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In answer to certified questions in Kelly v. State Farm Fire & Cas. Co., ___ So. 3d ___, 2015 WL 2082540 *13 (La. 2015), the Louisiana Supreme Court was asked to construe Louisiana Revised Statutes Annotated 22:1973 formerly numbered as LRSA Sections 22:1220(A), (B)(1) and (C), with respect to allegedly “[m]isrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.” [Emphasis added.] The Louisiana Supreme Court construed the statutory “or” to convey “disjunctive meaning, … meaning that an insurer can be liable for misrepresenting either: 1) ‘pertinent facts,’ or 2) ‘insurance policy provisions relating to any coverages at issue.’ La. R.S. 22:1973(B)(1).”
The filed rate 'doctrine' is being imported into insurance cases from the field of utility regulation. But no-one ever seems to ask a predicate question:
What was in the insurance company's rate filing when it requested approval of its rate?
Judges, defense lawyers, and policyholder lawyers should start asking this question. Inquiring minds want to know the answer. Before the so-called doctrine is applied in even one more insurance case.
Please Read The Disclaimer. Copyright 2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015), which includes a look at the filed rate doctrine. All Rights Reserved.
The third of the three noteworthy rulings of Judge Jonathan Goodman that we are looking at in the Lee case, came “off the books,” so to speak. The ruling is reflected only in a paperless order entered on the electronic docket. It deserves to be published.
For the rest of us, here is the paperless ruling, in its entirety. To say again, it deserves to be published and so here it is:
06/12/2015
160
ENDORSED ORDER re Supplement to Post Fairness Hearing Order 159 . Plaintiffs shall order the full transcript of yesterday's fairness hearing and arrange for the court reporter transcribing the hearing to upload it on CM/ECF by June 29, 2015 (so that the attorneys preparing the proposed orders on the motion to approve the settlement agreement will be able to use the transcript and, if they deem it necessary or helpful, to use pinpoint page references from the transcript).
In addition, Plaintiffs, Defendants and the Objectors (i.e., the Valdezes) who will be filing proposed orders shall also file a list of all cases (both appellate and trial level) from April 1, 2012 to the present, in which courts have approved settlements in lender-placed insurance cases, rejected settlements in lender-placed insurance cases, and/or ruled on motions to dismiss or for summary judgment, in whole or in part, in lender-placed insurance cases.
The lists shall include both class action lawsuits and individual lawsuits and shall include cases which have been officially published (e.g., in Fed. 3d., Fed. Supp. 3d or F.R.D.), unofficially published (e.g., only in Westlaw or Lexis) or not published at all (i.e., listed only on a court's CM/ECF docket sheet). The list shall include all cases that counsel are aware of, either because they participated in the case or because they are familiar with developments in lender-placed insurance cases.
This order does not require any party or their counsel to conduct independent legal research to track down all cases which have been entered since April 1, 2012. But based on the citation-filled memoranda filed to date, the Undersigned is aware that counsel are well-versed with recent developments in lender-placed insurance litigation and are relatively up to speed on most, if not all, significant court decisions.
Next to each case name and number, the party submitting the list shall provide a brief, one-sentence summary of what happened in the ruling (e.g., [a] district court approved settlement, [b] district court rejected settlement, [c] a district court dismissed without prejudice the RICO counts, dismissed with prejudice the breach of contract count, and upheld the breach of fiduciary duty and statutory unfair practices counts, and/or [d] a district court denied a dismissal motion but noted that a claim was problematic and suggested it might not survive summary judgment).
In order to avoid the parties submitting lists citing the same cases, the deadlines will be staggered; Plaintiffs shall file their list by June 29, 2015, Ocwen shall file its list by July 2, 2015, the Assurant group of Defendants shall file their list by July 6, 2015 and the Valdezes shall file their list by July 9, 2015. Parties need not cite cases already listed on a previously-filed list, but they may cite a case again if they have a different interpretation of the result, disagree with the summary or want to amplify or clarify the summary. Signed by Magistrate Judge Jonathan Goodman on 6/12/2015. (JG) (Entered: 06/12/2015)
A few things to emphasize in this unusual ruling. At the beginning, the context is crucial. Judge Goodman already gave preliminary approval to the class settlement in Lee. The Court’s final approval was supposed to be a done deal, a slam dunk. Until it wasn’t.
First, note in this paperless ruling that the Court is ordering the parties to order the transcript of the Fairness Hearing so that everyone involved in the case – Court, litigants, counsel, everyone – can see and reference the arguments and rulings. Yes, the transcript will be of great help to the lawyers preparing the proposed orders which this Judge required in a previous ruling. In the process, however, everyone involved in the Lee case – and anyone in the vast world outside of the Lee case, as well – can see for themselves the arguments and the rulings that were made in the context in which they were made.
Second, the Court is ordering everyone – plaintiffs, defendants, and persons registering objections to final approval of the class settlement – to provide a list of known lender force-placed insurance cases and the specific dispositions of those cases according to a matrix, if you will, that matches the boundaries within which this Court will decide those issues in this particular case, too.
Third, the deadlines for the lists to be provided are staggered, meaning that each person providing a list may have a different deadline to meet than other persons who are also required to provide a list of cases. The last deadline is July 9, 2015.
It does not take a genius, as they say, to guess that a ruling on the final approval request can be expected in Lee after July 9, 2015.
So stay tuned. Watch this space. The Lee ruling on the final approval of class settlement issues will be posted here as soon as the ruling is released on the public docket.
In the case of Lee, et al v. Ocwen Loan Servicing LLC, et al, (S.D. Fla. Case No. 0:14-cv-60649-JG ), a United States Magistrate Judge named Jonathan Goodman is presiding by consent of all the parties. Faced with a Fairness Hearing seeking his approval of a class action settlement, Judge Goodman entered a unique Order. He required the parties and their counsel to explain before the Fairness Hearing why the determination of acceptability should not be postponed until after the Eleventh Circuit rules on two similar class action settlements, why the plaintiffs had chosen not to depose a defendant’s corporate representative on a crucial issue – and invited them but did not purport to require them to take that deposition, and why the objectors should not receive the discovery they requested even if the law did not require that particular discovery in this case, among other things.
The Court’s Order in this regard is the first of three (3) extraordinary rulings by Judge Goodman in connection with the requested final approval of the class action settlement in this case:
As noted, all categories of objections must be examined, but the Court is specifically flagging the following issues as being worthy of comprehensive discussion:
Why should the Undersigned not reschedule the final approval hearing until after the Eleventh Circuit issues its rulings in two appeals raising the same objections as have been raised here? Those two appeals appear to be well underway. In Hall v. Tripasso, 11th Cir. Case No. 14‐15712 (S.D. Fla. Case 12‐cv‐22700‐FAM), Objectors‐Appellants Michael and Jill Tripasso filed their initial brief on May 12, 2015. The briefing in Nadeau v. Wells Fargo Bank, NA, 11th Cir. Case No. 14‐1500 (S.D. Fla. Case 13‐cv‐60721‐FAM) appears even further developed. Specifically, Appellants Pearson, Vanskyoit and Yoho filed their brief on December 24, 2014; Appellant Kirby filed an initial brief on January 14, 2015; Appellants Amirali Jabrani and Janet Jabrani filed their brief on February 9, 2015; Objector‐Appellant Jennifer Deachin n/k/a Jennifer Hinjosa filed her corrected brief on February 17, 2015 and the Pearson Appellants filed a supplemental authority on March 25, 2015.[1]
Even if not required, why would the settling parties not want to provide the additional information demanded by the objectors? Would an order approving the settlement and the attorney’s fee award be less likely to be reversed on appeal if the Undersigned had more information to analyze?
Given the appellate decisions which the objectors pinpointed from the Seventh and Ninth Circuits, should the Undersigned by concerned that the proposed Settlement Agreement contains “clear sailing” and “kicker” provisions?
Why should the Court not wait until the claims period is over before having a final hearing? Would that arrangement not provide for a clearer understanding of the actual value of the Settlement Agreement?
Would it not make sense for the Court to learn the actual dollar amount which will be paid to the Settlement Class, or at least a reasonable understanding of the likely range, before determining whether the agreement and the proposed fees are fair?
Why should the Court not postpone a ruling on attorney’s fees and expenses until after the settling parties advise how much Defendants will actually pay out under the settlement?
The Undersigned understands that class counsel reviewed a declaration from an Ocwen representative to support the conclusion that Ocwen’s databases cannot determine, on a systematic basis, which class members paid for lender‐placed insurance. Nevertheless, it appears as though counsel never took any discovery on this point. Under these circumstances, would it not be less risky for counsel to take the declarant’s deposition, to confirm the accuracy of his statements? Would discovery not shed additional light on the logic (or illogic) of a claims‐made procedure?
Should the Court be at all concerned that it is being asked to approve an attorney’s fee protocol without the submission of lodestar information and backup documentation?
Would the analysis of the percentage of the recovery for an attorney’s fees award change significantly if the award were evaluated against the dollars actually paid, as opposed to the potential dollars if all claimants submitted claims and did not opt out?
The Court did not approve or deny the requested final approval at the Fairness Hearing. Instead, in what may be a first of its kind in lender force-placed insurance class action settlements, the Court took the motion “under consideration.” Lee v. Ocwen Loan Servicing, LLC, Dkt No. 159, Post Fairness Hearing Order, filed on June 11, 2015 (S.D. Fla. Case No. 0:14-cv-60649): Download Lee v Ocwen Loan Servicing. Post Fairness Hearing Order. Dkt No 159 (S.D. Fla. Case No. 0.14.cv.60649.JG). This is the second of the three rulings by Judge Goodman which all deserve special attention, and this second ruling will be the subject of an article tomorrow on Insurance Claims and Issues blog.
[1] Interested Parties‐Appellants Owings Law Firm, Wagoner Law Firm and Walker Law PLC filed their brief on January 30, 2015, but the Eleventh Circuit dismissed their appeal on March 30, 2015.
When an insurance company put “advice of counsel” at issue with respect to its settlement of the underlying case, it thereby waived the attorney-client privilege. When the insurance carrier’s officers testified about the reasons they settled the underlying case, they helped to establish the discovery exception to work product qualified immunity, all in the case of Seneca Insurance Co. v. Western Claims, Inc., 774 F.3d 1272 (10th Cir. 2014)(applying Oklahoma law of attorney-client privilege).
The carrier sued an adjuster for indemnity and negligence in that case. The carrier “affirmatively put at issue its attorney’s advice by invoking ‘advice of counsel’ to support its claims in this litigation.” Seneca Insurance Co. v. Western Claims, Inc., 774 F.3d 1272, 1277 (10th Cir. 2014).
The carrier in that case had to prove that the underlying settlement was reasonable in order to recover on its indemnity claim against the adjuster. The carrier alleged that it relied on the advice of counsel that the settlement was reasonable. This allegation was a waiver of the privilege under established law.
The second aspect of the case was that the carrier’s own testimony further established that certain correspondence concerning the settlement was not protected from discovery as work product. The carrier’s own officers testified that they “generally” relied on the advice of counsel rather than on their own reasons for settling the underlying case. Seneca Insurance Co. v. Western Claims, Inc., 774 F.3d 1272, 1277 (10th Cir. 2014). This testimony helped to build a record that there was no substantial equivalent of the evidence which could be obtained without undue hardship, and so the evidence was not protected as work product.
Where the issue involves settling the underlying case, the law of Western Claims in Oklahoma is likely to be followed elsewhere.
There is an ongoing struggle over the standard of behavior which these professionals ought to meet. The current standard of conduct which governs the way advisers/brokers treat their customers is “suitability,” i.e., whether the advice they give or the investment they recommend is “suitable.” Some call this the “suitability or ‘good enough’ standard”. Robert Trigaux, “Wall Street Wants Big Profits, ‘Good Enough’ Advice” (posted on Tampa Bay Times March 13, 2015).
One alternative is to hold the conduct of advisers/brokers to a fiduciary standard. The fiduciary standard is recommended by the president and consumer groups. Their proposed change to a fiduciary standard is not going anywhere. The current suitability standard is unlikely to change any time soon. The fiduciary standard is perhaps understandably opposed by Wall Street. Robert Trigaux, “Wall Street Wants Big Profits, ‘Good Enough’ Advice” (posted on Tampa Bay Times March 13, 2015).
Ms. Barbara Roper, the director of investor protection for the Consumer Federation of America put it this way, as quoted by the Wall Street Journal and the Tampa Bay Times:
This is as Orwellian as it gets. They will serve their clients best by defeating a regulation that would require them to do what’s best for their clients?
