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Keywords

settlementjurisdictionattorneyappealsummary judgmentclass actiondue process
jurisdictionappealsummary judgmentclass actiondue process

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State v. Homeside Lending, Inc., 175 Vt. 239, 826 A.2d 997, 2003 VT 17

Facts

The case arose from a national class action in Alabama where over 300,000 mortgagors, including Vermont residents, alleged that banks required excessive amounts in escrow accounts for taxes and insurance. The Alabama court approved a settlement that included attorney's fees deducted from escrow accounts. The State of Vermont subsequently filed a collateral action against the banks, seeking to challenge the Alabama judgment and recover funds for Vermont mortgagors, arguing that the Alabama court lacked jurisdiction over them.

The case arose from a national class action in Alabama where over 300,000 mortgagors, including Vermont residents, alleged that banks required excessive amounts in escrow accounts for taxes and insurance.

Issue

Did the Alabama court have personal jurisdiction over Vermont class members in the national class action, and can the State of Vermont collaterally attack the Alabama judgment?

Did the Alabama court have personal jurisdiction over Vermont class members in the national class action, and can the State of Vermont collaterally attack the Alabama judgment?

Rule

Due process requires that absent class members receive adequate notice and representation to establish personal jurisdiction in class actions.

Due process requires that absent class members receive adequate notice and representation to establish personal jurisdiction in class actions.

Analysis

The Vermont court determined that the notice provided to absent class members in the Alabama action was inadequate and did not meet due process requirements. The court found that the class representatives did not adequately represent the interests of Vermont mortgagors, leading to the conclusion that the Alabama judgment could not be given preclusive effect in Vermont.

The Vermont court determined that the notice provided to absent class members in the Alabama action was inadequate and did not meet due process requirements.

Conclusion

The Vermont Supreme Court reversed the summary judgment in favor of the banks, allowing the State's claims to proceed based on the lack of personal jurisdiction established by the Alabama court.

The Vermont Supreme Court reversed the summary judgment in favor of the banks, allowing the State's claims to proceed based on the lack of personal jurisdiction established by the Alabama court.

Who won?

The State of Vermont prevailed in the appeal because the court found that the Alabama judgment was constitutionally infirm due to inadequate notice and representation of Vermont class members.

The State of Vermont prevailed in the appeal because the court found that the Alabama judgment was constitutionally infirm due to inadequate notice and representation of Vermont class members.

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