Preview
FILED
DALLAS COUNTY
1/5/2015 3:22:04 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE NO. 13-01744
TERRY C. HARPER, § IN THE DISTRICT COURT
§
PLAINTIFF, §
§
V. §
§ DALLAS COUNTY, TEXAS
RMI MANAGEMENT, LLC; RED ROCK §
FINANCIAL SERVICES, LLC; and RED ROCK §
FINANCIAL SERVICES TEXAS, LLC, §
§
DEFENDANTS. §
§
§ 162ND JUDICIAL DISTRICT
JOINT MOTION FOR AN ORDER FOR: (1) CONDITIONALLY CERTIFYING
SETTLEMENT CLASS; (2) PRELIMINARY APPROVAL OF CLASS SETTLEMENT
AGREEMENT; (3) DIRECTING THAT NOTICE BE SENT TO CLASS MEMBERS;
AND (4) SCHEDULING A FINAL FAIRNESS HEARING; MEMORANDUM OF
POINTS AND AUTHORITIES IN SUPPORT THEREOF
TO THE HONORABLE JUDGE OF SAID COURT:
PLEASE TAKE NOTICE that plaintiff Terry C. Harper, on behalf of himself
individually and on behalf of a class of those similarly situated (the “Class”) and defendants RMI
Management, LLC, Red Rock Financial Services, LLC, and Red Rock Financial Services Texas,
LLC (sometimes collectively referred to as “Red Rock”) (collectively referred to as the
“Parties”), will and hereby do jointly and respectfully move this Court for an order:
(1) conditionally certifying the settlement class;
(2) granting preliminary approval of the proposed settlement of this class action;
(3) directing that notice of the proposed settlement be mailed to Class members; and
(4) scheduling a final fairness hearing for final approval of settlement.
Said motion is based on the ground that the Parties have stipulated to the treatment of this
matter as a class action for settlement purposes only and have reached an agreement in principle
to settle this matter which is fair, adequate, and reasonable, and in the best interests of the
JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 1
1086404 21347751V1
classes.
This motion will be and hereby is based on this Notice of Motion and Motion, the
attached Memorandum of Points and Authorities, the concurrently filed Declarations of Charles
E. Dorr and Craig J. Mariam, together with the Exhibits attached thereto, including the proposed
Class Action Settlement Agreement and Release, the proposed notice to class members and the
proposed claim form, the complete files and records in this action, and on such further evidence
and argument as may be presented prior to or at the hearing on this motion.
Because all Parties have agreed to the proposed settlement and file this motion jointly,
this motion shall not be opposed.
Respectfully submitted,
/s/ Charles E. Dorr
CHARLES E. DORR
State Bar No. 00797921
CHARLES E. DORR, P.C.
654 East Walton Street
Madison, GA 30650
Telephone: (713) 443-7030
ced@cedpc.com
RANDAL MATHIS
State Bar No. 13194300
MARK DONHEISER
State Bar No. 05974800
MATHIS, DONHEISER & JETER
1412 Main Street, Suite 2600
Dallas, Texas 75202
Telephone: (214) 303-1919
Facsimile: (214) 303-0399
rmathis@mathisdonheiser.com
ATTORNEYS FOR PLAINTIFF
TERRY C. HARPER
JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 2
1086404 21347751V1
GORDON & REES LLP
/s/ Craig J. Mariam
CRAIG J. MARIAM
State Bar No. 24063831
Lead Counsel
KIRSTIE M. SIMMERMAN
State Bar No. 24083858
2100 Ross Avenue, Suite 2800
Dallas, Texas 75201
Telephone: (214) 231-4660
Facsimile: (214) 461-4053
cmariam@gordonrees.com
ksimmerman@gordonrees.com
ATTORNEYS FOR DEFENDANTS
RMI MANAGEMENT, LCC; RED ROCK
FINANCIAL SERVICES, LLC; and RED
ROCK FINANCIAL SERVICES TEXAS,
LLC
JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 3
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TABLE OF CONTENTS
PAGE
I. INTRODUCTION ...............................................................................................................1
II. NATURE OF THE CASE ...................................................................................................2
III. TERMS OF THE PROPOSED SETTLEMENT .................................................................3
IV. PROVISIONAL CLASS CERTIFICATION IS APPROPRIATE......................................5
A. The Proposed Settlement Class is Sufficiently Numerous. .....................................6
B. There Are Questions of Law and Fact Common to the Class..................................7
C. The Class Representatives’ Claims Are Typical. ....................................................8
D. The Class Representative Will Adequately Protect Class Interests.........................8
E. Common Issues Predominate and Class-wide Settlement is Superior to Other
Available Methods of Resolution. ...........................................................................9
V. THE PROPOSED SETTLEMENT WARRANTS PRELIMINARY APPROVAL..........11
A. Factors To Be Considered In Granting Preliminary Approval. .............................12
1. The Settlement is the Product of Serious, Informed and Non-Collusive
Negotiations. ..............................................................................................13
2. The Settlement Does Not Improperly Grant Preferential Treatment To
Class Representatives.................................................................................15
3. The Stage of The Proceedings Are Sufficiently Advanced To Permit
Preliminary Approval Of The Settlement. .................................................15
B. Class Settlement Notice. ........................................................................................16
VI. CONCLUSION..................................................................................................................17
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TABLE OF AUTHORITIES
PAGE
Cases
Amchem Prods., Inc. v. Windsor,
521 U.S. 591 (1997)................................................................................................................ 5, 6
Amoco Prod. Co. v. Hardy,
628 S.W.2d 813 (Tex. App.--Corpus Christi 1981, writ dism’d) ............................................. 10
Ball v. Farm & Home Sav. Ass’n,
747 S.W.2d 420 (Tex. App. – Fort Worth 1988, writ denied)...................................... 13, 14, 16
Castano v. American Tobacco Co.,
84 F.3d 734 (5th Cir. 1996) ...................................................................................................... 11
Central Power & Light Co. v. City of San Juan,
962 S.W.2d 602 (Tex. App.--Corpus Christi 1998, writ dism’d w.o.j. .................................... 10
Class Plaintiffs v. City of Seattle,
955 F.2d 1268 (9th Cir. 1992) .................................................................................................. 12
Cotton v. Hinton,
559 F.2d 1326 (5th Cir. 1977) .................................................................................................. 13
Enron Oil & Gas Co. v. Joffrion,
116 S.W.3d 215 (Tex. App.-Tyler 2003, no pet.)....................................................................... 9
Ford Motor Co. v. Sheldon,
22 S.W.3d 444 (Tex. 2000)....................................................................................................... 11
General Motors Corp. v. Bloyed,
916 S.W.2d 949 (Tex. 1996)......................................................................................... 11, 12, 13
Green v. Occidental Petroleum Corp.,
541 F.2d 1335 (9th Cir. 1976) .................................................................................................... 6
Grunin v. International House of Pancakes,
513 F.2d 114 (8th Cir. 1974) .................................................................................................... 16
Hi-Lo Auto Supply, L.P. v. Beresky,
986 S.W.2d 382 (Tex. App.-Beaumont 1999, no pet.) ............................................................... 7
In re Bluetooth Headset Prods. Liability Litig,
654 F.3d 935 (9th Cir. 2011) .................................................................................................... 11
In re General Motors Corp. Engine Interchange Litig.,
594 F.2d 1106 (7th Cir. 1979) .................................................................................................. 14
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TABLE OF AUTHORITIES
PAGE
In re Washington Pub. Power Supply Sys. Sec. Litig.,
720 F. Supp. 1379 (D. Ariz. 1989) ........................................................................................... 14
Intratex Gas Co. v. Beeson,
22 S.W.3d 398 (Tex. 2000)......................................................................................................... 5
Life Ins. Co. of the Southwest v. Brister,
722 S.W.2d 764 (Tex. App.--Fort Worth 1986, no writ).......................................................... 10
Mandujano v. Basic Vegetable Products, Inc.,
541 F.2d 832 (9th Cir. 1986) .................................................................................................... 16
McAllen Med. Ctr., Inc. v. Cortez,
66 S.W.3d 227 (Tex. Aug. 30, 2011)................................................................................ 5, 6, 12
Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306 (1950).................................................................................................................. 16
Nissan Motor Co. v. Fry,
27 S.W.3d 573 (Tex. App. – Corpus Christi 2000, pet. denied)........................................... 8, 10
Officers for Justice v. Civil Serv. Comm’n,
688 F.2d 615 (9th Cir. 1982) .............................................................................................. 12, 14
Rainbow Group, Ltd. v. Johnson,
990 S.W.2d 351 (Tex. App.-Austin 1999, pet. dism’d w.o.j.).................................................... 8
Reserve Life Ins. Co. v. Kirkland,
917 S.W.2d 836 (Tex. App.--Houston [14th Dist.] 1996, no writ)........................................... 10
Southwestern Ref. Co. v. Bernal,
22 S.W.3d 425 (Tex. 2000)....................................................................................... 6, 10, 11, 12
Sun Coast Res. v. Cooper,
967 S.W.2d 525 (Tex. App. – Houston [1st Dist.] 1998, pet. dism’d w.o.j.) ............................. 9
Union Pac. Res. Group v. Hankins,
111 S.W.3d 69,
46 Tex. Sup. Ct. J. 973 (Tex. 2003)............................................................................................ 7
United States v. Armour & Co.,
402 U.S. 673 (1971).................................................................................................................. 13
Weatherly v. Deloitte & Touche,
905 S.W.2d 642 (Tex. App. – Houston [14th Dist.] 1995, writ dis’d wo.j.) .............................. 8
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TABLE OF AUTHORITIES
PAGE
Weinberger v. Kendrick,
698 F.2d 61 (2d Cir. 1982) ....................................................................................................... 12
Statutes
Government Code section 83.001......................................................................................... 2, 8, 10
Other Authorities
Manual For Complex Litigation, Fourth § 21.632 (2008) ........................................................... 12
Rules
Federal Rules of Civil Procedure rule 23.................................................................................. 5, 11
Federal Rules of Civil Procedure rule 23(a)–(b)............................................................................. 6
Federal Rules of Civil Procedure rule 23(b)(1)(A)......................................................................... 6
Texas Rule of Civil Procedure rule 23(a) ....................................................................................... 6
Texas Rule of Civil Procedure rule 23(b) ....................................................................................... 6
Texas Rule of Civil Procedure rule 42................................................................................ 5, 11, 12
Texas Rule of Civil Procedure rule 42(a) ................................................................................... 5, 6
Texas Rule of Civil Procedure rule 42(a)(2)................................................................................... 7
Texas Rule of Civil Procedure rule 42(a)(3)................................................................................... 8
Texas Rule of Civil Procedure rule 42(a)(4)................................................................................... 8
Texas Rule of Civil Procedure rule 42(b) ....................................................................................... 5
Texas Rule of Civil Procedure rule 42(b)(1) .................................................................................. 6
Texas Rule of Civil Procedure rule 42(b)(1)(A)............................................................................. 6
Texas Rule of Civil Procedure rule 42(b)(2) .................................................................................. 6
Texas Rule of Civil Procedure rule 42(b)(3) ........................................................................ 6, 9, 10
Texas Rule of Civil Procedure rule 42(b)(4) ................................................................................ 10
Texas Rule of Civil Procedure rule 42(e)(1)(B) ........................................................................... 16
Texas Rule of Civil Procedure rule 42(e)(1)(C) ........................................................................... 11
JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE IV
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
This action involves claims against Red Rock on behalf of a putative class and of a
specific individual based upon allegations of, among other things, the unauthorized practice of
law in violation of Texas Government Code Section 83.001 arising from the purported
preparation and filing of documents affecting title to plaintiff’s property and charges to plaintiff
for preparation fees. After vigorous prosecution and defense of this action, extensive discovery
and arms-length adversarial negotiations, plaintiff, Red Rock, and their respective counsel have
reached a proposed Settlement that is believed by the Parties to be fair, adequate and reasonable,
and in the best interests of the Class.
Following a series of settlement discussions and mediation sessions over a number of
months, the Parties agreed to stipulate to class certification for the purposes of settlement, and
arrived at a mutually agreeable Class Action Settlement Agreement and Release (“Settlement
Agreement”). A true and correct copy of the executed Settlement Agreement is attached to the
concurrently filed Declaration of Craig J. Mariam (“Mariam Decl.”) as Exhibit A. Consistent
with the Settlement Agreement, the Parties have lodged with the Court a proposed Order (1)
conditionally certifying the settlement class; (2) preliminarily approving class action settlement;
(3) directing mailing of class notice; and (4) scheduling a final fairness hearing (“Fairness
Hearing”). Moreover, the Parties request that the Court establish certain dates for the mailing of
notice to the Settlement Class and the procedure and timing for submitting a Contact Form or
filing objections, if any, to the Settlement, or to opt out of the Settlement. A true and correct
copy of the Parties’ proposed Notice of Proposed Class Action Settlement is attached to the
Mariam Declaration as Exhibit B. A true and correct copy of the Parties’ proposed Contact
Form is attached to the Mariam Declaration as Exhibit C.
While the Parties believe the proposed Settlement Agreement merits final approval, this
Court need not make that determination at this time. The Court is being asked to conditionally
certify the settlement class, preliminarily approve the Settlement Agreement, to permit notice of
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the terms of the proposed Settlement Agreement to be given to the Class, and to schedule a
hearing to consider any views by Class members of the fairness of the proposed Settlement
Agreement. Given the nature of the dispute, and the uncertainties inherent in any class action
litigation, the proposed Agreement eliminates the risk that the action would be dismissed without
any benefit or relief to the Class. Moreover, as discussed herein, the proposed Settlement
Agreement is well within the range of possible approval in that its terms are fair, reasonable, and
adequate, and in the best interests of the Class. Accordingly, plaintiff and Red Rock submit that
preliminary approval of the Settlement Agreement is warranted, and that the Court should direct
that notice be provided to the Settlement Class and that a Fairness Hearing be scheduled.
II. NATURE OF THE CASE
On or about February 11, 2013, a putative class action was filed by Terry C. Harper in
Dallas County District Court as Cause No. 13-01744. The lawsuit alleges that Red Rock
engaged in the unauthorized practice of law by charging plaintiff for the preparation and filing of
a lien affecting plaintiff’s property for unpaid homeowners association assessment and the
preparation and filing of a release of lien upon plaintiff’s resolution of the outstanding debt. In
its Answer to plaintiff’s Complaint, Red Rock denied, and continues to deny, each and every one
of plaintiff’s claims. Red Rock posits that the documents at issue do not constitute liens, releases
of liens, or otherwise legal instruments that affect title to real estate, and as such do not fall
within the scope of Government Code Section 83.001. Likewise, Red Rock contends it did not
engage in the unauthorized practice of law because the documents it prepared were simple,
factual notices of plaintiff’s account status with his homeowners association.
Prior to mediation in this matter, the Parties propounded multiple sets of interrogatories
and requests for production of documents. Hundreds of pages documents were exchanged in the
process. The Parties agreed to mediate the matter before conducting further discovery, including
taking the depositions of plaintiff and several Red Rock employees. The case was submitted to
mediation on July 23, 2013 before the Honorable Leo S. Papas (Ret.) through Judicate West. As
the parties were unable to resolve their claims following the July 23 mediation, the case was
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submitted to a second mediation session on May 2, 2014 before the Honorable Leo S. Papas
(Ret.) through Judicate West. A third negotiation session took place between the parties, without
the presence of a mediator, in September 2014. Numerous settlement discussions took place
before and after these meetings.
After having engaged in the aforementioned extensive discovery and mediation, Red
Rock’s position notwithstanding, the Parties agreed to stipulate to certification of the class for
settlement purposes, consisting of:
All persons in Texas, excluding Red Rock, their agents, officers, directors and
employees, who between February 11, 2009 and the Effective Date of this
Agreement, paid Red Rock for, or from whom Red Rock received, directly or
indirectly, compensation for the preparation of instruments affecting title to real
property situated in the State of Texas, and against whose property situated in
Texas Red Rock recorded a lien instrument that includes the lien amount, Red
Rock’s lien preparation fee, and/or lien release preparation fee.
See Mariam Decl. Exh. A, ¶ 2.8. The Parties have also arrived at a mutually agreeable
Class Action Settlement Agreement and Release in an attempt to consummate settlement of this
class action on a class-wide basis, as well as the settlement of all related individual claims. The
proposed class representative is Terry C. Harper.
III. TERMS OF THE PROPOSED SETTLEMENT
As a direct result of the prosecution of this action and the negotiations between the
Parties, a proposed Settlement Agreement has been reached on the following terms:
The class is comprised of all persons in Texas, excluding Red Rock, their agents, officers,
directors and employees, who between February 11, 2009 and the Effective Date of this
Agreement, paid Red Rock for, or from whom Red Rock received, directly or indirectly,
compensation for the preparation of instruments affecting title to real property situated in the
State of Texas, and against whose property situated in Texas Red Rock recorded a lien
instrument that includes the lien amount, Red Rock’s lien preparation fee, and/or lien release
preparation fee. See Settlement Agreement, ¶ 2.8, attached to the Mariam Decl. as Exhibit A.
Moreover, in furtherance of the Settlement, plaintiff and Red Rock have agreed that this action
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shall be conditionally certified for settlement purposes only. See id. at ¶ 3.2.
Red Rock has agreed to pay a total sum of One Million Seven Thousand Five Hundred
Dollars and No Cents ($1,007,500.00) (the “Settlement Amount”) as a fund for the Class. See
Exhibit A to Mariam Decl. at ¶ 10.1. The Parties agree that Charles E. Dorr, P.C. and Mathis,
Donheiser & Jeter shall be appointed class counsel. Red Rock will not oppose a request for
attorneys’ fees and will not oppose a request for reimbursement of necessary and reasonable
costs or expenses claimed by class counsel relative to this action, provided that these fees, costs
and other expenses come from the Settlement Amount and no other source. See id. at ¶ 10.1.3.
Further, Red Rock will not oppose a request for an additional incentive payment for Terry C.
Harper, not to exceed Ten Thousand Dollars and No Cents ($10,000.00), provided this payment
comes from the Settlement Amount and no other source. See id. at ¶ 10.1.4. Red Rock does not
have any further obligation to fund, contribute, or pay any fees, costs, expenses, or any other
amount in this action beyond the amounts set forth above. See id. at ¶ 10.2.
Any and all fees, costs, and other expenses relative to the administration of the Settlement
Amount, including but not limited to the expenses for providing and publishing notice, claims
administration, and Claims Administrator fees, shall come from the Settlement Amount. See
Exhibit A to Mariam Decl. at ¶ 10.1.5.
The Settlement provides that upon this Court’s granting preliminary approval of the
proposed Settlement, the Court-designated Claims Administrator shall mail notice of the
proposed Settlement to potential members of the Settlement Class whose names shall be
provided to the Claims Administrator. See id. at ¶ 7.1. The potential members of the Settlement
Class will be identified by Red Rock following a diligent search and reasonable inquiry of its
records. See id.
In order to receive a cash benefit under the Settlement Agreement, Settlement Class
members must complete, sign and return the Contact Form to the Claims Administrator. See id.
at ¶ 11.2. The Claims Administrator shall review all Contact Forms timely received and shall
verify the claims to ensure their validity and accuracy, as outlined in the Settlement Agreement.
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See id. at ¶ 11.4. The amount that each claimant will receive shall be determined as follows: the
Class shall be entitled to the amount remaining in the settlement fund after deduction of class
counsel’s attorneys’ fees and costs, costs of administration, and the Terry C. Harper’s incentive
award. Id. at ¶ 10.1.1. Each member of the Class who submits a timely and complete Contact
Form shall receive a pro rata share of the amount allocated to his or her class.
In return for the consideration provided for in the Settlement Agreement, the Settlement
Class agrees to release, upon expiration of the opt out period, RMI Management, LLC, Red Rock
Financial Services, LLC, Red Rock Financial Services Texas, LLC, G. Scott Williams and Adam
Pugh, and each of their predecessors, successors, subsidiaries, parent companies, affiliates,
assigns, agents, directors, officers, employees, representatives, trustees, beneficiaries and
associates from any and all settled claims that were brought or could have been brought against
these entities and individuals based upon the acts and omissions alleged in this case. See id. at ¶
13.2-13.3.
The terms of the Settlement Agreement and proposed Notice of Proposed Class Action
Settlement (“Notice”) also set forth the manner in which members of the Settlement Class may
seek to exclude themselves from the binding effect of the Settlement Agreement (see id. at
¶¶ 8.1-8.2), or to oppose the proposed Settlement Agreement and appear in this lawsuit. See id.
at ¶ 6.2.
IV. PROVISIONAL CLASS CERTIFICATION IS APPROPRIATE
Where, like here, the proposed settlement involves a proposed class that has not yet been
certified, a court must preliminarily certify the proposed settlement class before it can
preliminarily approve the class settlement. See McAllen Med. Ctr., Inc. v. Cortez, 66 S.W.3d
227, 232 (Tex. Aug. 30, 2011); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620
(1997).1 A class may be certified if a plaintiff has met all four requirements of Texas Rule of
Civil Procedure 42(a), as well as at least one of the three requirements of Rule 42(b). See Fed.
1
The federal class-action rule was the model for Texas Rule 42. See Fed. R. Civ. P. 23.
Accordingly, decisions interpreting the federal rule may be persuasive when interpreting Rule
42. Intratex Gas Co. v. Beeson, 22 S.W.3d 398, 403 n.4 (Tex. 2000).
JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 5
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R. Civ. P. 23(a)–(b); McAllen Med. Ctr., 66 S.W.3d at 232; Southwestern Ref. Co. v. Bernal, 22
S.W.3d 425, 433 (Tex. 2000).
Rule 42(a) requires: (1) that the proposed class be “so numerous that joinder of all
members is impracticable”; (2) that there be “questions of law or fact common to the class”; (3)
that the representative plaintiff’s claims be typical of the class’s claims; and (4) that the
representative plaintiff will “fairly and adequately protect the interests of the class.” Tex. R.
Civ. P. 42(a). These four elements are mandatory prerequisites to a class being certified. Id.
In addition to meeting the conditions imposed by Rule 42(a), the parties seeking class
certification must also show that the action is maintainable under Tex. R. Civ. P. 42(b)(1), (2),
or (3). Bernal, 22 S.W.3d at 433. Here, the parties submit that certification is appropriate for
the purposes of settlement only under Rule 42(b)(3), which requires common questions of law
or fact to predominate over questions affecting only individual members and class treatment to
be “superior to other available methods for the fair and efficient adjudication of the
controversy.” Tex. R. Civ. P. 42(b)(3); see also Bernal, 22 S.W.3d at 433, referencing Amchem
Prods., Inc., 521 U.S. at 15 (discussing the kinds of class actions that can be maintained under
federal rule 23(b)); Green v. Occidental Petroleum Corp., 541 F.2d 1335, 1340 (9th Cir. 1976)
(observing that certification under federal rule 23(b)(1)(A), the federal counterpart to Texas’s
Rule 42(b)(1)(A), will ordinarily be inappropriate in an action for damages). In making this
determination, the courts are advised to consider: (1) the class members’ interests, if any, in
individually controlling the prosecution of separate actions; (2) the extent and nature of any
lawsuits concerning the controversy already begun by members of the proposed class; (3) the
desirability of concentrating the litigation in the particular judicial forum; and (4) “the likely
difficulties in managing a class action.” Tex. R. Civ. P. 42(b)(3).
A. The Proposed Settlement Class is Sufficiently Numerous.
The numerosity requirement for certification calls for a class to be sufficiently large
such that joinder of all members is impractical or individual joinder is impractical. As defined
here, the proposed potential Settlement Class consist of approximately 2,371 Texas
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homeowners who paid Red Rock for, or from whom Red Rock received, directly or indirectly,
compensation for the preparation of instruments affecting title to real property situated in the
State of Texas, and against whose property situated in Texas Red Rock recorded a lien
instrument that includes the lien amount, Red Rock’s lien preparation fee, and/or lien release
preparation fee. See Mariam Decl. at ¶ 5. Joinder of all members would be exceedingly
difficult given the large number of individual claimants. Accordingly, the numerosity
requirement is met.
B. There Are Questions of Law and Fact Common to the Class.
Second, Rule 42(a)(2) mandates that there be commonality of questions of law or fact
between the class members. While the threshold for commonality is not high, it does require at
least one issue of law or fact inhere in the complaints of all class members. Union Pac. Res.
Group v. Hankins, 111 S.W.3d 69, 74, 46 Tex. Sup. Ct. J. 973 (Tex. 2003). A common issue
must also be applicable to the class as a whole and be subject to generalized proof. See id.
Class certification will not be prevented merely because damages must be determined separately
for each class member. Hi-Lo Auto Supply, L.P. v. Beresky, 986 S.W.2d 382, 387 (Tex. App.-
Beaumont 1999, no pet.). In Wal-Mart Stores v. Dukes, 131 S.Ct. 2541 (2011), the Supreme
Court expanded on the notion of commonality, stating the “claims must depend upon a common
contention. . . . That common contention, moreover, must be of such a nature that it is capable
of classwide resolution–which means that determination of its truth or falsity will resolve an
issue that is central to the validity of each one of the claims in one stroke.” Id. at 2551.
Here, the claims of both plaintiff and the rest of the proposed Settlement Class all stem
from the same alleged conduct: preparing and filing liens claiming that plaintiff and the class
members owed amounts to Red Rock for the preparation of these documents, and preparing and
filing releases of lien, all which affected the property of Texas homeowners, without being
authorized to do so by law. As plaintiff claims that Red Rock was not authorized by law to
prepare, file or be reimbursed for any of these liens or releases of liens, this element is satisfied.
///
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C. The Class Representatives’ Claims Are Typical.
Rule 42(a)(3) requires that the representative plaintiff’s claims be “typical of the
claims or defenses of the class.” Rainbow Group, Ltd. v. Johnson, 990 S.W.2d 351, 356 (Tex.
App.-Austin 1999, pet. dism’d w.o.j.). To be typical of the class, the named plaintiff must
possess the same interest and suffer the same injury as the rest of the class. Weatherly v.
Deloitte & Touche, 905 S.W.2d 642, 653 (Tex. App. – Houston [14th Dist.] 1995, writ dis’d
wo.j.). Its claims must arise from the same event or course of conduct giving rise to the claims
of the other class members and must be based on the same legal theory. Id.
Here, plaintiff claims that the claims of the Class Representative is typical of the other
Class Members because they arise from the same factual basis and are based on the same legal
theories as those applicable to all Class Members. See Nissan Motor Co. v. Fry, 27 S.W.3d 573,
582 (Tex. App. – Corpus Christi 2000, pet. denied). Factual differences may exist between the
Class Members and the Class Representative so long as the claims arise from the same events or
course of conduct and are based on the same legal theories. Id. Here, plaintiff seeks relief
based on Red Rock’s preparation and filing of instruments affecting title to real property for
which Red Rock sought or received compensation, in violation of Texas Government Code
Section 83.001. Given that the Class is composed of Texas homeowners who each had these
instruments affecting title to real property filed regarding their real property during the same
time period, some of whom paid Red Rock for the preparation and filing of same, plaintiff’s
claims are typical of the Class Members who also had such instruments filed against their
property during the relevant time period. Thus, the parties submit the typicality requirement has
been met.
D. The Class Representative Will Adequately Protect Class Interests.
Finally, Rule 42(a)(4) requires a court to ask whether the representative plaintiff will
adequately protect the classes’ interests. The adequacy requirement consists of two elements:
(1) it must appear that the representatives, through their attorneys, will vigorously prosecute the
class claims; and (2) there must be an absence of antagonism or conflict between the
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representative's interests and those of the class members. Sun Coast Res. v. Cooper, 967
S.W.2d 525, 538 (Tex. App. – Houston [1st Dist.] 1998, pet. dism’d w.o.j.). Factors affecting
this determination include the following: (1) counsel’s adequacy, (2) potential conflicts of
interest, (3) the plaintiff's personal integrity, (4) the representative's familiarity with the
litigation and his belief in the grievance's legitimacy, (5) whether the class is unmanageable,
based on geographical limitations, and (6) whether the plaintiff can afford to finance the class
action. See id.; see also Enron Oil & Gas Co. v. Joffrion, 116 S.W.3d 215, 220 (Tex. App.-
Tyler 2003, no pet.).
Here, under the proposed Settlement, the Class Representative will receive a reasonable
award for his time and efforts assisting counsel with factual issues surrounding the case. Ex. A
to Mariam Decl. at ¶ 10.2.4. Other than this specific payment, all of the Class Members will
receive a proportionate share of the class’s allocation of the Net Settlement Amount. Ex. A to
Mariam Decl. at ¶ 10.2.1. Furthermore, there is sufficient basis to settle – namely, the cost of
litigation balanced against the risks plaintiff’s claims might not ultimately survive Red Rock’s
opposition to class certification or summary judgment attacks. The Parties recognize and
acknowledge the expense and time associated with continuing with further proceedings,
including trial, appeals and ancillary actions. The Parties are also mindful of the uncertain
outcome and risk involved in any litigation, especially in multi-party actions such as this
proceedi
Preview
FILED DALLAS COUNTY 1/5/2015 3:22:04 PM FELICIA PITRE DISTRICT CLERK CAUSE NO. 13-01744 TERRY C. HARPER, § IN THE DISTRICT COURT § PLAINTIFF, § § V. § § DALLAS COUNTY, TEXAS RMI MANAGEMENT, LLC; RED ROCK § FINANCIAL SERVICES, LLC; and RED ROCK § FINANCIAL SERVICES TEXAS, LLC, § § DEFENDANTS. § § § 162ND JUDICIAL DISTRICT JOINT MOTION FOR AN ORDER FOR: (1) CONDITIONALLY CERTIFYING SETTLEMENT CLASS; (2) PRELIMINARY APPROVAL OF CLASS SETTLEMENT AGREEMENT; (3) DIRECTING THAT NOTICE BE SENT TO CLASS MEMBERS; AND (4) SCHEDULING A FINAL FAIRNESS HEARING; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF TO THE HONORABLE JUDGE OF SAID COURT: PLEASE TAKE NOTICE that plaintiff Terry C. Harper, on behalf of himself individually and on behalf of a class of those similarly situated (the “Class”) and defendants RMI Management, LLC, Red Rock Financial Services, LLC, and Red Rock Financial Services Texas, LLC (sometimes collectively referred to as “Red Rock”) (collectively referred to as the “Parties”), will and hereby do jointly and respectfully move this Court for an order: (1) conditionally certifying the settlement class; (2) granting preliminary approval of the proposed settlement of this class action; (3) directing that notice of the proposed settlement be mailed to Class members; and (4) scheduling a final fairness hearing for final approval of settlement. Said motion is based on the ground that the Parties have stipulated to the treatment of this matter as a class action for settlement purposes only and have reached an agreement in principle to settle this matter which is fair, adequate, and reasonable, and in the best interests of the JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 1 1086404 21347751V1 classes. This motion will be and hereby is based on this Notice of Motion and Motion, the attached Memorandum of Points and Authorities, the concurrently filed Declarations of Charles E. Dorr and Craig J. Mariam, together with the Exhibits attached thereto, including the proposed Class Action Settlement Agreement and Release, the proposed notice to class members and the proposed claim form, the complete files and records in this action, and on such further evidence and argument as may be presented prior to or at the hearing on this motion. Because all Parties have agreed to the proposed settlement and file this motion jointly, this motion shall not be opposed. Respectfully submitted, /s/ Charles E. Dorr CHARLES E. DORR State Bar No. 00797921 CHARLES E. DORR, P.C. 654 East Walton Street Madison, GA 30650 Telephone: (713) 443-7030 ced@cedpc.com RANDAL MATHIS State Bar No. 13194300 MARK DONHEISER State Bar No. 05974800 MATHIS, DONHEISER & JETER 1412 Main Street, Suite 2600 Dallas, Texas 75202 Telephone: (214) 303-1919 Facsimile: (214) 303-0399 rmathis@mathisdonheiser.com ATTORNEYS FOR PLAINTIFF TERRY C. HARPER JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 2 1086404 21347751V1 GORDON & REES LLP /s/ Craig J. Mariam CRAIG J. MARIAM State Bar No. 24063831 Lead Counsel KIRSTIE M. SIMMERMAN State Bar No. 24083858 2100 Ross Avenue, Suite 2800 Dallas, Texas 75201 Telephone: (214) 231-4660 Facsimile: (214) 461-4053 cmariam@gordonrees.com ksimmerman@gordonrees.com ATTORNEYS FOR DEFENDANTS RMI MANAGEMENT, LCC; RED ROCK FINANCIAL SERVICES, LLC; and RED ROCK FINANCIAL SERVICES TEXAS, LLC JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 3 1086404 21347751V1 TABLE OF CONTENTS PAGE I. INTRODUCTION ...............................................................................................................1 II. NATURE OF THE CASE ...................................................................................................2 III. TERMS OF THE PROPOSED SETTLEMENT .................................................................3 IV. PROVISIONAL CLASS CERTIFICATION IS APPROPRIATE......................................5 A. The Proposed Settlement Class is Sufficiently Numerous. .....................................6 B. There Are Questions of Law and Fact Common to the Class..................................7 C. The Class Representatives’ Claims Are Typical. ....................................................8 D. The Class Representative Will Adequately Protect Class Interests.........................8 E. Common Issues Predominate and Class-wide Settlement is Superior to Other Available Methods of Resolution. ...........................................................................9 V. THE PROPOSED SETTLEMENT WARRANTS PRELIMINARY APPROVAL..........11 A. Factors To Be Considered In Granting Preliminary Approval. .............................12 1. The Settlement is the Product of Serious, Informed and Non-Collusive Negotiations. ..............................................................................................13 2. The Settlement Does Not Improperly Grant Preferential Treatment To Class Representatives.................................................................................15 3. The Stage of The Proceedings Are Sufficiently Advanced To Permit Preliminary Approval Of The Settlement. .................................................15 B. Class Settlement Notice. ........................................................................................16 VI. CONCLUSION..................................................................................................................17 JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE I 1086404 21347751V1 TABLE OF AUTHORITIES PAGE Cases Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)................................................................................................................ 5, 6 Amoco Prod. Co. v. Hardy, 628 S.W.2d 813 (Tex. App.--Corpus Christi 1981, writ dism’d) ............................................. 10 Ball v. Farm & Home Sav. Ass’n, 747 S.W.2d 420 (Tex. App. – Fort Worth 1988, writ denied)...................................... 13, 14, 16 Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996) ...................................................................................................... 11 Central Power & Light Co. v. City of San Juan, 962 S.W.2d 602 (Tex. App.--Corpus Christi 1998, writ dism’d w.o.j. .................................... 10 Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992) .................................................................................................. 12 Cotton v. Hinton, 559 F.2d 1326 (5th Cir. 1977) .................................................................................................. 13 Enron Oil & Gas Co. v. Joffrion, 116 S.W.3d 215 (Tex. App.-Tyler 2003, no pet.)....................................................................... 9 Ford Motor Co. v. Sheldon, 22 S.W.3d 444 (Tex. 2000)....................................................................................................... 11 General Motors Corp. v. Bloyed, 916 S.W.2d 949 (Tex. 1996)......................................................................................... 11, 12, 13 Green v. Occidental Petroleum Corp., 541 F.2d 1335 (9th Cir. 1976) .................................................................................................... 6 Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir. 1974) .................................................................................................... 16 Hi-Lo Auto Supply, L.P. v. Beresky, 986 S.W.2d 382 (Tex. App.-Beaumont 1999, no pet.) ............................................................... 7 In re Bluetooth Headset Prods. Liability Litig, 654 F.3d 935 (9th Cir. 2011) .................................................................................................... 11 In re General Motors Corp. Engine Interchange Litig., 594 F.2d 1106 (7th Cir. 1979) .................................................................................................. 14 JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE II 1086404 21347751V1 TABLE OF AUTHORITIES PAGE In re Washington Pub. Power Supply Sys. Sec. Litig., 720 F. Supp. 1379 (D. Ariz. 1989) ........................................................................................... 14 Intratex Gas Co. v. Beeson, 22 S.W.3d 398 (Tex. 2000)......................................................................................................... 5 Life Ins. Co. of the Southwest v. Brister, 722 S.W.2d 764 (Tex. App.--Fort Worth 1986, no writ).......................................................... 10 Mandujano v. Basic Vegetable Products, Inc., 541 F.2d 832 (9th Cir. 1986) .................................................................................................... 16 McAllen Med. Ctr., Inc. v. Cortez, 66 S.W.3d 227 (Tex. Aug. 30, 2011)................................................................................ 5, 6, 12 Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950).................................................................................................................. 16 Nissan Motor Co. v. Fry, 27 S.W.3d 573 (Tex. App. – Corpus Christi 2000, pet. denied)........................................... 8, 10 Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615 (9th Cir. 1982) .............................................................................................. 12, 14 Rainbow Group, Ltd. v. Johnson, 990 S.W.2d 351 (Tex. App.-Austin 1999, pet. dism’d w.o.j.).................................................... 8 Reserve Life Ins. Co. v. Kirkland, 917 S.W.2d 836 (Tex. App.--Houston [14th Dist.] 1996, no writ)........................................... 10 Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425 (Tex. 2000)....................................................................................... 6, 10, 11, 12 Sun Coast Res. v. Cooper, 967 S.W.2d 525 (Tex. App. – Houston [1st Dist.] 1998, pet. dism’d w.o.j.) ............................. 9 Union Pac. Res. Group v. Hankins, 111 S.W.3d 69, 46 Tex. Sup. Ct. J. 973 (Tex. 2003)............................................................................................ 7 United States v. Armour & Co., 402 U.S. 673 (1971).................................................................................................................. 13 Weatherly v. Deloitte & Touche, 905 S.W.2d 642 (Tex. App. – Houston [14th Dist.] 1995, writ dis’d wo.j.) .............................. 8 JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE III 1086404 21347751V1 TABLE OF AUTHORITIES PAGE Weinberger v. Kendrick, 698 F.2d 61 (2d Cir. 1982) ....................................................................................................... 12 Statutes Government Code section 83.001......................................................................................... 2, 8, 10 Other Authorities Manual For Complex Litigation, Fourth § 21.632 (2008) ........................................................... 12 Rules Federal Rules of Civil Procedure rule 23.................................................................................. 5, 11 Federal Rules of Civil Procedure rule 23(a)–(b)............................................................................. 6 Federal Rules of Civil Procedure rule 23(b)(1)(A)......................................................................... 6 Texas Rule of Civil Procedure rule 23(a) ....................................................................................... 6 Texas Rule of Civil Procedure rule 23(b) ....................................................................................... 6 Texas Rule of Civil Procedure rule 42................................................................................ 5, 11, 12 Texas Rule of Civil Procedure rule 42(a) ................................................................................... 5, 6 Texas Rule of Civil Procedure rule 42(a)(2)................................................................................... 7 Texas Rule of Civil Procedure rule 42(a)(3)................................................................................... 8 Texas Rule of Civil Procedure rule 42(a)(4)................................................................................... 8 Texas Rule of Civil Procedure rule 42(b) ....................................................................................... 5 Texas Rule of Civil Procedure rule 42(b)(1) .................................................................................. 6 Texas Rule of Civil Procedure rule 42(b)(1)(A)............................................................................. 6 Texas Rule of Civil Procedure rule 42(b)(2) .................................................................................. 6 Texas Rule of Civil Procedure rule 42(b)(3) ........................................................................ 6, 9, 10 Texas Rule of Civil Procedure rule 42(b)(4) ................................................................................ 10 Texas Rule of Civil Procedure rule 42(e)(1)(B) ........................................................................... 16 Texas Rule of Civil Procedure rule 42(e)(1)(C) ........................................................................... 11 JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE IV 1086404 21347751V1 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION This action involves claims against Red Rock on behalf of a putative class and of a specific individual based upon allegations of, among other things, the unauthorized practice of law in violation of Texas Government Code Section 83.001 arising from the purported preparation and filing of documents affecting title to plaintiff’s property and charges to plaintiff for preparation fees. After vigorous prosecution and defense of this action, extensive discovery and arms-length adversarial negotiations, plaintiff, Red Rock, and their respective counsel have reached a proposed Settlement that is believed by the Parties to be fair, adequate and reasonable, and in the best interests of the Class. Following a series of settlement discussions and mediation sessions over a number of months, the Parties agreed to stipulate to class certification for the purposes of settlement, and arrived at a mutually agreeable Class Action Settlement Agreement and Release (“Settlement Agreement”). A true and correct copy of the executed Settlement Agreement is attached to the concurrently filed Declaration of Craig J. Mariam (“Mariam Decl.”) as Exhibit A. Consistent with the Settlement Agreement, the Parties have lodged with the Court a proposed Order (1) conditionally certifying the settlement class; (2) preliminarily approving class action settlement; (3) directing mailing of class notice; and (4) scheduling a final fairness hearing (“Fairness Hearing”). Moreover, the Parties request that the Court establish certain dates for the mailing of notice to the Settlement Class and the procedure and timing for submitting a Contact Form or filing objections, if any, to the Settlement, or to opt out of the Settlement. A true and correct copy of the Parties’ proposed Notice of Proposed Class Action Settlement is attached to the Mariam Declaration as Exhibit B. A true and correct copy of the Parties’ proposed Contact Form is attached to the Mariam Declaration as Exhibit C. While the Parties believe the proposed Settlement Agreement merits final approval, this Court need not make that determination at this time. The Court is being asked to conditionally certify the settlement class, preliminarily approve the Settlement Agreement, to permit notice of JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 1 1086404 21347751V1 the terms of the proposed Settlement Agreement to be given to the Class, and to schedule a hearing to consider any views by Class members of the fairness of the proposed Settlement Agreement. Given the nature of the dispute, and the uncertainties inherent in any class action litigation, the proposed Agreement eliminates the risk that the action would be dismissed without any benefit or relief to the Class. Moreover, as discussed herein, the proposed Settlement Agreement is well within the range of possible approval in that its terms are fair, reasonable, and adequate, and in the best interests of the Class. Accordingly, plaintiff and Red Rock submit that preliminary approval of the Settlement Agreement is warranted, and that the Court should direct that notice be provided to the Settlement Class and that a Fairness Hearing be scheduled. II. NATURE OF THE CASE On or about February 11, 2013, a putative class action was filed by Terry C. Harper in Dallas County District Court as Cause No. 13-01744. The lawsuit alleges that Red Rock engaged in the unauthorized practice of law by charging plaintiff for the preparation and filing of a lien affecting plaintiff’s property for unpaid homeowners association assessment and the preparation and filing of a release of lien upon plaintiff’s resolution of the outstanding debt. In its Answer to plaintiff’s Complaint, Red Rock denied, and continues to deny, each and every one of plaintiff’s claims. Red Rock posits that the documents at issue do not constitute liens, releases of liens, or otherwise legal instruments that affect title to real estate, and as such do not fall within the scope of Government Code Section 83.001. Likewise, Red Rock contends it did not engage in the unauthorized practice of law because the documents it prepared were simple, factual notices of plaintiff’s account status with his homeowners association. Prior to mediation in this matter, the Parties propounded multiple sets of interrogatories and requests for production of documents. Hundreds of pages documents were exchanged in the process. The Parties agreed to mediate the matter before conducting further discovery, including taking the depositions of plaintiff and several Red Rock employees. The case was submitted to mediation on July 23, 2013 before the Honorable Leo S. Papas (Ret.) through Judicate West. As the parties were unable to resolve their claims following the July 23 mediation, the case was JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 2 1086404 21347751V1 submitted to a second mediation session on May 2, 2014 before the Honorable Leo S. Papas (Ret.) through Judicate West. A third negotiation session took place between the parties, without the presence of a mediator, in September 2014. Numerous settlement discussions took place before and after these meetings. After having engaged in the aforementioned extensive discovery and mediation, Red Rock’s position notwithstanding, the Parties agreed to stipulate to certification of the class for settlement purposes, consisting of: All persons in Texas, excluding Red Rock, their agents, officers, directors and employees, who between February 11, 2009 and the Effective Date of this Agreement, paid Red Rock for, or from whom Red Rock received, directly or indirectly, compensation for the preparation of instruments affecting title to real property situated in the State of Texas, and against whose property situated in Texas Red Rock recorded a lien instrument that includes the lien amount, Red Rock’s lien preparation fee, and/or lien release preparation fee. See Mariam Decl. Exh. A, ¶ 2.8. The Parties have also arrived at a mutually agreeable Class Action Settlement Agreement and Release in an attempt to consummate settlement of this class action on a class-wide basis, as well as the settlement of all related individual claims. The proposed class representative is Terry C. Harper. III. TERMS OF THE PROPOSED SETTLEMENT As a direct result of the prosecution of this action and the negotiations between the Parties, a proposed Settlement Agreement has been reached on the following terms: The class is comprised of all persons in Texas, excluding Red Rock, their agents, officers, directors and employees, who between February 11, 2009 and the Effective Date of this Agreement, paid Red Rock for, or from whom Red Rock received, directly or indirectly, compensation for the preparation of instruments affecting title to real property situated in the State of Texas, and against whose property situated in Texas Red Rock recorded a lien instrument that includes the lien amount, Red Rock’s lien preparation fee, and/or lien release preparation fee. See Settlement Agreement, ¶ 2.8, attached to the Mariam Decl. as Exhibit A. Moreover, in furtherance of the Settlement, plaintiff and Red Rock have agreed that this action JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 3 1086404 21347751V1 shall be conditionally certified for settlement purposes only. See id. at ¶ 3.2. Red Rock has agreed to pay a total sum of One Million Seven Thousand Five Hundred Dollars and No Cents ($1,007,500.00) (the “Settlement Amount”) as a fund for the Class. See Exhibit A to Mariam Decl. at ¶ 10.1. The Parties agree that Charles E. Dorr, P.C. and Mathis, Donheiser & Jeter shall be appointed class counsel. Red Rock will not oppose a request for attorneys’ fees and will not oppose a request for reimbursement of necessary and reasonable costs or expenses claimed by class counsel relative to this action, provided that these fees, costs and other expenses come from the Settlement Amount and no other source. See id. at ¶ 10.1.3. Further, Red Rock will not oppose a request for an additional incentive payment for Terry C. Harper, not to exceed Ten Thousand Dollars and No Cents ($10,000.00), provided this payment comes from the Settlement Amount and no other source. See id. at ¶ 10.1.4. Red Rock does not have any further obligation to fund, contribute, or pay any fees, costs, expenses, or any other amount in this action beyond the amounts set forth above. See id. at ¶ 10.2. Any and all fees, costs, and other expenses relative to the administration of the Settlement Amount, including but not limited to the expenses for providing and publishing notice, claims administration, and Claims Administrator fees, shall come from the Settlement Amount. See Exhibit A to Mariam Decl. at ¶ 10.1.5. The Settlement provides that upon this Court’s granting preliminary approval of the proposed Settlement, the Court-designated Claims Administrator shall mail notice of the proposed Settlement to potential members of the Settlement Class whose names shall be provided to the Claims Administrator. See id. at ¶ 7.1. The potential members of the Settlement Class will be identified by Red Rock following a diligent search and reasonable inquiry of its records. See id. In order to receive a cash benefit under the Settlement Agreement, Settlement Class members must complete, sign and return the Contact Form to the Claims Administrator. See id. at ¶ 11.2. The Claims Administrator shall review all Contact Forms timely received and shall verify the claims to ensure their validity and accuracy, as outlined in the Settlement Agreement. JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 4 1086404 21347751V1 See id. at ¶ 11.4. The amount that each claimant will receive shall be determined as follows: the Class shall be entitled to the amount remaining in the settlement fund after deduction of class counsel’s attorneys’ fees and costs, costs of administration, and the Terry C. Harper’s incentive award. Id. at ¶ 10.1.1. Each member of the Class who submits a timely and complete Contact Form shall receive a pro rata share of the amount allocated to his or her class. In return for the consideration provided for in the Settlement Agreement, the Settlement Class agrees to release, upon expiration of the opt out period, RMI Management, LLC, Red Rock Financial Services, LLC, Red Rock Financial Services Texas, LLC, G. Scott Williams and Adam Pugh, and each of their predecessors, successors, subsidiaries, parent companies, affiliates, assigns, agents, directors, officers, employees, representatives, trustees, beneficiaries and associates from any and all settled claims that were brought or could have been brought against these entities and individuals based upon the acts and omissions alleged in this case. See id. at ¶ 13.2-13.3. The terms of the Settlement Agreement and proposed Notice of Proposed Class Action Settlement (“Notice”) also set forth the manner in which members of the Settlement Class may seek to exclude themselves from the binding effect of the Settlement Agreement (see id. at ¶¶ 8.1-8.2), or to oppose the proposed Settlement Agreement and appear in this lawsuit. See id. at ¶ 6.2. IV. PROVISIONAL CLASS CERTIFICATION IS APPROPRIATE Where, like here, the proposed settlement involves a proposed class that has not yet been certified, a court must preliminarily certify the proposed settlement class before it can preliminarily approve the class settlement. See McAllen Med. Ctr., Inc. v. Cortez, 66 S.W.3d 227, 232 (Tex. Aug. 30, 2011); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997).1 A class may be certified if a plaintiff has met all four requirements of Texas Rule of Civil Procedure 42(a), as well as at least one of the three requirements of Rule 42(b). See Fed. 1 The federal class-action rule was the model for Texas Rule 42. See Fed. R. Civ. P. 23. Accordingly, decisions interpreting the federal rule may be persuasive when interpreting Rule 42. Intratex Gas Co. v. Beeson, 22 S.W.3d 398, 403 n.4 (Tex. 2000). JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 5 1086404 21347751V1 R. Civ. P. 23(a)–(b); McAllen Med. Ctr., 66 S.W.3d at 232; Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425, 433 (Tex. 2000). Rule 42(a) requires: (1) that the proposed class be “so numerous that joinder of all members is impracticable”; (2) that there be “questions of law or fact common to the class”; (3) that the representative plaintiff’s claims be typical of the class’s claims; and (4) that the representative plaintiff will “fairly and adequately protect the interests of the class.” Tex. R. Civ. P. 42(a). These four elements are mandatory prerequisites to a class being certified. Id. In addition to meeting the conditions imposed by Rule 42(a), the parties seeking class certification must also show that the action is maintainable under Tex. R. Civ. P. 42(b)(1), (2), or (3). Bernal, 22 S.W.3d at 433. Here, the parties submit that certification is appropriate for the purposes of settlement only under Rule 42(b)(3), which requires common questions of law or fact to predominate over questions affecting only individual members and class treatment to be “superior to other available methods for the fair and efficient adjudication of the controversy.” Tex. R. Civ. P. 42(b)(3); see also Bernal, 22 S.W.3d at 433, referencing Amchem Prods., Inc., 521 U.S. at 15 (discussing the kinds of class actions that can be maintained under federal rule 23(b)); Green v. Occidental Petroleum Corp., 541 F.2d 1335, 1340 (9th Cir. 1976) (observing that certification under federal rule 23(b)(1)(A), the federal counterpart to Texas’s Rule 42(b)(1)(A), will ordinarily be inappropriate in an action for damages). In making this determination, the courts are advised to consider: (1) the class members’ interests, if any, in individually controlling the prosecution of separate actions; (2) the extent and nature of any lawsuits concerning the controversy already begun by members of the proposed class; (3) the desirability of concentrating the litigation in the particular judicial forum; and (4) “the likely difficulties in managing a class action.” Tex. R. Civ. P. 42(b)(3). A. The Proposed Settlement Class is Sufficiently Numerous. The numerosity requirement for certification calls for a class to be sufficiently large such that joinder of all members is impractical or individual joinder is impractical. As defined here, the proposed potential Settlement Class consist of approximately 2,371 Texas JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 6 1086404 21347751V1 homeowners who paid Red Rock for, or from whom Red Rock received, directly or indirectly, compensation for the preparation of instruments affecting title to real property situated in the State of Texas, and against whose property situated in Texas Red Rock recorded a lien instrument that includes the lien amount, Red Rock’s lien preparation fee, and/or lien release preparation fee. See Mariam Decl. at ¶ 5. Joinder of all members would be exceedingly difficult given the large number of individual claimants. Accordingly, the numerosity requirement is met. B. There Are Questions of Law and Fact Common to the Class. Second, Rule 42(a)(2) mandates that there be commonality of questions of law or fact between the class members. While the threshold for commonality is not high, it does require at least one issue of law or fact inhere in the complaints of all class members. Union Pac. Res. Group v. Hankins, 111 S.W.3d 69, 74, 46 Tex. Sup. Ct. J. 973 (Tex. 2003). A common issue must also be applicable to the class as a whole and be subject to generalized proof. See id. Class certification will not be prevented merely because damages must be determined separately for each class member. Hi-Lo Auto Supply, L.P. v. Beresky, 986 S.W.2d 382, 387 (Tex. App.- Beaumont 1999, no pet.). In Wal-Mart Stores v. Dukes, 131 S.Ct. 2541 (2011), the Supreme Court expanded on the notion of commonality, stating the “claims must depend upon a common contention. . . . That common contention, moreover, must be of such a nature that it is capable of classwide resolution–which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. at 2551. Here, the claims of both plaintiff and the rest of the proposed Settlement Class all stem from the same alleged conduct: preparing and filing liens claiming that plaintiff and the class members owed amounts to Red Rock for the preparation of these documents, and preparing and filing releases of lien, all which affected the property of Texas homeowners, without being authorized to do so by law. As plaintiff claims that Red Rock was not authorized by law to prepare, file or be reimbursed for any of these liens or releases of liens, this element is satisfied. /// JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 7 1086404 21347751V1 C. The Class Representatives’ Claims Are Typical. Rule 42(a)(3) requires that the representative plaintiff’s claims be “typical of the claims or defenses of the class.” Rainbow Group, Ltd. v. Johnson, 990 S.W.2d 351, 356 (Tex. App.-Austin 1999, pet. dism’d w.o.j.). To be typical of the class, the named plaintiff must possess the same interest and suffer the same injury as the rest of the class. Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 653 (Tex. App. – Houston [14th Dist.] 1995, writ dis’d wo.j.). Its claims must arise from the same event or course of conduct giving rise to the claims of the other class members and must be based on the same legal theory. Id. Here, plaintiff claims that the claims of the Class Representative is typical of the other Class Members because they arise from the same factual basis and are based on the same legal theories as those applicable to all Class Members. See Nissan Motor Co. v. Fry, 27 S.W.3d 573, 582 (Tex. App. – Corpus Christi 2000, pet. denied). Factual differences may exist between the Class Members and the Class Representative so long as the claims arise from the same events or course of conduct and are based on the same legal theories. Id. Here, plaintiff seeks relief based on Red Rock’s preparation and filing of instruments affecting title to real property for which Red Rock sought or received compensation, in violation of Texas Government Code Section 83.001. Given that the Class is composed of Texas homeowners who each had these instruments affecting title to real property filed regarding their real property during the same time period, some of whom paid Red Rock for the preparation and filing of same, plaintiff’s claims are typical of the Class Members who also had such instruments filed against their property during the relevant time period. Thus, the parties submit the typicality requirement has been met. D. The Class Representative Will Adequately Protect Class Interests. Finally, Rule 42(a)(4) requires a court to ask whether the representative plaintiff will adequately protect the classes’ interests. The adequacy requirement consists of two elements: (1) it must appear that the representatives, through their attorneys, will vigorously prosecute the class claims; and (2) there must be an absence of antagonism or conflict between the JOINT MOTION FOR AN ORDER FOR PRELIMINARY APPROVAL OF CLASS ACTION AGREEMENT PAGE 8 1086404 21347751V1 representative's interests and those of the class members. Sun Coast Res. v. Cooper, 967 S.W.2d 525, 538 (Tex. App. – Houston [1st Dist.] 1998, pet. dism’d w.o.j.). Factors affecting this determination include the following: (1) counsel’s adequacy, (2) potential conflicts of interest, (3) the plaintiff's personal integrity, (4) the representative's familiarity with the litigation and his belief in the grievance's legitimacy, (5) whether the class is unmanageable, based on geographical limitations, and (6) whether the plaintiff can afford to finance the class action. See id.; see also Enron Oil & Gas Co. v. Joffrion, 116 S.W.3d 215, 220 (Tex. App.- Tyler 2003, no pet.). Here, under the proposed Settlement, the Class Representative will receive a reasonable award for his time and efforts assisting counsel with factual issues surrounding the case. Ex. A to Mariam Decl. at ¶ 10.2.4. Other than this specific payment, all of the Class Members will receive a proportionate share of the class’s allocation of the Net Settlement Amount. Ex. A to Mariam Decl. at ¶ 10.2.1. Furthermore, there is sufficient basis to settle – namely, the cost of litigation balanced against the risks plaintiff’s claims might not ultimately survive Red Rock’s opposition to class certification or summary judgment attacks. The Parties recognize and acknowledge the expense and time associated with continuing with further proceedings, including trial, appeals and ancillary actions. The Parties are also mindful of the uncertain outcome and risk involved in any litigation, especially in multi-party actions such as this proceedi