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Fangman v. Genuine Title, LLC

United States District Court, D. Maryland

June 7, 2017

EDWARD J. AND VICKI FANGMAN, et al., Plaintiffs,
v.
GENUINE TITLE, LLC, et al. Defendants.

          MEMORANDUM ORDER

          Richard D. Bennett, United States District Judge

         On May 31, 2017, this Court conducted a Final Fairness Hearing on the Proposed Class Action Settlements of all claims asserted in this action against Defendants E Mortgage Management, LLC (“E Mortgage Settlement”) (ECF No. 394-2) and E Properties, LLC (“E Properties Settlement”) (ECF No. 394-3) (collectively “Settlement Agreements”). Via Order dated that same day (ECF No. 468), this Court granted final approval of the Settlement Agreements, dismissed all claims against Defendants E Mortgage and E Properties, and approved the parties' requested service awards for Class Representatives Bertha & Alvin Cole; Preston & Beatrice Johnson; Ann & Gerald Jones; and Tinna & John Mahoney in the amount of $5, 000 per married couple, inclusive of settlement benefits, for a total of $20, 000.[1] See Order, ¶¶ 10, 11, 16, ECF No. 468. Final Judgement has been entered in this case against E Mortgage and E Properties in “the amounts[2] necessary to fund Settlement Benefits payable to [E Mortgage and E Properties] Class Members, in accordance with the . . . Settlement Agreement[s].” Id., ¶¶ 13, 14, 19. Still pending before this Court is Settlement Counsels' Petition for Attorneys' Fees and Expenses (ECF No. 455). This Court heard argument on the issue of attorneys' fees and expenses at the conclusion of the May 31, 2017 Final Fairness Hearing, and no additional hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons stated herein, the pending Settlement Counsels' Petition for Attorneys' Fees and Expenses (ECF No. 455) is GRANTED in the reduced amount of $330, 433.62, an award equal to 20% of the maximum settlement value for both Settlement Agreements.[3]

         BACKGROUND

         In January of 2014, Plaintiffs Edward J. and Vicki Fangman brought this class action against Defendant Genuine Title, LLC alleging, inter alia, violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2607(a), (b)[4]. See Compl., ECF No. 2. E Mortgage Management, LLC (“E Mortgage”) was first named as a Defendant in the Amended Complaint (ECF No. 47), filed in January of 2015.[5] An additional thirteen home mortgage lenders have also been named as Defendants (collectively “Lender Defendants”) via the First and Second Amended Complaints in this action. Attorneys Michael Paul Smith, Sarah Zadrozny, Timothy J. Maloney, and Veronica Nannis of the law firms of Smith, Gildea & Schmidt, LLC (“SGS”) and Joseph, Greenwald & Laake, P.A. (“JGL”) (hereinafter “Settlement Counsel”) have represented all Plaintiffs, including the E Mortgage and E Properties Plaintiffs, throughout this litigation.

         In prosecuting this case, Settlement Counsel have incurred significant expense and have undergone significant investigation. For example, in July of 2013, Plaintiffs filed a Petition for Emergency Appointment of a Receiver for the purpose of retrieving and preserving the documents, books, and records of Genuine Title in the Circuit Court for Baltimore County, Maryland. That court granted the petition on July 30, 2014, and Settlement Counsel were able to retrieve vast amounts of evidence from Genuine Title's records, including the identities of E Mortgage and E Properties Class Members.

         While several of the Lender Defendants filed motions to dismiss the Second Amended Complaint in July of 2015, E Mortgage sought an early mediation before Magistrate Judge Timothy Sullivan of this Court. E Mortgage did not participate in briefing the motions to dismiss and, at E Mortgage's request, this Court stayed all deadlines in this case with respect to E Mortgage on July 20, 2015, pending completion of the mediation. See Stay Order, ECF No. 160. Although E Mortgage later joined the already fully-briefed motions to dismiss of the remaining Lender Defendants when resolution efforts temporarily stalled in October of 2015, it did so via a brief memorandum (ECF No. 203-1), adopting many of the arguments previously raised by the other Lender Defendants. Plaintiffs responded with a 2-page filing (ECF No. 209) stating only that “[t]here are no new arguments made in the E Mortgage Motion that have not already been fully briefed and argued by other defendants, ” and incorporating their previously filed opposition briefs.

         The E Mortgage Settlement Agreement provides for the payment of the following benefits to the E Mortgage Class Members: for Subclass 1 members, an award equal to 220% the Section 1100 Charges that were paid to Genuine Title (excluding title underwriter's fees) as reflected on the member's HUD-1 Settlement Statement; and for qualifying Subclass 2 members, an award equal to 50% of the Section 1100 Charges that were paid to Genuine Title (excluding title underwriter's fees) as reflected on the member's HUD-1 Settlement Statement. E Mortgage Settlement Agreement, ¶ 6.1, ECF No. 394-2. The E Properties Settlement Agreement provides for the payment of the following benefits to members of the E Properties Class: an award equal to 160% the Section 1100 Charges that were paid to Genuine Title (excluding title underwriter's fees) as reflected on the member's HUD-1 Settlement Statement. E Properties Settlement Agreement, ¶ 6.1, ECF No. 394-3. The settlement benefits for all settlement classes are to be deposited into a Common Fund, which Settlement Counsel have subsequently indicated will reach a maximum value of $1, 652, 168.08. Mem. Supp. Mot., p. 26, ECF No. 455-1.

         With respect to attorneys' fees and expenses, both Settlement Agreements provide that the settling Defendants will pay attorneys' fees and expenses “in addition to, not out of the Common Fund.” E Mortgage Settlement Agreement, ¶ 13, ECF No. 394-2; E Properties Settlement Agreement, ¶ 12, ECF No. 394-3. The Settlement Agreements further provide that Settlement Counsel shall limit the amount of their requested attorneys' fees and expenses to an amount equal to 25% of the maximum settlement value. Id. The Agreements further provide that the Defendants reserve the right to oppose any petition for attorneys' fees and expenses that seeks more than an aggregate award equal to 20% of the Common Fund. Id.

         Under the terms of the Settlement Agreements, notice plans were completed pursuant to which all members of the E Mortgage and E Properties classes were informed of the Settlement Agreement terms, including the provisions for payment of attorneys' fees and expenses. No objections to the terms of the Settlement Agreements or requests for exclusion from the settlements have been filed. On May 31, 2017, this Court conducted a Final Fairness Hearing on the proposed settlements and granted final approval of the Settlement Agreements that same day.

         ANALYSIS

         Settlement Counsel have requested an award of attorneys' fees and expenses in the amount of 25% of the full potential settlement value for both settlements, or $413, 042.02. Mem. Supp. Mot., p. 26, ECF No. 455-1. Pursuant to the terms of the Settlement Agreement, $13, 135.96 of that award will be paid to the Class Representatives-the difference between their settlement benefits and $5, 000 service awards, per married couple, previously awarded by this Court. Id. An additional $13, 843.23 of that award will cover Settlement Counsels' expenses. Id. Accordingly, Settlement Counsel request a total of $386, 062.83 in attorneys' fees alone. Id. Defendants E Mortgage and E Properties object to any award in excess of 20% of the Common Fund, or $330, 433.62.

         Rule 23(h) of the Federal Rules of Civil Procedure provides that “[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement.” Fed.R.Civ.P. 23(h). Additionally, the Real Estate Settlement Procedures Act (“RESPA”) provides that “[i]n any private action brought pursuant to this subsection, the court may award to the prevailing party the court costs of the action together with reasonable attorneys fees.” 12 U.S.C. § 2607(d)(5). As this Court has previously noted, “[t]here are two primary methods of calculating attorneys' fees: the lodestar method and the ‘percentage of recovery' method.” Whitaker v. Navy Fed. Credit Union, No. RDB-09-2288, 2010 WL 3928616, at *4 (D. Md. Oct. 4, 2010). “The lodestar method requires the multiplication of the number of hours worked by a reasonable hourly rate, the product of which this Court can then adjust by employing a ‘multiplier.' ” Id. “The percentage of the recovery method involves an award based on a percentage of the class recovery, set by the weighing of a number of factors by the court.” Id.

         For the reasons explained in this Court's prior Memorandum Order of November 18, 2016 (ECF No. 411), the “percentage of recovery” method shall be used to calculate Settlement Counsels' attorneys' fees and expenses in this case. However, this Court will cross-check the “percentage of recovery” analysis with a lodestar analysis. This Court has previously recognized that “using the percentage of fund method and supplementing it with the lodestar cross-check . . . take[s] advantage of the benefits of both methods.” Singleton v. Domino's Pizza, LLC, 976 F.Supp.2d 665, 681 (D. Md. 2013) (quoting In re The Mills Corp. Securities Litig., 265 F.R.D. 246, 261 (E.D. Va. 2009)).

         A. “Percentage of Recovery”

Analysis

         Although the United States Court of Appeals for the Fourth Circuit “has not yet identified factors for district courts to apply when using the ‘percentage of recovery' method, . . . District courts in this circuit have analyzed the following seven factors:”

(1) the results obtained for the class; (2) the quality, skill, and efficiency of the attorneys involved; (3) the risk of nonpayment; (4) objections by members of the class to the settlement terms and/or fees requested by counsel; (5) awards in similar cases; (6) the complexity and duration of the case; and (7) public policy. [citing, e.g., The Kay Company v. Equitable Production Co., 749 F.Supp.2d 455, 464 (S.D. W.Va. 2010)]. Importantly, “fee award reasonableness factors ‘need not be applied in a formulaic way' because each case is different, ‘and in certain cases, one factor may outweigh the rest.' ” In re AT & T Corp., 455 F.3d 160, 166 (3d Cir. 2006) (quoting In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 301 (3rd Cir. 2005)).

Singleton, 976 F.Supp.2d at 682.

         a. Results Obtained for the Class

         “ ‘[T]he most critical factor in calculating a reasonable fee award is the degree of success obtained.' ” Id. (quoting McKnight v. Circuit City Stores, Inc., 14 F. App'x. 147, 149 (4th Cir. 2001)). In this case, Settlement Counsel have secured a significant financial recovery for the members of the E Mortgage and E Properties Classes. As outlined supra, members of E Mortgage Settlement Subclass 1 will receive 220% of the settlement charges paid to Genuine Title on their loans; members of E Mortgage Settlement Subclass 2 will receive 50% of the settlement ...


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