High Court Sends Back Thrift Suit

The California Supreme Court decertified a class-action lawsuit against Washington Mutual Inc., the largest U.S. savings and loan, ruling that a lower court didn’t adequately analyze what state laws should apply in a nationwide case.

Plaintiff Jayne Briseno sued Irvine thrift American Savings Bank, now Washington Mutual, alleging breach of contract and unfair business practices. An Orange County trial court in 1998 certified the case as a nationwide class-action suit, representing at least 25,000 mortgagors who were allegedly charged excessive insurance premiums since 1993.

The Irvine S&L; required mortgagors to maintain hazard insurance on their secured property. When mortgagors defaulted, American Savings imposed new premiums of up to five times the price. Washington Mutual, based in Seattle, purchased American in 1996.

The state’s high court sent the case back to the California Court of Appeal in Orange County.

In a 26-page opinion, the state’s high court said the class was certified on the “faulty legal assumption” that a decision on which state’s law to use “need not be resolved as part of the certification process.”