... Does the law clothe that Court Order with the mantle of res judicata to preclude the claims of every other person in any other case who might have been in the class (which was not certified except for the settlement)?
Can a party obtain the right to raise res judicata in other cases because of a Court-approved class action settlement in one action, that the party could not have obtained unless the Court approved a settlement because the Court never otherwise certified a class in that action?
That is the question arising from a class action settlement of lender force-placed insurance (“LFPI”) claims in a Federal case in Florida. The Court in that case approved a nation-wide class action settlement of LFPI claims, including the claims of absent persons, that had already or might be raised against the defendants in that case. The “Order Granting Final Approval to Class Action Settlement” in that case is reported at Fladell v. Wells Fargo Bank, N.A., 2014 WL 5488167 (S.D. Fla. October 29, 2014).
The date of this Order was October 29, 2014. The use of this settlement as a defense to LFPI litigation began months earlier, however. Apparently the parties in Fladell began talking about a national class action settlement as early as February, 2014. “On February 3, 2014 the parties in Fladell reached a settlement in principle,” anticipating a motion for preliminary approval of their class action settlement in March. A little over two weeks later, a Federal Court stayed an alleged LFPI class action involving California homeowners. The ground for the California Court’s Order was that a settlement in Florida in Fladell might preclude the LFPI class action alleged in the complaint which was filed in California in October, 2013. Ursomano v. Wells Fargo Bank, N.A., 2014 WL 644340 *1-*2 (N.D. Cal. February 19, 2014).
As readers of this blog know, this makes the third reported case involving a defense that LFPI claims are precluded by a class action settlement of LFPI practices in Florida in Fladell. In the earlier of the other two decisions, a Federal Court in Oklahoma stayed an alleged LFPI 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, and in the other case, a Federal Court in the State of Washington conditionally enjoined a foreclosure proceeding and refused to immediately dismiss an alleged LFPI class action. In both cases, the defendants raised the settlement by the parties in Fladell as a bar —unless the plaintiffs in the other cases can show that they are not bound by the Court Order in Florida approving the Fladell settlement.
The proceedings in the Ursomano case paralleled the developments in both of these other cases. Ursomano contained both a request for a stay and, later, a dismissal. The proceedings are instructive. First, as noted, the California Court granted the defendants’ motion to stay because the Court was informed that the issues and allegations may be the same in Ursomano as in Fladell. (They arguably were not the same at all, but the Court was informed that they were. “It appears undisputed that the issues and putative classes are effectively the same in Fladell and Ursomano.” Ursomano v. Wells Fargo Bank, N.A., 2014 WL 644340 *2 (N.D. Cal. February 19, 2014).) Even though the Court was under the impression that the issues were the same in both cases, the Court nonetheless stated that it recognized its duty, if and when a settlement agreement was actually written in Fladell, to “determine whether the terms release Defendants from liability from claims asserted herein and whether Plaintiffs and the putative classes are covered by the Fladell class.” Ursomano v. Wells Fargo Bank, N.A., 2014 WL 644340 *2 (N.D. Cal. February 19, 2014). [Emphasis added.]
That never happened.
The Fladell case was settled, all right, but a close review of the Ursomano Court File on PACER (“Public Access to Court Electronic Records”) does not show that anyone reviewed the terms of the Florida settlement agreement to see whether the terms release the same defendants from liability from claims asserted in California and whether the California plaintiffs and the Ursomano putative classes are covered by the Fladell case.
To say again, it never happened. There was no review, no comparison, no further argument.
The District Judge who wrote the February opinion in Ursomano was reassigned and another District Judge took his place. The new Judge ordered all parties to notify him if and when the Fladell case was settled. On October 29, 2014 – the same date on which the Florida Court gave its final approval to the Fladell settlement – the parties in California filed their joint “Statement Regarding Settlement” informing the Federal Court in California that the parties in Florida “have drafted a settlement agreement” and were then having it signed. Download URSOMANO Dkt 71 10.29.14 WELLS FARGO et al Notice re hope Fladell Settlement Agreement to be signed in 2 weeks. The next day, the Federal Court entered its Order of Dismissal giving any party 90 days to certify “that the agreed consideration for said settlement has not been delivered over”. If no certification of a failure of consideration for the settlement in Florida was filed within those 90 days, the dismissal in Ursomano would stand “with prejudice.” [Emphasis in original.] Download URSOMANO Dkt 73 10.30.14 Order of Dismissal.
The parties did file something other than a certification concerning the Florida settlement, however. Within two weeks, they filed their joint Stipulation of Voluntary Dismissal on November 12, 2014. They did not address whether the claims or classes alleged in California were the same or similar as those alleged in Florida. However, they did point out to the Federal Court that their alleged classes were never certified in Ursomano. The plaintiffs were careful to obtain the defendants’ agreement that “the parties have reached a settlement of Plaintiffs’ individual claims against Defendants in which the Plaintiffs’ individual claims will be dismissed with prejudice and the members of any putative class will be dismissed without prejudice,” and, moreover, that while all individual claims of the individual claims were settled and should be dismissed with prejudice, under this stipulation “[a]ll claims and allegations of any putative class members are hereby dismissed without prejudice.” [Emphases added.] Download URSOMANO Dkt 74 11.12.14 STIP FOR DISMISSAL.
The Ursomano Court approved this Stipulation in a text-only entry on November 13, 2014, without a written Order:
Order by Hon. James Donato granting 74 Stipulation of Voluntary Dismissal. Pursuant to the parties' stipulation, the Court dismisses this action with prejudice as to Mr. Canonico, Ms. Canonico and Mr. Ursomano and without prejudice as to the putative class. The putative class members retain all claims and causes of action, if any, against defendants. (This is a text-only entry. There is no document associated with this entry.) (jdlc1S, COURT STAFF) (Filed on 11/13/2014) (Entered: 11/13/2014)
That concludes the saga of the Ursomano case. But that is not the end of the lender force-placed insurance saga by any means. For one thing, the Washington State case mentioned above is still pending, and the Oklahoma Federal Court case may be reopened. Beyond those two cases, there are many other LFPI class action cases which are pending and others which are likely to be filed in the future. Some of those LFPI class actions will involve the same defendants as in the Fladell case. So, the next question to be answered is one question which will determine whether any and all of these LFPI cases will be filed or, once filed, will be allowed to proceed:
Can a party obtain the right to raise res judicata in a Court-approved class action settlement, that the party could not have obtained otherwise because the Court never certified the class in that action?
When the Court-approved class action settlement is obtained in a case like Fladell, the answer might well be no.
To be continued ….
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