UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIR E

James Scott et al .

V .

First American Title

Insurance CompanV

Civil No . 06-cv-286-JD

O R D E R

The plaintiffs, James and Sue Scott and Stephen and Ellen

St . Louis, brought a putative class action against First American

Title Insurance Company, alleging breach of the duty of good

faith and fair dealing and unjust enrichment . After a year of

litigation, the parties reached a settlement . The parties have

renewed their joint motion for preliminary approval of a

settlement class and of their settlement stipulation . In support

of their motion, the parties filed their proposed stipulation

with three amendments, an unsigned copy of a release to be signed

by the representative plaintiffs, a notice of the case to

potential class members, a claim form, an exclusion form, a

proposed order granting preliminary approval of the stipulation,

a proposed final order and judgment, a proposed summary notice of

the class action and final hearing, and three declarations

related to the numbers of potential claimants .

Case 1:06-cv-00286-JD Document 74 Filed 11/05/08 Page 1 of 11
I . Preliminary Class Certification

A . Class Definition

The parties have agreed to a definition of the conditional

class for settlement purposes . Although the parties cite Section

V(B)(8) of the Stipulation for their agreed class definition, the

cited section pertains to discovery . The agreed definition is

instead found in the definitions section of the Stipulation, as

follows :

"Class" or "Class Members" means all owners of New

Hampshire property who, during the Class Period,

refinanced mortgages on such property within ten years

after the date of the issuance of a prior lenders [sic]

policy of title insurance insuring a mortgage covering

the same property, where there was no change in

ownership, and who paid a premium for a lenders policy

of title insurance issued by First American in an

amount in excess of the Reissue Rate .

"Class Period" means the period of time from June 30, 2003,

through December 31, 2007 .

Stipulation, V(A)(8) & (9) .

B . Class Claims and Defense s

The plaintiffs represent that institutional mortgage lenders

require mortgage insurance to protect the security of their

loans . When a homeowner refinances a recent mortgage, the

insurer relies on the prior policy and conducts only an

abbreviated title examination . Because of the shortened process ,

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insurers offer a reduced premium rate for refinancing recent

mortgages .

The plaintiffs allege that First American offered a lower

"reissue" rate for mortgage insurance when borrowers refinanced

their mortgages within ten years of the original mortgage . They

also allege that their transactions, refinancing mortgages, were

eligible for First American's lower reissue rate but they were

charged the full standard rate . They contend that by charging

them the full rate, First American breached the implied covenant

of good faith and fair dealing, or alternatively, that First

American was unjustly enriched by the excess premium charges .

First American denies all wrong doing and liability and

asserts that its practices complied with New Hampshire law . In

addition, First American contends that the named plaintiffs do

not have valid claims because they did not produce their prior

policies when they refinanced their mortgages and that its agents

were not required to provide the reissue rate . Although First

American has agreed to the conditional class for purposes of

settlement only, it otherwise contests certification of a class

because individual investigations would be required as to each

transaction, making the proposed class unmanageable .

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C . Class Certification Requirement s

In response to the parties' previous motions, the court has

determined that the requirements of Federal Rule of Civil

Procedure 23(a) have been satisfied as to numerosity,

commonality, and typicality . The court also determined that the

proposed class met the requirements of Rule 23(b)(3) . The

question of whether the adequacy requirement under Rule 23(a) was

satisfied remained to be resolved, because of the potential for a

conflict of interest based on the size of the settlement fund .

Under the proposed stipulation, the settlement fund would

initially hold $166,666 . In addition, First American would also

pay administrative costs of $74,200, attorneys' fees of $83,333,

and $6,000 to the class representatives . First American's total

liability under the settlement would be capped at $330,200 ,

unless the total amount of claimant shares exceeded $333,333 . A

claimant share is the difference between the premium paid by the

class member and the applicable refinance rate .

Class members would receive 100% of their claimant shares

only if the total amount of the claimant shares does not exceed

$166,666 . If the total exceeds $166,666 but is less than

$333,333, the claimant shares would be reduced on a pro rata

basis so that the total amount would be no more than $166,666 .

Under that calculation, the claimant shares could not be reduce d

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more than 50%, so that class members would receive at least 50 %

of their claimant shares . If the total amount of claimant shares

exceeds $333,333, each share would be reduced by 50%, and First

American would have to supplement the settlement fund to pay the

additional amounts . The cap on First American's maximu m

liability, provided in the amendment to Section V(B)(2), does not

apply if the total amount of claimant shares exceeds $333,333 .

Originally, the named plaintiffs were to receiv e

representative fees of $3,000 for each couple . That provision

has been changed to allow the named representatives to apply to

the court for representative fees . The change, which puts the

named plaintiffs on equal footing with other class members unless

the court decides that the representative fee is appropriate,

removes the conflict issue as to payment of the representative

fees .

As construed, the proposed conditional class for purposes of

settlement meets the requirements of Rule 23(a) and Rule

23(b)(3) .

D . Class Counse l

Generally, the court must appoint class counsel when a class

is certified . Fed . R . Civ . P . 23(g)(1) . In the process of

appointing class counsel, the court must consider the factor s

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provided in Rule 23(g)(1)(A), may consider other pertinent

factors, and must determine that class counsel will "fairly and

adequately represent the interests of the class ." Fed . R . Civ .

P . 23(g)(1), (2), & (4) . The required considerations are the

work counsel has done to identify or investigate potential

claims ; counsel's experience in complex actions, class actions,

and similar cases ; counsel's knowledge of the applicable law, and

the resources that will be committed to the case . Fed . R . Civ .

P . 23(g)(1)(A) .

The plaintiffs' counsel is Edward K . O'Brien of the O'Brien

Law Firm, PC . O'Brien has had prior experience representing

banks and mortgage companies in regulatory matters . He now

focuses on representing consumers in challenges to lending and

business practices in both individual and class actions . He

lists more than fifty class action cases in which he represented

consumer plaintiffs . O'Brien states in his affidavit that he

also stays informed of similar cases pending in other states .

In connection with mortgage insurance reissue rate cases,

O'Brien and his associate reviewed mortgage and title records

online to determine whether the transactions were eligible for

the reissue insurance rate, reviewed HUD settlement statements,

interviewed title insurance agents about insurance transactions,

and interviewed the plaintiffs and other potential class members .

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Based on his research, O'Brien decided to pursue a statewide

class action of homeowners seeking relief from First American's

practices with respect to insurance on mortgage refinancing .

O'Brien states that he has and will continue to contribute

substantial resources to this case . In addition, under the terms

of the parties' settlement stipulation, First American agrees to

provide $74,200 for an "Administration Fund" that O'Brien will

use to pay the costs of notice and other mailings to the class

and to administer the settlement . The O'Brien Law Firm is

responsible for any costs in excess of the fund provided by First

American .

The plaintiffs have satisfied the requirements of Rule

23(g)(1)(A) . The O'Brien Law Firm is appointed as class counsel

for the purpose of providing notice and other mailings to

potential class members and administering the settlement .

E . Conditional Class Certificatio n

The proposed class is conditionally certified for purposes

of settlement only, without prejudice to First American's right

to contest class certification if the proposed settlement,

contained in the parties' stipulation, is not fully implemented .

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II . Preliminary Approval of Proposed Settlemen t

As discussed in the court's order issued on June 24, 2008, a

proposed settlement of a class action may be given preliminary

approval if the settlement appears to be "fair, reasonable, and

adequate ." Fed . R . Civ . P . 23(e)(2) . For purposes o f

preliminary approval, the court considers whether the proposed

settlement is illegal or collusive . Tenn . Assoc . of Health

Maintenance Oras ., Inc . v . Grier , 262 F .3d 559, 565 (6th Cir .

2001) . If the proposed settlement appears to meet the standard

of being fair, reasonable, and adequate, it may be approved,

preliminarily, as within the range of possible approval . See

Colella v . Univ . of Pittsburgh, 569 F . Supp . 2d 525, 527 (W .D .

Pa . 2008) .

In this case, the court is satisfied that the proposed

settlement is neither illegal nor collusive . The structure of

payment of class shares, which guarantees a share that is at

least 50% of each class member's loss, appears to be fair,

reasonable, and adequate . Because the representative fee to be

paid to the named plaintiffs is now left to the discretion of the

court, that provision does not unfairly favor the named parties .

Therefore, the proposed settlement is granted preliminary

approval .

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III . Settlement Notice, Forms, Summary Notic e

When parties propose a settlement of a class action, "[t]he

court must direct notice in a reasonable manner to all class

members who would be bound by the proposal ." Fed . R . Civ . P .

23(e)(1) . In addition, due process requires that notice be

"reasonably calculated to reach interested parties ." Fidel v .

Farley , 534 F .3d 508, 513 (6th Cir . 2008) (internal quotation

marks omitted) . For classes certified under Rule 23(b)(3), "the

court must direct to class members the best notice that is

practicable under the circumstances, including individual notice

to all members who can be identified through reasonable effort ."

Fed . R . Civ . P . 23(c)(2)(B) . Notice for a Rule 23(b)(3) class

must

clearly and concisely state in plain, easily understood

language : (i) the nature of the action ; (ii) the

definition of the class certified ; (iii) the class

claims, issues, or defenses ; (iv) that a class member

may enter an appearance through an attorney if the

member so desires ; (v) that the court will exclude from

the class any member who requests exclusion ; (vi) the

time and manner for requesting exclusion ; and (vii) the

binding effect of a class judgment on members under

Rule 23(c)(3) .

Fed . R . Civ . P . 23(c)(2)(B) .

The plaintiffs propose to provide individual notice to

potential class members . After a succinct statement of the

potential for payment and a warning of the effect of th e

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settlement, the notice addresses potential class members a s

follows :

TO : ALL OWNERS OF NEW HAMPSHIRE PROPERTY WHO

REFINANCED THEIR MORTGAGES BETWEEN JUNE 30, 2003 AND

THROUGH JULY _, 2007 AND PAID FOR A LENDERS POLICY OF

TITLE INSURANCE ISSUED BY FIRST AMERICAN TITLE

INSURANCE COMPANY AND WERE ELIGIBLE FOR, BUT WHO DID

NOT RECEIVE A "REISSUE RATE" DISCOUNT ON THE LENDERS

POLICY OF TITLE INSURANCE .

Exhibit 3, ex . C . The ending date of the class period should be

changed to December 31, 2007 . Stipulation, V(A)(9) . The notice

provides the definition of class members, which again should have

the class period amended to conform to the stipulation . The

notice discusses the class's claims and the nature of the action,

in a section titled "What This Lawsuit Is About ." In the section

titled "Summary of the Settlement," the notice explains that

class members will receive between 50% to 100% of the difference

between the amount they paid in premiums and the amount they

should have paid . The discussion of payment of class

representatives' fees should be amended to indicate that the fees

must be approved by the court .

The proposed notice explains that class members have a right

to attend the final settlement hearing and that they can be

represented by counsel or can represent themselves . The notice

also addresses exclusion and clearly and understandably explains

the effect of exclusion and the procedure for requesting it . The

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binding effect of a class judgment is also explained .

Therefore, the proposed notice meets the requirements o f

Rule 23(c)(2)(B) and Rule 23(e)(1) . The claim and exclusion

forms and the summary notice (if the class period dates were

changed to conform to the stipulation) are approved .

Conclusion

For the foregoing reasons, the parties' joint motion fo r

preliminary approval (document no . 73) is granted . Class counsel

shall send notice to potential class members as provided in this

order .

The final fairness hearing will be held on Thursday, March

12, 2009, at 10 :00 a .m .

SO ORDERED .

/s/ Joseph A . DiClerico, Jr .

Joseph A . DiClerico, Jr .

United States District Judge

November 5, 200 8

cc : Edward O'Brien, Esq .

Charles Newman, Esq .

Christopher Baucom, Esq .

Douglas King, Esq .

Elizabeth Ferrick, Esq .

Wilbur Glahn, III, Esq .

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