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Cohen v. J.P. Morgan Chase & Co.

September 23, 2009

SYLVIA COHEN, PLAINTIFF
v.
J.P. MORGAN CHASE & CO. & J.P. MORGAN CHASE BANK, DEFENDANTS.



The opinion of the court was delivered by: Charles P. Sifton (electronically signed) United States District Judge

MEMORANDUM OPINION AND ORDER

SIFTON, Senior Judge.

On September 22, 2004, Sylvia Cohen ("plaintiff") commenced a proposed class action against J.P. Morgan Chase & Co. and J.P. Morgan Chase Bank ("Chase") (collectively, "defendant"), seeking damages for violations of Section 8(b) of the Real Estate Settlement Procedures Act of 1974 ("RESPA"), 12 U.S.C. § 2607(b),*fn1 and section 349 of the New York General Business Law (GBL).*fn2 Now before the court is a motion by plaintiff for preliminary approval of a class action settlement between the parties, certification of the class for settlement purposes, approval of class notice and scheduling of a fairness hearing. For the reasons set forth below, the motion is granted.

BACKGROUND

The following facts are taken from the Court's previous opinions in this case. For the purposes of this motion, the facts are undisputed.

I. Facts

In February 2003, plaintiff and her husband applied for a Chase loan in order to refinance the purchase of their cooperative apartment in Brooklyn, New York. Chase granted the loan and charged plaintiff several fees in connection with it, including a "post closing fee" in the amount of $225. The mortgage transaction closed on September 23, 2003. As described by Chase, the services for which plaintiff was charged the post-closing fee included the following: reviewing the documents received from the settlement agent to ensure that the agent followed the Chase closing instructions and that all necessary documents were correct and present in the file, correcting any mistakes in the documents, retrieving any documents that were missing from the file, combining the closing documents with the existing underwriting file in a particular order and sending that combined file to the National Post Closing center ("NPC"), and forwarding any late-arriving documents to NPC. Chase represented that the primary purpose behind post-closing review of loans was to ensure their salability on the secondary mortgage market. The post-closing fee was charged primarily in the New York area until 2007, when Chase shifted to a fee structure that did not include a post-closing fee. Chase has charged over 50,000 post closing fees, which ranged in amount from $125 to $325. Post-closing services were and still are performed on all loans handled by Chase.

II. Litigation History

Plaintiff filed her first complaint in this action on September 22, 2004, alleging that defendant wrongfully charged her an unearned post closing fee in violation of RESPA and the GBL § 349. By Memorandum and Order dated March 16, 2005, I granted defendant's motion to dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Cohen v. J.P. Morgan Chase & Co., 2005 U.S. Dist. LEXIS 45466 (E.D.N.Y. March 16, 2005). I subsequently denied plaintiff's motion for reconsideration. Cohen v. J.P. Morgan Chase & Co., 2006 U.S. Dist. LEXIS 597. (E.D.N.Y. January 4, 2006). On August 6, 2007, the Second Circuit Court vacated the judgment of dismissal and remanded the case for reinstatement of the complaint. Cohen v. J.P. Morgan Chase & Co., 498 F.3d 111, 113 (2007). On October 12, 2007, plaintiff filed her First Amended Complaint. Defendant moved for summary judgment on July 18, 2008. On August 27, 2008, plaintiff moved for class certification. I denied defendant's motion for summary judgment on January 28, 2009. Cohen v. J.P. Morgan Chase & Co., 608 F. Supp. 2d 330 (E.D.N.Y. 2009).

On February 3, 2009, defendant moved to stay consideration of the motion for class certification and to toll defendant's time to file a motion for reconsideration of the denial of summary judgment or for certification of an interlocutory appeal, on the ground that the parties were conducting settlement negotiations. I granted the motion, which was renewed several times over the ensuing six months. During that time, the parties engaged in extensive, arm's length settlement negotiations assisted by a mediator. On August 21, 2009, the parties moved for preliminary approval of the settlement.

III. Settlement Agreement

The parties have agreed to define the settlement class as follows: "All borrowers who were charged a post-closing fee by Chase in connection with the origination of their residential mortgage loan at any time between September 22, 2001 through December 31, 2008."

The proposed settlement establishes a process by which each class member can receive 100% of the post-closing fee paid, plus interest at 5% per annum. The settlement will provide a maximum of $19.92 million in cash refunds (including interest) to class members. In addition to the refunds and interest, Chase will pay the attorneys' fees and expenses of counsel for plaintiff and the class and the costs of notice and settlement administration. Chase denies that the charging of a post-closing fee violates RESPA or Section 349.

A. Members of the Class and Identity of Lead Plaintiffs

The proposed class consists of all borrowers who were charged a post-closing fee in connection with the origination (including refinancing) of a residential mortgage loan at any time between September 22, 2001 through December 31, 2008. The class is represented by lead plaintiff Sylvia C. Cohen, who will receive $15,000 in recognition of her contributions as class representative and as compensation for her post-closing fee.

B. Refund of Post Closing Fee

Subject to claims procedures, defendant agrees to reimburse each class member for post-closing fees paid in the amount set forth in the class members' final mortgage settlement statement, plus interest. In the event that the class member was awarded a closing cost credit at the time of settlement, the refund is reduced according to a set formula.

Class members whose loans are no longer serviced by Chase as of the effective date of settlement will receive their refund by check. Class members whose loans are still serviced by Chase will either receive a check or, if the class member is delinquent in payments, the refunds will be applied to past amounts due. For class members whose mortgage has been foreclosed, the refund will equal 50% of the post-closing fee paid to Chase or $100, whichever is less.

Refunds shall be provided within 21 days after Chase completes its analysis of the claims. Class members must present checks ...


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