PART TWO OF TWO PARTS COMPLETED WITH ALL FOOTNOTES REPRINTED HERE ON THURSDAY, NOVEMBER 29, 2018.
The following reprint from the book, Catastrophe Claims: Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author of the reprinted selection. This selection, Section 2:19 (2018, Thomson Reuters), is reprinted here with permission of Thomson Reuters. Any further reproduction without the consent of the publisher is expressly prohibited.
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Continued from the end of Part One on Tuesday, November 27, 2018:
In addition to the Ursomano case, there are as noted two other decisions which have been found to be on point at this time. In one of the two other available decisions which have been located on point in addition to Ursomano, a Federal Court in Oklahoma stayed an alleged lender force-placed insurance class action because the Court in Oklahoma was advised by the defendants that the defendants were negotiating settlement with the parties in the Florida case. On the strength of that representation alone, and without requiring any proof or a written order or even a briefing on the res judicata affirmative defense, the Federal Court in Oklahoma swiftly entered its order staying the proceedings in Utah unless the plaintiffs in Oklahoma could prove that their claims are not barred by the Fladell proceedings in Florida, proceedings to which the Oklahoma plaintiffs are not parties. The Oklahoma Federal Court's decision is in the case of Ali v. Wells Fargo Bank, N.A.17
In the other case which has been located as being on point here, a Federal Court in the State of Washington conditionally enjoined a foreclosure proceeding and refused to immediately dismiss an alleged LFPI class action. However, the Federal Court in Washington State required the plaintiffs in that case, none of whom it seems are plaintiffs in the Fladell case in Florida, to prove that their claims are not barred by the settlement to which they are not parties. The Federal Court's decision in Washington State is in the case of Keller v. Wells Fargo Bank, N.A.18
Beyond the three cases which have just been discussed, each decision coming from a different Federal Court and a different jurisdiction, Ursomano from California, Ali from Oklahoma, and Keller from Washington State, there are many other lender force-placed insurance class action cases and many other types of cases which are pending and others which are likely to be filed in the future. Some of those class actions will involve the same defendants as in cases which have settled and in which a “class” has been “certified for settlement purposes,” as in the Fladell case. Orders in those cases will be used in defense in other cases, whether or not they contain expressions of res judicata, preclusive effect as does the stipulated settlement order in Fladell.
Although the Fladell case was ultimately settled by a stipulated agreement which the Court approved in that case, it is interesting to note the several objections which the Fladell defendants raised to class certification when they were against it and before they were for it.
The Court never addressed any of the defendants' objections, and it did not adjudicate them, either. What follows is taken mainly from the defendants' own Response in Opposition to Plaintiff's' Motion for Class Certification in Fladell, which the defendants filed in December 2013.19
In the Fladell case, the defendants pointed out in their opposition that the plaintiffs were seeking limited certification. According to the Fladell defendants, the plaintiffs requested certification of a national class on three Federal claims but not of their Florida law claims, for which the plaintiffs requested certification “of a Florida-only class.”20 That statement obviously contradicts the position taken afterward by the same defendants in other legal proceedings, that the Fladell class settlement bars all lender force-placed insurance claims in all other cases in the nation.
In approving the Fladell parties' settlement agreement, the parties and the Federal Judge said that the Florida class action settlement complied with Federal Rules 23(a) and 23(b). Rule 23 requires among other things that the proposed class action procedure be a superior means of adjudicating the alleged claims and that the current named plaintiffs are adequate to represent the alleged classes in pursuing those claims.
When the defendants opposed the class certification motion, and before they were in favor of it, they objected that the proposed class action was an inferior means by which to adjudicate the plaintiffs' claims:
Plaintiffs are not adequately representing borrowers in every state other than Florida, and this action is an inferior way for them to litigate.21
Of even greater significance here, however, the defendants objected to certification in Fladell because of the potential danger that other Courts might preclude the potential claims of other people in other lawsuits who did not participate in the Fladell settlement agreement:
Plaintiffs seek national certification only on federal-law claims, which are, at best, highly dubious. If those claims are certified but fail on the merits, res judicata may prevent borrowers residing in 49 other states from bringing the more substantial state-law claims that Plaintiffs assert only for the proposed class of Florida borrowers. This is not a superior method of adjudication, nor adequate representation of those absent borrowers.22
In this same vein, it bears repeating that, as the Fladell defendants pointed out, the Fladell plaintiffs requested certification “of a Florida-only class” of Florida claims, and those Florida claims were four in number: “contract, implied covenant, unjust enrichment, and fiduciary duty.”23 Yet, the defendants argue now, in other cases, that they tried to settle and the Federal Court purportedly approved their settlement in the Fladell case in Florida of every claim in every State in the nation involving also allegations of “alleged tortious interference,” alleged compliance with “disclosure” laws, “the receipt or non-disclosure of any benefit,” the making or failure to make any “communications” concerning LFPI insurance anywhere, and last but not least, “the regulatory approval or non-approval of any insurance policy, or the premium thereon, placed or charged by the Wells Fargo Defendants.”24
It is noteworthy but perhaps not entirely surprising that District Judges often make their secrecy decisions in unreported Orders. Being unreported, they are much harder to find than reported decisions. In one such secrecy Order, captioned “ORDER RE: ADMINISTRATIVE MOTIONS TO SEAL,”25 a District Court treated a motion for class certification as a nondispositive motion even though disposition of the motion for class certification was at the heart of the plaintiffs' collective claims. The parties once again stipulated to secrecy, in this instance, to request that exhibits filed in connection with the motion for class certification should be kept secret. Applying an explicitly lesser standard for sealing documents and parts of documents when they are exhibits concerning “nondispositive” motions as opposed to dispositive motions, the District Court entered its Order granting the parties' stipulation to “file all documents sought to be sealed in redacted form consistent with their joint submission.”26 In other words, the holding that a motion to certify a class in a case in which the reason for the lawsuit's existence lies in class certification -- and few if any putative class action lawsuits fit into any other category -- drove the decision to keep documents secret which probably and almost certainly would support the plaintiffs' substantive claims in the case.
In sum, stipulations have recently taken over much of litigation both in lieu of discovery which keep the evidence secret, and in settlement stipulations in which parties try to provide by agreement what they could not obtain by litigation. The most glaring example of the latter conduct is in the recent attempts by defendants to write and propose settlement stipulations for class actions that attempt to dispense with the requirements of class actions, and which will stand as res judicata determinations of those requirements if the same allegations are raised in other cases against the defendants. The effects of all of these stipulations remain to be worked out in each individual case, but until then, practitioners and their clients should be aware of the possibilities which they may face in presenting their catastrophic claims. In particular, these stipulations have not confronted the public policy sometimes embodied in statutes tending to prohibit public harm caused by secret agreements.27
© 2018 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.
Footnotes
1
Houston Cas. Co. v. Charter Oak Fire Ins. Co., No. 1:16-cv-535-LJO-EPG, 2017 WL 35500 at *1 (E.D. Cal. January 3, 2017).
2
Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 (S.D. Fla. July 3, 2014) (Seltzer, Chief U.S.M.J.).
3
Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 *9 (S.D. Fla. July 3, 2014) (Seltzer, Chief U.S.M.J.).
4
See Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 *9 (S.D. Fla. July 3, 2014) (Seltzer, Chief U.S.M.J.).
5
See generally Dennis J. Wall, “Conditional and Other ‘Nonspecific’ Objections to Discovery Are No Objections at All in an Insurance (or in Any Other Case),” 33 Ins. Lit. Rptr. 437 (2011).
6
Floyd Norris, “High & Low Finance / Failed Bank's Broken Vows Mean Little” p. B1, col. 1 (New York Times Nat'l ed., “Business Day” Section, Friday, September 19, 2014). The order of the Federal Court in North Carolina can be found in FDIC v. Rippy, Order of September 10, 2014 granting defendants' summary judgment motion, Dkt. No. 124 (E.D.N.C. Case No. 7-11-cv-00165-BO).
7
FDIC v. Rippy, Dkt. No. 124, Order of September 10, 2014 granting defendants’ summary judgment motion, at p. 3 (E.D.N.C. Case No. 7-11-cv-00165-BO).
8
FDIC v. Rippy, Dkt. No. 71, May 21, 2013 Amended Stipulated Protected Order and Non-Waiver Agreement, at p. 2 (E.D.N.C. Case No. 7-11-cv-00165-BO).
9
Fed. R. Civ. P. 26.
10
In addition to the clear language of Rule 26, the Advisory Committee Notes to the present enactment of Rule 26(c) in 1970, provide:
The new reference to trade secrets and other confidential commercial information reflects existing law. The courts have not given trade secrets automatic and complete immunity against disclosure, but have in each case weighed their claim to privacy against the need for disclosure.
An alternative to secrecy stipulations pursued in the cases, is to settle the class action case and provide for secrecy in the settlement agreement which the Court is then requested to approve. This method of obtaining secrecy is at work in the class action lawsuit filed against the high-profile corporations of Silicon Valley who allegedly conspired to limit their workers' “mobility and incomes.” David Streitfeld, “New Accord is Expected in Hiring Ban,” p. B1, col. 5 (New York Times Nat'l ed., “Business Day” Section, Thursday, January 15, 2015). As explained in this Times report, a second settlement agreement was reached in the case and presented to the Court for approval “[t]o head off a trial and the exposure of reams of incriminating emails.” The Federal District Judge already rejected one settlement because the amount was too low to be “‘within the range of reasonableness,'” i.e., the original settlement amount presented for the Court's approval was unreasonably low. Although the second attempt at a settlement agreement contains more money, “[t]he settlement money is pocket change to the companies, which include some of the world's wealthiest. If they let the case go to trial, however, it might corrode their image as forward-thinking, worker-friendly benevolent empires.” David Streitfeld, “New Accord is Expected in Hiring Ban,” p. B1, col. 5 (New York Times Nat'l ed., “Business Day” Section, Thursday, January 15, 2015).
11
Fladell, et al., Plaintiffs v. Wells Fargo Bank, N.A., et al., Defendants (S.D. Fla. Case No. 13-cv-60721), app. dismissed (unreported) (11th Cir. August 4, 2015).
12
Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, 2014 WL 644340 *1-*2 (N.D. Cal. February 19, 2014).
13
Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, 2014 WL 644340 *2 (N.D. Cal. February 19, 2014).
14
Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, 2014 WL 644340 *2 (N.D. Cal. February 19, 2014). [Emphasis added.]
15
Fladell v. Wells Fargo Bank, N.A., No. 13-cv-60721-FAM, 2014 WL 5488167 (S.D. Fla. October 29, 2014), app. dismissed (unreported) (11th Cir. August 4, 2015). The appeal to the Eleventh Circuit Court of Appeals was filed in Fladell after several plaintiffs objected to the attorney's fees award in that case of $19 Million “payable pursuant to the terms of the settlement agreement.”
16
Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, Dkt. No. 74 filed on Nov. 12, 2014 (N.D. Cal. Case No. C-13-4381).
17
Ali v. Wells Fargo Bank, N.A., No. CIV-13-876-D, 2014 WL 819385, at *2 (W.D. Okla. March 3, 2014) (granting defendants' motion to stay lender force-placed insurance claims of plaintiffs who were not parties in the Florida case, unless those plaintiffs could prove that their claims were not settled in Fladell). The Ali case was distinguished when the same issue was raised, with a different result, in the case of Valdez v. Saxon Mort. Serv's, Inc., No. 2:14-cv-03595-CAS(MANx), 2015 WL 93387, at *2 (C.D. Cal. January 6, 2015): “Here, in contrast, the Lee settlement [the asserted fact of which was relied on in Ali] will not resolve all of plaintiffs' claims; rather, as moving defendants argue, the Lee settlement ‘if approved, will resolve claims against Ocwen [] and Deutsche Bank [] ….’ Mot. Stay at 1.”]
18
See, e.g., Keller v. Wells Fargo Bank, N.A., No. C14-422, 2014 WL 6684895 *2-*3 (W.D. Wash. November 25, 2014) (“limited injunction” ultimately granted against defendants foreclosing on plaintiffs' home so as to allow the plaintiffs to prove that their case is not included in the Fladell settlement).
19
Fladell v. Wells Fargo Bank, N.A., No. 13-cv-60721-FAM, Dkt. No. 108 [hereinafter “DE 108”], filed December, 2013 (S.D. Fla. Case No. 13-cv-60721-FAM), app. dismissed (unreported) (11th Cir. August 4, 2015).
20
DE 108 at page 1.
21
DE 108 at page 19.
22
DE 108 at pages 2-3. [Emphasis added.]
23
DE 108 at page 1.
24
Fladell v. Wells Fargo Bank, N.A., 2014 WL 5488167 *7 (S.D. Fla. Oct. 29, 2014), app. dismissed (unreported)(11th Cir. August 4, 2015).
25
Stitt v. Citibank, N.A., ORDER RE: ADMINISTRATIVE MOTIONS TO SEAL, Dkt. No. 152 Filed December 17, 2015 (N.D. Cal. No. 4:12-cv-032892-YGR).
26
Stitt v. Citibank, N.A., ORDER RE: ADMINISTRATIVE MOTIONS TO SEAL, Dkt. No. 152, at p.2, Filed December 17, 2015 (N.D. Cal. No. 4:12-cv-032892-YGR).
27
See, e.g., 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 3:107, “Settlement of third-party bad faith claims: Confidentiality (protected) or concealment (void)” (3d Edition and 2017 Supplement, Thomson Reuters West); 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 9:28, “Settlement of first party bad faith claims: Confidentiality (protected) or concealment (void)” (3d Edition and 2017 Supplement, Thomson Reuters West), examining among other things, Florida Statute Section 69.081.
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End of Document
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© 2018 Thomson Reuters. No claim to original U.S. Government Works
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The above reprint from the book, Catastrophe Claims: Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author. This selection, Section 2:19 (2018, Thomson Reuters), is reprinted here in its entirety with permission of Thomson Reuters. Any further reproduction without the consent of the publisher is expressly prohibited.
