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Edward J. v. Genuine Title, LLC

United States District Court, D. Maryland

August 10, 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 August 8, 2017, this Court conducted a Final Fairness Hearing on the Proposed Class Action Settlement (ECF No. 432-2) (“Settlement Agreement”) of all claims asserted in this action against Defendant PNC Bank, N.A. (“PNC”). Via Order dated that same day (ECF No. 479), this Court granted final approval of the Settlement Agreement, dismissed all claims against PNC, and approved the requested service awards for Class Representatives Gerald F. and Ruby B. Coggins, Lusetha Rolle, and Rose A. Lease, in the total amount of $15, 000, including their settlement benefits.[1] See Order, ¶¶ 1, 9, 13, ECF No. 479. Final Judgement has been entered in this case against PNC in an “amount[2] necessary to fund the Settlement Benefits payable to the Settlement Class Members, in accordance with the Settlement Agreement, ” as discussed further infra. Id. ¶¶ 11, 15.

         Still pending before this Court is Settlement Counsels' Petition for Attorneys' Fees and Expenses (ECF No. 462), in which Settlement Counsel request an award of attorneys' fees and expenses in an amount equal to 25% of the Common Fund, to be paid in addition to, and not out of, the Common Fund. PNC objects to any award “in excess of 20% of the [C]ommon [F]und.”[3] See Response, ECF No. 465. 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. 462) is GRANTED, but in the reduced amount of $199, 425.61, an award equal to 20% of the estimated value of the 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. Defendant PNC Bank, N.A. (“PNC”) 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 PNC 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 PNC Class Members. PNC filed a Motion to Dismiss the Second Amended Complaint on July 21, 2015 (ECF No. 165), to which Plaintiffs responded on September 4, 2015 (ECF No. 175). Following a hearing on November 24, 2015, this Court denied PNC'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).

         The parties filed a Joint Motion to Preliminarily Approve Settlement on January 20, 2017 (ECF No. 432), attaching the Settlement Agreement (ECF No. 432-2). This Court held a Preliminary Fairness Hearing on February 1, 2017 and granted the parties' Joint Motion via Order dated that same date (ECF No. 435). 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 6.1 of the Settlement Agreement provides for the payment of the following benefits to the PNC Class Members:

Within ninety (90) days after the Finality of the Settlement, the Settlement Administrator shall issue a check from the Common Fund account to each member of the Settlement Class who did not file a complete and valid Request for Exclusion by the Exclusion Deadline, in an amount equal to 220% of the Section 1100 Charges that were paid to Genuine Title (excluding Line 1108 title underwriter's fees) as reflected on the member's final HUD-1 Settlement Statement for the member's PNC loan less any Consumer Redress Payment actually paid and received by such Settlement Class Member.

         Counsel have indicated that the Common Fund totals approximately $997, 128.03.

         With respect to attorneys' fees and expenses, the Settlement Agreement provides that Settlement Counsel shall limit their requested attorneys' fees and expenses to an amount equal to 25% of the Common Fund. Settlement Agreement, ¶ 12, ECF No. 432-2. The Agreement further provides that PNC reserves 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. Attorneys' fees and expenses shall be paid in addition to, not out of, the Common Fund.

         Under the terms of the Settlement Agreement, a notice plan was completed pursuant to which all members of the PNC Class were informed of the Settlement Agreement's terms, including the provisions for payment of attorneys' fees and expenses. See id. ¶ 10. No objections to the terms of the Settlement Agreement have been filed. On August 8, 2017, this Court conducted a Final Fairness Hearing on the proposed settlement and granted final approval of the Settlement Agreement that same day.

         ANALYSIS

         Settlement Counsel have requested an award of attorneys' fees and expenses in an amount equal to 25% of the Common Fund, or $249, 282.01. Mem. Supp. Mot., p. 29, ECF No. 462-1. PNC objects to any award in excess of 20% of the Common Fund.

         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 ...


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