STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF NEW HANOVER 96 CVS 5903
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IN RE W.R. BONSAL COMPANY )
EIFS LITIGATION )
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FINAL ORDER AND JUDGMENT GRANTING
THIS CAUSE coming on for hearing before the undersigned Special Superior Court Judge For Complex Business Cases on March 17, 2000, pursuant to this Court’s Order of December 23, 1999, in order for this Court to conduct a final fairness hearing to determine whether the proposed settlement with Settling Defendant W.R. Bonsal Company (hereafter “Settling Defendant”) is fair, reasonable and adequate, and to address Class Counsel’s application for an award of attorney’s fees and costs; and the Settlement Class Members being represented by Class Counsel, including Gary K. Shipman, Marvin K. Blount, Jr., Everette L. Doffermyre, Kent M. Williams, Gary E. Mason, Carl W. Thurman III and William M. Audet, and the Settling Defendant being represented by its attorneys, Daniel G. Clodfelter and Curtis J. Shipley;
AND THE COURT having read and considered the Settlement Agreement, the Notice Plan, and Memoranda submitted by Class Counsel, having received evidence at the hearing, having heard arguments from Class Counsel and the Settling Defendant, and being further advised in the premises, now makes the following:
FINDINGS OF FACT
1. This action was commenced on January 5, 1996, and on January 9, 1996, this action was certified as a class action, pursuant to Rule 23 of the North Carolina Rules of Civil Procedure, by the Honorable Ernest B. Fullwood, Superior Court Judge.
2. On September 18, 1996, Judge Fullwood re-certified this action as a class action, and defined the class as: “all individuals, proprietorships, partnerships, corporations, and other entities (hereinafter “persons and entities”) that own or previously owned any structure used as a single family or multi-family residential dwelling (herein referred to as “structure”) located in the State of North Carolina, which structure had an EIFS system installed as an exterior wall cladding during the period 1969 through the present.”
3. On June 16, 1999, this Court, although questioning whether the Action would be certified as a class action were the issue presented today, denied defendants’ motions to decertify the class, ordered a separate trial for each defendant, and set the first phase of the trial for October 4, 1999. On July 13, 1999, this Court further denied Settling Defendant’s motion to decertify based upon separate arguments unique to its products. Settling Defendant appealed this Court’s June 16, 1999, and July 13, 1999 Orders, and the North Carolina Court of Appeals denied a stay pending appeal. The Settlement Agreement was executed prior to a decision being reached by the Court of Appeals on Settling Defendant’s appeal.
4. After more than four years of intensive litigation in this action and as a result of more than three years of intensive, arm’s length negotiations between Class Counsel and Settling Defendant, the parties have reached accord with respect to a settlement that provides substantial benefits to Settlement Class Members, in return for a release and dismissal of the claims at issue in this case against the Settling Defendant. The Court preliminarily approved the resulting Settlement Agreement on December 23, 1999.
5. As part of the Order Granting Preliminary Approval, this Court approved a proposed Notice Plan and Class Notice, which provided Settlement Class Members notice of this and other proposed settlements with other Defendants. The Notice Plan provided an opportunity for class members to file objections to the settlement by March 6, 2000. In approving the Notice Plan, the Court was particularly attuned to the significance of the Notice reaching homeowners in North Carolina. Thus, the Court approved a Notice Plan that relied on a combination of television, radio, print advertising, an interactive website which provides access to the Notice and Claim Forms, and direct mail to provide the best notice practicable under the circumstances to reach North Carolina homeowners. The number of requests for the Notice and Claim Forms indicate that the Notice Plan has been successful.
6. As of the deadline for the filing of objections, no objections were filed. Given the magnitude of this settlement, and the saturated notice described above, this Court finds the absence of any objections indicative of the fairness, reasonableness and adequacy of the settlement with the Settling Defendant.
7. The settling Parties have filed with the Court a declaration from Kinsella Communications declaring that the mailing and publication of the Court-approved notice, consistent with the Notice Plan, have been completed. According to this declaration, an estimated 94.5% of adults older than 25 in North Carolina were exposed to advertising about the settlement an estimated average of 4.24 times.
8. The Court finds that the mailing, State-wide publication of notice and Internet posting constitute the best practicable notice of the Fairness Hearing, the proposed settlement, Class Counsel’s application for fees and expenses, and other matters set forth in the Class Notice and the Summary Notice; and that such mailing and publication of notice constituted valid, due and sufficient notice to all members of the Settlement Class, and complied fully with the requirements of Rule 23 of the North Carolina Rules of Civil Procedure, the Constitution of the United States, the laws of North Carolina and any other applicable law. Furthermore, Class Counsel and counsel for the Settling Defendant have agreed that the Claims Administrator shall send direct notice to all those to whom Claim Forms have been submitted, confirming that the deadline for filing claims is January 17, 2003. All future Claim Forms and notifications to class members shall specifically indicate that the deadline for filing claims is January 17, 2003.
9. The Settling Defendant has paid the cost and expense of implementing its share of the Notice Plan, including mailing the Class Notice and publishing the Summary Notice.
10. Any persons who wished to be excluded from this Action were provided an opportunity to opt out pursuant to the initial notice, and any persons who complied with the Court’s June 16, 1999 Order were permitted a second opportunity to exclude themselves from this Action. All persons who have validly excluded themselves from this Action have no rights under the Settlement Agreement and shall not be bound by the Settlement Agreement or the final judgment herein.
11. Any class member who has timely and properly elected to be excluded from the Action may seek to revoke such election by mailing a Request for Revocation of Prior Election to the Claims Administrator. At the sole discretion of the Settling Defendant, the former class member may become a Settlement Class Member for all purposes. Any person who has elected to be excluded from the Action and who does not seek to revoke such election as provided above has no rights under the Settlement Agreement.
12. Settlement Class Members are bound by the settlement, the Settlement Agreement and releases contained therein, and the Final Order and Judgment, and do not have any further opportunity to opt out of the Action.
13. Any class member who did not timely file and serve an objection in writing to the Settlement Agreement, to the entry of Final Order and Judgment, or to Plaintiffs’ Class Counsel’s application for fees, costs, and expenses, in accordance with the procedure set forth in the Class Notice and mandated in the Order Granting Preliminary Approval of Settlement, is deemed to have waived any such objection by appeal, collateral attack, or otherwise.
14. On the basis of all of the issues in this litigation, and the provisions of the Settlement Agreement, the Court is of the opinion that the settlement is a fair, reasonable and adequate compromise of the claims against the Settling Defendant in this case, pursuant to Rule 23(c) of the North Carolina Rules of Civil Procedure. There are a number of factors which the Court has considered in affirming this settlement, including:
a. The liability issues in this case have been hotly contested. There have been delays in dealing with these issues, and the Court has been concerned and continues to be concerned about the effect of these delays on the parties.
b. There are numerous individual EIFS cases pending before the various
Courts in North Carolina and other states, most of which involve claims against contractors and parties other than EIFS manufacturers. The Court notes that for settlement purposes, this settlement has the benefit of providing some relief to North Carolina homeowners now, without further litigation, under circumstances where the liability issues are still very hotly debated among the parties to this litigation and among the parties to the individual litigation. This settlement provides homeowners the opportunity for a substantial cash benefit.
c. This Court has been concerned from the outset of this class action with the possibility that prolonged litigation could adversely impact the financial condition of the Settling Defendant, resulting in the potential loss of significant protection to homeowners if this were to occur. The Settling Defendant has assured this Court that it can fund this settlement. Further, Class Counsel have submitted an affidavit indicating that they have reviewed the resources available to the Settling Defendant to fund the settlement. The Court has retained jurisdiction to review this settlement should Settling Defendant’s continuing ability to fund this settlement be called into question, notwithstanding these assurances.
d. There have been no objections to the proposed settlement, after adequate notice to class members and what the Court finds to be an above average response to the Notice.
e. The fact that the North Carolina Attorney General’s office does not object to the settlement is further indication that some independent objective parties have reviewed the settlement and determined that it is in the best interests of consumers. The North Carolina Attorney General’s office has expressed great interest in the resolution of the issues in this litigation, and has participated in several of the meetings held by the Court with Class Counsel and counsel for the Defendants, and the position advanced by the North Carolina Attorney General’s office has been very supportive of the Settlement Agreement.
f. This settlement is clearly a byproduct of hard-fought litigation between the parties, and not a result of any collusion on the part of Class Counsel or counsel for the Settling Defendant.
g. Homeowners are left with the ability to pursue claims against the other parties that they might feel are responsible for damages to their homes, and as such, this settlement is not a final decision with respect to the rights of homeowners as to those parties; however, it does provide homeowners with monetary compensation, which the Court finds to be very valuable. In order to retain the ability to pursue claims against other parties while still providing the Settling Defendant with the peace and protection from contribution and indemnity claims which it seeks through this settlement, Settlement Class Members have agreed in Paragraph 20 of the Settlement Agreement to reduce any judgment obtained against any such other person by whatever amount is necessary under applicable law to eliminate contribution and indemnity claims against the Settling Defendant. Thus, there would be no possibility of a judgment for contribution or indemnity being entered against Settling Defendant, no justiciable issue of contribution or indemnity would exist in a third-party claim, and Settling Defendant would achieve its goal of peace. The Court finds that this agreement by the Settlement Class Members is fair and reasonable in light of both the value to be received by Settlement Class Members pursuant to the Settlement Agreement and the potential value available to them through retention of the ability to pursue claims against other persons. The Court also finds that this approach for providing protection to the Settling Defendant against contribution and indemnity claims is preferable to other alternatives available.
h. The following procedures are to be followed in implementing the judgment reduction provisions in Paragraph 20 of the Settlement Agreement for the following reasons: It is anticipated that Settlement Class Members will pursue separate actions against builders or other third parties who may be responsible for damages to their homes, including damages for which those third parties may contend that the Settling Defendant is liable in whole or in part. It is the intent of the Settlement Agreement that the participation of the Settling Defendant not be required in such actions because its participation is not necessary for a determination of the issues in such individual actions. If claims for indemnity or contribution are brought against the Settling Defendant despite the provisions of Paragraph 20, the Settling Defendant shall:
1. notify the counsel for the Settlement Class Member of the assertion of the claims. Such notice shall be given before the expiration of time for the Settling Defendant to answer or otherwise respond to any such contribution or indemnity claim, including any extension thereof, or as soon as practicable after an answer or other response, if any, is filed by the Settling Defendant.
2. expressly authorize and acknowledge the right of the Settlement Class Member to intervene in his or her own name or in the name of the Settling Defendant in any proceeding asserting a contribution or indemnity claim against a Settling Defendant as described above in order to plead any matter in defense of such contribution and indemnity claim or in avoidance of any determination of liability which would cause a reduction to such Settlement Class Member’s judgment as provided in Paragraph 20.2 of the Settlement Agreement.
i. The claims procedure established under the Settlement Protocol is fair, a simplified process and workable, and if inspections are conducted by independent, experienced and well-trained inspectors, the Settlement Protocol will work to the advantage of homeowners. In any event the Court will retain jurisdiction to work out any unanticipated problems.
j. With respect to the scientific support for the “moisture triggers” established under the Protocol, the Court believes that the standards that have been set are fair and adequate and the best that the parties could have hoped to achieve under the circumstances of this Settlement.
15. The Settling Defendant has informed the Court that it has retained Poorman-Douglas Corporation as the Claims Administrator in accordance with the Settlement Agreement and the continuing jurisdiction of this Court.
16. On March 1, 2000, Settlement Class Counsel also submitted to the Court and served on the Settling Defendant their application for reasonable attorneys’ fees, costs, and expenses consistent with the terms of the Settlement Agreement. Class Counsel point out that attorneys fees have been agreed to by the Settling Defendant, and they are not counted against the overall benefits made available to class members. This Court has considered Class Counsel’s request under the factors set forth in North Carolina’s Revised Rules of Professional Conduct, Rule 1.5, and finds that each of these factors supports Class Counsel’s request for Seven Hundred Fifty Thousand Dollars ($750,000.00) in attorneys fees and expenses.
NOW,
THEREFORE, ON THE BASIS OF THE FOREGOING FINDINGS OF FACT, THE COURT HEREBY
MAKES THE FOLLOWING:
CONCLUSIONS OF LAW
1. This Court has jurisdiction over the parties and the subject matter of this proceeding.
2. Pursuant to Rule 23(a) and (c) of the North Carolina Rules of Civil Procedure, the following Settlement Class is certified for purposes of final settlement:
All persons or entities who, as of September 18, 1996, owned or formerly owned a one or two family residential dwelling or townhouse in the State of North Carolina clad, in whole or in part, with W.R. Bonsal Company’s Exterior Insulation and Finish System (“EIFS”).
3. The Court finds that, for the purpose of this Settlement, the requirements of Rule 23(a) of the North Carolina Rules of Civil Procedure are satisfied, and that a class action is an appropriate method for resolving the disputes in this litigation.
4. The Settlement Class Representatives are Carol Roberts, Edward and Leah Dowd, and Leonard and Joan Winter.
5. As Settlement Class Representatives, Carol Roberts, Edward and Leah Dowd, and Leonard and Joan Winter are entitled to and are hereby awarded an additional payment of Eleven Thousand Two Hundred Fifty Dollars ($11,250.00), with the Dowds and Winters to jointly share the award, over and above their claims for damages, in recognition of the efforts they have undertaken and the risk they have incurred on behalf of the Class.
6. The Court grants final approval of the Settlement Agreement as being fair, reasonable and adequate, pursuant to Rule 23(c) of the North Carolina Rules of Civil Procedure.
7. The Court grants the application/petition of Class Counsel for reasonable fees and expenses as fair and reasonable, and well-supported by applicable law.
NOW, THEREFORE, ON THE BASIS OF THE FOREGOING FINDINGS OF FACT AND CONCLUSIONS OF LAW, IT IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS:
1. The Motion for Final Approval of the Proposed Settlement is GRANTED.
2. As Settlement Class Representatives, Carol Roberts, Edward and Leah Dowd, and Leonard and Joan Winter are entitled to and are hereby awarded an additional payment of Eleven Thousand Two Hundred Fifty Dollars ($11,250.00), with the Dowds and Winters to jointly share the award, over and above their claims for damages, in recognition of the efforts they have undertaken and the risk they have incurred on behalf of the Class.
3. Class Counsel’s Petition for an Award of Attorneys’ Fees and Expenses in the amount of Seven Hundred Fifty Thousand Dollars ($750,000.00) is GRANTED.
4. This Action and all claims against the Settling Defendant are hereby dismissed with prejudice, but the Court shall retain exclusive and continuing jurisdiction of the Action, all Parties, and Settlement Class Members, to interpret and enforce the terms, conditions and obligations of this Settlement Agreement.
This the 24th day of March, 2000.
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THE HONORABLE BEN F. TENNILLE
SPECIAL SUPERIOR COURT JUDGE
FOR COMPLEX BUSINESS CASES