Mimnorm Realty Corp. v. Sunrise Federal Savings & Loan Ass'n

In an action to recover damages for breach of a mortgage loan agreement, defendant appeals from an order of the Supreme Court, Nassau County (Young, J.), entered August 8,1980, which, inter alia, granted plaintiff’s motion for an order directing that the action proceed as a class action, and ordered defendant to produce certain documents and information relevant to plaintiff’s class action claim. Order affirmed, with $50 costs and disbursements. The discovery shall proceed at the place directed in the order under review, at a time to be fixed in a written notice of not less than 20 days, to be given by plaintiff, or at such other time and place as the parties may agree. Conditioning its obligation, inter alia, upon plaintiff’s payment of a commitment fee and its agreement to pay certain mortgage loan closing costs, Sunrise Federal Savings and Loan Association agreed to lend $150,000 to the plaintiff. Relying on the terms of the commitment letter Sunrise had sent its corporate predecessor, plaintiff paid the $1,500 commitment fee, subsequently paid the other loan expenses when the mortgage transaction closed, and then brought this action on its own behalf and for all others similarly situated to 937 recover the amount of the fee. A primary issue between the parties is the meaning of particular language in the commitment letter which declared: “The commitment fee is non-refundable. Upon actual closing, such sum shall be credited against the expensefs] of the loan.” The items listed in the letter as loan expenses included the commitment fee itself and charges for appraisal, credit report, inspection, recording, title examination, mortgage tax and legal costs. When the transaction actually closed, however, Sunrise submitted a loan settlement statement to the plaintiff which did not credit the commitment fee against the various closing expenses it enumerated. The statement contained a declaration — intended for the borrower’s signature — which provided that the borrower “agrees to the correctness thereof, and authorizes and ratifies the disbursement of the funds as stated therein.” After Sunrise refused plaintiff’s demand for a credit or refund in the amount of the commitment fee, plaintiff signed the statement. In its complaint, plaintiff declares that it sues for itself and others similarly situated who entered into commitment agreements with Sunrise which provided “that commitment fees paid were to be credited against expenses at closing and who failed to receive such credit.” After serving its answer, Sunrise sought dismissal of the action via summary judgment, but Special Term denied the motion, finding that there were “ambiguities in the documents,” and we affirmed (Mimnorm Realty Corp. v Sunrise Fed. Sav. & Loan Assn., 66 AD2d 1036). Plaintiff then moved for class action certification. Special Term granted the motion together with ancillary relief and defendant appealed. We believe affirmance is required. The record reveals that there were no negotiations between plaintiff and Sunrise concerning closing costs and that those expenses were first listed in the commitment letter at issue. When it moved for summary judgment, and in its subsequent appeal upon denial of that motion, Sunrise argued that “no question of fact exists that warrants a trial” because the commitment letter was clear and it affected all borrowers the same way. Faced with our affirmance on the summary judgment appeal and the circumstances which now confront it, Sunrise contends that the crucial language of the commitment letter (which is essentially identical in the four forms of the letter used by Sunrise) is ambiguous and there can be no commonality of questions affecting the proposed class because different borrowers may have interpreted the language differently. Our dissenting colleagues base much of their reasoning upon the fact that many different individuals were involved in the 90 transactions which utilized the forms in issue. But nowhere in the papers at Special Term or even here does Sunrise claim that mortgage closing costs were separately negotiated with each borrower. While admitting that Job Development Authority borrowers received the commitment letter without being seen or spoken to by Sunrise representatives until the closing itself, the most Sunrise permits itself to say concerning other borrowers is that commitment fees were “often discussed” during loan negotiations. But despite its knowledge of those discussions, Sunrise fails to claim that the meaning of the commitment letters varied from transaction to transaction. The overriding fact is that regardless of discussions or even negotiations, only two interpretations of the language at issue are available. Either the borrower is entitled to credit the commitment fee against its other loan expenses or it is not. Therefore, we cannot comprehend how the existence of preclosing discussions of loan expenses can alter the fact that the common and underlying question in all the cases is the meaning of the commitment letter language. Since that language was essentially identical in all the commitment letters, once its meaning has been established by trial, the most significant issue in all of the cases will have been decided. Although, as we have noted, Sunrise has failed to specify even one transaction in which the meaning of the terminology was modified by negotiation, if such a 938 separate issue does exist in any particular situation, it cannot serve to frustrate the plaintiff’s right to class action status. Nor is commonality defeated by the asserted affirmative defenses of waiver, ratification, estoppel or merger, for Sunrise does not dispute that all members of the class were charged closing costs in accordance with the loan settlement statements submitted at closing. If assent to those charges created a waiver, ratification, estoppel or merger sufficient to defeat recovery, the legal result should be the same for all members of the class. If other borrowers imitated the instant plaintiff in demanding credit for the commitment fee at the closing, the legal consequences of such demands should be the same for all who took that course. In any event, “the fact that questions peculiar to each individual may remain after resolution of the common questions is not fatal to the class action” (Friar v Vanguard Holding Corp., 78 AD2d 83, 98). To deny class action status — as our dissenting colleagues would have us do — because some members of the proposed class may have discussed loan expenses with Sunrise prior to the loan commitment or because some acquiesced in the loan settlement statement while others may have objected to it would contradict the holding in Friar where we rejected the process of weighing individual claims against common claims to determine class action certification questions. We said then (78 AD2d, at p 97): “We * * * abjure the weighing process in the belief that the decision as to whether there are common predominating questions of fact or law so as to support a class action should not be determined by any mechanical test, but rather, ‘whether the use of a class action would “achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated” ’ [citations omitted].” On the facts adduced, it is apparent that once the class action court has determined what the commitment letter meant and the significance of compliance with the loan settlement statement, the principal issues affecting most of the plaintiffs will have been determined. Class action certification thus will serve the goals of economies of time, effort and promotion of uniformity of decision. We find no merit in defendant’s other contentions. Lazer, J. P., Mangano and Gibbons, JJ., concur.