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Click here for the full text of this decision FACTS:Michael and Betty Posey of Fannin County purchased a manufactured home from a dealership in Denison. The agreement obligated the Poseys to make annual payments for 20 years, and it also covered property insurance covering the home and its contents for 36 months. The initial interest rate was 10.74 percent, and the contract stated that Texas law would govern any dispute. The contract was assigned to Vanderbilt Mortgage, a Tennessee corporation with headquarters in Tennessee. In 2001, two years after purchasing their home, the Poseys received notice from Vanderbilt that their interest rate had been adjusted to 12.74 percent and that they were obligated to begin making escrow payments for insurance payments. The Poseys claimed the contract did not allow so much of a percentage adjustment on the interest rate, and that they were not supposed to have to make escrow payments until 60 days before the original policy expired. Another letter was sent to the Poseys a year later. Vanderbilt claimed its higher-than-expected interest rate was allowable under a “variable rate carryover provision” in the contract. The Poseys were eventually able to get a modified per annum rate of 10.99 percent. Shortly thereafter, the Poseys began a class action suit against Vanderbilt. The other plaintiffs hailed from 44 other states. They alleged numerous violations of the Tennessee Consumer Protection Act related back to the higher interest rate and the insurance escrow payments. The trial court granted the motion to certify the class under Texas Rule of Civil Procedure 42(b)(4), but refused to certify the class pursuant to Rule 42(b)(2). In addition to establishing the four basic prerequisites of certification under Rule 42(a) � 1. the class is so numerous that joinder of all members is impracticable; 2. there are questions of law or fact common to the class; 3. the claims or defenses of the representative parties are typical of the claims or defenses of the class; and 4. the representative parties will fairly and adequately protect the interests of the class � a plaintiffs class must also satisfy one of the conditions of subsection (b). Subsection (b)(2) provides for injunctive or declaratory relief when the defendant has acted or refused to act on grounds generally applicable to the class, while subsection (b)(4) requires that there be common issues of fact. The trial court also concluded that Tennessee law applied and explained how the discovery process would proceed. Neither party asked for findings of fact or conclusions of law, and the trial court did not enter any sua sponte. Vanderbilt appeals the certification under Rule 42(b)(4), and the Poseys cross-appeal the denial of certification under Rule 42(b)(2). HOLDING:Affirmed in part; reversed and remanded in part. The court first determines that it will use an abuse-of-discretion standard to review the case. It rejects Vanderbilt’s contention that Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425 (Tex. 2000), changed the standard for class action certification reviews to something more stringent. The Bernal court’s use of the phrase “rigorous analysis” meant that trial courts must rigorously analyze whether the certification requirements have been met, but reaffirmed that the trial court’s decision itself should be based on an abuse of discretion standard. To determine if there are common legal issues to justify certification under Rule 42(b)(4), the court says it must first determine the applicable law. The first step is to determine if the laws of the 44 states where the plaintiffs are from differ. If the laws differ, the next step is to examine all transactions and determine if any state has the “most significant” contacts with all the transactions. The third step is to determine whether an exception or limitation applies which prevents the application of the law of the state with the most significant contacts. The court finds no evidence presented by the Poseys that the laws of the other 43 states do not conflict. Additionally, the court notes that in Henry Schein Inc. v. Stromboe, 102 S.W.3d 675 (Tex. 2003), the Texas Supreme Court found that the deceptive trade practices laws of the 50 states conflict. The Poseys only presented an analysis of the laws of Texas and Tennessee, but not any others. Turning to the second step of the choice of law analysis, the court looks to see which state has the most significant contacts with the issue being litigated. Choice of law in tort cases is determined by applying the “most significant relationship” analysis. For misrepresentations, the “most significant relationship” test involves three levels: 1. a general test that weighs the competing policy interests of the different jurisdictions; 2. a test of the policy interests related to the specific cause of action alleged (in this case, torts); and 3. the specific context within the area of law (in this case, misrepresentation). Again, the Poseys showed only how Texas and Tennessee compared under these three levels, so the Poseys did not meet their burden of providing a choice of law analysis on which the trial court could determine whether Tennessee had the most significant contacts of all of the 44 states. The court goes to the third step of the choice of law analysis to see if any exception applies to the choice of law lying in the state with the most significant contacts. The Poseys argue that since Tennessee law does not conflict with Texas public policy, the Full Faith and Credit Clause should allow application of Tennessee law. This argument fails, the court rules, because the policy of not enforcing a law that is contrary to Texas public policy is an exception to the Texas choice of law rules, not to the rule itself. The fact that the Tennessee law is not contrary to the morals, natural justice and policy of Texas does not mean that Tennessee law applies. The court then addresses separate arguments raised by both Vanderbilt and the Poseys. Vanderbilt contends that a national class action based on deceptive trade practices cannot be certified as a matter of law. “In order for a class to be certified because only one state’s law applies, a single state must have the most significant contacts for all of the transactions. Choice of law must be determined for each individual transaction. If the same state has the most significant contacts for all of the transactions, the class can be certified. This will be a rare circumstance.” The Poseys argue that since Tennessee law and Texas law do not conflict, all of Texas’ interests are protected under Tennessee law. The court characterizes this argument as one of “false conflicts.” While the false conflicts doctrine has important influence in the governmental policy analysis contained in the Second Restatement of Conflicts, the court concludes that it should not be used to determine whether a conflict exists. The court next turns to whether the trial court erred in concluding that there are common issues of fact. The Poseys have not shown that a single common issue of law or fact exists, the court finds. The trial court was not presented with any evidence that any members of the class received misrepresentations other than the Poseys. The only evidence of misrepresentations was the letters received by the Poseys. The Poseys contend that due to the vast number of mortgages managed by Vanderbilt, and the fact that the letters they received were clearly form letters, it can be inferred that the letters were computer-generated and that the unnamed class members received misrepresentations. The court points out that compliance with the certification requirements must be actual, not presumed, and the trial court abused its discretion by basing certification on presumed facts. The court then reviews the denial of certification under Rule 42(b)(2). As noted above, the Poseys did not prove commonality of facts. Consequently injunctive relief would not be appropriate and the denial was correct. OPINION:Carter, J.; Morriss, C.J., Ross and Carter, JJ.

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