Procedural Posture
The Superior Court of California, Orange County, certified as a class action the real party in interest's claims against petitioner for breach of contract, breach of the implied covenant of good faith and fair dealing, unfair business practices under Cal. Bus. & Prof. Code §17200 et seq., unjust enrichment, and conversion. The Court of Appeal, Fourth Appellate District, Division Three, affirmed. Petitioner sought review.
Overview:
Real party in interest sued petitioner bank for breach of contract, unfair business practices, and similar claims, alleging that petitioner maintained a practice of procuring expensive replacement insurance (forced order insurance) when mortgagors failed to maintain appropriate policies of hazard insurance for their properties. The trial court certified the case as a nationwide class action, and the court of appeal affirmed. The supreme court held that certification was based upon the faulty legal assumption that choice-of-law issues did not need resolution as part of the certification process. In particular, the trial court should not have granted certification without first determining the effect of the choice-of-law agreements at issue. Further, it was the claimants' burden to identify any variations of applicable state law and to meaningfully demonstrate how a trial on the class causes of action could be conducted fairly and efficiently in light of those variations.
Outcome
The court reversed the judgment of the court of appeal, and remanded with instructions to issue a peremptory writ of mandate directing the trial court to vacate its order of certification, and apply the correct analysis to determine the applicable state law considering the choice of law provisions of the challenged contracts, and issues of manageability.