No. 03-15-00436-CV

In the Third Court of Appeals

Austin, Texas

CHARLES O. “CHUCK” GRIGSON, 

GERALD HOOKS, AND LESLIE HOOKS, 

Appellants, 

v.

THE STATE OF TEXAS; THE TEXAS DEPARTMENT OF 

INSURANCE; THE TEXAS COMMISSIONER OF INSURANCE;

AND FARMERS GROUP, INC. ET AL., 

Appellees.

On Appeal from the 261st Judicial District Court, Travis County, Texas

Cause No. D-1-GV-02-002501

APPELLEES’ MOTION FOR LEAVE TO FILE REPLY IN FURTHER 

SUPPORT OF JOINT MOTIONS TO DISMISS APPELLANTS’

APPEALS FOR LACK OF APPELLATE JURISDICTION

Marcy Hogan Greer

State Bar No. 08417650 

mgreer@adjtlaw.com

ALEXANDER DUBOSE JEFFERSON &

TOWNSEND LLP

515 Congress Ave., Suite 2350 

Austin, Texas 78701 

Telephone: 512-482-9300 

Telecopier: 512-482-9303 

M. Scott Incerto

State Bar No. 10388950 

scott.incerto@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

98 San Jacinto Blvd., Suite 1100 

Austin, Texas 78701 

Telephone: 512-474-5201 

Telecopier: 512-536-4598 

COUNSEL FOR DEFENDANTS-APPELLEES 

THE FARMERS PARTIES

Joshua R. Godbey 

State Bar No. 24049996 

joshua.godbey@texasattorneygeneral.gov 

Ryan S. Mindell 

State Bar No. 24089707 

ryan.mindell@texasattorneygeneral.gov 

Jennifer S. Jackson 

State Bar No. 24060004 

jennifer.jackson@texasattorneygeneral.gov 

OFFICE OF THE ATTORNEY GENERAL

P.O. Box 12548 

Austin, Texas 78711-2548 

Telephone: (512) 475-4209 

Fax: (512) 477-2348)

COUNSEL FOR PLAINTIFFS-APPELLEES, THE 

STATE OF TEXAS, THE TEXAS DEPARTMENT 

OF INSURANCE, AND THE TEXAS 

COMMISSIONER OF INSURANCE

ACCEPTED

03-15-00436-CV

6465052

THIRD COURT OF APPEALS

AUSTIN, TEXAS

8/12/2015 2:02:21 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 8/12/2015 2:02:21 PM JEFFREY D. KYLE Clerk
TO THE HONORABLE COURT OF APPEALS:

Appellees, the State of Texas, the Texas Department of Insurance and the 

Texas Commissioner of Insurance (jointly, “the State”) and the Farmers Parties1

(together with the State, the “Settling Parties”) file this Motion for Leave to File 

Reply in Further Support of Joint Motions to Dismiss Appellants’ Appeals for 

Lack of Appellate Jurisdiction to show the Court the following:

Appellant Charles O. “Chuck” Grigson filed his Response to Appellees’ 

Joint Motion to Dismiss for Lack of Appellate Jurisdiction (“Grigson’s Response”)

on July 31, 2015.

Appellants Gerald and Leslie Hooks untimely2 filed their Response to 

Appellees’ Joint Motion to Dismiss Gerald and Leslie Hookses’ Appeal for Lack 

of Appellate Jurisdiction (“Hookses’ Response”) on August 7, 2015.

Grigson’s Response and the Hookses’ Response necessitate a reply by the 

Settling Parties to address Grigson’s and the Hookses’ characterizations of the 

record and the law applicable to this case.

 1 Farmers Group, Inc., Fire Underwriters Association, Farmers Underwriters Association, 

Farmers Insurance Exchange, Fire Insurance Exchange, Texas Farmers Insurance Company, 

Mid-Century Insurance Company of Texas, Mid-Century Insurance Company, Farmers Texas 

County Mutual Insurance Company, Truck Insurance Exchange, and Truck Underwriters 

Association

2

 On July 27, 2015, this Court directed the Hookses to file their response on or before August 6, 

2015.
2

CONCLUSION AND PRAYER

For these reasons, the Appellees, the Settling Parties, request that the Court 

grant them leave to file the accompanying Joint Reply, consider the attached Joint 

Reply, and grant all other and further relief the Appellees have requested in this 

appeal and are entitled to.
3

Date: August 12, 2015 Respectfully submitted,

/s/ M. Scott Incerto

Marcy Hogan Greer

State Bar No. 08417650

mgreer@adjtlaw.com

ALEXANDER DUBOSE JEFFERSON & TOWNSEND LLP

515 Congress Avenue, Suite 2350

Austin, Texas 78701-3562

Telephone: (512) 482-9300

Facsimile: (512) 482-9303

M. Scott Incerto

State Bar No. 10388950

scott.incerto@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

98 San Jacinto Blvd., Suite 1100

Austin, Texas 78701

Telephone: 512-474-5201

Telecopier: 512-536-4598

Darryl W. Anderson

State Bar No. 24008694

darryl.anderson@nortonrosefulbright.com

Geraldine W. Young

State Bar No. 24084134

geraldine.young@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

1301 McKinney, Suite 5100

Houston, Texas 77010 3095

Telephone: 713 651 5151

Telecopier: 713 651 5246

ATTORNEYS FOR DEFENDANTS-APPELLEES FIRE 

UNDERWRITERS ASSOCIATION, FARMERS GROUP,

INC., FARMERS UNDERWRITERS ASSOCIATION,

FARMERS INSURANCE EXCHANGE, FIRE INSURANCE 

EXCHANGE, TEXAS FARMERS INSURANCE COMPANY,

MID-CENTURY INSURANCE COMPANY OF TEXAS,

MID-CENTURY INSURANCE COMPANY, FARMERS 

TEXAS COUNTY MUTUAL INSURANCE COMPANY,

TRUCK INSURANCE EXCHANGE, AND TRUCK 

UNDERWRITERS ASSOCIATION
4

Respectfully submitted,

KEN PAXTON

Attorney General of Texas

CHARLES E. ROY

First Assistant Attorney General

JAMES E. DAVIS

Deputy Attorney General for Civil Litigation

ROBERT O’KEEFE

Division Chief

Financial Litigation, Tax, and Charitable Trusts Division

/s/ Joshua R. Godbey

JOSHUA R. GODBEY

Assistant Attorney General 

LEAD ATTORNEY

State Bar No. 24049996

Telephone: (512) 475-4209

joshua.godbey@texasattorneygeneral.gov

RYAN S. MINDELL

Assistant Attorney General

State Bar No. 24089707

Telephone: (512) 936-1721

ryan.mindell@texasattorneygeneral.gov

JENNIFER S. JACKSON

Assistant Attorney General

State Bar No. 24060004

Telephone: (512) 463-9917

jennifer.jackson@texasattorneygeneral.gov

Financial Litigation, Tax, and Charitable Trusts Division

P.O. Box 12548

Austin, Texas 78711-2548

Fax: (512) 477-2348)

ATTORNEYS FOR PLAINTIFFS-APPELLEES, THE STATE 

OF TEXAS, THE TEXAS DEPARTMENT OF INSURANCE,

AND THE TEXAS COMMISSIONER OF INSURANCE
5

CERTIFICATE OF SERVICE

On August 12, 2015, I electronically filed the Appellees’ Motion for Leave 

to File Reply in Further Support of Joint Motions to Dismiss Appellants’ Appeals

for Lack of Appellate Jurisdiction with the Clerk of the Court using the 

eFile.TXCourts.gov electronic filing system which will send notification of such 

filing to the following (unless otherwise noted below). 

Joe K. Longley

Philip K. Maxwell

1609 Shoal Creek Blvd. # 100

Austin, TX 78701

Joe@JoeLongley.com

phil@philmaxwell.com

Counsel for Appellant Charles O. 

“Chuck” Grigson

Michael J. Woods

8620 N. New Braunfels, Ste. 522

San Antonio, TX 78217

MichaelJWoods@sbcglobal.net

Pro Se Intervenor/Objector 

Joseph C. Blanks

P.O. Box 999

Doucette, TX 75942

blanxlex@gmail.com

Counsel for Appellants Gerald and 

Lesly Hooks

/s/ M. Scott Incerto

M. Scott Incerto
6

CERTIFICATE OF CONFERENCE

I certify that, on August 11, 2015, I conferred with Joe K. Longley, counsel 

for Appellant Charles O. “Chuck” Grigson, and with Joseph Blanks, counsel for 

Appellants Gerald and Leslie Hooks, about the merits of the foregoing motion, 

pursuant to Texas Rule of Appellate Procedure 10.1(a)(5), and they stated, 

respectively, that Grigson and the Hookses were opposed to the motion.

/s/ M. Scott Incerto

M. Scott Incerto

CERTIFICATE OF COMPLIANCE WITH TEX. R. APP. P. 9.4(i)

I certify that the foregoing document contains 310 words and complies with 

the word limit set forth in Texas Rule of Appellate Procedure 9.4(i).

/s/ M. Scott Incerto

M. Scott Incerto
No. 03-15-00436-CV

In the Third Court of Appeals

Austin, Texas

CHARLES O. “CHUCK” GRIGSON, 

GERALD HOOKS, AND LESLIE HOOKS,

Appellants,

v.

THE STATE OF TEXAS; THE TEXAS DEPARTMENT OF 

INSURANCE; THE TEXAS COMMISSIONER OF INSURANCE;

and FARMERS GROUP, INC. ET AL., 

Appellees.

On Appeal from the 261st Judicial District Court, Travis County, Texas

Cause No. D-1-GV-02-002501

APPELLEES’ REPLY IN FURTHER SUPPORT OF JOINT MOTIONS

TO DISMISS APPELLANTS GRIGSON’S AND THE HOOKSES’ 

APPEALS FOR LACK OF APPELLATE JURISDICTION

Marcy Hogan Greer

State Bar No. 08417650

mgreer@adjtlaw.com

ALEXANDER DUBOSE JEFFERSON &

TOWNSEND LLP

515 Congress Ave., Suite 2350

Austin, Texas 78701

Telephone: 512-482-9300

Telecopier: 512-482-9303

M. Scott Incerto

State Bar No. 10388950

scott.incerto@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

98 San Jacinto Blvd., Suite 1100

Austin, Texas 78701

Telephone: 512-474-5201

Telecopier: 512-536-4598

COUNSEL FOR DEFENDANTS-APPELLEES 

THE FARMERS PARTIES

Joshua R. Godbey

State Bar No. 24049996

joshua.godbey@texasattorneygeneral.gov

Ryan S. Mindell

State Bar No. 24089707

ryan.mindell@texasattorneygeneral.gov

Jennifer S. Jackson

State Bar No. 24060004

jennifer.jackson@texasattorneygeneral.gov

OFFICE OF THE ATTORNEY GENERAL

P.O. Box 12548

Austin, Texas 78711-2548

Telephone: (512) 475-4209

Fax: (512) 477-2348)

COUNSEL FOR PLAINTIFFS-APPELLEES, THE 

STATE OF TEXAS, THE TEXAS DEPARTMENT 

OF INSURANCE, AND THE TEXAS 

COMMISSIONER OF INSURANCE
TO THE HONORABLE COURT OF APPEALS:

Appellees, the State of Texas, the Texas Department of Insurance and the 

Texas Commissioner of Insurance (jointly, “the State”) and the Farmers Parties1

(together, the “Settling Parties”) file this Reply in further support of their:

(1) Joint Motion to Dismiss Appellant Charles O. “Chuck” Grigson’s

Appeal for Lack of Appellate Jurisdiction and Request for Expedited 

Consideration of the Motion (“Motion to Dismiss Grigson’s Appeal”), which was 

filed on July 20, 2015; and

(2) Joint Motion to Dismiss Appellants Gerald and Leslie Hookses’ Appeal 

for Lack of Appellate Jurisdiction and Request for Expedited Consideration of the 

Motion (“Motion to Dismiss Hookses’ Appeal”), which was filed on July 24, 2015.

This Reply also responds to Grigson’s Response to the Motion to Dismiss 

Grigson’s Appeal (“Grigson’s Response”) that was filed on July 31, 2015, and the 

Hookses’ Response to the Motion to Dismiss Hookses’ Appeal (“Hookses’

Response”) that was untimely filed on August 7, 2015.

2

 1 Farmers Group, Inc., Fire Underwriters Association, Farmers Underwriters Association, 

Farmers Insurance Exchange, Fire Insurance Exchange, Texas Farmers Insurance Company, 

Mid-Century Insurance Company of Texas, Mid-Century Insurance Company, Farmers Texas 

County Mutual Insurance Company, Truck Insurance Exchange, and Truck Underwriters 

Association

2

 On July 27, 2015, this Court directed the Hookses to file their response on or before August 6, 

2015.
2

PRELIMINARY STATEMENT

Grigson’s and the Hookses’ Responses confirm that the district court’s 

Order of Preliminary Approval (“Preliminary Approval Order”) cannot be 

appealed under the narrow jurisdictional window for orders that certify or refuse to 

certify a class. Grigson and the Hookses (jointly, “Intervenors”) can point to no 

language in the order that certifies the Settlement Classes.3

 Given that the 

Settlement Classes were indisputably certified in 2003 and affirmed on appeal by 

the Texas Supreme Court and this Court, it is not surprising that the district court 

did not engage in a superfluous re-certification of the same classes—a fact 

Intervenors recognized at the preliminary approval hearing itself, but now seek to 

avoid in an effort to obtain an unwarranted second bite at the appellate apple.

To try and create an appellate hook, Intervenors’ Responses resort to 

contradictory positions and mischaracterization. Intervenors assert that the district 

court’s reference to its prior certification decision, approval of class notice, and

rejection of Grigson’s “collusion” allegations somehow means that the court 

“expressly” certified the Settlement Classes anew. In the alternative, they argue

the converse—that the district court also wrongly omitted express certification 

language from the Preliminary Approval Order. In this regard, they claim that the 

 3 For consistency, the Settling Parties will continue to use the terms they defined in their Motions 

to Dismiss.
3

prior 2003 certification decision “terminated” or was “abandoned”—even though 

the Parties to the agreement themselves and the district court have confirmed that 

the relevant documents do not support such an interpretation. Intervenors also 

argue that an interlocutory appeal is permitted because the Preliminary Approval 

Order “altered” the Settlement Classes but they fail to show any alteration in the 

Settlement Classes—only changes in the Settlement Agreement, which are not 

appealable at this time. In short, Grigson’s and the Hookses’ arguments are 

supported by neither law nor evidence and fail to provide any jurisdictional basis 

for their identical attempted appeals. Grigson’s arguments about staying class 

notice are the same groundless assertions from his Emergency Motion to Stay the 

Sending of Class Notice and should also be rejected.

For the reasons demonstrated here and in the Settling Parties’ Motions to 

Dismiss, Grigson’s and the Hookses’ appeals should be dismissed.

ARGUMENT

I. Intervenors Fail to Demonstrate that the District Court’s Preliminary 

Approval Order Certified a Class Action

Grigson first argues that the Preliminary Approval Order is, “[b]y its express 

terms . . . a class certification order” because the Order contains language about the 

class definitions, class notice, and no collusion that is similar to the language found 
4

in the Texas class action rule, Texas Rule of Civil Procedure 42.4

 Grigson’s 

Response at 2. The Hookses, on the other hand, concede that the Order lacks 

express certification but nonetheless argue that it “certifies the settlement classes.” 

Hookses’ Response at 2.

At the outset, Intervenors’ inability to identify any actual class certification 

language in the Order defeats their own arguments. If there were any doubt, the 

Court need only read the passages from the July 2015 preliminary approval hearing 

where the district court made it absolutely clear that it was not recertifying the 

Settlement Classes and was rejecting arguments that recertification was required 

under any reading of the Settlement Agreement or the district court’s prior orders. 

Ex. 3 to Motion to Dismiss Grigson’s Appeal, Tr. 122-23, 133-34. Indeed, 

Grigson’s complaint to the district court was not that it wrongly certified a class

but instead that the district court erred in refusing to make another certification 

determination.5

 Because, as Grigson complained, the district court did not even

decide certification, its Preliminary Approval Order cannot be one that “certifies or 

 4 In fact, the certification of this class action was affirmed pursuant to the Insurance Code, see

Tex. Ins. Code § 541.251, as the Texas Supreme Court made clear in its prior ruling affirming 

the certification decision. See Lubin v. Farmers Grp., Inc., 222 S.W.3d 417, 424-27 (Tex. 2007).

5 See Ex. 3 to Motion to Dismiss Grigson’s Appeal, Tr. 122 (Grigson’s counsel objecting to “an 

order that does not certify classes”), Tr. 134:14-16 (Grigson’s counsel acknowledging on the 

record that the district court’s Order “will not have a separate certification or refusal to certify”); 

Ex. 4 to Grigson’s Response, at 4 (Grigson’s Response to Preliminary Approval, May 15, 2015) 

(“Grigson objects to preliminary approval of the proposed settlement without a hearing on 

whether the settlement classes can be certified and a Court determination on that issue.”).
5

refuses to certify a class.” See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(3). 

Unable to quote any actual “express terms,” Intervenors instead present the Court 

with an entirely twisted reading of the Preliminary Approval Order that fails to 

provide interlocutory jurisdiction.

First, Intervenors have no basis, under Rule 42, Texas Insurance Code 

§ 541.251, or any other authority, to argue that the mere recitation of the settlement 

class definitions somehow turns an order into a certification decision. See 

Grigson’s Response at 2. As is evident from the face of the Order, the district 

court only acknowledged that it “previously certified” the classes, with definitions 

that have not changed since 2003, and that the certification “has been affirmed in 

its entirety by the appellate courts of Texas.” Ex. 1 to Motion to Dismiss 

Grigson’s Appeal, at 2-3 ¶ 2. That is not a certification or a refusal to certify.

Second, Intervenors cannot establish interlocutory appellate jurisdiction 

based on the district court’s approval of a revised class notice in the Preliminary 

Approval Order. See, e.g., Citgo Ref. and Mktg., Inc. v. Garza, 94 S.W.3d 322, 

327 (Tex. App.—Corpus Christi-Edinburg 2002, no pet.) (“[N]o Texas court has 

held that an order approving the form of notice to a class is subject to interlocutory 

appeal. . . . the present attempted appeal is dismissed for want of jurisdiction.”).

Third, contrary to Intervenors’ arguments, the Preliminary Approval Order 

does not “fundamentally alter[]” the 2003 certification decision in this case. See 
6

Grigson’s Response at 2. It does not alter the Settlement Classes one iota. 

Grigson’s redline comparison in his Response actually demonstrates that any

changes made to the no collusion portion of the Order were minor and immaterial. 

See Grigson’s Response at 3. In the Order, the district court affirms its previous 

conclusion about no collusion and the State’s representation of the classes. Ex. 1 

to Motion to Dismiss Grigson’s Appeal, at 3 ¶ 5. Nowhere does the court say that 

it is making a new certification determination under Rule 42(a)(4) or Texas 

Insurance Code § 541.251. Moreover, Intervenors’ “collusion” allegations were 

considered in connection with preliminary approval of the settlement—not class 

certification—and the preliminary approval is not subject to an interlocutory 

appeal. See McAllen Med. Ctr., Inc. v. Cortez, 66 S.W.3d 227, 234 (Tex. 2001) 

(“[T]he trial court’s preliminary approval of the [] settlement has no binding force. 

. . . appellate review is premature.”).

Finally, Intervenors’ overall argument—that a class action order that merely 

mentions class action requirements is an appealable order under § 51.014(a)(3)—is 

contrary to the statute and well-established Texas law and public policy.

6

 It was 

“the [Texas] Legislature’s intent that section 51.014 be strictly construed . . . [and] 

 6 Hall v. Pedernales Elec. Co-op., Inc., 278 S.W.3d 536, 549 (Tex. App.—Austin 2009, no pet.) 

(“Appellate review of the trial court’s approval of a class settlement is limited, due to ‘the strong 

judicial policy favoring the resolution of disputes through settlement.’”); Briscoe v. Goodmark 

Corp., 102 S.W.3d 714, 716 (Tex. 2003) (law of the case doctrine).
7

that an appeal lies only from an order that ‘certifies or refuses to certify a class.’” 

Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 355, 358 (Tex. 2001). It was 

not the Legislature’s intent to “[a]llow[] interlocutory appeals whenever a trial 

court refuses to change its mind” like the district court did here when it refused to 

re-do its 2003 certification decision; a contrary rule “would invite successive 

appeals and undermine the statute’s purpose of promoting judicial economy.” City 

of Houston v. Estate of Jones, 388 S.W.3d 663, 667 (Tex. 2012) (per curiam). 

Texas courts have even gone so far as to reject attempted interlocutory appeals 

from orders modifying a class definition or the size of a class7 and orders refusing 

to decertify a class.8

Thus, had Intervenors actually moved the district court to decertify the 

classes based on their “collusion” and “conflict” arguments or the purported

 7 Bally, 53 S.W.3d at 355 (“[T]he statute does not authorize an appeal of an order merely 

enlarging the size of a class or an order modifying a class’s definition.”); Tana Oil & Gas Corp. 

v. Cernosek, No. 03-02-00096-CV, 2002 WL 536308, at *1 (Tex. App.—Austin Apr. 11, 2002, 

no pet.) (dismissing an interlocutory appeal from a class modification order for lack of 

jurisdiction); Garza, 94 S.W.3d at 328 (“[A] trial court’s exercise of its continuing power to alter

or amend the nature of an existing certified class by an order increasing its size does not ‘certify 

or refuse to certify a class’ for purposes of an interlocutory appeal. Similarly, an order 

modifying the class definition is not subject to interlocutory appeal . . . .”).

8 Estate of Jones, 388 S.W.3d at 667 (“A trial court’s refusal to decertify was not the functional 

equivalent of a decision granting certification; the Legislature could have added language to 

section 51.014(a)(3) to permit appeals from orders refusing to decertify a class, but did not.”);

Rainbow Grp., Ltd. v. Wagoner, 219 S.W.3d 485, 491 (Tex. App.—Austin 2007, no pet.) (“[A]n 

order denying a motion to decertify a class is not within the scope of the statute authorizing 

interlocutory appeals.”); Union Pac. Res. Grp., Inc. v. Hankins, 51 S.W.3d 738, 740-41 (Tex. 

App.—El Paso 2001, no pet.) (holding that the trial court’s orders supplementing a class 

certification order and denying a motion to reconsider certification were not appealable).
8

termination of the prior settlement, clear authority from the Texas Supreme Court 

would have precluded an appeal from an order denying that relief. Yet Intervenors 

ask this Court to uphold jurisdiction over these same issues, where they never even 

attempted to modify, much less move to decertify, the Settlement Classes. If 

intervenors could create appellate jurisdiction over class action settlements merely 

by refraining from actually filing a formal motion to decertify, the limits on 

jurisdiction enforced by the Texas Supreme Court would be rendered illusory.

The district court’s Preliminary Approval Order had zero impact on the 

certified classes, precluding any legitimate argument for an interlocutory appeal at 

this time. The Preliminary Approval Order only preliminarily approved the 

Settlement Agreement and authorized that a revised class notice, 12 years overdue, 

finally be sent to the 1.8 million absent class members. Such an order does not fit 

within the legislature’s small window for interlocutory appeals.

II. The Preliminary Approval Order Is Not Otherwise Appealable

A. The 2003 Certification Still Governs, As the Law of the Case and 

As Recognized by the District Court and the Settling Parties

Intervenors try to manufacture appellate jurisdiction by arguing that, at the 

time of the Preliminary Approval Order, the class settlement in this case and 

previously certified classes had “terminated” or been “abandoned” and thus the 

Settling Parties and district court are somehow “abrogating” appellate jurisdiction 
9

by omitting express certification from the Order.9

 Grigson’s Response at 4-12; 

Hookses’ Response at 3. These arguments are contrary to the express language of 

the 2003 certification order, the settlement documents in this case, and the intent of 

the Settling Parties and the district court—all of which have maintained that the 

2003 certification still governs.10 In any event, the Settling Parties’ agreement 

could not abrogate the orders and opinions of the district court, this Court, and the 

Texas Supreme Court.

Under all iterations of the Settlement Agreement, certification of the 

Settlement Classes can be vacated only “[i]f this Settlement Agreement is 

terminated pursuant to its terms, or if the Effective Date does not occur for any 

reason.” Ex. 6 to Grigson’s Response, at 8 § III.5; Ex. 13 to Grigson’s Response, 

at 8 § III.5. Intervenors have not argued that any of these events have occurred, 

 9 But, contradictorily, Grigson claims earlier in his Response that the certification is “express.” 

See Grigson’s Response at 2-3.

10 See Ex. 1 to Motion to Dismiss, at 2-3 ¶ 2; Ex. 3 to Motion to Dismiss, Tr. 122-23 

(recognizing the Settling Parties’ position “that the class was previously certified . . . and that the 

class has never been decertified,” before stating that the district court will enter the Settling 

Parties’ preliminary approval order as presented without any re-certification language).

Grigson’s excerpted quote from the September 4, 2014, hearing (Response at 8) mischaracterizes 

the statements by the district court, which later recognized the updated 2013 settlement as merely 

a “continuation” of the 2003 settlement and clarified, at the preliminary approval hearing, its 

intent not to engage in re-certification. Ex. 1 to Reply, 9/4/2014 Hearing Tr. 58:8-16; see also id.

at 55-58 (full discussion); Ex. 3 to Motion to Dismiss Grigson’s Appeal, Tr. 134:7-18 (“[Y]ou 

were each trying to spin my prior comments on the record to be a ‘oh, we need to recertify this 

class’ from your perspective and ‘no we don't’ from their perspective. . . . It’s going to be the 

order they’ve proposed.”); Ex. 3 to Reply, 4/29/2014 Hearing Tr. 104 (“We did all of the 

standards of class certification. I don’t want to redo them.”).
10

nor could they. Under the settlement’s terms, only the parties to the agreement—

and not an intervenor like Grigson or the Hookses—have the right to terminate it, 

and neither Settling Party has exercised that right. See Ex. 6 to Grigson’s 

Response, at 14 §§ VII.1, VII.4; Ex. 13 to Grigson’s Response, at 15-16 §§ VII.1, 

VII.4. Indeed, despite a decade of delay and failed appeals by intervenors

(including the Hookses and the former client of Grigson’s counsel), the Settling 

Parties have maintained, and only enhanced the benefits in, their agreement. And 

while the “Effective Date” (or final judgment) has not yet occurred, it can still 

occur (even if Intervenors prevailed on their baseless appeals). See Ex. 6 to 

Grigson’s Response, at 2; Ex. 13 to Grigson’s Response, at 2.

Furthermore, the Settlement Agreement in this case expressly allows and 

contemplates that the Settling Parties would amend and modify the agreement in 

writing, as the parties have done, without terminating the agreement or 

certification. See Ex. 6 to Grigson’s Response, at 17 § X.3; Ex 13 to Grigson’s 

Response, at 18 § X.3. Contrary to Intervenors’ assertions (Grigson’s Response at 

5; Hookses’ Response at 3-4), the 2013 Second Amended Settlement Agreement 

modified the 2003 Settlement Agreement in this case as little as possible, not 

renegotiating any settlement terms and only bringing the settlement current, but it

did not require the parties to re-seek class certification. See Ex. 13 to Grigson’s 

Response, at 8 § III.2. And the 2015 Supplement expressly provides that the 
11

Settling Parties have fulfilled the requirement of obtaining class certification, 

leaving no doubt of their intention that the Second Amended Settlement 

Agreement and Supplement have no impact on the class definitions as previously 

certified. Ex. 11 to Grigson’s Response at 2 § III.

The district court’s decision in 2014 not to preliminarily approve the Second 

Amended Settlement Agreement (that, along with the 2015 Supplement, was just 

preliminarily approved) also had no effect on certification. Contra Grigson’s 

Response at 7. The “termination clause” excerpted by Grigson from the Second 

Amended Settlement Agreement states only that “[i]n the event that the Court were 

not to approve and certify the Settlement Classes in all respects as defined in this 

Settlement Agreement (1) any stipulations and agreements made herein are null 

and void.” Grigson’s Response at 7. There can be no question that the district 

court has certified and the appellate courts have affirmed the Settlement Classes in 

all respects as they are defined in the current Settlement Agreement. In sum, 

neither Grigson nor the Hookses have any basis to argue “termination” or 

“abandonment” of the 2003 certification.11

 11 Indeed, Intervenors’ tortured contractual reading is fundamentally at odds with hornbook 

contract law. It does not comport with the plain language of the Settlement Agreement; it is 

contrary to the expressed (and agreed) intent of the parties that signed the Settlement Agreement; 

and it has been rejected by the district court. In no case of which the Settling Parties are aware 

are non-signatories to a contract permitted to tell contracting parties that their agreement means 

something different than what they think and intended it to mean. Certainly, Intervenors cite to 

no authority for such a breathtaking usurpation of the law of contracts.
12

Grigson nonetheless brazenly asserts the “complicity of the trial court” in 

this alleged effort to “abrogate” appellate jurisdiction. Grigson’s Response at 12; 

see also id. at 9-12. As evidenced by the voluminous record and colloquy with 

Grigson’s counsel, the district court heard Grigson’s and the Hookses’ objections, 

as well as the evidence and arguments presented by the Settling Parties, and ruled 

against Grigson and the Hookses. See Grigson’s Response at 10-11. There is 

nothing complicit about that. Moreover, “a trial court is afforded considerable 

authority and discretion in . . . decertifying or modifying the class if necessary as 

the case develops.” Philadelphia Am. Life Ins. Co. v. Turner, 131 S.W.3d 576, 585 

(Tex. App.—Fort Worth 2004, no pet.). None of the Intervenors even moved the 

district court to invoke that discretion. The July 1-2, 2015, hearing was instead 

about preliminary approval of the Settlement Agreement. Even if the Preliminary 

Approval Order “might be wrong . . . [that] does not make it appealable, else all 

alleged irregularities in a class-action suit would be immediately subject to 

review.” Bally, 53 S.W.3d at 355-56. An appeal can be taken from the final 

judgment if the Settlement Agreement is ultimately approved. But Grigson and the 

Hookses lack any basis for invoking appellate jurisdiction at this time.

B. The District Court’s Preliminary Approval Order Did Not 

Fundamentally Change the Nature of the Settlement Classes

Grigson and the Hookses also claim that this Court has appellate jurisdiction 

over the Preliminary Approval Order even if the Order says nothing about 
13

certification. Grigson’s Response at 12; Hookses’ Response at 9-10. The only

case they cite for that proposition, Phillips Petroleum Co. v. Yarbrough, 405 

S.W.3d 70 (Tex. 2013), fails to support their argument. Phillips and the earlier 

case that it relies on, De Los Santos v. Occidental Chemical Corp., 933 S.W.2d 

493 (Tex. 1996) (per curiam), stand only for the “narrow” proposition that an 

order, with no express certification, is appealable only if “it alters the fundamental 

nature of the class.” Id. at 494; Phillips, 405 S.W.3d at 76.

In De Los Santos, after the district court previously certified a litigated optout class, the parties settled and the class counsel, contrary to its previous position, 

agreed to turn the opt-out class into a mandatory class, which the district court then 

certified. 933 S.W.2d at 494. The Texas Supreme Court ruled that that specific 

order was subject to an interlocutory appeal because “[c]hanging a class from optout to mandatory does not simply enlarge its membership; it alters the fundamental 

nature of the class.” Id. at 494. The Texas Supreme Court has since construed De 

Los Santos as a “narrow ruling” that only covers orders that fundamentally alter 

class certification. Bally, 53 S.W.3d at 355-56; see also Tana Oil & Gas Corp. v. 

Cernosek, No. 03-02-00096-CV, 2002 WL 536308, at *1 (Tex. App.—Austin Apr. 

11, 2002, no pet.) (dismissing appeal for lack of jurisdiction where there was “no 

fundamental change in the class certification order”); Garza, 94 S.W.3d at 328 

(“[A]n order that merely alters attributes of a class and does not affect the 
14

underlying certification of the action as a class action is not an order subject to 

interlocutory appeal under article 51.014(a)(3).”).

In Phillips, the Texas Supreme Court once again emphasized that the “ruling 

in De Los Santos is narrow.” Phillips, 405 S.W.3d at 76. In that case, involving a 

litigated class action, the class representative amended her petition after class 

certification to add a new claim; the defendant moved for a ruling to preclude 

adding the new claim as part of the class and for a new certification hearing, which 

the district court denied. Id. at 72. The Texas Supreme Court found, for that 

narrow circumstance, that appellate jurisdiction existed because the district court’s 

order “changed the fundamental nature of the class in allowing the addition of the 

claim.” Id. at 80.

Grigson and the Hookses have failed to, and could not, demonstrate that the 

Preliminary Approval Order in this case has changed or altered “the fundamental 

nature of the class[es]” that were previously certified by the district court in 2003 

and affirmed by this Court and the Texas Supreme Court. De Los Santos, 933 

S.W.2d at 494 (emphasis added). The class definitions or structure have not been 

changed in any way. Unlike Phillips and De Los Santos, there has been no change

from opt-out to mandatory. Nor has any new claim been added. Instead, while the 

Settling Parties updated their settlement in 2013 and 2015, they did not change the

nature of the classes or the claims settled, and the class definitions and 
15

fundamental settlement structure in this case have remained exactly the same since 

the 2003 certification order that was affirmed by this Court in 2009. See Ex. 13 to 

Grigson’s Response, at 5; Lubin v. Farmers Grp., Inc., No. 03-03-00374-CV, 2009 

WL 3682602 (Tex. App.—Austin Nov. 6, 2009, no pet.).

12

Grigson’s and the Hookses’ arguments in their Responses instead target 

either the Settling Parties’ maintenance of settlement terms, entered into and 

preliminarily approved in 2003, or issues that are irrelevant to certification and 

settlement approval or that pertain only to preliminary approval of the settlement’s 

terms—none of which are appealable at this time:

• Intervenors both complain about the State’s decision, as class counsel, 

to maintain the original settlement term that undistributed settlement 

proceeds will go to the Texas Unclaimed Property fund. This is a 

baseless challenge to a settlement term that not only existed in 2003 

but cannot, under Texas law, be appealed at this time;

13

• Intervenors allege that the Settling Parties, by cooperating in postsettlement efforts (as settling parties do), have somehow participated 

in “collusion.” Once again, they lack any basis for that serious 

accusation,

14 which, as shown above, is not appealable at this time;

 12 These and other facts are also in the personal knowledge of the undersigned, and so, no 

affidavit in support is needed. TEX. R. APP. P. 10.2.

13 See Cortez, 66 S.W.3d at 234 (at preliminary approval, “the proposed settlement’s terms do 

not affect the parties or the proceedings, and appellate review is premature”). This challenge and 

its erroneous citation to the Highland Homes v. State case were also fully refuted by the Texas 

Commissioner of Insurance, David Mattax, at the July 1, 2015, preliminary approval hearing. 

Ex. 2 to Reply, Tr. 94:17-96:11, 137:7-138:4, 234:11-236:18; see also id. at 71:7-74:2.

14 As the Supreme Court has made clear, the question of “collusion” turns on whether or not the 

settlement was “negotiated at arms’ length.” Gen. Motors Corp. v. Bloyed, 916 S.W.2d 949, 955 
16

• Grigson’s cursory and groundless objection to the joint representation 

of the Farmers Parties by their counsel of 13 years, from 2002 to the 

present, is irrelevant to the settlement and does not transform the 

Preliminary Approval Order into an appealable order;

15

• Grigson asserts a frivolous “ex parte” allegation, related to his denied 

Motion to Disqualify, that is not only grounded in no law or facts but 

is irrelevant to certification and the settlement;

16

• The Hookses claim, without any actual evidence, that class 

membership has changed because a “quarter” of class members “have 

likely expired” or died. Even if true, the certified classes are still the 

same, as previously recognized by the district court and even the 

Hookses’ counsel.17 In any event, Texas law is clear that modification 

of class size (which was not even done in the Preliminary Approval 

Order) does not give rise to an interlocutory appeal;18 and

 

(Tex. 1996). Intervenors do not challenge the negotiation of any settlement terms but merely 

challenge the Settling Parties’ decision to stick with the law of the case. That is not collusion. 

15 See Garza, 94 S.W.3d at 329 (“[The Texas Supreme Court] did not hold . . . that a conflict of 

interest alone, even if one is created, transforms an order that is not otherwise subject to 

interlocutory appeal into one that is.”). In any event, this “conflict” allegation was fully heard 

and rejected by the district court in December 2014 when it refused to grant Grigson’s baseless 

Motion to Disqualify opposing counsel, filed in September 2014 (12 years after the joint 

representation started) and joined in by the Hookses. Grigson and the Hookses have never 

sought a writ of mandamus from that ruling, and now it is far too late.

16 With no evidence whatsoever, Grigson continues to make the extraordinary claim that the 

mediator in this case, former Judge Patrick Keel, who presided over a mediation that Grigson 

refused to participate in, improperly contacted the district court at the Settling Parties’ request; 

this allegation was refuted by mediator Keel in his testimony at the July 1, 2015, preliminary 

approval hearing. Ex. 2 to Reply, Tr. 59:19-60:8. 

17 When the Hookses previously made this same argument, the district court rejected it and 

explained, “Whether they died or divorced or remarried or whatever, it’s still the same group of 

people”; in response, the Hookses’ counsel conceded, “Well, in the abstract, the definition is still 

the same definition.” Ex. 3 to Reply, 4/29/2014 Hearing Tr. 103 (emphasis added). The 

Hookses also previously claimed in 2014, again with no evidence, that “10 percent or so” of 

class members had died, so their “death” figure has more than doubled in just a year. Id. at 102.

18 Bally, 53 S.W.3d at 355 (“[T]he statute does not authorize an appeal of an order merely 

enlarging the size of a class or an order modifying a class’s definition.”); Garza, 94 S.W.3d at

328 (“[A] trial court’s exercise of its continuing power to alter or amend the nature of an existing 
17

• The Hookses cite several settlement updates (the enhancement of $10 

million in settlement funds to class members, a carve-out in the 

released claims, and elimination of the State’s attorneys’ fees)—but 

fail to explain how those updates alter the fundamental nature of the

Settlement Classes—as opposed to the Settlement Agreement. The

updates are preliminarily approved settlement terms that cannot be 

appealed at this time.

See Grigson’s Response at 12-14; Hookses’ Response at 4-9.

In short, Grigson and the Hookses have no basis to argue, under De Los 

Santos, Phillips, or any other Texas authority, that they can take an appeal from a

Preliminary Approval Order that effects no change to any aspect of the previously 

certified classes. This Court therefore lacks appellate jurisdiction to and cannot 

reach the merits of Grigson’s and the Hookses’ challenges to the terms of the 

settlement until after a final judgment is signed.

19 

III. A Stay of Class Notice Is Unwarranted and Would Be Unnecessary and 

Unfair to the Other Class Members

A stay of the sending of class notice is not required or supported by any 

legal, factual, or equitable basis, as demonstrated in the Appellees’ Joint Response 

to Appellant Grigson’s Emergency Motion to Stay the Sending of Class Notice 

(“Joint Response to Stay Motion”), which is incorporated here by reference. 

 

certified class by an order increasing its size does not ‘certify or refuse to certify a class’ for 

purposes of an interlocutory appeal.”).

19 In stark contrast to the evidence cited by the Settling Parties, Grigson and the Hookses cite no 

evidence from the record to support any of their allegations. This utter lack of evidence is 

particularly egregious given the severity of the baseless allegations they have lodged against the 

district court, the mediator, and the Settling Parties and their counsel in this case.
18

First, in his Response, Grigson offers no legal authority for his argument 

(which was not even raised in his Stay Motion) that class notice is somehow 

automatically stayed in this case. Instead, as demonstrated above, because Grigson 

has no basis for invoking the Court’s interlocutory appellate jurisdiction, he has no 

basis for staying any proceeding in the district court—whether automatic or 

discretionary.

Second, as refuted in the Joint Response to the Stay Motion, sending class 

notice as currently scheduled would not notify the class “of a hearing that cannot 

happen,” nor will it interfere with the appellate process. See Grigson’s Response at 

14-15; Joint Response to Stay Motion at 3-5. There is no appellate jurisdiction to 

be interfered with but, even if there were, no interference would occur. Under the 

Preliminary Approval Order and the Class Notice in this case, staying class notice 

is unnecessary even if the final hearing in this case cannot occur as scheduled 

because both documents contemplate that possibility and inform potential class 

members of it. Ex. 1 to Motion to Dismiss Grigson’s Appeal, at 9, ¶ 15; Ex. 1 to 

Motion to Dismiss Grigson’s Appeal, at Ex. 1 (Class Notice), at 9 ¶ 21. The result 

would therefore be the same as any other case where a hearing date needed to be 

moved; there is nothing “absurd” about that common occurrence.

Third, Grigson’s claim that the Court should grant a stay in 2015 because it 

granted a stay in 2003 is unavailing. In 2003, the appeal concerned the district 
19

court’s express certification decision, and the primary issue before the Court then

was whether the State could bring and certify this class action at all. See Lubin, 

222 S.W.3d at 420. Today’s circumstances are entirely different, particularly 

given the long appellate history of this case, warranting a different result. The fact 

that the district court’s class certification decision has already been the subject of a 

full round of appellate review is a reason against staying notice now, not, as 

Grigson seems to think, a reason in favor of yet further delay.

Finally, class notice will not impose any “irreparable” harm on class 

members. See Grigson’s Response at 15-16. As well-chronicled in the annals of 

this case, the district court performed the required analysis and scrutiny in 2003 

when it certified the Settlement Classes in this case that, to this day, have remained 

fundamentally the same. See Hookses’ Response at 8 (“[H]eightened scrutiny is 

required to protect the absent class members. The trial court did this in 2003.”).

And as established with evidentiary support in the Joint Response to Stay Motion, 

class notice will not be paid by “policyholders’ own money” and will not harm 

policyholders who are class members in any way. Joint Response at Stay Motion, 

at 6-7 & Exs. 1-3. Grigson, on the other hand, despite being apprised of the 

Settling Parties’ arguments and presentation of evidence, has yet to produce any

evidence to support his conclusory allegation of harm. 
20

It is instead Grigson’s and the Hookses’ improperly attempted interlocutory 

appeals and Grigson’s Stay Motion that will harm the approximately 1.8 million 

class members who have effectively been shut out of the settlement approval 

process for the past 12 years. No more delay should be allowed. Grigson and the 

Hookses had the full opportunity to participate in a full-blown preliminary 

approval hearing (the second for the Hookses and Grigson’s counsel), and they

failed in their opposition—a failure that is not appealable. The other absent class 

members are entitled to be informed of the preliminarily approved settlement as 

soon as practicable.

CONCLUSION AND PRAYER

For these reasons and those stated in their Joint Motions to Dismiss for Lack 

of Appellate Jurisdiction, the Settling Parties request that the Court: (i) expedite 

consideration of their requests; (ii) grant the Appellees’ Joint Motions to Dismiss 

Intervenors Grigson’s and the Hookses’ Appeals for Lack of Appellate 

Jurisdiction; (iii) dismiss the two appeals; and (iv) grant such other and further 

relief to which the Appellees are entitled.
21

Date: August 12, 2015 Respectfully submitted,

/s/ M. Scott Incerto

Marcy Hogan Greer

State Bar No. 08417650

mgreer@adjtlaw.com

ALEXANDER DUBOSE JEFFERSON & TOWNSEND LLP

515 Congress Avenue, Suite 2350

Austin, Texas 78701-3562

Telephone: (512) 482-9300

Facsimile: (512) 482-9303

M. Scott Incerto

State Bar No. 10388950

scott.incerto@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

98 San Jacinto Blvd., Suite 1100

Austin, Texas 78701

Telephone: 512-474-5201

Telecopier: 512-536-4598

Darryl W. Anderson

State Bar No. 24008694

darryl.anderson@nortonrosefulbright.com

Geraldine W. Young

State Bar No. 24084134

geraldine.young@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

1301 McKinney, Suite 5100

Houston, Texas 77010 3095

Telephone: 713 651 5151

Telecopier: 713 651 5246

ATTORNEYS FOR DEFENDANTS-APPELLEES FIRE 

UNDERWRITERS ASSOCIATION, FARMERS GROUP,

INC., FARMERS UNDERWRITERS ASSOCIATION,

FARMERS INSURANCE EXCHANGE, FIRE INSURANCE 

EXCHANGE, TEXAS FARMERS INSURANCE COMPANY,

MID-CENTURY INSURANCE COMPANY OF TEXAS,

MID-CENTURY INSURANCE COMPANY, FARMERS 

TEXAS COUNTY MUTUAL INSURANCE COMPANY,

TRUCK INSURANCE EXCHANGE, AND TRUCK 

UNDERWRITERS ASSOCIATION
22

Respectfully submitted,

KEN PAXTON

Attorney General of Texas

CHARLES E. ROY

First Assistant Attorney General

JAMES E. DAVIS

Deputy Attorney General for Civil Litigation

ROBERT O’KEEFE

Division Chief

Financial Litigation, Tax, and Charitable Trusts Division

/s/ Joshua R. Godbey 

JOSHUA R. GODBEY

Assistant Attorney General 

LEAD ATTORNEY

State Bar No. 24049996

Telephone: (512) 475-4209

joshua.godbey@texasattorneygeneral.gov

RYAN S. MINDELL

Assistant Attorney General

State Bar No. 24089707

Telephone: (512) 936-1721

ryan.mindell@texasattorneygeneral.gov

JENNIFER S. JACKSON

Assistant Attorney General

State Bar No. 24060004

Telephone: (512) 463-9917

jennifer.jackson@texasattorneygeneral.gov

Financial Litigation, Tax, and Charitable Trusts Division

P.O. Box 12548

Austin, Texas 78711-2548

Fax: (512) 477-2348)

ATTORNEYS FOR PLAINTIFFS-APPELLEES, THE STATE 

OF TEXAS, THE TEXAS DEPARTMENT OF INSURANCE,

AND THE TEXAS COMMISSIONER OF INSURANCE
23

CERTIFICATE OF SERVICE

On August 12, 2015, I electronically filed the Appellees’ Reply in Further 

Support of Joint Motions to Dismiss Appellants Grigson’s and the Hookses’ 

Appeals for Lack of Appellate Jurisdiction with the Clerk of the Court using the 

eFile.TXCourts.gov electronic filing system which will send notification of such 

filing to the following (unless otherwise noted below). 

Joe K. Longley

Philip K. Maxwell

1609 Shoal Creek Blvd. # 100

Austin, TX 78701

Joe@JoeLongley.com

phil@philmaxwell.com

Counsel for Appellant Charles O. 

“Chuck” Grigson

Michael J. Woods

8620 N. New Braunfels, Ste. 522

San Antonio, TX 78217

MichaelJWoods@sbcglobal.net

Pro Se Intervenor/Objector 

Joseph C. Blanks

P.O. Box 999

Doucette, TX 75942

blanxlex@gmail.com

Counsel for Appellants Gerald and 

Lesly Hooks

/s/ M. Scott Incerto

M. Scott Incerto
24

CERTIFICATE OF COMPLIANCE WITH TEX. R. APP. P. 9.4(i)

I certify that the foregoing document contains 6,966 words and complies 

with the word limit set forth in Texas Rule of Appellate Procedure 9.4(i).

/s/ M. Scott Incerto

M. Scott Incerto
25

No. 03-15-00436-CV

In the Third Court of Appeals

Austin, Texas

CHARLES O. “CHUCK” GRIGSON, 

GERALD HOOKS, AND LESLIE HOOKS,

Appellants,

v.

THE STATE OF TEXAS; THE TEXAS DEPARTMENT OF 

INSURANCE; THE TEXAS COMMISSIONER OF INSURANCE;

and FARMERS GROUP, INC. ET AL., 

Appellees.

On Appeal from the 261st Judicial District Court

Travis County, Texas

Cause No. D-1-GV-02-002501

APPENDIX TO 

APPELLEES’ REPLY IN FURTHER SUPPORT OF JOINT MOTIONS

TO DISMISS APPELLANTS GRIGSON’S AND THE HOOKSES’ 

APPEALS FOR LACK OF APPELLATE JURISDICTION

Exhibit 1

Exhibit 2

Exhibit 3

Transcript Excerpts from the September 4, 2014, Hearing on 

Motions to Strike and Motion to Lift Stay on Discovery

Transcript Excerpts from the July 1, 2015, Hearing on Joint 

Motion for Preliminary Approval

Transcript Excerpts from the April 29, 2014, Hearing on 

Preliminary Approval
Exhibit 1

TO APPELLEES’ REPLY IN FURTHER SUPPORT OF 

 JOINT MOTIONS TO DISMISS APPELLANTS GRIGSON'S AND THE

 HOOKSES' APPEALS FOR LACK OF APPELLATE JURISDICTION 
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REPORTER'S RECORD

VOLUME 1 OF 1 VOLUME

TRIAL COURT CAUSE NO. D-1-GV-02-002501

STATE OF TEXAS, THE TEXAS

DEPARTMENT OF INSURANCE,

AND THE TEXAS

COMMISSIONER OF

INSURANCE,

Plaintiffs,

VS.

FARMERS GROUP, INC.,

FARMERS UNDERWRITERS

ASSOCIATION, FIRE

UNDERWRITERS ASSOCIATION,

FARMERS INSURANCE

EXCHANGE, FIRE INSURANCE

EXCHANGE, TEXAS FARMERS

INSURANCE COMPANY,

MID-CENTURY INSURANCE

COMPANY OF TEXAS, AND

FARMERS TEXAS COUNTY

MUTUAL INSURANCE COMPANY,

Defendants.

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IN THE DISTRICT COURT

TRAVIS COUNTY, TEXAS

261ST JUDICIAL DISTRICT

-------------------------------------------------

HEARING ON MOTIONS TO STRIKE

AND MOTION TO LIFT STAY ON DISCOVERY

--------------------------------------------------

On the 4th day of September, 2014, the following

proceedings came on to be heard in the above-entitled

and numbered cause before the Honorable Scott H.

Jenkins, Judge presiding, held in Austin, Travis County,

Texas;

Proceedings reported by machine shorthand.
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A P P E A R A N C E S

FOR THE PLAINTIFFS, THE STATE OF TEXAS, THE TEXAS

DEPARTMENT OF INSURANCE, AND THE TEXAS COMMISSIONER OF

INSURANCE:

DAVID C. MATTAX

SBOT NO. 13201600

Deputy Attorney General for Defense Litigation

JOSHUA GODBEY

SBOT NO. 24049996

Assistant Attorney General

OFFICE OF THE ATTORNEY GENERAL

P.O. Box 12548

Austin, Texas 78711-2548

(512) 463-0150

FOR DEFENDANTS FIRE UNDERWRITERS ASSOCIATION, FARMERS

GROUP, INC., FARMERS INSURANCE EXCHANGE, FIRE INSURANCE

EXCHANGE, TEXAS FARMERS INSURANCE COMPANY, MID-CENTURY

INSURANCE COMPANY OF TEXAS, MID-CENTURY INSURANCE

COMPANY, FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,

TRUCK INSURANCE EXCHANGE, AND TRUCK UNDERWRITERS

ASSOCIATION:

RICHARD N. CARRELL

SBOT NO. 03871000

LAYNE KRUSE

SBOT NO. 11742550

DARRYL ANDERSON

SBOT NO. 24008694

FULBRIGHT & JAWORSKI

1301 McKinney, Suite 5100

Houston, Texas 77010-3095

(713) 651-5151

M. SCOTT INCERTO

SBOT NO. 10388950

FULBRIGHT & JAWORSKI

98 San Jacinto Boulevard, Suite 1100

Austin, Texas 78701

(512) 474-5201
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A P P E A R A N C E S

(CONTINUED)

MARCY HOGAN GREER

SBOT NO. 08417650

ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND

515 Congress Avenue, Suite 2350

Austin, Texas 78701

(512) 482-9300

FOR INTERVENORS GERALD HOOKS AND LESLY HOOKS:

JOSEPH BLANKS

SBOT NO. 02456770

LAW OFFICE OF JOSEPH C. BLANKS

P.O. Box 999

Doucette, Texas 75942

(409) 837-9707

FOR INTERVENOR MICHAEL J. WOODS:

MICHAEL J. WOODS, PRO SE

8620 N. New Braunfels #522

San Antonio, Texas 78217

(210) 822-1560
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A P P E A R A N C E S

(CONTINUED)

FOR INTERVENOR CHARLES O. "CHUCK" GRIGSON:

JOE K. LONGLEY

SBOT NO. 12542000

LAW OFFICE OF JOE K. LONGLEY

1609 Shoal Creek Boulevard, Suite 100

Austin, Texas 78701

(512) 477-4444

PHILIP K. MAXWELL

SBOT NO. 13254000

LAW OFFICE OF PHILIP K. MAXWELL

1609 Shoal Creek Boulevard, Suite 100

Austin, Texas 78701

(512) 947-5434
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I N D E X

VOLUME 1

HEARING ON MOTIONS TO STRIKE

AND MOTION TO LIFT STAY ON DISCOVERY

SEPTEMBER 4, 2014

Page Vol.

Announcements............................ 8 1

MOTION TO STRIKE INTERVENTION OF WOODS

Argument by Mr. Incerto.................. 15 1

Argument by Mr. Woods.................... 25 1

Further Argument by Mr. Incerto.......... 29 1

MOTION TO STRIKE INTERVENTION OF GRIGSON

Argument by Mr. Incerto.................. 30 1

Argument by Mr. Longley.................. 39 1

Further Argument by Mr. Incerto.......... 54 1

Comments by Mr. Mattax................... 60 1

Court's Ruling........................... 73 1

Adjournment.............................. 101 1

Court Reporter's Certificate............. 102 1
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judgment on the settlement that went up through appeals.

That has not occurred at this point. This language was

brought forward and, you know --

THE COURT: What am I to make of the

language farther up the page, though, that he didn't

cite, Farmers parties do not agree to certification of

the settlement classes for any purpose other than to

effectuate this settlement agreement?

Well, I haven't approved this settlement

agreement. In fact, I rejected it. So you are now in a

posture where you don't agree with the class action.

And in fact, you were the party who wanted the class

action 12 years ago. So it seems to me we're back at

square one with no settlement agreement, no certified

class, because no party -- I mean, you were the party

who asked for it, and now you don't agree to it,

according to your own signed document, and the State

really wasn't the one who asked for it to begin with.

So what am I to make of all that?

MR. INCERTO: Well, I have to respectfully

disagree with the Court's analysis on that. I think we

do have a class action. I believe it's law in the case

from the Supreme Court. I believe that this particular

provision --

THE COURT: Well, then is this just
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gratuitous? You put it in this -- this is the one you

signed, and you put it as part of your motion filed in

August of 2013 that you wanted me to read and consider

to approve the settlement and to approve -- well, to

approve the settlement, get preliminary approval. Now

that I have declined to do that, I mean, this is the

language that you kept in there. And you obviously gave

it a lot of attention because I looked at the changes

you made.

MR. INCERTO: Your Honor, we tried to

change as little as possible and carried forward

everything from the prior agreement except what

absolutely needed to be changed because of I said the

problem with the credit notice -- credit reports not

being --

THE COURT: Well, does that mean if I

decline to approve a settlement, this settlement, and

you're now going to litigate it -- because I went back

and read what now Justice Boyd said at the time when he

was a witness, we'll have to decide how to structure

this trial in this case. In other words, you are

agreeing to a class action trial or not?

MR. INCERTO: No, Your Honor. We agreed

for purposes of this settlement agreement --

THE COURT: Exactly.
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MR. INCERTO: -- if this Court denies the

preliminary approval.

THE COURT: Exactly. Since I've denied

it, it seems to me now there's no agreement. I've got

the State who didn't want to do it -- didn't ask to do

it to begin with, Farmers who wanted to do it because

they wanted to effectuate a settlement, and now the

Court has declined to approve the settlement. I'm just

thinking that that language is significant. You don't

think that it is, apparently.

MR. INCERTO: Your Honor, I don't think

the Court has denied preliminary approval. There's no

order denying preliminary approval of the current

settlement agreement. The Court has expressed some

concerns and some issues --

THE COURT: Well, actually, that's what we

started off with at this hearing. I thought I was

pretty clear on April 29th I'm declining to approve the

second amended settlement agreement. I thought that was

pretty clear, and I thought that you and I had that sort

of meeting of the minds at the beginning of this

hearing, but I guess if I wasn't clear, I'm hopefully

clear now. So what does that mean?

MR. INCERTO: Well, Your Honor, what it

means is we've got -- we've -- the parties have been
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working on a settlement agreement that we believe

addresses the issues that the Court has outlined.

THE COURT: And that's because you knew I

was refusing to approve this and so you worked on a new

one. You've been working since then on a new one.

MR. INCERTO: We've been working on a new

one.

THE COURT: And that makes perfect sense.

I thought you would. And so it comes back to this line

here, since I did not approve -- effectuate this

settlement agreement, I didn't approve it -- I guess

you're saying we're still trying to effectuate it. This

will be the third amended, and therefore, that's sort of

a continuation of our effort, and as long as we can

enter into a settlement agreement, we're still agreeing

to class action, but in no other circumstances.

MR. INCERTO: That's correct.

THE COURT: All right. I get it.

MR. INCERTO: Your Honor, let me address

some of the other arguments that were made and starting

with this one. Mr. Grigson wants to talk about investor

meetings and who's going to pay. It's simply like I

said in my opening remarks. They want to talk about the

merits of the issues they raise before they establish --

and frankly in lieu of establishing that they have a
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102

REPORTER'S CERTIFICATE

THE STATE OF TEXAS )

COUNTY OF TRAVIS )

I, Chavela V. Crain, Official Court

Reporter in and for the 53rd District Court of Travis

County, State of Texas, do hereby certify that the above

and foregoing contains a true and correct transcription

of all portions of evidence and other proceedings

requested in writing by counsel for the parties to be

included in this volume of the Reporter's Record, in the

above-styled and numbered cause, all of which occurred

in open court or in chambers and were reported by me.

I further certify that this Reporter's Record of

the proceedings truly and correctly reflects the

exhibits, if any, offered in evidence by the respective

parties.

WITNESS MY OFFICIAL HAND this the 10th day of

September, 2014.

/s/ Chavela V. Crain

Chavela V. Crain

Texas CSR 3064, RMR, CRR

Expiration Date: 12/31/2015

Official Court Reporter

53rd District Court

Travis County, Texas

P.O. Box 1748

Austin, Texas 78767

(512) 854-9322

*
Exhibit 2

TO APPELLEES’ REPLY IN FURTHER SUPPORT OF 

 JOINT MOTIONS TO DISMISS APPELLANTS GRIGSON'S AND THE

 HOOKSES' APPEALS FOR LACK OF APPELLATE JURISDICTION 
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1

REPORTER'S RECORD

VOLUME 1 OF 2 VOLUMES

TRIAL COURT CAUSE NO. D-1-GV-02-002501

STATE OF TEXAS, THE TEXAS

DEPARTMENT OF INSURANCE,

AND THE TEXAS

COMMISSIONER OF

INSURANCE,

Plaintiffs,

VS.

FARMERS GROUP, INC.,

FARMERS UNDERWRITERS

ASSOCIATION, FIRE

UNDERWRITERS ASSOCIATION,

FARMERS INSURANCE

EXCHANGE, FIRE INSURANCE

EXCHANGE, TEXAS FARMERS

INSURANCE COMPANY,

MID-CENTURY INSURANCE

COMPANY OF TEXAS, AND

FARMERS TEXAS COUNTY

MUTUAL INSURANCE COMPANY,

Defendants.

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IN THE DISTRICT COURT

TRAVIS COUNTY, TEXAS

261ST JUDICIAL DISTRICT

-------------------------------------------------

HEARING ON JOINT MOTION FOR

PRELIMINARY APPROVAL OF SECOND AMENDED

SETTLEMENT AGREEMENT

--------------------------------------------------

On the 1st day of July, 2015, the following

proceedings came on to be heard in the above-entitled

and numbered cause before the Honorable Scott H.

Jenkins, Judge presiding, held in Austin, Travis County,

Texas;

Proceedings reported by machine shorthand.
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A P P E A R A N C E S

FOR THE PLAINTIFFS, THE STATE OF TEXAS, THE TEXAS

DEPARTMENT OF INSURANCE, AND THE TEXAS COMMISSIONER OF

INSURANCE:

JOSHUA GODBEY

SBOT NO. 24049996

RYAN MINDELL

SBOT NO. 24089707

JENNIFER JACKSON

SBOT NO. 24060004

Assistant Attorney General

OFFICE OF THE ATTORNEY GENERAL

P.O. Box 12548

Austin, Texas 78711-2548

(512) 475-4209

FOR DEFENDANTS FIRE UNDERWRITERS ASSOCIATION, FARMERS

GROUP, INC., FARMERS INSURANCE EXCHANGE, FIRE INSURANCE

EXCHANGE, TEXAS FARMERS INSURANCE COMPANY, MID-CENTURY

INSURANCE COMPANY OF TEXAS, MID-CENTURY INSURANCE

COMPANY, FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,

TRUCK INSURANCE EXCHANGE, AND TRUCK UNDERWRITERS

ASSOCIATION:

M. SCOTT INCERTO

SBOT NO. 10388950

NORTON ROSE FULBRIGHT

98 San Jacinto Boulevard, Suite 1100

Austin, Texas 78701

(512) 474-5201

DARRYL ANDERSON

SBOT NO. 24008694

NORTON ROSE FULBRIGHT

1301 McKinney, Suite 5100

Houston, Texas 77010-3095

(713) 651-5151

MARCY HOGAN GREER

SBOT NO. 08417650

ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND

515 Congress Avenue, Suite 2350

Austin, Texas 78701

(512) 482-9300
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A P P E A R A N C E S

(CONTINUED)

FOR INTERVENORS GERALD HOOKS AND LESLY HOOKS:

JOSEPH BLANKS

SBOT NO. 02456770

LAW OFFICE OF JOSEPH C. BLANKS

P.O. Box 999

Doucette, Texas 75942

(409) 837-9707

FOR INTERVENOR MICHAEL J. WOODS:

MICHAEL J. WOODS, PRO SE

8620 N. New Braunfels #522

San Antonio, Texas 78217

(210) 822-1560

FOR INTERVENOR CHARLES O. "CHUCK" GRIGSON:

JOE K. LONGLEY

SBOT NO. 12542000

LAW OFFICE OF JOE K. LONGLEY

1609 Shoal Creek Boulevard, Suite 100

Austin, Texas 78701

(512) 477-4444

PHILIP K. MAXWELL

SBOT NO. 13254000

LAW OFFICE OF PHILIP K. MAXWELL

1609 Shoal Creek Boulevard, Suite 100

Austin, Texas 78701

(512) 947-5434
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I N D E X

VOLUME 1

HEARING ON JOINT MOTION FOR

PRELIMINARY APPROVAL OF SECOND AMENDED

SETTLEMENT AGREEMENT

JULY 1, 2015

Page Vol.

Announcements............................ 25 1

INTERVENOR GRIGSON'S WITNESSES

Direct Cross Vol.

PATRICK KEEL

By Mr. Maxwell 33 1

Page Vol.

Opening Statement by Mr. Godbey.......... 60 1

Opening Statement by Mr. Woods........... 78 1

PLAINTIFF STATE'S WITNESSES

Direct Cross Vol.

DAVID MATTAX

By Mr. Godbey 83 1

By Mr. Incerto 99 1

By Mr. Longley 106 1
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I N D E X

VOLUME 1 - CONTINUED

HEARING ON JOINT MOTION FOR

PRELIMINARY APPROVAL OF SECOND AMENDED

SETTLEMENT AGREEMENT

JULY 1, 2015

DEFENDANT FARMERS' WITNESSES

Direct Cross Vol.

SHANNON WHEATMAN

By Ms. Greer 160 1

By Mr. Maxwell 174 1

By Mr. Blanks 189 1

By Ms. Greer 200 1

By Mr. Maxwell 202 1

By Mr. Blanks 217 1

PLAINTIFF STATE'S WITNESSES

Direct Cross Vol.

DAVID MATTAX (CONTINUED)

By Mr. Longley 219 1

By Mr. Blanks 252 1

By Mr. Woods 266 1

By Mr. Incerto 283 1

By Mr. Longley 290 1

By Mr. Woods 295 1

Page Vol.

Adjournment............................... 300 1

Court Reporter's Certificate.............. 301 1
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59

he may have had information he learned about this case,

you may. I mean, I don't know.

Q. (BY MR. MAXWELL) Did you have any other

communication in which you learned things about this

case?

A. When?

Q. At any time.

A. I read about the case in the newspaper about

ten years ago, as I recall.

Q. All right. Nothing else?

A. Not to my recollection.

Q. You've read of Judge Jenkins' recollection of

this conversation as contained in the transcripts,

haven't you?

A. I have.

Q. And do you agree with those?

A. I do.

Q. All right. Well, just housekeeping,

Mr. Longley never gave you any authority to contact the

Court, did he?

A. Mr. Longley didn't participate in the

mediation, so no, he did not.

Q. All right. And you realize that it was an

ex parte contact?

THE COURT: I'm sorry. I couldn't --
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60

Q. (BY MR. MAXWELL) You realize it was an

ex parte contact with the Court, correct?

A. Mr. Maxwell, I don't agree with that. I do not

believe it is an ex parte communication when a party

chooses not to participate in a mediation and the

mediator gets the permission of the parties who do

participate to communicate with the Court. It never

occurred to me that that would be considered ex parte.

Q. Well, you have read the motion with regard to

having you testify, correct? In other words, my

response to the motion to quash, you've seen that,

haven't you?

A. I have.

Q. And you have seen the revisions that I have

quoted in the material?

A. I have.

Q. And that anything -- that any communication

with the Court where not all parties to the court

proceedings are present is an ex parte contact; you

understand that, don't you?

A. I do understand your argument.

Q. Well, the mediation statute doesn't talk about

ex parte, does it?

A. I don't believe the term ex parte appears in

the statute.
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71

THE REPORTER: Getting this deal what?

MR. GODBEY: Getting this deal forward.

Sorry. When the mold acts up --

THE COURT: Just keep the pace slow and it

solves everything.

MR. GODBEY: Exactly, Your Honor.

Your Honor, Highland Homes isn't controlling on the

decision to preliminarily approve this settlement in

this case either. Highland Homes very clearly -- the

decision in Highland Homes very clearly says at the

beginning of the discussion that in that case the

Unclaimed Property Act does not apply in that

circumstance. And to be clear, the circumstance of the

settlement in the Highland Homes case involved a

settlement with checks that would go out. The checks

were valid for 90 days at which point they become void

and then they would be cy pres to The Nature

Conservancy.

So in the Highland Homes case they never

had to address Chapter 73 of the Property Code, which is

money that's held by financial institutions, because in

the Highland Homes case it was held by financial

institutions for 90 days and then it went out in cy pres

to The Nature Conservancy.

In our case we have no such provision that
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72

voids out the checks or any such provision that

transfers money cy pres to a charitable institution. So

Chapter 73 of the Property Code becomes operative in our

case where it was not operative in the Highland Homes

decision.

The money will be transferred to the

settlement administrator. The settlement administrator

will, of course, put that money in their bank and checks

will be sent out. Those checks will be good. The

settlement money will remain in the bank account and at

which point Chapter 73.002 and 73.102 of the Property

Code become operative. The bank will be a depository

under 002 of that statute, which means they are subject

to the Unclaimed Property Act. And 102 provides the

checks that are cut that have not been cashed for three

years are presumed abandoned under the Unclaimed

Property Act. That's the difference between us and the

Highland Homes decision, because these checks will live

out there for three years, which will allow them to

become presumed abandoned by the Unclaimed Property Act

and delivered to the comptroller so that they can then

be claimed by absent class members down the road.

Furthermore, Highland Homes is really

fundamentally about the discretion of the class

representatives and the class counsel to make decisions
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73

that they feel are in the best interest of the class as

a whole. And what we feel is in the best interest of

the class as a whole, it's the same thing that we felt

in 2003 when the provision -- the unclaimed property

provision was put in the settlement agreement. It was

never objected to at the time as being in any way unfair

to the class members. We feel the Unclaimed Property

Act is the best.

A narrow reading of the Highland Homes

decision that's being advanced by the intervenors in

this case would allow for a class action structure where

you could never return funds to absent class members who

don't request those funds in a very narrow window like

the 90-day window. You would be forced under that

decision to either cy pres the funds, which would not

benefit absent class members who don't fall into that

narrow window, or the settling parties would be forced

to pro rata out the funds to the class members who do

make claims or are easily found, which, of course, would

harm absent class members and could also, depending on

the structure of the settlement, prove to be a windfall

for those class members who do assert claims or do have

current addresses. The other option would be to revert

the money back to the party defendant, which as

Your Honor well knows is highly disfavored in class
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74

action jurisprudence and really what is -- the argument

that has been --

THE COURT: You were here yesterday in

yesterday's hearing.

MR. GODBEY: Yes, Your Honor.

THE COURT: You heard that Mr. Maxwell was

suggesting that very thing. I believe that's what he

was suggesting. He'll let us know in a minute. Just

leave the money in the Exchanges. Did you hear that?

MR. GODBEY: I did, Your Honor.

THE COURT: Okay. That's where you're

going now. I thought you might.

MR. GODBEY: Yes, Your Honor. And so not

only is that reverting money to a party defendant, which

is highly disfavored, but it also does not benefit the

class as a whole. As has been argued, the class -- the

members of the class are not all current Farmers

policyholders anymore just by the passage of time.

THE COURT: He was suggesting I think

yesterday that they hold the money and just keep paying

it out over time whenever these claimants appear years

later, "I would like my money now, Exchange; please pay

me," I guess. That seems to be what he was saying

yesterday, but it was -- it was somewhat cryptic, but

that seemed to be the suggestion. Did you pick up on
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94

Commissioner Karina Casari's testimony, they were

actually claiming --

THE COURT: Slow that down a little bit.

Deputy Commissioner --

THE WITNESS: Oh, I'm sorry. Deputy

Commissioner Karina, K-a-r-i-n-a, Casari,

K[sic]-a-s-a-r-i.

I did go back and read her testimony in

preparation for this hearing, and she reminded me that

at the time Farmers was claiming that this was a

politically charged trumped-up lawsuit at the time that

had no basis in law or fact. And so I think the fact

that we were able to, through some very difficult

negotiations in 2002, provide a lot of relief to the

Farmers policyholders, I think it was a great result

then, and I think it's even a better result now.

Q. (BY MR. GODBEY) Commissioner, regarding the

disposition of unclaimed funds under the settlement

agreement, do you think that it would be fair to class

members to put those unclaimed funds back into the

Farmers Exchanges?

A. No. Let me, if I may -- and I think it may

come up at a later date. But I recently entered into a

settlement agreement with State Farm, and there was a

provision in that agreement that any unclaimed proceeds
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95

from that settlement were paid to the unclaimed property

fund. Let me explain why. The position of the

Department of Insurance is when a premium is overcharged

to a policyholder, then the company that collects that

excessive premium must return that to the policyholders.

And if the policyholders for whatever reason don't

collect it, it should go to the unclaimed property

fund --

THE REPORTER: I'm sorry. Don't collect

it?

THE WITNESS: Don't collect -- if the

policyholders --

THE COURT: For whatever reason don't

collect it is what he said.

THE WITNESS: Yes. Thank you. For

whatever reason don't collect that, then it's placed in

the unclaimed property fund to be held in perpetuity for

those policyholders. That has been the position of the

Department of Insurance in the past. That was the

position in that settlement. And until last year it had

been the position of the attorney general in all class

action settlements that the money should go into the

Unclaimed Property Act.

And so I think that it's the fairest thing

to do here, because, frankly, if you just return it to
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96

surplus, it's not going to do anything. It's just going

to sit there. And so to sort of do what the Court did

in the Highland Homes case and basically have this Court

decide to extinguish the rights of those policyholders I

think is the wrong approach.

Now, Highland Homes did say that the class

action counsel has the authority to extinguish the

rights of absent class members, and therefore, the

attorney general has the authority to do that here,

extinguish their rights and give the money somewhere

else, but I would disagree with that.

THE COURT: The court reporter's been

going -- we all have -- close to an hour and a half now.

If you need to ask another question or two to close a

topic that's okay, but we're going to need to break

soon. Is this a good break time or do you need to cover

anything else?

MR. GODBEY: Your Honor, I estimate I

probably only have five minutes left with Commissioner

Mattax. I would be happy to break now if that works

best for everyone, but if you'd rather that I break when

I pass --

THE COURT: I don't want you to feel

rushed. Five minutes comes and goes pretty quickly.

THE WITNESS: I would just -- let's all
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137

A. Correct.

Q. And the checks that come back, those are the

checks that are in play whether they stay with the

Exchanges or do they go to the unclaimed property

section of the comptroller's office?

A. Or go to a charity.

Q. Or to a charity. And y'all have chosen, at

least throughout this settlement, that it goes to the

comptroller's office.

A. It goes to the unclaimed property fund because

we think that historically has been the best way to get

the money back to the rightful owner. We do not agree

that sending it back to the defendant is a good idea,

nor do we think -- although the Highland Homes court did

say it was okay for class counsel to give it -- to

extinguish those rights and give it to a charity, we

think it better not to extinguish these people's rights

to their money and enable them to get it later through

the programs the comptroller has to find these folks on

their website. That's the appropriate way to do it.

If you have $500 in a bank account you

forgot about, the bank doesn't get to keep it to make

money on it. The bank turns that over to the unclaimed

property fund so that you may have access to get it

later. So to me, as commissioner of insurance, it's
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138

more appropriate to use the structure that the State has

set up for people to get their money than to extinguish

their rights, and I think that can be done under

Highland Homes.

Q. But the money has never left the Exchanges, has

it? They're not getting it back. It's never left if

you leave it there. Am I right?

A. I hope it leaves, because I hope the

policyholders get paid someday.

Q. Well, what I'm saying, though, is the money

hasn't left if the checks haven't been cashed?

A. The money then would be -- if after three years

the checks remain uncashed, then the money is turned

over to the comptroller, so the comptroller then has it

as unclaimed property. And pursuant to all the rules of

unclaimed property, they retain that in perpetuity for

the rightful owners of the property.

And I think what we disagree on is who is

the rightful owner of this property. And the rightful

owner of the property is the people who paid too much in

premiums, not future policyholders of Farmers, not a

charity. It's the owners of the property. And the

unclaimed property fund is the vehicle the State uses to

hold forever their rights. I am not in favor of

extinguishing their rights, which is what you're asking
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233

to get new lawyers, I'd already have a deal for those

lawyers to look at, so I would have streamlined this

process. That's the point of it.

Q. So your assumption was that the

disqualification of the lawyers would not change the

dynamics of the settlement that you were wed to?

A. That's true. I don't think it would have.

Q. Thank you.

THE COURT: Is this a good break time?

All right. We'll go ahead and break now. Let me tally

up your time so you'll know how much you've used.

You may step down if you wish.

The intervenors have used two hours and

49 minutes. The State and Farmers collectively have

used an hour and 12 minutes. I'll see you back in about

15 minutes, maybe 20. It depends on how much I'm going

to find in my office on other matters that I need to

juggle.

(Recess taken)

THE COURT: You may resume.

Q. (BY MR. LONGLEY) Mr. Mattax, I thought I heard

State's counsel say in opening that the Highland Home --

you're familiar with Highland Homes, are you not?

A. I read it a couple days ago.

Q. Okay. I thought I saw your name on some of the
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234

briefs in that. Were you actually on the briefs?

A. I could have been, because either I would have

been the division chief at the time of the briefing or

the deputy attorney general for litigation, but I didn't

read any of the underlying briefs.

Q. But the State in that case was against

Fulbright & Jaworski as well as Alexander DuBose,

correct?

A. They were wrong, but the Supreme Court

disagreed.

Q. So that didn't come out in your favor, but I

thought I heard your counsel say that the Highland Homes

case does not apply to this settlement. Did I hear that

correctly?

A. That's correct.

Q. And can you tell me why?

A. Yeah. It's rather complicated, but let me -- I

did read the case in anticipation of getting that

question. So what the Court in Highland Homes said was

when a class is certified, the class representative

makes a claim for whatever is at issue in that case.

And therefore, when the class counsel makes -- or the

class representative makes the claim, there is no

unclaimed property. Hence, if the class counsel wants

to release or extinguish the rights of class members who
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didn't get their money, he had the right to do that.

And in that case, the decision was made that any checks

that weren't cashed would go to, I guess, The Wildlife

Conservancy or something like that.

THE COURT: The Nature Conservancy.

THE WITNESS: Nature. Thank you. Thank

you, Your Honor. The Nature Conservancy.

So what that means to me is this, is that

when you are a class action counsel, you no longer have

to follow a case. But frankly, my division tried in

1995 the Snell case which said that the Unclaimed

Property Act prevented class counsel from extinguishing

the rights of class members. The Supreme Court has now

said they can extinguish the class rights if they want

to. In this settlement class counsel has chosen not to

extinguish the rights of the policyholders.

So what does that mean? What that means

is a check will be sent to all the policyholders as has

been discussed, and if that check remains uncashed, then

there is no provision for those rights to be terminated.

That payment will always -- that policyholder will

always be able to claim that payment from the claims

administrator.

So what you have there is a situation,

which I think Mr. Godbey was alluding to -- you now have
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a situation where the agreement has the claims

administrator/Farmers holding that check in perpetuity

for the rightful owner. Much as if I had $200 in a

bank, the fact that I haven't done anything with that

bank doesn't mean they can spend it. They still have to

hold it for me in perpetuity. And what the State has

done through the Unclaimed Property Act is allow

situations like that where banks are holding unclaimed

property to give it to the unclaimed property fund, and

then they would hold it in perpetuity.

So that's the distinction that I believe

class counsel is making in this case, and I believe that

is consistent with what's going on in the Highland

Homes, because the decision to extinguish the rights or

not extinguish the rights rests with class counsel. And

if that decision isn't made, then after three years the

money would go into the unclaimed property fund. That's

the way I interpret it.

Q. (BY MR. LONGLEY) Okay. And so on any check

that's not cashed, that money is still not gone. It's

still being held by the administrator; is that what you

said?

A. The admin -- well, I think the money is being

held by the -- by Farmers.

Q. Right.
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REPORTER'S CERTIFICATE

THE STATE OF TEXAS )

COUNTY OF TRAVIS )

I, Chavela V. Crain, Official Court

Reporter in and for the 53rd District Court of Travis

County, State of Texas, do hereby certify that the above

and foregoing contains a true and correct transcription

of all portions of evidence and other proceedings

requested in writing by counsel for the parties to be

included in this volume of the Reporter's Record, in the

above-styled and numbered cause, all of which occurred

in open court or in chambers and were reported by me.

I further certify that this Reporter's Record of

the proceedings truly and correctly reflects the

exhibits, if any, offered in evidence by the respective

parties.

WITNESS MY OFFICIAL HAND this the 13th day of July,

2015.

/s/ Chavela V. Crain

Chavela V. Crain

Texas CSR 3064, RMR, CRR

Expiration Date: 12/31/2015

Official Court Reporter

53rd District Court

Travis County, Texas

P.O. Box 1748

Austin, Texas 78767

(512) 854-9322

*
Exhibit 3

TO APPELLEES’ REPLY IN FURTHER SUPPORT OF 

 JOINT MOTIONS TO DISMISS APPELLANTS GRIGSON'S AND THE

 HOOKSES' APPEALS FOR LACK OF APPELLATE JURISDICTION 
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1

REPORTER'S RECORD

VOLUME 1 OF 1 VOLUME

TRIAL COURT CAUSE NO. D-1-GV-02-002501

STATE OF TEXAS, THE TEXAS

DEPARTMENT OF INSURANCE,

AND THE TEXAS

COMMISSIONER OF

INSURANCE,

Plaintiffs,

VS.

FARMERS GROUP, INC.,

FARMERS UNDERWRITERS

ASSOCIATION, FIRE

UNDERWRITERS ASSOCIATION,

FARMERS INSURANCE

EXCHANGE, FIRE INSURANCE

EXCHANGE, TEXAS FARMERS

INSURANCE COMPANY,

MID-CENTURY INSURANCE

COMPANY OF TEXAS, AND

FARMERS TEXAS COUNTY

MUTUAL INSURANCE COMPANY,

Defendants.

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IN THE DISTRICT COURT

TRAVIS COUNTY, TEXAS

261ST JUDICIAL DISTRICT

-------------------------------------------------

HEARING ON JOINT MOTION FOR

PRELIMINARY APPROVAL OF

THE SECOND AMENDED SETTLEMENT AGREEMENT

AND STIPULATION OF CLASS NOTICE

--------------------------------------------------

On the 29th day of April, 2014, the following

proceedings came on to be heard in the above-entitled

and numbered cause before the Honorable Scott H.

Jenkins, Judge presiding, held in Austin, Travis County,

Texas;

Proceedings reported by machine shorthand.
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A P P E A R A N C E S

FOR THE PLAINTIFFS, THE STATE OF TEXAS, THE TEXAS

DEPARTMENT OF INSURANCE, AND THE TEXAS COMMISSIONER OF

INSURANCE:

DAVID C. MATTAX

SBOT NO. 13201600

Deputy Attorney General for Defense Litigation

JOSHUA GODBEY

SBOT NO. 24049996

Assistant Attorney General

JAMES R. WENZEL

SBOT NO. 21179370

Assistant Attorney General, Consumer Protection

OFFICE OF THE ATTORNEY GENERAL

P.O. Box 12548

Austin, Texas 78711-2548

(512) 463-0150

FOR DEFENDANTS FIRE UNDERWRITERS ASSOCIATION, FARMERS

GROUP, INC., FARMERS INSURANCE EXCHANGE, FIRE INSURANCE

EXCHANGE, TEXAS FARMERS INSURANCE COMPANY, MID-CENTURY

INSURANCE COMPANY OF TEXAS, MID-CENTURY INSURANCE

COMPANY, FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,

TRUCK INSURANCE EXCHANGE, AND TRUCK UNDERWRITERS

ASSOCIATION:

RICHARD N. CARRELL

SBOT NO. 03871000

LAYNE KRUSE

SBOT NO. 11742550

FULBRIGHT & JAWORSKI

1301 McKinney, Suite 5100

Houston, Texas 77010-3095

(713) 651-5151

M. SCOTT INCERTO

SBOT NO. 10388950

FULBRIGHT & JAWORSKI

98 San Jacinto Boulevard, Suite 1100

Austin, Texas 78701

(512) 474-5201
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A P P E A R A N C E S

(CONTINUED)

MARCY HOGAN GREER

SBOT NO. 08417650

ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND

515 Congress Avenue, Suite 2350

Austin, Texas 78701

(512) 482-9300

FOR INTERVENORS GERALD HOOKS AND LESLY HOOKS:

JOSEPH BLANKS

SBOT NO. 02456770

LAW OFFICE OF JOSEPH C. BLANKS

P.O. Box 999

Doucette, Texas 75942

(409) 837-9707

FOR INTERVENORS RODOLFO AND ANNA VELA:

RODOLFO VELA, SR., PRO SE

1001 Coffeyville Trail

Grand Prairie, Texas 75052

(972) 639-2487

FOR INTERVENOR MICHAEL J. WOODS:

MICHAEL J. WOODS, PRO SE

8620 N. New Braunfels #522

San Antonio, Texas 78217

(210) 822-1560
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A P P E A R A N C E S

(CONTINUED)

FOR INTERVENOR CHARLES O. "CHUCK" GRIGSON:

JOE K. LONGLEY

SBOT NO. 12542000

LAW OFFICE OF JOE K. LONGLEY

1609 Shoal Creek Boulevard, Suite 100

Austin, Texas 78701

(512) 477-4444

PHILIP K. MAXWELL

SBOT NO. 13254000

LAW OFFICE OF PHILIP K. MAXWELL

1609 Shoal Creek Boulevard, Suite 100

Austin, Texas 78701

(512) 947-5434
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I N D E X

VOLUME 1

HEARING ON JOINT MOTION FOR

PRELIMINARY APPROVAL OF

THE SECOND AMENDED SETTLEMENT AGREEMENT

AND STIPULATION OF CLASS NOTICE APRIL 29, 2014

Page Vol.

Announcements.......................... 7 1

Argument by Mr. Mattax................. 21 1

Argument by Mr. Carrell................ 66 1

Argument by Mr. Blanks................. 95 1

INTERVENOR HOOKS WITNESSES

Direct Cross Vol.

DAN ROSENTHAL

By Mr. Blanks 107 1

By Ms. Greer 120 1

Page Vol.

Adjournment.............................. 142 1

Court Reporter's Certificate............. 143 1
102

MR. BLANKS: Right.

THE COURT: But in terms of composing the

class, people who bought HOA policies and who allegedly

were overcharged for that are the rate class, right?

MR. BLANKS: Well --

THE COURT: We know what the discount

class is. We know what the credit class is. And why

would we -- other than carving out Geter, why would we

go back and have to litigate that all over again because

those people are still those people who were affected by

that?

MR. BLANKS: Well, Mr. Mattax said that

the settlement hadn't been modified, the class hadn't

been modified, but I say the class has modified itself.

In 11 years, probably 10 percent or so of those people

have died. Another 7, 8, 9, 10, 12 percent have

divorced.

THE COURT: Well, the people you say who

fall within the retrospective rate -- let's talk about

the first class, the rate class. That's simple; can you

agree? So you're saying in the retrospective rate

compensation group, something you already heard me

concerned about there being no interest -- I'm not so

concerned about no interest for the first couple years

when everybody would have thought we might have finished
103

this, but no interest for a decade is concerning me, as

you know. But we want to finish this settlement -- or

they want to finish this settlement and compensate those

people. And you're saying, well, some of them have

died. Well, then it would go to their estate. Some of

them are divorced. Well, it would be part of the

marital estate. Hopefully it was accounted for, but

maybe not. Maybe they didn't even know it was in their

marital estate because they didn't know about the class.

So that's going to be very interesting.

I can't imagine -- I can't -- in my

14 years, I don't think I've dealt with that where we

didn't know that was in the estate. But, I mean, those

things can be accounted for. It's still, though, the

people who were the HOA people. So I'm not

understanding you is what I'm saying. That's still that

same group of people. Whether they died or divorced or

remarried or whatever, it's still the same group of

people.

MR. BLANKS: Well, in the abstract, the

definition is still the same definition --

THE COURT: Yes.

MR. BLANKS: -- and you define the same

class, but I'm just saying the makeup of the class has

drastically changed. I don't know how the advocates
104

deal with it. I assume that they can, but it's

definitely a different class. And how you define the

class today perhaps should be changed too.

THE COURT: Well, how -- I will need a

written definition from you assuming that -- and you

have to understand that I -- I was satisfied that they

met the class requirements that the attorney general is

required to meet. There was some argument about whether

adequacy of representation is one. I thought it was

because it was an argument of collusion that they

couldn't adequately represent. But we did all of that.

We did all of the standards for class certification. I

don't want to redo them.

MR. BLANKS: I appreciate that.

THE COURT: So what I need from you is

evidence that shows me that I have to revise in some way

this class, which I've already decided is worthy of

being a class, and I'm not going to go backwards on

that, and carving out Geter, which I know you embrace,

and some other tweaking of the settlement before I can

embrace its possible fairness, and you already heard

those rhetorical questions. So I will need from you

evidence about how it is I'm supposed to change the

settlement, like with interest, what that interest

should be, or what to do about people who died. I don't
143

REPORTER'S CERTIFICATE

THE STATE OF TEXAS )

COUNTY OF TRAVIS )

I, Chavela V. Crain, Official Court

Reporter in and for the 53rd District Court of Travis

County, State of Texas, do hereby certify that the above

and foregoing contains a true and correct transcription

of all portions of evidence and other proceedings

requested in writing by counsel for the parties to be

included in this volume of the Reporter's Record, in the

above-styled and numbered cause, all of which occurred

in open court or in chambers and were reported by me.

I further certify that this Reporter's Record of

the proceedings truly and correctly reflects the

exhibits, if any, offered in evidence by the respective

parties.

WITNESS MY OFFICIAL HAND this the 12th day of May,

2014.

/s/ Chavela V. Crain

Chavela V. Crain

Texas CSR 3064, RMR, CRR

Expiration Date: 12/31/2015

Official Court Reporter

53rd District Court

Travis County, Texas

P.O. Box 1748

Austin, Texas 78767

(512) 854-9322