IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK. GORDON CASEY, individually and on behalf of all others similarly situated,

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK GORDON CASEY, individually and on behalf of all others similarly situated, Plaintiff, NOTICE OF CLASS ACTION SETTLEMENT v. MIDFIRST BANK, N.A. d/b/a/ MIDLAND MORTGAGE and FIRSTINSURE, INC. et al., Civil Action No.: 5:12-cv Defendants. THIS IS A NOTICE OF A PROPOSED CLASS ACTION SETTLEMENT. PLEASE READ THIS NOTICE CAREFULLY. YOUR RIGHTS MAY BE AFFECTED. YOU MAY BE ENTITLED TO MONEY FROM THIS SETTLEMENT This is an important notice from the United States District Court for the Northern District of New York (the Court ) regarding a proposed class action settlement and upcoming hearing in this class action lawsuit that may affect your rights. This notice is being sent to you because you have been identified as a Settlement Class Member in this lawsuit. If you were charged for a lender-placed flood insurance policy by Midland Mortgage during the Class Period, and have not already received a full refund from Midland, a Claim Form is enclosed with this Notice, and you may be eligible to receive monetary compensation. To receive monetary compensation, you must complete, sign, and return a Claim Form by August 29, I. BACKGROUND AND SUMMARY OF LITIGATION This class action lawsuit alleges that Defendant MidFirst Bank, doing business as Midland Mortgage ( Midland ), violated the legal rights of borrowers who reside in flood zones by unlawfully forcing them to carry excessive flood insurance coverage for their property, and that Midland and its affiliate, Firstinsure, Inc. ( Firstinsure ), improperly profited from the forceplacement of flood insurance. Midland and Firstinsure (the MidFirst Defendants ) deny that they have acted unlawfully, but have agreed to enter into this Settlement to resolve these allegations. The Court has preliminarily approved the Settlement and has certified the following class for settlement purposes: All persons with a mortgage loan owned or serviced by Midland who were sent a flood insurance cycle letter by Midland or who were charged for lender-placed flood insurance by Midland on or after May 17, 2006 through May 9, 2014 (the Settlement Class ).

2 II. SUMMARY OF THE PROPOSED SETTLEMENT The Court certified the Settlement Class and preliminarily approved the settlement on May 9, The Settlement Agreement provides for the following relief: A. Monetary Relief for Settlement Class Members Pursuant to the Settlement, the MidFirst Defendants have agreed to pay each Settlement Class Member who was charged for lender-placed flood insurance and timely returns a valid Claim Form ( Claimant ) a Settlement Payment equal to twenty percent (20%) of the net amount of premiums that Midland charged such Claimant for all lender-placed flood insurance placements during the time period from May 17, 2006 through May 9, 2014 (the Class Period ) (meaning 20% of the total amount of premiums that Midland charged such Claimant less any refunds of premiums that were issued). If Midland Mortgage s records show that you were charged for lender-placed flood insurance, and were not already refunded in full, a Claim Form is enclosed with this Notice of Class Action Settlement. (Additional copies may be obtained on the settlement website at Only Settlement Class Members who were charged for lender-placed flood insurance, and were not subsequently refunded in full, will receive a Claim Form with this Notice. If you did not receive a Claim Form with this Notice, it is because Midland Mortgage s records show that you were not charged for lender-placed flood insurance during the relevant time period, or that you already have been refunded in full. If you believe you should have received a Claim Form but did not, you may call the Claims Administrator at or download a claim form from the settlement website at Although not all Settlement Class Members are eligible to submit Claim Forms, everyone is entitled to prospective relief, as described in Section II.B. below. In order to receive compensation from this Settlement, you must submit a Claim Form by August 29, Claimants who do not have an active mortgage escrow account with Midland will receive their Settlement Payment by check. All other Claimants with active mortgage escrow accounts who were charged for lender-placed flood insurance will receive their Settlement Payment via escrow credit or check, at Midland s election. Claimants who are issued their Flood Settlement Payments by check will have 180 days to cash their settlement check (the Payment Period ). Any checks that remain uncashed following the Payment Period will be paid to the Consumer Credit Counseling Service of Central Oklahoma or another organization approved by the Court. Settlement Class Members who have made or who make a claim for property damage in the future on their lender-placed flood insurance policy will not be affected in any way as a result of their participation in this Settlement, and may participate in this Settlement to the same extent as Settlement Class Members who have not made a claim on their lender-placed flood insurance policy. In addition, there will be no offset to any amount received by any Claimant under this Settlement to account for any payments that the Claimant received or may receive under any other settlement between the MidFirst Defendants and any governmental or private entity, including the 2

3 Office of the Comptroller of the Currency (the OCC ). You are encouraged to review Paragraphs of the Settlement Agreement for the full scope of the monetary relief available to class members, available at B. Prospective Relief (meaning required changes with respect to the MidFirst Defendants flood insurance policies and practices) 1. No Prohibited Commissions to the MidFirst Defendants in Connection with Lender- Placed Flood Insurance. The MidFirst Defendants and their affiliates shall not accept any commissions in connection with lender-placed flood insurance that are prohibited by law, applicable regulations, or by specific instruction to the MidFirst Defendants from the United States Department of Housing and Urban Development ( HUD ) or the OCC. 2. Opportunity for Settlement Class Members to Elect Minimum Flood Insurance Coverage Requirement. Within 90 days following the Effective Date of the Settlement, and for no less than three years thereafter, Midland shall provide Settlement Class Members with the opportunity to lower the required amount of flood insurance on their property to an amount equal to the lesser of the replacement cost value of their property, the maximum amount of flood insurance available under the National Flood Insurance Program (currently $250,000 for residential structures), or the unpaid principal balance of their loan, provided that the existing flood coverage is otherwise sufficient to meet minimum requirements under federal laws and regulations and any insurance or investor requirements, the amount of insurance is otherwise sufficient to cover the total amount secured by the borrower s mortgage, and borrowers affirm in writing that they understand the risk of insuring for less than the full replacement cost value of their property, and hold Midland harmless from liability associated with the reduced coverage. For no less than three (3) years thereafter, Midland shall inform borrowers who made the election of their right to renew their election. 3. Conflicts With Regulatory Requirements. The foregoing prospective relief is subject to changes in applicable law or changes in investor or insurer requirements that would prevent the MidFirst Defendants from implementing such prospective relief. The MidFirst Defendants represent that they are not currently aware of any legal, investor, or insurer requirements that would currently prevent them from implementing such prospective relief. You are encouraged to review Paragraphs of the Settlement Agreement for the full scope of the prospective relief available to class members, available at III. RELEASE OF CLAIMS In exchange for the monetary and injunctive relief provided by the settlement, all Settlement Class Members who do not timely exclude themselves by opting out of the settlement and each Settlement Class Member and each of their respective spouses, children, executors, representatives, guardians, wards, heirs, estates, bankruptcy estates, bankruptcy trustees, successors, predecessors, guardians, wards, joint tenants, tenants in common, tenants by the 3

4 entirety, co-mortgagors, co-obligors, co-debtors, attorneys, agents and assigns, and all those who claim through them or who assert claims (or could assert claims) on their behalf (collectively, the Releasors ), shall release, resolve, relinquish, and discharge the MidFirst Defendants and their employees, agents, affiliates, predecessors, parents, and subsidiaries, and the MidFirst Defendants lender-placed insurance vendors, including any brokers, agents, insurance providers, and providers of tracking and placement services (collectively, the Released Parties ), from any and all claims, counterclaims, actions, causes of action, demands, obligations and liabilities, of whatever kind or character, including, without limitation, those known or unknown, that arose during the Class Period, in any way arising from or related to the Released Parties conduct, policies, or practices as to flood insurance that Releasors have, had, or may have had against Released Parties; including, without limitation, any and all claims for individual money damages that were asserted or could have been asserted against Released Parties concerning the conduct, policies, or practices as to placement of flood insurance on behalf of Releasors in the Amended Complaint through the date this Settlement Agreement is executed ( Released Claims ). Nothing in this Agreement shall affect in any way a claim for insurance coverage under any insurance policy, including any lenderplaced flood insurance policy. The Released Claims shall include, but not be limited to: all claims related to charges for Midland s placement of lender-placed flood insurance policies during the Class Period; Midland s flood insurance requirements; the relationship, whether contractual or otherwise, between the MidFirst Defendants and their employees, agents, affiliates, predecessors, parents, and subsidiaries, and the MidFirst Defendants flood insurance vendors including any brokers, agents, flood insurance providers, and providers of tracking and placement services, regarding lenderplaced flood insurance, including, but not limited to, the procuring, underwriting, placement, insurance tracking, or costs of lender-placed flood insurance policies; the coverage amount, duration, issue date, alleged backdating, or alleged excessive cost of any lender-placed flood insurance policies placed or charged by the MidFirst Defendants; the payment or receipt of commissions, expense reimbursements, alleged kickbacks, or any other compensation under any lender-placed flood insurance policies placed or charged by the MidFirst Defendants; any alleged tying arrangement involving the MidFirst Defendants and lender-placed flood insurance; any alleged breach of fiduciary duty by the MidFirst Defendants concerning lender-placed flood insurance policies; any alleged tortious interference by the MidFirst Defendants and their employees, agents, affiliates, predecessors, parents, and subsidiaries, and the MidFirst Defendants lender-placed flood insurance vendors including any brokers, agents, insurance providers, and providers of tracking and placement services with mortgage contracts serviced by Midland; the disclosure or non-disclosure of any payment, expenses, fees, charges, or feature pertaining to or under any lender-placed flood insurance policies placed or charged by the MidFirst Defendants; the receipt or non-disclosure of any benefit to the MidFirst Defendants under any lender-placed flood insurance policies placed or charged by the MidFirst Defendants; the content, manner, or accuracy of any communications regarding the placement of any lender-placed flood insurance policies by the MidFirst Defendants; and the regulatory approval or non-approval of any lenderplaced flood insurance policy, or the premium thereon, placed or charged by the MidFirst Defendants. You are encouraged to review Paragraphs of the Settlement Agreement for the full scope of the release, available at If the proposed settlement is approved 4

5 by the Court, a judgment will be entered by the Court following the Final Fairness Hearing, which will dismiss with prejudice the Released Claims as set forth above. This release will not affect in any way any claim for coverage under any insurance policy, including any lender-placed insurance policy. IV. YOUR LEGAL RIGHTS AND OPTIONS In order to receive monetary relief from this Settlement, YOU MUST RETURN A COMPLETED CLAIM FORM TO THE CLAIMS ADMINISTRATOR BY AUGUST 29, You may submit a Claim Form to the Claims Administrator using any one of the following options: \ By mailing it to the following address: Midland Mortgage Settlement Administrator PO Box Birmingham, AL By facsimile, by faxing a copy of your completed Claim Form to By , by ing a copy of your completed Claim Form to steve@noticeclass.com By submitting your Claim Form online, by uploading it to the Settlement Website, which is You are only required to submit one Claim Form regardless of how many times you were subjected to lender-placed flood insurance by Midland Mortgage during the Class Period. If you do not wish to participate in this Settlement, and want to be excluded from the Settlement Class, you must send a letter to the Claims Administrator at the address above, postmarked no later than August 29, 2014, requesting exclusion from the settlement ( opt-out ). Your written request for exclusion must contain your name, address, telephone number and address, and be personally signed by you. No opt-out request may be made on behalf of a group of Settlement Class Members. Any Settlement Class Member who requests exclusion from (opts out of) the Settlement will not be bound by the Settlement Agreement, and will not have any right to object, appeal or comment thereon. If you exclude yourself, you will not receive any compensation under the Settlement, but you will keep your right to sue any or all of the Released Parties on your own at your expense. If you wish to object to the Settlement, you must mail a written statement of objection to the Clerk of Court, to Class Counsel and Defense Counsel at the addresses below no later than August 29, 2014: 5

6 To the Court: Clerk of Court United States District Court for the Northern District of New York Alexander Pirnie Federal Building 10 Broad Street Utica, NY To Class Counsel: BERGER & MONTAGUE, P.C. Shanon J. Carson 1622 Locust Street Philadelphia, PA Telephone: (215) Fax: (215) and NICHOLS KASTER, PLLP Kai Richter 4600 IDS Center 80 South Eighth Street Minneapolis, MN Telephone: (612) Fax: (612) To counsel for the MidFirst Defendants: GOODWIN PROCTER LLP John C. Englander Matthew G. Lindenbaum Exchange Place Boston, MA Telephone: (617) Fax: (617) In your written statement, you must set forth: (a) the case name and number; (b) the basis for your objection; (c) your name, address, telephone number, and address; (d) a statement of whether you intend to appear at the Final Approval Hearing, either with or without counsel; and (e) personally sign your objection. Settlement Class Members who fail to make objections in the manner specified above shall be deemed to have waived any objections and shall be foreclosed from making any objection (whether by appeal or otherwise) to the Settlement Agreement. If you 6

7 object to the Settlement, you will remain a Settlement Class Member, and will be bound by the terms of the Settlement and the release specified above, regardless of whether your objection is accepted or rejected by the Court. V. THE FINAL APPROVAL HEARING On September 26, 2014, at 10:00 a.m., before the Honorable David N. Hurd, in the United States Courthouse, Alexander Pirnie Federal Building, 10 Broad Street, Utica, NY , the Court will hold a Final Approval Hearing to determine whether to grant final approval to the Settlement and determine the appropriate amount of attorneys fees and costs to award to counsel for the Settlement Class and any service award to the Named Plaintiffs. You may attend this hearing but are not required to do so. You may also enter an appearance in the case through your own attorney, if you so desire. You may review a copy of the Settlement Agreement and other documents that are relevant to this case, including Class Counsel s Motion for Attorneys Fees and Costs (when it is filed), at the Settlement Website. You may also review a copy of the Settlement Agreement at the Clerk s Office at the U.S. District Court for the Northern District of New York, Alexander Pirnie Federal Building, 10 Broad Street, Utica, NY VI. HOW TO OBTAIN ADDITIONAL INFORMATION This Notice of Class Action Settlement provides a summary of the proposed Settlement Agreement. If you have any questions concerning this Settlement, you should visit the Settlement Website, If you have further questions after visiting the Settlement Website, or need any assistance in completing the Claim Form, you may call the Claims Administrator at , or mail or your inquiry to the Claims Administrator at the address below: Midland Mortgage Settlement Administrator PO Box Birmingham, AL You may also contact Class Counsel directly, as follows: BERGER & MONTAGUE, P.C. NICHOLS KASTER, PLLP 1622 Locust Street 4600 IDS Center Philadelphia, PA South Eighth Street Telephone: (866) Minneapolis, MN Fax: (215) Telephone: (612) Fax: (612) PLEASE DO NOT CONTACT THE COURT 7