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Green v. American Modern Home Insurance Co.

United States District Court, W.D. Arkansas, Texarkana Division

June 1, 2017

PAMELA GREEN and GARY EDWARDS, individually and on behalf of all others similarly situated PLAINTIFFS
v.
AMERICAN MODERN HOME INSURANCE COMPANY, DEFENDANTS

          FINAL ORDER AND JUDGMENT

          Susan O. Hickey, United States District Judge.

         Before the Court is Plaintiffs' Motion for Final Approval of Class Action and Entry of Final Order and Judgment (“Motion for Final Approval”). (ECF No. 86). Also before the Court is Class Counsel's Motion for Attorneys' Fees and Costs Related to the Stipulation of Settlement and Request for Fee Award to Class Representatives (“Class Counsel's Application for Fees”). (ECF No. 88). Plaintiffs and Defendants have agreed-subject to Court approval- to settle this litigation pursuant to the terms and conditions stated in the Amended Stipulation of Settlement filed with the Court on February 28, 2017. (ECF No. 84). On May 24, 2017, the Court held a final approval hearing on the motions. The Court finds the matter ripe for consideration.

         I. BACKGROUND

         1. Plaintiffs filed an Amended Complaint in this Action alleging that American Modern Home Insurance Company, American Family Home Insurance Company, American Western Home Insurance Company, American Southern Home Insurance Company, American Modern Select Insurance Company, American Modern Surplus Lines Insurance Company, Consumers County Mutual Insurance Company, and American Modern Insurance Group, Inc. (collectively, “American Modern”) violated applicable law and breached their contracts with insureds by wrongfully depreciating the cost of labor when resolving structural damage claims in the State of Arkansas. American Modern has maintained throughout this Action that they have at all times paid claims when reasonable and appropriate to do so and have consistently acted in accordance with the governing laws and regulations of Arkansas and each State in which they do business.

         2. After litigation between the parties and arms-length negotiations between Class Counsel and counsel for American Modern, the parties have reached a settlement that provides substantial benefits to a Settlement Class, in return for a release and dismissal of claims against American Modern. The Settlement was reached after the Parties engaged in extensive and lengthy negotiations and mediation before the Honorable Barry A. Bryant, United States Magistrate Judge for the Western District of Arkansas. Class Counsel was therefore well positioned to evaluate the benefits of the Settlement, taking into account the expense, risk, and uncertainty of protracted litigation with respect to numerous difficult questions of law and fact.

         3. Plaintiffs and American Modern executed a Stipulation of Settlement and exhibits thereto dated January 23, 2017, which was filed with the Court along with a motion for preliminary approval of the Proposed Settlement on January 24, 2017.

         4. On February 15, 2017, the Court held a hearing to consider preliminary approval of the Proposed Settlement.

         5. Plaintiffs and American Modern executed an Amended Stipulation of Settlement (“Stipulation” or “Stipulation of Settlement”) dated February 28, 2017, which was filed with the Court the same day.

         6. On February 28, 2017, the Court, entered an Order Preliminarily Approving Class Settlement (“Preliminary Approval Order”), preliminarily approving the Stipulation, preliminarily certifying the Settlement Class for settlement purposes only, and scheduling a hearing for May 24, 2017 at 9:00 a.m. to consider final approval of the Proposed Settlement and other actions described in the Preliminary Approval Order and the Stipulation (“Final Approval Hearing”).

         7. As part of its Preliminary Approval Order, the Court preliminarily certified for settlement purposes only a Settlement Class (hereinafter, “Settlement Class”) defined as follows:

All Persons who had a Covered Loss in the state of Arkansas that occurred during the Class Period of April 11, 2009 through April 11, 2014, where the claim was paid at less than the limit of liability (accounting for deductible), and where American Modern made an ACV payment for Structural Loss that included a deduction for Labor Depreciation, or would have made an ACV payment for Structural Loss but for the deduction of Labor Depreciation.

         Excluded from the Settlement Class are:

(1) Persons who received indemnification payment(s) for full replacement cost;
(2) Claims that were open and still being actively adjusted as of April 11, 2014;
(3) Claims for which American Modern received an executed release during the Class Period;
(4) American Modern and its officers and directors;
(5) Members of the judiciary and their staff to whom this action is assigned; and
(6) Class Counsel.
“Covered Loss” means a first party insurance claim for Structural Loss, as defined below, that (a) occurred during the Class Period, (b) American Modern or a court of competent jurisdiction determined to be a covered loss under an Arkansas homeowners insurance policy issued by American Modern, and (c) resulted in an indemnity payment for Structural Loss by American Modern, or would have resulted in an indemnity payment for Structural Loss but for the deduction of labor Depreciation.
“Class Period” means the period of April 11, 2009, through April 11, 2014, inclusive of those dates.

         By doing so, the Court also preliminarily modified the litigation class previously certified by the Court in its August 24, 2016 order, to conform with the definition of the Settlement Class.

         8. As part of the Preliminary Approval Order, this Court approved a proposed Mailed Notice in the form attached to the Stipulation as Exhibit “2”, which provided Class Members with detailed notice of and information about the Proposed Settlement and Stipulation. In accordance with the Stipulation, the Mailed Notice also explained the opportunity for Class Members to file objections to the Proposed Settlement and the process by which Class Members could exclude themselves from the Settlement Class. The Court also approved published notice of the Settlement in the Arkansas Democrat-Gazette (the “Publication Notice”), in the form attached to the Stipulation of Settlement as Exhibit “4”, which further provided Class Members with information about the Proposed Settlement.

         9. Also as part of the Preliminary Approval Order, this Court approved the establishment of an automated toll-free interactive voice response phone number and a Settlement website, to provide further notice and information to and answer questions of Class Members concerning the Settlement.

         10. The Court ordered that the Mailed Notice and Claim Form, in the forms attached to the Stipulation of Settlement as Exhibits “2” and “3”, be mailed by Garden City Group, Inc. (the “Administrator”), who was retained as the independent third-party settlement administrator for the Proposed Settlement, by first-class mail, postage prepaid, on or before March 24, 2017 (the “Notice Mailing Date”) to all Persons reasonably believed to be potential Class Members whose names and last known addresses were ascertained by American Modern through a reasonable search and inquiry of its records of claims for Covered Losses during the Class Period, with updates of those addresses by the Administrator as described in the Stipulation.

         11. On May 12, 2017, Plaintiffs moved the Court for Final Approval of the terms of the Proposed Settlement and for the entry of this Final Judgment, with an Amended version filed on May 15, 2017. In support of the Motion for Final Approval, Plaintiffs submitted, among other things, evidence concerning the dissemination and adequacy of the Mailed Notice and Claim Form, evidence reflecting publication of the Publication Notice and establishment of an automated toll-free interactive voice response phone number and a Settlement website, evidence regarding the names of potential Class Members who timely submitted requests for exclusion from the Settlement Class, evidence regarding the negotiation of the Stipulation, evidence regarding the fairness, reasonableness, and adequacy of the terms of the Stipulation, and evidence regarding the fairness, reasonableness and adequacy of Class Counsel's Application for Fees. In further support of the Motion for Final Approval, Plaintiffs submitted a Brief in Support of Motion for Final Approval, setting forth extensive argument and authority along with various exhibits attached thereto. Likewise, Class Counsel's Application for Fees contained both extensive argument and supporting authority.

         12. In accordance with the Preliminary Approval Order, the Court held the Final Approval Hearing on May 24, 2017, in Texarkana, Arkansas.

         13. At the Final Approval Hearing, Plaintiffs offered the following evidence in support of the Motion for Final Approval and Class Counsel's Application for Fees:

Exhibit No.

Description

1

Declaration of Matt Keil

2

Declaration of Pamela Green

3

Declaration of Gary Edwards

4

Declaration of Jose C. Fraga

         14. On May 19, 2017, Class Counsel filed with the Court the declaration of Jose Fraga, the Administrator's senior director of operations. Mr. Fraga declared that the initial mailing of the Court-approved Mailed Notice was completed on March 24, 2017. The Mailed Notice, along with a Claim Form, was mailed via First Class United States mail to 14, 482 potential Class Members after updating addresses through the National Change of Address database. The Administrator received a return of 1, 872 Mailed Notices as undeliverable and without forwarding addresses. These addresses were updated through a commercial database and returned Mailed Notices and Claim Forms were re-mailed to the more current address. After remailing with updated addresses, a total of 832 Mailed Notices remain undeliverable. The Court finds that the percentage of Mailed Notices that were returned a second time without forwarding addresses (approximately 5.745%) is reasonable. As of May 17, 2017, the Administrator had received four valid and timely Requests for Exclusion and the Court had received zero objections to the Stipulation of Settlement. No objections were made at the Final Approval Hearing.

         15. Plaintiffs and the Administrator have satisfactorily demonstrated that the Mailed Notice and a Claim Form were mailed, that the Publication Notice was published, and that an automated toll-free interactive voice response phone number and a Settlement website were established, in accordance with the Stipulation and Preliminary Approval Order.

         16. The Court further finds that all notices concerning the Settlement required by the Class Action Fairness Act of 2005, 28 U.S.C. §§ 1715, et seq., have been sent and that American Modern has fully complied with the notice requirements under that Act.

         17. The Settlement provides substantial monetary benefits to Class Members who timely submit completed and signed Claim Forms. The potential monetary liability of American Modern for settlement payments to Class Members who timely submit eligible Claim Forms; Class Counsel's attorneys' fees, costs, and expenses; and Court-approved incentive awards to the Class Representatives is reasonably estimated to be $3, 281, 795.00. In addition, American Modern has agreed to fund the costs of notice and settlement administration. The claims procedure established under the Stipulation is uniform and fair, and provides Class Members with an extended and ample opportunity to receive settlement payments as described in the Stipulation.

         18. All Persons who wished to be excluded from the Settlement Class were provided an opportunity to request exclusion as described in the Mailed Notice and Publication Notice. The Court finds that the individual interests of those Class Members who timely sought exclusion from the Settlement Class are preserved and that no Class Member was precluded from being excluded from the Settlement Class if he or she so desired. Those Class Members who timely and properly excluded themselves from the Settlement Class are identified in the attached Exhibit “1.” 19. Class Members who did not timely file and serve an objection in writing to the Stipulation, to the entry of this Final Judgment, or to Class Counsel's Application for Fees, in accordance with the procedure set forth in the Mailed Notice and mandated in the Preliminary Approval Order, are deemed to have waived any such objection through any appeal, collateral attack, or otherwise.

         20. At the Final Approval Hearing, the Court considered, among other matters described herein, (a) whether certification of the Settlement Class for settlement purposes only is appropriate under Rule 23; (b) the fairness, reasonableness, and the adequacy of the Stipulation; and (c) the fairness and reasonableness of Class Counsel's Application for Fees under applicable law. The Court independently evaluated not only the pleadings, evidence, and arguments of Class Counsel and American Modern, but also rigorously and independently evaluated the Stipulation and Class Counsel's Application for Fees on behalf of Class Members, and as such, the Court considered arguments that could ...


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