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Kemp v. Tower Loan of Mississippi, LLC

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

December 20, 2017




         On November 27, 2017, Plaintiffs and Class Counsel filed their Motion for Final Approval of Class Settlement (Dkt. No. 80; the “Motion”), seeking Final Approval of the Settlement Agreement and Release (“Settlement” or “Agreement”; capitalized terms that are not defined herein have the meanings given in the Agreement) with Tower Loan of Mississippi, LLC (“TLM”) and First Tower Loan, LLC (“FTL”; TLM and FTL are referred to collectively herein as “Tower”). The Settlement Agreement and Release contains provisions authorizing service awards to the named plaintiffs. Class counsel filed a separate petition for attorney's fees. Dkt. No. 81. Counsel supported each motion with a separate memorandum. See Dkt. Nos. 81, 83 and 85. On December 18, 2017, a Final Approval Hearing was held pursuant to the Court's Preliminary Approval Order dated August 8, 2017. See Dkt. No. 79. The Court reviewed all of the filings related to the Settlement and heard from counsel for both parties.

         The Court confirms that it has jurisdiction over this matter and the parties to it. After carefully considering the parties' presentations, the Court concludes that the Settlement constitutes a satisfactory result for the Settlement Class under the circumstances and challenges presented by the Action. The Court specifically finds that the Settlement: (i) is fair, reasonable, and adequate; (ii) is a satisfactory compromise of the Settlement Class Members' claims; and (iii) fully complies with Fed.R.Civ.P. 23(e). The Court therefore grants Final Approval to the Settlement, certifies the Settlement Class, and awards the fees and costs requested by Class Counsel, as well as the requested Service Awards for the representative Plaintiffs.


         The present evidentiary record is more than adequate for the Court to consider the fairness, reasonableness, and adequacy of the Settlement. A fundamental question is whether the district judge has sufficient facts before him to evaluate and intelligently and knowledgeably approve or disapprove the settlement. In re General Tire & Rubber Co. Sec. Litig., 726 F.2d 1075, 1084 n.6 (6th Cir. 1984) (citing Detroit v. Grinnell, 495 F.2d 448, 463-68 (2d Cir. 1974)). In this case, the Court clearly has such facts before it in considering the Motion, including the evidence and opinions of Class Counsel.

         A. Factual and Procedural Background

         1. On July 8, 2015, Plaintiffs Barbara J. Kemp and Tijuanna Hall filed a class action complaint in the United States District Court for the Southern District of Mississippi against TLM in which they asserted class and individual claims based on alleged violations of the Truth in Lending Act, 15 U.S.C. §1601 et seq., as amended, and implementing Regulation Z, 12 C.F.R. Part 1026. Plaintiffs sought inter alia, monetary damages, rescission, and attorney's fees and costs. Plaintiffs also moved for class certification against TLM.

         2. On September 30, 2015, TLM filed its answer to the Action, denying any and all wrongdoing and liability whatsoever and asserting various affirmative defenses.

         3. Following a telephonic conference held on January 15, 2016, this Court denied Plaintiffs' motion to certify class without prejudice and granted Plaintiffs leave to amend their complaint. Plaintiffs filed their first amended complaint that same day.

         4. TLM answered the first amended Complaint, and the Parties proceeded to conduct discovery.

         5. On June 24, 2016, the Parties participated in a court-ordered settlement conference with United States Magistrate Judge Linda R. Anderson. Although an agreement was not reached at the conclusion of this conference, the Parties agreed to continue settlement discussions with the assistance of Magistrate Judge Anderson.

         6. On August 9, 2016, the Parties participated in a second settlement conference with Magistrate Judge Anderson. An agreement was not reached, but it was agreed that the deadline for Plaintiffs to amend their complaint could be extended.

         7. Following the settlement conference, Magistrate Judge Anderson entered an order that extended the deadline to amend pleadings until August 26, 2016 and that stayed all remaining deadlines until further order of the Court.

         8. On September 7, 2016, Plaintiffs filed a second amended complaint that added FTL as a defendant. FTL and TLM each answered the second amended complaint by denying all wrongdoing and liability and by asserting various affirmative defenses.

         9. The Parties continued to pursue settlement of the Action and, at the request of counsel, Magistrate Judge Anderson conducted a third settlement conference on December 21, 2016. The case did not settle, but counsel agreed to continue to confer.

         10. In the absence of a settlement, a telephonic scheduling conference was held before Magistrate Judge Anderson on January 12, 2017. Thereafter, on January 19, 2017, the Court issued its scheduling order on class certification.

         11. After further discussions, the Parties reached an agreement in principal to settle the Action in its entirety without any admission of liability, with respect to all claims of the Settlement Class and all claims of the individual Plaintiffs, subject to the drafting and execution of a mutually acceptable final settlement agreement.

         12. Following further negotiating at arms-length, the Parties finalized the Agreement, which the Parties intend to bind Plaintiffs, Tower, and all members of the Settlement Class who do not request on a timely basis in accordance with the terms of a Court-approved notice to be excluded from the Settlement. In satisfaction of Fed.R.Civ.P. 23(e)(3), a copy of the Agreement was provided to the Court with the motion seeking the entry of the Preliminary Approval Order.

         13. The Court granted the motion seeking the entry of the Preliminary Approval Order and entered the Preliminary Approval Order on August 8, 2017. See Dkt. No. 79.

         14. In accordance with the Court's Preliminary Approval Order, on September 20, 2017, actual notice was sent by first class mail to all Settlement Class Members by (the “Class Administrator”). A total of 405 separate loans are part of the Settlement Class. The Class Administrator mailed the notice separately to each co-borrower for each loan, for a total of 576 notices mailed. Of the notices initially mailed, 17 were returned by the post office, 13 of the returned notices were successfully redelivered to new addresses. One class member has been reported as deceased.

         15. In accordance with the Court's Preliminary Approval Order, the Class Administrator established a toll-free telephone number to answer questions from Settlement Class Members.

         16. In satisfaction of Fed.R.Civ.P. 23(e)(2), counsel for the Parties timely appeared before the Court on December 18, 2017 for the Final Approval Hearing to determine whether (i) the Action satisfies the applicable prerequisites for class action treatment; (ii) the proposed settlement is fundamentally fair, reasonable, adequate; and (iii) the proposed settlement is in the best interest of the Settlement Class Members and should be approved by the Court.

         17. Settlement Class Members were given an opportunity to object to the settlement. No Settlement Class Members objected to the Settlement. The Settlement Class Members who made valid and timely requests for exclusion are excluded from the class and settlement and are not bound by this Order. Only two (2) Settlement Class Members validly and timely requested exclusion.

         B. Summary of the Settlement Terms

         The Settlement's terms are detailed in the Agreement (Dkt. No. 78-1). The following is a summary of certain material terms. This summary is merely an abbreviated synopsis and is not a substitute for the actual terms of the Agreement.

         1. The Settlement Class

         The Settlement Class is an opt-out class under Rule 23(b)(3) of the Federal Rule of Civil Procedure. The Settlement Class is defined as:

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

Agreement ¶ 54; also Preliminary Approval Order (Dkt. No. 79).

         2. Settlement Consideration for the Benefit of the Class

         Under the Settlement, Tower timely made its initial deposit into an Escrow Account following this Court's Preliminary Approval. Agreement ¶ 73. That deposit created the Settlement Fund, which will be used to pay: (i) checks to certain Settlement Class Members in the specific cases described in Paragraph 56 of the Agreement; (ii) the Court-ordered award of Class Counsel's attorneys' fees, costs, and expenses; (iii) the Court-ordered Service Awards to the Class Representatives; (iv) any residual distribution as set forth in Section XIII of the Agreement; (v) any costs of settlement administration other than those paid by Tower; and (vi) additional fees, costs and expenses not specifically enumerated in the Agreement, subject to approval of Class Counsel and Tower. Agreement ¶ 75. Tower is responsible for paying all fees, costs, charges and expenses incurred by the Settlement Administrator. Agreement ¶ 59.

         Settlement Class Members do not have to submit claim forms or take any other affirmative steps to receive relief under the Settlement. Tower will re-amortize each Settlement Class Member's Mortgage Loan. Agreement ¶¶ 56, 76. Within 157 days after the Effective Date, the Settlement Administrator will distribute checks to all Settlement Class Members entitled to a cash payment. Agreement ¶ 80.

         Any uncashed or returned checks will remain in the Settlement Fund for one year from the date the first distribution check is mailed, during which time the Settlement Administrator will make reasonable efforts to effectuate delivery of the Settlement Fund payments. Agreement ¶ 81.

         The Agreement also provides a mechanism for distributing any funds remaining in the Settlement Fund more than one year plus 30 days after the date the Settlement Administrator mails the first Settlement Fund Payments. Agreement ¶ 82. The Parties will jointly file a proposed plan with the Court for distributing the funds to a nonprofit organization that promotes financial literacy in a way that is consistent with well-regarded guidance on those types of supplemental distributions. Id. The Court has the discretion to approve the plan or disregard it as it deems fit. Id.

         3. Additional Relief

         Tower will pay all fees, costs, charges, and expenses incurred by the Settlement Administrator in connection with the Notice Program. Agreement ¶ 59.

         4. Class Release

         In exchange for the benefits conferred by the Settlement, all Settlement Class Members shall automatically be deemed to have fully and irrevocably released and forever discharged Tower from claims relating to the subject matter of the Action as fully described and defined in Section XIV of the Agreement.


         The federal courts have long recognized a strong policy and presumption in favor of class settlements. The Rule 23(e) analysis should be “informed by the strong judicial policy favoring settlements as well as the realization that compromise is the essence of settlement.” In re Chicken Antitrust Litig. Am. Poultry, 669 F.2d 228, 238 (5th Cir. 1982); see also In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088, 1105 (5th Cir. 1977) (“[s]ettlement agreements are highly favored in the law and will be upheld whenever possible because they are a means of amicably resolving doubts and uncertainties and preventing lawsuits.”). “The recommendation by Plaintiff's counsel and the good faith bargaining between the parties . . . militates heavily in favor of approving the settlement.” Murillo v. Texas A & M Univ. Sys., 921 F.Supp. 443, 446 (S.D. Tex. 1996). The Court does not ‚Äúsubstitute its business judgment for that ...

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