Washington Mutual Bank v. Superior Court

BUSINESS LAW
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(January 31, 2012)
Outline
Introduction
Discussion
Conclusion
Business Law
Washington Mutual Bank v. Superior Court
Breach of Contract by the Washington Mutual Bank
In most cases, a breach of contract takes place in circumstances whereby one party does not perform exactly and precisely his or her contract obligations. These cases have been recorded mostly in the real estate industry. This is because the majority of sellers normally wish to vacate the house they are selling hastily. Thesis Statement: The Washington Mutual Bank Victimized its Borrowers through Overcharging for Insurance Mortgage Substitution.
The Washington Mutual Bank originated loans of home mortgages in Arizona, Texas, California and Colorado. It then bought loans from different lenders in the whole of America. The standard loan documents of the bank constituted a trust deed which required the mortgagor to keep hazard insurance on the secured property. It provided that in a case where the mortgagor did not do so, then the lender would do and pay whatever required protecting property value and the rights of the lenders in the property (Tonnon, 2005).
Consequently, Jayne Briseno went to court to sue the bank for a breach of contract. The breach was as a result of the good faith covenant and fair dealing. Additionally, she felt that the mortgage transaction was an example of an unfair practice of violations in business under the unfair competition law of the state of California concerning unjust conversion and enrichment. On the basis of the second amended complaint, the bank had maintained the activity of procuring costly replacement insurance when mortgagors made a default on their loan obligation to keep relevant hazard insurance policies for their properties. The amount charged by the bank for compelled order insurance was typically higher than the premium amount on the initial lapsed policy would have been.
The foundation of the dispute was if the bank victimized its borrowers through overcharging for the substitution of insurance coverage. Additionally, the bank had also profited secretly through cash commissions and in-kind services arising from the insurance replacement vendors.
Briseno had moved to court for the certification of the case as a country-wide class action. It included approximately twenty five thousand mortgagors found within America. These mortgagors had been charged very high premiums for forced order insurance for a long time. This excluded those who had been refunded the whole premium. She provided an argument among many other things; California was capable of exercising jurisdiction constitutionally past the claims of non-resident mortgagors. Additionally, California was capable of applying its own rules unless the bank proved otherwise. This was provided well in the constitution (24 Cal. 4th 913). This was a case of conflict of laws and rules in the state of California. On the other hand, the bank responded by alleging that the obvious law questions do not call for a countrywide class. This was because enforcement towards the choice-of-law given to each loan of the mortgagor symbolized that the step would comprise making an application of the laws governing all the fifty states (DeAngelis, 2010).
The trial court called for the certification of a countrywide class action. This was supposed to be without deciding the law to be applied towards the class member’s allegations. Afterwards, the court of appeal briefly denied the petition of the bank. The mortgagors then granted the bank a review petition and transferred the case to the court of appeal. This happens with instructions to give out an alternative writ. After the directive of the mortgagors is followed, the Court of Appeal denied the bank a writ petition. The court then released the alternative wrist.
The Court of Appeal afterwards gave an affirmation to the certification order. The court reasoned that the majority of the selection of law clause brought up the issue that the strength of the law of another state could apply. Consequently, it made a conclusion that in a case where the defendant opposing the countrywide class certification on the grounds of choice-of-law covenants contained the burden of illustrating that the selected contractual laws led to outcomes distinct from the laws of California. Additionally, this could make the action of the nationwide class unsuitable. The petition was then given back to the bank for review.
The trial court gave a certification of the case as countrywide class action without establishing the effect and force of contractual agreements, which, on the basis of the defendant, called for the application of the laws of different states in action. The Court of Appeal further established that the certification was proper. This was because the defendant had not shown that the contractually chosen legislations would lead to distinct results. There was a conclusion that the order of certification was supposed to be vacated. This was because it was founded on an erroneous and incomplete analysis of the appropriate factors of certification.
Section 382 of the Code of Civil Procedure gives authority to class suits in California when the issue concerned is one of the obvious and general interests, of a lot of people. Additionally, this is normally the case when the concerned parties are many and impossible to bring all of them to court. The weight is normally on the party looking for certification to find out the availability of both a well-defined interest of the community and ascertainable class among the members of the class.
When establishing the requisite of interest of the community, the certification proponent is supposed to demonstrate, interlia which questions the law or obvious facts to the class. This should predominate past the questions influencing the individual members sometimes called predominance. This gives an implication that all members are not required to personally litigate many and substantial questions to establish his or her right to recover after the class judgment. Additionally, the issues that may be tried jointly when compared to other in need of different adjudication should be fully adequate and substantial to come up with the action for the class which will favor the process of adjudication. It is mandatory for a class action to give substantial benefits both to the litigants and the court for it to be certified.
Secondly, because the courts of the trial are normally set to examine the practicalities and the efficiencies of allowing group action, they are normally awarded a lot of discretion on the basis of giv...