Covering All The Bases: An Example Of How Reed Smith's Financial Services Litigators Combined Legal Analysis And Opposition Research To Secure Victory

Covering All The Bases: An Example Of How Reed Smith's Financial Services Litigators Combined Legal Analysis And Opposition Research To Secure Victory

In the growing fray of class action suits supported by consumer lending advocacy groups, Reed Smith litigators recently secured dismissal of a putative class action brought against six of the firm's financial services clients in an Ohio state court. Wilborn v. Bank One Corp., No. 03 CV 02674 (Court of Common Pleas, Mahoning County, Ohio, July 21, 2004). In seeking dismissal of the plaintiffs' claims, Reed Smith employed multiple strategies, including preparation of preemption arguments on behalf of two national bank clients and research regarding the advocacy group supporting the plaintiffs' claims, the National Consumer Law Center.

Factual Background

The plaintiffs were Ohio residents who allegedly defaulted on their home mortgage loans, and, after the filing of foreclosure proceedings, contracted to have their loans reinstated. Under each such contract, a plaintiff agreed to pay the attorneys' fees that his mortgagee incurred in foreclosure proceedings. After the mortgages were reinstated, the plaintiff mortgagors alleged that their lenders had impermissibly collected attorneys' fees as a condition of reinstatement and that Ohio common law and public policy prohibited such a practice. The plaintiffs asserted a violation of state common law, unjust enrichment, and civil conspiracy. In addition to injunctive relief, the plaintiffs sought compensatory and punitive damages on behalf of all Ohio residents who paid attorneys' fees as a condition of reinstatement during the past 15 years. The plaintiffs also sought disgorgement of the disputed fees.

Reed Smith's Arguments

On behalf of six of the nine defendants in the case, Reed Smith argued that recent federal and state decisions had upheld the recovery of attorneys' fees as a condition of the reinstatement of a residential mortgage loan. The Reed Smith litigators argued that the case on which the plaintiffs built their claim, Miller v. Kyle, 85 Ohio St. 186 (1911), had since been distinguished as inapplicable to the reinstatement of residential mortgage loans. Although no single case overturned Miller in its entirety, several subsequent decisions criticized Miller and expressly limited the reach of its holding. See, e.g., Nottingdale Homeowners Assoc., Inc. v. Darby, 33 Ohio St. 3d 32, 37 (1987).

In formulating arguments regarding Ohio...