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Edward J. v. Genuine Title, LLC

United States District Court, D. Maryland

June 15, 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 June 8, 2017, this Court conducted a Final Fairness Hearing on the Proposed Class Action Settlement (ECF No. 412-2) (“Settlement Agreement”) of all claims asserted in this action against Defendant Net Equity Financial, Inc. (“Net Equity”). Via Order dated that same day (ECF No. 471), this Court granted final approval of the Settlement Agreement, dismissed all claims against Net Equity, and approved the requested service award for Class Representative Helen L. Householder in the amount of $5, 000, including her Settlement Benefit.[1] See Order, ¶¶ 1, 9, 13, ECF No. 471. Final Judgement has been entered in this case against Net Equity in an “amount[2] necessary to fund Settlement Benefits payable to the Settlement Class Members, in accordance with the Settlement Agreement, ” discussed infra. Id. ¶¶ 11, 15. Still pending before this Court is Settlement Counsels' Petition for Attorneys' Fees and Expenses (ECF No. 459), in which Settlement Counsel request an award of attorneys' fees and expenses in the amount of “20% of the amount of the Settlement Benefit to the Settlement Class, specifically, $607, 163.33.” Net Equity has not opposed that request.[3] The parties' submissions have been reviewed, and no additional hearing on the issue of attorneys' fees and expenses 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. 459) is GRANTED in the full requested, and unopposed, amount of $607, 163.33, an award equal to 20% of the Settlement Benefit to the Settlement Class or, alternatively, 1/6 of the entire Common Fund.[4]

         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)[5]. See Compl., ECF No. 2. Net Equity Financial, Inc. (“Net Equity”) was named as a Defendant in the First Amended Complaint (ECF No. 47). 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 Net Equity 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 potential Net Equity Class Members.

         Net Equity Filed a Motion to Dismiss the Second Amended Complaint on July 21, 2015 (ECF No. 162), to which Plaintiffs responded on September 4, 2015 (ECF No. 178). Following a hearing on November 24, 2015, this Court denied Net Equity's Motion to Dismiss with respect to Plaintiffs' claims under the Real Estate Settlement Procedures Act in a Memorandum Opinion and Order dated December 9, 2015 (ECF Nos. 211 & 212). Following this Court's entry of a Scheduling Order on December 15, 2015 (ECF No. 220), the parties engaged in a period of contested discovery. Settlement Counsel have indicated that several discovery disputes remained unresolved at the time of settlement.

         The parties filed a Joint Motion to Preliminarily Approve Settlement on November 22, 2016 (ECF No. 412), attaching the Settlement Agreement (ECF No. 412-2). This Court held a Preliminary Fairness Hearing on January 12, 2017 and granted the parties' Joint Motion via Order dated that same date (ECF No. 431). This Court's Order designated 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”) as Settlement Counsel.

         Section 7.2 of the Settlement Agreement provides for the payment of the following benefits to the Net Equity Class Members:

Each of these class members shall receive a proportionate share of the Common Fund remaining after deduction of any awards of attorneys' costs, expenses, and fees and service awards . . . . The formula for distribution shall be the Common Fund less any awards of attorneys' costs, expenses, and fees and service awards divided by the number of members of the Settlement Class who did not file a complete and valid Request for Exclusion by the Exclusion Deadline.

         Settlement Counsel have indicated that the Common Fund now totals $3, 642, 980.

         With respect to attorneys' fees and expenses, the Settlement Agreement provides that “[p]ayment of any award of attorneys' costs, expenses and fees shall come from the Common Fund.” Settlement Agreement, ¶ 13, ECF No. 412-2 (emphasis added). The Settlement Agreement provides that Settlement Counsel shall limit their requested attorneys' fees and expenses to an amount equal to 25% of the amount of the Settlement Benefit to the Settlement Class. Id. The Agreement further provides that Net Equity reserves the right to oppose any petition for attorneys' fees and expenses that seeks more than an aggregate award equal to 20% of the Settlement Benefit to the Settlement Class. Id.

         Under the terms of the Settlement Agreement, a notice plan was completed pursuant to which all members of the Net Equity Class were informed of the Settlement Agreement's terms, including the provisions for payment of attorneys' fees and expenses. See Id. ¶ 11. No objections to the terms of the Settlement Agreement have been filed. One request for exclusion was filed by Sonia Gilroy, personal representative for the Estate of David K. Gilroy. On November 4, 2016, this Court conducted a Final Fairness Hearing on the proposed settlement and granted final approval of the Settlement Agreement that same day, excluding Gilroy from the Settlement Class.

         ANALYSIS

         Settlement Counsel have requested an award of attorneys' fees and expenses of “20% of the amount of the Settlement Benefit to the Settlement Class, specifically, $607, 163.33.” Mot. for Attorneys' Fees, p. 2, ECF No. 459. After deducting Settlement Counsels' reported costs and expenses of $34, 876.08, the attorneys' fees sought are $572, 287.25. See Mem. Supp. Mot., p. 22, ECF No. 459-1. Net Equity does not oppose this award.

         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 Opinion 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 ...

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