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In a new subdivision, a builder has constructed and sold 70 single-family houses. In 50 of the 70 houses, the roofs begin to leak shortly after the owners move in. The leaks cause water to collect behind the walls, which in turn causes mold to grow.
In each affected house, the mold and water have combined to cause significant damage. Each house’s roof needs repair, and the affected walls must be demolished and rebuilt. Depending on the extent of the leakage, these repairs will cost between $15,000 and $60,000 per house. Worse still, other damage to furniture, flooring, and personal property ranges from $2,000 to $25,000 per house.
A total of 85 owners occupy the 50 affected houses. (Some houses are owned concurrently—e.g. by tenancy in common.) In varying degrees, each owner has suffered medical problems due to the mold. Some endure only mild sneezing and coughing, while others have developed persistent skin rashes, fevers, and serious coughs. A few of the most severely affected owners have been hospitalized, and many have lost time at work because of their symptoms. In short, owing to these illnesses, the owners have sustained varying degrees of pain, suffering, and mental distress. They have also incurred lost wages and medical bills, ranging from zero to $40,000 per person.
Owner #1 owns one affected house, and Owner #2 owns another. In the appropriate United States district court, the two owners jointly sue the builder for breach of warranty, breach of contract, negligence, and fraud. Assume that the court has personal and subject-matter jurisdiction, and that venue is proper.
The cost of repairs to Owner #1’s house is $40,000; Owner #1 has accumulated $800 in medical bills, but no lost wages. The cost of repairs to Owner #2’s house is $18,000; Owner #2 has incurred medical bills of $10,000 and lost wages of $6,000. In addition to these compensatory damages, each owner seeks punitive damages of $50,000.
The two homeowners’ attorney has been practicing law for almost three years. Six months ago, she established her own law firm, partnering with a law-school classmate. Before then, she worked for two years at a real-estate firm. There, she mostly researched property titles and managed residential closings. At her new firm, she has tried two divorce cases. She has also represented a local restaurant owner in litigation against a franchisor. In that case, she negotiated a settlement of $85,000 in favor of her client.
The two homeowners seek to represent a class consisting of the 85 people who own the 50 affected houses. The attorney has filed a motion to certify this class, which the builder opposes. As is common knowledge, class actions can require large investments of time, extensive staffing, and often expensive financing to support the litigation before trial.