On July 12, 2010, the Georgia Supreme Court issued a new opinion that impacts class action practice in Georgia. In Schorr v. Countrywide Home Loans, Inc., 697 S.E.2d 827 (Ga. 2010), the plaintiffs filed a putative class action in the United States District Court for the Middle District of Georgia. The plaintiffs paid their mortgage loan in full with Countrywide, and then demanded in writing that Countrywide cancel the underlying security deed pursuant to O.C.G.A. § 44-14-3. The statute at the time provided for a $500 liquidated penalty upon the failure of a mortgage holder to cancel a security deed within 60 days after a written demand. Upon Countrywide’s failure to provide a written cancellation within the statutory period, the plaintiffs filed an action on behalf of themselves and all others similarly situated, seeking recovery of the statutory penalty.
Countrywide filed a motion to dismiss the claims of the unnamed class members on the ground that they had not individually made a written demand for liquidated damages as required by O.C.G.A. § 44-14-3. Upon request of the plaintiffs, the district court certified the question to the Georgia Supreme Court of whether a liquidated demand made by the named plaintiffs was sufficient for the named plaintiffs and the putative class. The Georgia Supreme Court (Carley, J.) answered in the affirmative, holding that “the named plaintiffs’ written demand and filing of this lawsuit put Countrywide on notice of a class action which is governed by former O.C.G.A. § 44-14-3 and which includes all of its customers whose security deeds had not been cancelled as required by that same substantive law.” Justice Melton dissented from the majority’s holding.
From the perspective of protecting Georgia consumers, Schorr is a significant step in the right direction. Many Georgia statutes aimed at protecting Georgia consumers require pre-suit notice. For example, O.C.G.A. § 33-4-6, which provides for a 50% penalty plus attorneys’ fees upon an insurer’s failure to pay a first party insurance claim within 60 days of notice of the claim, requires a similar demand for payment to that at issue in Schorr. Schorr dictates that notice from the named plaintiff serves as notice for all of the putative class, which protects the rights of Georgia consumers to recover all available damages under Georgia law.