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Kemp v. Tower Loan of Mississippi, LLC

United States District Court, S.D. Mississippi, Northern Division

August 8, 2017




         Class Representatives, Barbara J. Kemp and Tijuanna Hall, have filed their motion for preliminary approval of class action settlement and certifying settlement class. Docket No. 77. Defendants Tower Loan of Mississippi, LLC (“TLM”) and First Tower Loan, LLC (“FTL”; TLM and FTL are referred to collectively as “Tower”) have agreed to a settlement, the terms and conditions of which are set forth in an executed Settlement Agreement and Release (the “Settlement”), which has been filed with the Court. The Court held a hearing on July 31, 2017, and counsel for the parties, to the satisfaction of Court, addressed all issues raised by the Court. The Agreement requires, among other things, notice to the class members and a final hearing.

         Having reviewed the terms and conditions of the Settlement Agreement and being satisfied with the responses to the Court's inquiries at the hearing, upon preliminary examination, the proposed settlement appears fair, reasonable and adequate. A hearing shall be held on December 18, 2017, after notice to the class members, to confirm that the proposed settlement is fair, reasonable and adequate, and to determine whether a Final Order and Judgment should be entered in this lawsuit. A brief explanation of how we reached this point is appropriate.

         I. Factual and Procedural History

         Plaintiffs filed this action in July 2015, alleging that defendant, Tower Loan of Mississippi, LLC, violated the Truth in Lending Act, 15 U.S.C § 1601 et seq. (“TILA”), as amended by the Home Ownership and Equity Protection Act of 1994 (“HOEPA”), and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and implementing Regulation Z, 12 C.F.R part 1026 in connection with mortgage loans it made in Southern Mississippi. Plaintiffs filed an Amended Complaint in January 2016, clarifying their legal theories. Plaintiffs filed a Second Amended Complaint in September 2016, adding First Tower Loan, LLC as a defendant because one of the plaintiffs' loans had been issued by FTL. At the heart of plaintiffs' claims was the assertion that defendants violated these laws and regulations when they made certain mortgage loans without making certain required disclosures.

         The defendants answered the charges, raised numerous defenses and asserted counterclaims and opposed the certification of a class. The parties engaged in extensive written discovery and exchange of documents including a random sample of class member loan files. The parties participated in three court-ordered settlement conferences with United States Magistrate Judge Linda R. Anderson. The parties reached the Settlement through arm's-length negotiations following settlement conferences with the Magistrate Judge. They have now presented the Settlement to this Court for preliminary approval.

         Under the Settlement, subject to the terms and conditions therein and subject to Court approval, Plaintiffs and the proposed Settlement Class would fully, finally, and forever resolve, discharge, and release their claims in exchange for Tower's interest rate reduction of 1.254% on mortgage loans made to Settlement Class Members during the Class Period, without admission of liability by Tower, plus attorneys' fees and costs to Class Counsel, not to exceed $150, 000.00, and Service Awards to Class Representatives, not to exceed $5, 000.00 per named Class Representative, to create a fund to benefit the Settlement Class. In addition, Tower has agreed to pay all fees and costs associated with providing notice to the Settlement Class and for Settlement Administrator implementation of the Settlement.

         The Settlement has been filed with the Court, and Plaintiffs and Class Counsel filed an Unopposed Motion for Preliminary Approval of Class Settlement and for Certification of the Settlement Class (the “Motion”). Upon considering the Motion and exhibits thereto, the Settlement, the record in these proceedings, the representations and recommendations of Class Counsel, and the requirements of law, the Court finds that: (1) this Court has jurisdiction over the subject matter and parties to these proceedings; (2) the proposed Settlement Class meets the requirements of Federal Rule of Civil Procedure 23 and should be certified for settlement purposes only; (3) the persons and entities identified below should be appointed Class Representatives and Class Counsel; (4) the Settlement is the result of informed, good-faith, arm's-length negotiations between the parties and their capable and experienced counsel and is not the result of collusion; (5) the Settlement is within the range of reasonableness and should be preliminarily approved; (6) the proposed Notice program and proposed form of Notice satisfy Federal Rule of Civil Procedure 23 and constitutional due process requirements, and are reasonably calculated under the circumstances to apprise the Settlement Class of the pendency of the Action, class certification, the terms of the Settlement, Class Counsel's application for an award of attorneys' fees and expenses (“Fee Application”) and request for Service Awards for Plaintiffs, and their rights to opt-out of the Settlement Class and object to the Settlement, Class Counsel's Fee Application, and/or the request for Service Awards for Plaintiffs; (7) good cause exists to schedule and conduct a Final Approval Hearing, pursuant to Federal Rule of Civil Procedure 23(e), to assist the Court in determining whether to grant final approval of the Settlement and enter Final Judgment, and whether to grant Class Counsel's Fee Application and request for Service Awards for Plaintiffs; and (8) the other related matters pertinent to the preliminary approval of the Settlement should also be approved.

         Based on the foregoing, IT IS HEREBY ORDERED AND ADJUDGED as follows:

         1. As used in this Order, capitalized terms shall have the definitions and meanings accorded to them in the Settlement.

         2. The Court has jurisdiction over the subject matter and parties to this proceeding pursuant to 15 U.S.C. § 1640 and 28 U.S.C. § 1331. Specifically, the Court finds that Plaintiffs have standing to bring their claims outlined under TILA, as amended because they properly allege they (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendants, and (3) that is likely to be redressed by a favorable judicial decision. See, e.g., Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016).

         3. Venue is proper in this District.

         Provisional Class Certification and Appointment of Class Representatives and Class Counsel

         4. In deciding whether to provisionally certify a settlement class, a court must consider the same factors that it would consider in connection with a proposed litigation class - i.e., all Rule 23(a) factors and at least one subsection of Rule 23(b) must be satisfied - except that the Court need not consider the manageability of a potential trial, since the settlement, if approved, would obviate the need for a trial. In re Deepwater Horizon, 739 F.3d 790, 818 (5th Cir. 2014), cert. denied, 135 S.Ct. 754 (2014); Amchem Products, Inc. v. Windsor, 521 U.S. 591, 620 (1997).

         5. The Court finds, for settlement purposes, that the Federal Rule of Civil Procedure 23 factors are present and that certification of the proposed Settlement Class is appropriate under Rule 23. The Court, therefore, provisionally certifies the following Settlement Class:

All Borrowers of any Mortgage Loan with Tower that has a Date of Loan from June 1, 2013 through and including November 3, 2015.

         6. Specifically, the Court finds, for settlement purposes, that the Settlement Class satisfies the following factors of Federal Rule of Civil Procedure 23:

(a) Numerosity: In the Action there are approximately 405 potential class members in at least two states (Mississippi and Louisiana). Their joinder is impracticable. Thus, the Rule 23(a)(1) numerosity requirement is met. See Pederson v. La. State Univ., 213 F.3d 858, 868 (5th Cir. 2000); Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 624 (5th Cir. 1999), cert. denied, 528 U.S. 1159 (2000) (numerosity satisfied where it would be difficult or inconvenient to join all of the class members). See also McWilliams v. Advanced Recovery Sys., Inc., 310 F.R.D. 337, 339 (S.D.Miss. 2015) (where class consisted of hundreds of members joinder of all members determined to be impracticable) (citing Fed.R.Civ.P. 23(a)(1)).
(b) Commonality: The threshold for commonality under Rule 23(a)(2) is not high. The bar for proving commonality is met when there is at least one issue whose resolution will affect all or a significant number of the putative class members. Lightbourn v. Cty. of El Paso, Tex., 118 F.3d 421, 426 (5th Cir. 1997), cert. denied, 522 U.S. 1052 (1998). This Action satisfies the commonality requirement because there are questions of law and fact common to the Settlement Class that center on Tower's loan documentation and class-wide practices. See Fed. R. Civ. P. 23(a)(2); see also In re Checking Account Overdraft Litig., 275 F.R.D. 666, 673-74 (S.D. Fla. 2011), pet. for leave to appeal denied, No. 11-90012 (11th Cir. Oct. 7, 2011). Forcing each potential class member to proceed individually to prove the facts which center on Tower loan documentation and class-wide practices would run counter to the spirit of Rule 23. See Walton v. Franklin Collection Agency, Inc., 190 F.R.D. 404, 409 (N.D. Miss. 2000).
(c) Typicality: Plaintiffs' claims are typical of the Settlement Class for purposes of this settlement because they concern the same alleged practices, arise from the same legal theories, and allege the same types of entitlement to relief. Rule 23(a)(3) is therefore satisfied. See Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th Cir. 2002) (for the typicality prong, “the critical inquiry is whether the class representative's claims have the same essential characteristics of those of the putative class.”)
(d) Adequacy: Adequacy under Rule 23(a)(4) relates to: (1) whether the proposed class representatives have interests antagonistic to the Settlement Class; and (2) whether the proposed class counsel has the competence to undertake the litigation at issue. See Stirman, 280 F.3d at 563. Rule 23(a)(4) is satisfied here because plaintiffs will fairly and adequately protect the interests of the class. There are no conflicts of interest between the Plaintiffs and the Settlement Class, and Plaintiffs have retained competent counsel to represent them and the Settlement Class. Class Counsel here regularly engage in consumer class litigation and other complex litigation similar to the present Action, and have dedicated substantial resources to prosecuting the Action. Their experience is extensive, see Docket No. 2-1, and satisfies the considerations of Rule 23(g). Moreover, the Plaintiffs and Class Counsel have vigorously and competently represented the Settlement Class Members' interests in the Action.
(e) Predominance and Superiority: Rule 23(b)(3) is satisfied for settlement purposes, as well, because the common legal and alleged factual issues here predominate over individualized issues, and resolution of the common issues for hundreds of Settlement Class Members in a single, coordinated proceeding is superior to many individual lawsuits addressing the same legal and factual issues. With respect to predominance, Rule 23(b)(3) requires that “the questions of law or fact common to class members predominate over any questions affecting only individual members, and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3); Unger v. Amedisys Inc., 401 F.3d 316, 320 (5th Cir. 2005) (“The predominance element requires a finding that common issues of law or fact predominate over any questions affecting only individual members.”). Based on the record currently before the Court, the predominance requirement is satisfied here for settlement purposes because common questions present a significant aspect of the case and can be resolved for all Settlement Class Members in a single common judgment. The Court finds that a class action is the superior method to adjudicate this controversy. See McWilliams, 310 F.R.D. at 340.

         7. Consistent with the terms of the Second Amended Complaint, the Court appoints the following persons as Class ...

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