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Michigan Supreme Court Lansing, Michigan

Opinion
KRISTINE COWLES, Plaintiff-Appellee, and KAREN B. PAXSON, Intervening Plaintiff-Appellee, v BANK WEST, f/k/a BANK WEST FSB, Defendant-Appellant.

Chief Justice:

Justices:

Clifford W. Taylor

Michael F. Cavanagh Elizabeth A. Weaver Marilyn Kelly Maura D. Corrigan Robert P. Young, Jr. Stephen J. Markman

FILED JULY 27, 2006

No. 127564

BEFORE THE ENTIRE BENCH CAVANAGH, J. The trial court in this class action dismissed intervening plaintiff Karen Paxson's claim against defendant Bank West under the Truth in Lending Act (TILA), 15 USC 1601 et seq., on the basis that it was barred by the statute of limitations. The Court of Appeals reversed, holding, among other things, that the period of limitations applicable to Paxson's claim was tolled under MCR 3.501(F) and that the claim was subject to the rule of relation back of amendments under

MCR 2.118(D). Having concluded that Paxson's claim was not time-barred, the Court of Appeals then held that summary disposition on the merits of Paxson's TILA claim was improper because a question of fact exists concerning whether defendant's document preparation fee was "bona fide" under applicable federal law. In this matter of first impression, we must first decide whether the filing of a class-action complaint tolls the period of limitations under MCR 3.501(F) for a putative class member's claim when that claim was not pleaded in the initial classaction complaint but arose out of the same factual and legal nexus. We hold that the filing of such a complaint is sufficient to toll the period of limitations as long as the defendant has notice of both the claim being brought and the number and generic identities of the potential plaintiffs. Accordingly, we affirm the Court of Appeals decision that, in this particular case, the intervening plaintiff's claim was not time-barred and, therefore, was improperly dismissed on statute of limitations grounds. Because the claim was not time-barred in this particular case, we need not decide whether the amendment to the class-action complaint adding this claim related back to the date of the initial filing. Thus, we vacate that portion of the opinion of the Court of Appeals. Finally, in light of our conclusion that Paxson's claim was not time-barred, we must also address whether summary disposition was nonetheless warranted under MCR 2.116(C)(10) on the merits of Paxson's claim. We agree with the 2


Court of Appeals that summary disposition would be improper because a question of fact exists over whether the document preparation fee was "bona fide." Therefore, we affirm in part, vacate in part, and remand for further proceedings in the trial court consistent with this opinion. I. FACTS AND PROCEDURAL HISTORY On February 7, 1997, plaintiff Kristine Cowles obtained a residential real estate mortgage loan from defendant Bank West. In connection with this loan, defendant charged Cowles a $250 document preparation fee. The fee was reported on line 1105 of Cowles's United States Department of Housing and Urban Development statement, also known as a HUD-1 settlement statement. On February 9, 1998, intervening plaintiff Karen Paxson obtained a residential refinancing loan from defendant. Defendant similarly charged Paxson a $250 document preparation fee. On July 1, 1998, Cowles filed a class-action complaint against defendant, alleging several claims concerning the document preparation fee. The class was defined to include all consumers who obtained real estate loans in Michigan from defendant and who were charged and paid or financed the document preparation fee in the six-year period before the filing of Cowles's class-action complaint. In the complaint, Cowles claimed that defendant's charging of a document preparation fee in connection with the services defendant provided constituted the unauthorized practice of law. Further, the complaint alleged that the document preparation fee violated certain provisions of the Michigan Consumer Protection 3


Act (MCPA), MCL 445.901 et seq.

Additionally, the class-action complaint

asserted claims of replevin, unjust enrichment, innocent misrepresentation, and negligent misrepresentation. On August 20, 1998, Cowles amended her complaint to add a claim that the document preparation fee also violated

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Michigan Law