. 2d 569(1968) ; Ruffin v. County of Los Angeles, 607 F.2d 1276,1280 (9th Cir. 1979) . In attempting to establish theexistence of this factual dispute, the opposing party maynot rely upon the mere allegations or denials of itspleadings, but is required to tender evidence of specificfacts in the form of affidavits, and/or admissible

discovery material, in support of its contention that thedispute exists. Rule 56(e) ; Matsushita, 475 U.S. at 586 n.11 ; First Nat'l Bank, 391 U.S. at 289 ; Strong v. France,474 F.2d 747, 749 (9th Cir. 1973) . The opposing partymust demonstrate that the fact in contention [*9] ismaterial, i.e., a fact that might affect the outcome of thesuit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202(1986) ; T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) , and that thedispute is genuine, i.e., the evidence is such that areasonable jury could return a verdict for the nonmovingparty, Anderson, 477 U.S. 248-49 ; Wool v. TandemComputers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987) .

In the endeavor to establish the existence of a factualdispute, the opposing party need not establish a materialissue of fact conclusively in its favor. It is sufficient that"the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truthat trial." First Nat'l Bank, 391 U.S. at 290 ; T.W. Elec.




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Serv., 809 F.2d at 631 . Thus, the "purpose of summary judgment is to pierce the pleadings and to assess theproof in order to see whether there is a genuine need fortrial.'" Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ.P. 56(e) [*10] advisory committee's note on 1963amendments); International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985) .

In resolving the summary judgment motion, the courtexamines the pleadings, depositions, answers tointerrogatories, and admissions on file, together with theaffidavits, if any. Rule 56(c) ; Poller, 368 U.S. at 468 ;SEC v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9thCir. 1982) . The evidence of the opposing party is to bebelieved, Anderson, 477 U.S. at 255 , and all reasonableinferences that may be drawn from the facts placedbefore the court must be drawn in favor of the opposing

party, Matsushita, 475 U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 8 L. Ed.2d 176 (1962) (per curiam); Abramson v. University of Hawaii, 594 F.2d 202, 208 (9th Cir. 1979) . Nevertheless,inferences are not drawn out of the air, and it is theopposing party's obligation to produce a factual predicatefrom which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D.Cal. 1985) , aff'd [*11] , 810 F.2d 898, 902 (9th Cir.1987) .

DISCUSSION

I. Servicemembers' Rights Under the SCRA

The Soldiers and Sailors Civil Relief Act of 1940was substantially amended in 1991 and was renamed theServicemembers Civil Relief Act by the 2003amendments. The 2003 amendments provided that theSCRA, as amended in 1991 and as reenacted in 2003,applies in any case that is not final before December 19,2003, the date of reenactment. Because this case is notyet final, the 2003 amendments are applicable.

The SCRA is codified at 50 App. U.S.C. 501, et

seq. The purpose of the act is:

(1) to provide for, strengthen, and toexpedite the national defense throughprotection extended by this Act [. . .] toservicemembers of the United States toEnable such persons to devote their entireenergy to the defense needs of the Nation;and

(2) to provide for the temporarysuspension of judicial and administrativeproceedings and transactions that mayadversely affect the civil rights of servicemembers during their militaryservice.

50 App. U.S.C., section 502 . 1

Pertinent to Plaintiff's claims for relief againstDefendants for improper [*12] interest rate charges, theSCRA provides that "[a]n obligation or liability bearinginterest at a rate in excess of 6 percent per year that isincurred by a servicemember, or the servicemember andthe servicemember's spouse jointly, before theservicemember enters military service shall not bearinterest at a rate in excess of 6 percent per year during the

period of military service." 527(a)(1) . Subdivision (2)provides that interest in excess of 6 percent that wouldotherwise be incurred is to be forgiven. 527(a)(2) . Toreceive protection under this section, the servicememberis responsible to provide notice of his entry into activemilitary service within "180 days after the date of theservicemembers termination or release from militaryservice." 527(b)(1) .

1 References to section numbers hereinafter referto sections of Title 50 Appendix of the UnitedStates Code, unless otherwise specified.

With regard to credit reports, the SCRA provides thatapplication by a servicemember for relief under the [*13]SCRA "shall not itself (without regard to otherconsiderations) provide a basis for [. . .]:"

(3) An adverse report relating to thecreditworthiness of the servicemember byor to a person engaged in the practice of assembling or evaluating consumer credit.

518 .

Pertinent to Plaintiff's claims for relief by reducingand restructuring his monthly payments, a servicememberwho incurs a contractual obligation to make periodicpayments against a debt is entitled to a number of protections under the SCRA that have the effect of modifying the contractual obligation. The specificprotections vary somewhat with the nature of the debtand the type of action instituted against theservicemember. See, e.g., 532 (preventing recision or




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termination of contract before or during military service),533 (providing stay to enforce an obligation on real orpersonal property for such time as is equitable), 591(providing stay of enforcement of contracts, conditions of stay being dependant on whether the contracts are for realestate or other). Plaintiff's complaint specifically invokesthe protections afforded by section 591 , which will bediscussed in more detail infra .

[*14] II. Plaintiff's Opposition and FurtherAmendment of the Complaint

Plaintiff's opposition to Defendants' motions forsummary judgment does not directly address any of thelegal issues raised by Defendants' motions, nor does itrefute the facts Defendants allege in their statements of undisputed material fact. Rather, Plaintiff's opposition

consists of some generalized assertions concerning therights afforded by the SCRA, and a few factualallegations that have only tangential relevance to theclaims set forth in the complaint. Specifically, Plaintiff alleges that Bank of America attempted to repossess hishome and sent "agents to illegally repossess his family'srecreational boat while petitioner is on active duty."Plaintiff's opposition also alleges Bank of America,American Express and Valley First issued credit reportscontaining negative credit information. Plaintiff'sopposition implies that the damages he suffered were thedirect result of these negative credit reports.

Of particular concern to the court, Plaintiff states inhis opposition that he "hereby amends the Petition" toinclude claims for relief under the Fair Credit ReportingAct, the Federal Truth in Lending [*15] Act, andpursuant to a number of California state codes. Rule 15(a)of the Federal Rules of Civil Procedure provides that "[a]party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served[. . . .] Otherwise, a party may amend the party's pleadingonly by leave of the court or by written consent of theadverse party and leave shall be freely given when justiceso requires." The court notes that each of the Defendantsin this case have filed responsive pleadings. Simply put,Plaintiff may not amend his complaint without leave of the court and that leave has not been requested orgranted.

Even if Plaintiff had requested leave to amend in hisopposition, that leave would not be granted at this latestage of the proceedings because to do so would severelyprejudice the Defendant parties by further delaying what

has already been a very protracted and often-delayedproceeding. Further, Plaintiff suffers little prejudice as aresult of the denial of leave to amend. Although an indepth review of Plaintiffs additional allegations is notwarranted here, a cursory glance at the additional claims[*16] indicates the success of those claims would dependon the court's finding that the actions of the Defendants,which would otherwise represent lawful steps to securetheir rights under the various loan and credit agreementswith Plaintiff, are unlawful under the SCRA. As will bediscussed in some detail below, Plaintiff, with only oneminor exception, has failed to allege specific facts thatwould sustain any claim of unlawful activity under theSCRA on the part of any Defendant. Plaintiff's oppositionhas failed to allege any specific facts that, if true, wouldwarrant relief under any of the additional statutes Plaintiff wishes to add to the complaint.

The court will therefore deny Plaintiff's presumedrequest to further amend the complaint.

III. Plaintiff's Claims Against Individual Defendants

A. Valley First Credit Union

Valley First alleges the following facts, whichplaintiff has not disputed. Plaintiff and his wife jointlyfinanced a balance of $ 41,276.40 for the purchase of anew automobile on or about December 29, 2001. Theinterest rate at the time of financing was 7 percent. On orabout March 15, 2002, Valley First was notified thatPlaintiff had [*17] commenced active duty. Valley Firstreduced the interest rate on the loan to 6 percent as of thatdate. On or about April 1, 2002, Valley First wrote toPlaintiff's wife offering to reduce the monthly payment toreflect the reduction in interest charge and to make thechange retroactive. Valley First also offered to extend thepayment period to 84 months thereby reducing themonthly payments. Plaintiff and Plaintiff's wife did notrespond but continued making installment payments atthe previous rate on and off for several months. Plaintiff was sometimes delinquent in his payment and on one

occasion a late fee was assessed, however that late feewas promptly credited back to Plaintiff's account.

On or about May 16, 2002, Valley First made annegative credit report reflecting a late payment of Plaintiff's loan. However, that negative report wasformally withdrawn by Valley First on October 21, 2004.Plaintiffs credit report currently does not reflect anynegative credit information generated by Valley First. On




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January 22, 2003, Valley First was notified Plaintiff wascoming off active duty and that Plaintiff wished to acceptValley First's offer of extended and lowered monthlypayments. [*18] Valley First offered to extend paymentsand lower the payment amount to $ 602 per month and tocontinue the 6 percent interest rate for another sixmonths. Plaintiff accepted the offer. Plaintiff remains inpossession of the automobile, and Valley First has nevermade any effort to repossess it.

Valley First contends it is entitled to summary judgment on each of Plaintiff's claims. As to Plaintiff'sclaims with regard to interest rates, Valley First is notentitled to summary judgment. Section 527 provides thatthe servicemember is entitled to the reduction of interestrates to 6 percent as of the date of entry into active duty,not as of the date of notice. Valley First's undisputed facts

indicate the interest rate was lowered as of March 15,2002; the date Valley First received notice. Theundisputed facts also establish that Valley First offered torestructure the payments and make the paymentsretroactive and that Plaintiff's wife did not respond, butcontinued to make monthly payments at the same rate.While Valley First may have extended the loweredinterest rate longer than required by statute or in someother way offered greater accommodation than the SCRArequires, the [*19] court's focus for purposes of thismotion is strictly on the issue of whether there remains amaterial issue of fact as to Plaintiff's claim that Valley

First did not adjust the interest rate and credit excessinterest paid as required by law. Pursuant to the SCRA,Valley First was obliged to lower the interest rate as of the date Plaintiff entered active duty and to credit hisaccount with the interest that was paid between the dateof entry and the date of notification. Defendant presentsno authority that the obligation of Valley First toretroactively apply the credit paid between February andMarch of 2002 is waived by Plaintiff's non-response toValley first's offer. Whether or not Plaintiff's wifeaccepted Valley First's offer to restructure the payments,Valley First should have credited the account with theexcess interest paid. Valley First's undisputed facts do notestablish that such a credit was applied to the account.The court therefore finds summary judgment is notwarranted with respect to Plaintiffs claim regardinginterest rates assessed by Valley First.

As to Plaintiff's claim that Valley First unlawfullyissued a negative credit report, Valley First correctly[*20] contends the SCRA does not prohibit the issuance

of credit reports, it prohibits the issuance of a negativecredit report that is based solely on fact theservicemember availed him or herself of the benefits of the SCRA. That is, the provisions of section 518 protectthe servicemember from retaliatory credit reports ornegative credit reports that are not based on actualinformation reflecting credit problems. Plaintiff presentsno support for the proposition that credit reports thattruthfully reflect credit problems, such as late paymentsare actionable under this provision. Here, it is notdisputed that Plaintiff was late on one or more monthlypayments and that fact was reflected in a credit report.Because the negative credit report was based on a factualoccurrence that may legitimately be reported in creditreports as a normal matter of course, Valley First did notoffend the terms of SCRA by issuing the report. ValleyFirst is entitled to summary judgment with respect toPlaintiff's claims of issuance of an unlawful credit report.

In his complaint, Plaintiffs seeks relief pursuant tosection 590 of the SCRA, which provides for thereorganization of debt and the staying of [*21]enforcement of contracts for a period of time followingactive duty. Specifically, Plaintiff seeks the reduction of his current monthly payments to each Defendant toone-tenth of the pre-active duty amount for a period of twelve months. As previously noted, this case is governedby the terms of the 2003 amendments to the SCRA. Asamended, section 590 has been deleted and replaced by

section 591 . Pertinent to Plaintiff's claims against ValleyFirst, section 591 provides that:

A servicemember may, during militaryservice or within 180 days of terminationof or release from military service, applyto a court for relief --

(1) from any obligation or liabilityincurred by the servicemember before theservicemember's military service [P . . . . P]

(2) Stay of enforcement of othercontracts

(A) in the case of any [non-tax]obligation, liability, [. . .], or assessment,the court may grant a stay of enforcement--

(i) during the




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servicemenber's militaryservice; and

(ii) from the date of termination of or releasefrom military service, orfrom the date of applicationif made after termination orrelease from militaryservice.

(B) Any stay under this paragraph[*22] shall be --

(i) for a period of timeequal to the period of theservicemember's military

service or any part of suchperiod;

(ii) subject to paymentof the balance of principaland accumulated interestdue and unpaid at the dateof termination or releasefrom military service, orthe date of application, inequal periodic installmentsduring this extended periodat the rate if interest as maybe prescribed for thisobligation, liability, tax orassessment, if paid whendue, and subject to otherterms as may be equitable.

The provisions of this section are essentiallyidentical with the provisions of the now-deleted section590 , as far as Plaintiff's request for relief is concerned. In

both cases, a grant of relief requires the servicememberapply to a court for relief "within 180 days of terminationof or release from military service." As Valley First andall the other Defendants point out, Plaintiff wasterminated or released from military service as that termis defined in the statute on February 12, 2003. This actionwas filed on July 11, 2003, which is within the statutorytime period, however Plaintiff did not file a noticedmotion for stay. Plaintiff requested [*23] a stay and

restructuring of his payments in the complaint, but acomplaint is not a motion, and a stay pursuant to section591 (or section 590 ) is not self-executing. Plaintiff hadthe burden to file and serve a separate motion for stay andfailed to do so.

As Defendants point out, section 591 provides a stayto continue from the time of application -- here not laterthan 180 days after February 12, 2003 -- for a periodequal to the time of military service, or one year in thiscase. Plaintiff has provided no authority for theproposition that a stay pursuant to section 591 is to betolled during the pendency of the action that requests thestay. Any such tolling would be extraordinarily unfair ina case such as the one at bar where Plaintiff has notbrought the request for stay directly to the court'sattention and Plaintiff has been the source of numerous

delays in the case. Thus, the court must conclude thateven if the complaint did constitute a motion for staywithin the meaning of section 591(a) , the time during thestay would be in force under the statute ended not laterthan mid-August of 2004. Plaintiff's request for stay istherefore now moot, as the court is without [*24]authority to grant a stay that could extend beyond Augustof 2004.

The court concludes Defendants have shown thereremains no genuine issue of material fact to the court'sauthority to grant Plaintiff's requested stay. Summary judgment in favor of Valley First, as well as the otherDefendants is therefore warranted as to Plaintiff's claimfor stay relief pursuant to section 591 .

B. Defendant Citibank

Citibank's unopposed statement of undisputedmaterial facts establishes that Plaintiff opened a businessaccount credit card on or about March 17, 1999. The cardwas issued in the names of Pacific Construction Conceptsand Oscar Rodriguez. Citibank received notice in July of 2002, that Plaintiff had been ordered to active duty. Uponreceipt of notice, Citibank reduced Plaintiff's interest rate

on the business credit card account to 0.0%, and creditedPlaintiff's account with all interest charges that hadaccrued from the date of Plaintiff's entry into activeservice to the date of notice.

Plaintiff's claim for relief from credit charges inexcess of the amount allowed by statute is factuallyunsupported as to Citibank. Although Plaintiff did notmake any specific allegations [*25] with respect to




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Citibank's interest charges, Citibank points out that itscredit charges on Plaintiff's account were considerablylower that required by law and were applied retroactivelyto Plaintiff's date of entry into active service.Consequently, Citibank has alleged facts that aresufficient to show there remains no genuine issue of material fact as to Citibank's assertion that it did notcharge interest in violation of the SCRA during the timeof Plaintiff's active military service.

Citibank also points out that, of the three Citibank credit card accounts that are listed by Plaintiff in hiscomplaint as being among those Plaintiff seeks stay relief pursuant to section 591 , two of those accounts belong toPlaintiff's wife. With respect to the reduction of interestcharges, section 527 provides that the interest rate cap of 6% applies to interest on debts incurred by the

servicemember and by the servicemember's spouse wherethe debts were incurred jointly. Neither Plaintiff'scomplaint nor Plaintiff's opposition to Defendants'motions for summary judgment allege that Plaintiff'swife's accounts with Citibank were joint accounts duringthe period of time relevant to this action. [*26] Further,Citibank alleges in its statement of undisputed materialfacts that Citibank voluntarily afforded Plaintiff's wife'saccounts all the benefits to which Plaintiff's account wasotherwise entitled under the SCRA. In view of theforegoing, the court concludes Citibank has alleged factsthat are sufficient to show the absence of any issue of

material fact as to Plaintiff's allegation of unlawfulinterest charges as to him or his wife. Summary judgement in favor of Citibank is therefore warranted onthis issue.

As to improper credit reports, Plaintiff's complaintdoes not specify precisely which Defendants are allegedto have submitted negative credit reports, howeverCitibank makes no mention in its statement of undisputedmaterial facts of having submitted any credit reportsduring the time in question nor does Plaintiff allege anysuch submission with respect to Citibank in itsopposition. Citibank states in its moving papers that, if any credit reports were issued with respect to Plaintiffscredit card account, the reports merely reflectednon-payment or late payments. Citibank denies that therewere any reports that were of an improper or retaliatorynature. Because Citibank [*27] has alleged fact sufficientto establish the absence of a issu

jonathon rowles v. chase home finance, llc response to petition for tro

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