Defendants ask judge to deny class certification in manufactured homes case

By Michelle Massey, East Texas Bureau | Aug 27, 2008

TEXARKANA, Ark. – Defendants in a proposed class action against makers of manufactured homes for not disclosing charges for axles and wheels have asked an Arkansas judge to deny the class certification.

After a recent hearing on the plaintiffs' motion for class certification, the parties were directed to submit proposed findings of fact and conclusions of law to the Miller County Circuit Court for consideration.

Although Judge Jim Hudson has not currently issued a ruling, the defendants have filed a proposed order asking the court to deny class certification.

The proposed order denying class certification argues that the named plaintiffs are "merely puppets" and that "the proposed representatives must be more than just 'shell' plaintiffs controlled entirely by plaintiffs' attorneys."

The defendants argue that these factors present a serious risk and prejudice other class members' claims.

On behalf of the potential class, Texarkana attorney Matt Keil of the Keil and Goodson law firm filed the original class complaint on Feb 17, 2005, against Clayton Homes Inc. and CMH Homes Inc.

The complaint accuses Clayton Homes and CMH Homes of charging for the manufactured homes' wheels and axles, but not disclosing the charge to the purchaser. The charge for the wheels and axles "appears nowhere on any of the documents the plaintiffs are asked to sign during the purchase of the home," the complaint states.

The plaintiffs argue that the defendants represented to the purchaser that they are not buying the wheels and axles. The defendants are accused of then taking the wheels and axles and reselling them to an outside company and retaining the proceeds.

The complaint alleges claims of common law fraud, conversion, and unjust enrichment.

In a recently filed proposed order the defendants ask the court to deny certification based on evidence that purchasers of manufactured homes acknowledged whether or not they were purchasing the wheels and axles through retailer closing agreements, wheel and axle certification, homeowner videos, visual inspections forms and other retailer-specific documents.

Some acknowledged that they were not purchasing the wheels and axles used to deliver their homes and would not be allowed to keep the wheels and axles. Others acknowledge that they did wish to purchase the wheels and axles and did so pursuant to their contracts.

The defendants' proposed order also states that the named class members are inadequate representatives of the entire class.

According to court documents, named plaintiffs Ronald Baird and Chris McClure have filed petitions seeking Chapter 13 bankruptcy relief in the U.S. Bankruptcy Court for the Western District of Arkansas and failed to name the current lawsuit as a potential asset. The defendants argue their claims are subject to lack of standing and judicial estoppel.

Other named plaintiffs Alex and Mayela Cruz previously sued CMH Homes and Clayton Homes in Texas, alleging claims relating to their manufactured home purchases. The case ended with a final judgment in which the Cruzes agreed to take nothing from the defendants on the merits and signed an "extremely broad general releases releasing and discharging defendants from all claims," according to the proposed order.

Further, the defendants believe the proposed class representatives have "at best – limited knowledge of the nature of their claims, or the alleged facts underlying those claims."

When asked about his basis for asserting the defendants concealed the charges, Baird responded that he knew by "just speaking with my lawyers."

When McClure was asked why he felt he purchased the wheels and axles, he responded "that's through my lawyers. I'm not answering. I mean, I don't know nothing about that."

Mr. Cruz testified that he did not have information to support his claims outside of what his lawyers told him. When Mrs. Cruz was asked about when she learned that she may have a claim, she responded "more or less yesterday when it was explained to me what it was all dealing (with)."

The lawsuit is seeking a total of approximately $2,200 for each class member, $1,200 for the wheels and axles that they were unknowingly charged and $1,000 for the resale value.

As the nation's largest builder and retailer of manufactured housing, Clayton Homes builds, sells, finances, leases, and insures manufactured and modular homes, as well as re-locatable commercial and educational buildings. Clayton Homes' finance company, Vanderbilt Mortgage and Finance Inc. provides more than $11 billion in loans to its customers.

Case No. cv-2005-72-2

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