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IN THE CIRCUIT COURT OF JACKSON COUNTY, MISI AT KANSAS CITY
JOHN AND JEANNETTE SCHWARTZ, et al.
Plaintiffs. Case No. 00 CV 226639 Case No. 00 CV 226639-•
vs. Case No. 00 CV 226639.-,,• Case No, 00 CV 226639•'(Y•
BANN-COR MORTGAGE, et al.,
Defendants. Division 14 [ c•
PLAINTIFFS' MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
Plaintiffs, on behalf of the Settlement Class, defined below, hereby move this Court for
the entry of an Order pursuant to Rule 52.08(e) of the Missouri Rules of Civil Procedure which
•reliminarily approves the settlement of the Settlement Class Members' claims against
Defendants Wachovia Equity Servicing, LLC and The Money Store, LLC (the "HomEq
Defendants") and also makes the following related orders, set forth below, which are necessary
prerequisites under Missouri law and the terms of the Settlement Agreement, 2 for Final
Approval of the Settlement.
The settlement, which is explained in detail in the accompanying Suggestions, is without
question fair, adequate and reasonable. Class Counsel believes it to be exceptional. The
settlement provides a benefit of up to $4 million to the Settlement Class as to the 52 loans
purchased or assigned to and/or serviced to the HomEq Defendants.
The Court of Appeals for the Western L,•mct,•':-"•" in State ex tel. Byrd v. t•rtudw•ck,'-" "•':-y.•u "•.'9'v.•d• 369 (Mo. App. W.D. 1997), addressed the process for preliminary approval of class action settlements. This motion and the accompanying suggestions follow the analytical framework espoused therein.
2 The parties' Settlement Agreement is attached hereto as Exhibit 1. A Proposed Order Preliminarily Approving the Class Action Settlement granting this Motion is attached as Exhibit B to the Settlement Agreement.
The $4 million provides the following benefits to the Settlement Class:
1) An Initial Payment to the Settlement Class of $1,188,032 proportionately to each member of the Settlement Class which is comprised of the sum of the following:
a. All alleged illegal fees violating the SMLA;
b. All past interest paid on their loans in alleged violation of the SMLA and Missouri law;
c. Prejudgment interest on all alleged illegal fees calculated from the date of their loans;
d. Prejudgment interest on all interest payments, calculated from the date of each interest payment;
2) An additional payment to each member of the Settlement Class of their pro-rata share of 65% of the Common Fund Recovery, which is the amount that remains after payment of the Initial Payment to each member of the Plaintiff Class, actual attorney and paraprofessional time, litigation costs and expenses and Named Plaintiffs' incentive award;
3) Reimbursement of attorneys' fees in an amount not to exceed $1,8785,000 for actual time expended and 35% of the Common Fund Recovery;
4) Reimbursement of litigation costs and expenses in an amount not to exceed $150,000; and
5) An incentive award to the Named Plaintiffs in the amount of $18,000.
The Settlement Class members' claims against the HomEq Defendants were severed
from the Litigation Class Members' other claims against the other Defendants by Order dated
March 26, 2008. 3 The proposed settlement does not affect the claims of the Named Plaintiffs
and the Litigation Class against Defendants other than Defendants Wachovia Equity Servicing,
LLC and The Money Store, LLC (the "HomEq Defendants")
The Litigation Class is defined as follows:
All individuals who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as defined by § 408.231.1 RSMo, from Bann-Cor Mortgage, secured by real property located in Missouri.
See Order Certifying Plaintiff Class, dated March 25, 2008.
The matters to be addressed in the Proposed Order Preliminarily Approving the Class
Action Settlement, and explained below in the accompanying Suggestions, are as follows:
Preliminary Certification of a Settlement Class;
Preliminary Approval of the Settlement as Presumptively Fair, Adequate and 2.
Reasonable;
3. Approval of the Notice Plan and Notice of Class Action Settlement, including the
instructions to Class Members regarding such things as their opt-out and objection rights,
including related deadlines; and
4. Scheduling the Fairness Hearing and Related Deadlines; and
5. Miscellaneous Matters set forth in the Proposed Order Preliminarily Approving
the Class Action Settlement. 4
Plaintiffs further advise the Court that Defendants Wachovia Equity Servicing, LLC and
The Money Store, LLC consent to the relief requested in this motion and the grounds therefore.
WHEREFORE, for these reasons, and the reasons more fully set forth below in the
accompanying Suggestions, Plaintiffs respectfully request the Court to certify the Settlement
Class and to appoint Plaintiffs John & Jeannette Schwartz as the Representatives of the
Settlement Class and R. Frederick Walters, J. Michael Vaughan, Kip D. Richards, David M.
Skeens and Garrett M. Hodes of Walters, Bender, Strohbehn & Vaughan, P.C. as Class Counsel.
Furtl•er, Plaintiffs, for reasons set forth in the accompanying Suggestions, request the Court grant
4 These "Related Deadlines" and "Miscellaneous Matters" include such things set forth in the Proposed Order Preliminarily Approving the Class Action Settlement (1) placing duties on Class Counsel to file certifications regarding the mailing of the Notice of Class Action Settlement and the number of opt-out or exclusion requests; (2) to set deadlines for Plaintiffs to file their motions and memoranda in support of final approval of the settlement and their application for attomeys' fees; (3) to stay further proceedings in the lawsuit by the Settlement Class related to their claims against the HomEq Defendants, pending approval of the settlement; (4) directing that the non- Settlement Class Members' claims against the Defendants other than the HomEq Defendants are not suspended or stayed; and (5) confirming that the settlement is not an admission of liability or wrongdoing by the HomEq Defendants. See Exhibit B, at ¶¶ 11, 13, 17, 22, 23, 25.
preliminary approval of the settlement of this class action as presumptively fair, adequate and
reasonable, and enter its Order Preliminarily Approving the Class Action Settlement in the form
attached as Exhibit B to the Settlement Agreement.
Dated: May 11, 2009 Respectfully submitted,
WALTERS BENDER STROHBEHN & VAUGHAN P.C. •
BYR.,I•c•::" Walters-Mo. Bar 25069
J. lyIij/hael Vaughan Mo. Bar #24989 KilO. Richards Mo. Bar # 39743 David M. Skeens Mo. Bar #35728 Garrett M. Hodes Mo. Bar #50221 2500 City Center Square 12 th •5 Baltimore P.O, Box 26188 Kansas City, MO 64196 (816) 421-6620 (816) 421-4747 (Facsimile)
ATTORNEYS FOR PLAINTIFFS AND CLASS COUNSEL
CERTIFICATE OF SERVICE
It is hereby certified that a copy of the above and foregoing document was hand-delivered this 11 th day of May 2009, to:
Randolph Willis Rassmussen Willis Dickey & Moore, LLC 9200 Ward Parkway, Ste. 310 Kansas City, Missouri 64114 (816) 960-1669 (fax)
Mary J. Hackett Jeremy D. Feinstein Reed Smith, LLP 435 Sixth Avenue Pittsburgh, PA 15219-1886 Attorneys for Wachovia Equity Servicing, LLC, as successor to HomEq Servicing Corporation, and The Money Storel LLC
Hon. William F. Mauer 901 Burning Tree Drive Kansas City, MO 64145 (816) 943-3444 (fax)
A'nT@'for Pi-a•ntiffs
,)
SETTLEMENT AGREEMENT _AND RELEASE
This Settlement Agreement and P,.elease (this "Agreement") dated as of May 11, 2009, is
entered into by and between plaintiffs John A. Schwartz and Jeannette A. Schwartz (the "Named
Plaintiffs"), individually and as representatives of the "Settlement Class" (as defined herein), and
defendants Wachovia Equity Servicing, LLC (as successor in interest to HomEq Servicing, LLC,
f/k/a TMS Mortgage, Inc, d/b/a The Money Store) and The Money Store, LLC (f/k/a The Money
Store, Inc.) (collectively, the "HomEq Defendants"), subject to approval by the Court (as defined
herein). The Named Plaintiffs, the HomEq Defendants and the Settlement Class are collectively
referred to as the "Parties."
WHEREAS, the Named Plaintiffs filed an action which is currently pending in the
Circuit Court of/lackson County, Missouri at IndependenCe (the "Court"), entitled 3ohn A. and
Jeanette A. Schwartz, et al. v. Bann-Cor Mortgage, et al., Case Nos. 00 CV 226639, 00 CV
226639-01, 00 CV 226639-02, and 00 CV 226639-03 (the "Litigation")•
WHEREAS, the Named Plaintiffs have asserted claims against the HomEq Defendants
for alleged violations of the Missouri Second Mortgage Loan Act, P,..S. Mo. § 408.231 et seq.,
(the "SMLA") and seek compensatory and punitive damages and other relief, on their own
behalf and on behalf of a class of persons similarly situated, as a result of certain loan fees and
interest amounts that the Named Plaintiffs contend Defendant Bann-Cor Mortgage and/or the
Horn.Eq Defendants, and each of them, directly or indirectly charged, contracted for or received
in connection with certain loans made to the Settlement Class (as defined herein), which loans
were purchased by and asslgnea t the HomEq •,•xe•uan• L•-avu•,x ttl•t/t
business.
WHEREAS, on March 25, 2008, the Court certified a litigation class in the Litigation
comprised of those persons who obtained a second mortgage loan from Barm-Cor Mortgage on
or after October 31, 1994 (the "Litigation Class").
WHEREAS, notice was provided to the members of the Litigation Class of their
opportunity to opt out or exclude themselves from the Litigation Class and no member of the
Litigation Class timely elected to exercise his, her, or its right to opt out of the Litigation Class.
WHEREAS, on March 26, 2008, the Court severed the claims of those members of the
Litigation Class whose Barm-Cor Loans were purchased by and assigned to TMS Mortgage, Inc.
d/b/a The Money Store from those members of the Litigation Class whose Bann-Cor Loans were
purchased or assigned to someone other than TMS Mortgage, Inc. d/b/a The Money Store (the
"Non-HomEq Plaintiff Borrowers").
WHEREAS, the HomEq Defendants deny each of the claims asserted against them in the
Litigation and deny any and all liability.
WHEREAS, counsel for the Named Plaintiffs and the proposed Settlement Class
("Plaintiffs' Counsel) and counsel for the HomEq Defendants have thoroughly investigated the
facts relating to the claims alleged and the underlying events and transactions in the Litigation,
including formal and informal discovery, and have made a thorough study of the legal principles
applicable to the claims asserted against the HomEq Defendants.
WHEREAS, the Parties have reached an agreement, subject to Court approval, to resolve
the Litigation as between them in accordance with the terms set forth herein.
arm's length negotiations concerning the settlement of the claims asserted in the Litigation.
WHEREAS, the Named Plaintiffs and Plaintiffs' Counsel have concluded, based upon
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their investigation, study, negotiations and discovery taken, and taking into account the contested
issues involved, the expense and time necessary to prosecute the Litigation against the HomEq
Defendants through trial, the delays and the risks and costs of further prosecution of the
Litigation against the HomEq Defendants, the uncertainties of complex litigation, and the
benefits to be received pursuant to this Agreement, that a settlement with the HomEq Defendants
on the terms set forth herein is fair, just, equitable, reasonable, adequate and in the best interests
of the Named Plaintiffs and the Settlement Class.
WHEREAS, the HomEq Defendants desire to settle the claims asserted against them in
the Litigation on the terms and conditions set forth herein, for the purpose of avoiding the
burden, expense, and uncertainty of Continuing litigation, and for the purpose of putting to rest
ai1 controversies that have been or could be raised against either or both of them as a part of the
Litigation.
WHEREAS, the Parties acknowledge and agree that this Agreement constitutes a
compromise in settlement of the claims and causes of action that have been or could be raised by
the Named Plaintiffs and the Settlement Class against the HomEq Defendants in the Litigation
and shall in no way release or otherwise affect (a) the existing or future claims, causes of action,
remedies, and/or rights to relief of James Wong, Daniel and Wanda Jensen and/or any of the
other ',Non-HomEq Plaintiff Borrowers" against Bann-Cor Mortgage, the Master Financial
Defendants and/o• any other person, association or entity other than the Released Persons (as
defined herein); or (b) the existing or furore claims, causes of action, remedies, and/or rights to
retiet asser•ea or to •e assertea in any lawsuit or pro..,•ul•,g, ea.•.• •-•.•,.--*---*,r -'.,•......'.• including,
without limitation, any claims, causes of action, remedies, motions and requests for sanctions,
and/or any other rights to relief asserted or to be asserted against Wachovia Equity Servicing,
LLC (as successor in interest to HomEq Servicing, LLC, f/k/a TMS Mortgage, Inc, d/b/a The
Money Store), The Money Store, LLC, their attorneys, or any other "Released Party" in the
lawsuits entitled Steven R. and Ruth E. Mitchell v. Residential Funding Company LLC, et al,,
Case No. 03 CV220489 (currently on appeal) and Baker v. Century Financial Group, Case No.
CV 100 4294 (Clay County, Missouri).
NOW THEREFORE, the Parties, intending to be legally bound and acknowledging the
sufficiency of the consideration and undertakings set forth below, do hereby agree, subject to the
approval of the Court and the provisions contained herein, that the Litigation and the Released
Claims (as defined herein) against the Released Persons (as defined herein) are finally and fully
compromised and settled and that the Litigation shall be dismissed with prejudice against the
HomEq Defendants as follows:
1. Denial of LiabilitT; No Admissions
The Parties are entering into this Agreement for the sole purpose of resolving vigorously
disputed claims that have arisen between them and in the interest of avoiding the burdens,
expense, and risk of further litigation. By entering into any preliminary settlement discussion,
agreeing to the terms of this Agreement, or seeking the approval of the settlement, the Parties are
not making any admissions or concessions whatsoever with respect to any claims or defenses
alleged or asserted, or any factual or legal assertions in the Litigation. Neither this Agreement,
nor any of its terms or probisions,
nor any of the negotiations between the Parties or their
counsel, shall be construed as an admission or concession by any of the Parties or their counsel
or duty, any alleged fraud, misrepresentation or deception, or any alleged violation of any
federal, state, or local law, role, regulation, guideline or legal requirement (or any other
applicable law, rule, regulation, guideline or leg•. zequirement). Except as necessary in a
proceeding to enforce the terms of this Agreement, this Agreement and its terms and provisions
shall not be offered or received as evidence in any action or proceeding to establish any liability
or admission on the part of the HomEq Defendants or their parent or affiliated companies, or to
establish the existence of any condition constituting a violation of or non-compliance with any
federal, state, local or other applicable law, rule, regulation, guideline or other legal requirement,
or the propriety of class certification in any other proceeding or action. The Parties expressly
agree that, in the event that the Court does not approve the Agreement, or any appeIlate court
disapproves of the Agreement in any way that prevents the settlement from becoming final and
effective, no Party will use or attempt to use any conduct or statement of any other Party in
connection with this Agreement or any effort to seek approval of the Agreement to affect or
prejudice any other Party's rights in any ensuing litigation. The HomEq Defendants expressly
reserve all rights and defenses to any claims and do not waive any such rights or defenses in the
event that the Agreement is not approved for any reason.
2. Definitions
As used in this Agreement, the following terms shall be defined as set forth below:
2.1 Bann-Cor Loan. "Bann-Cor Loan" means any "Second Mortgage Loan" as
defined in R.S. Mo. § 408.231.1, that was originated on or after October 31, 1994, secured by a
mortgage or a deed of trust on residential real property locatedin the State of Missouri,
originated by Bann Cor Mortgage, and purchased by and assigned to TMS Mortgage, Inc., d/b/a
I-he Money Store.
2.2 Class Counsel. "Class Counsel" shall mean Plaintiffs' Counsel,
2.3 Class Mail Notice. "Class Mail Notice" means a document in the form attached
hereto as Exhibit A to this Agreement and made a part hereof, or a substantially similar form.
2.4 Common Fund Recover,(. "Common Fund Recovery" means the amount by
which the Final Settlement Amount exceeds (a) the "Initial Settlement Class Member Payment"
for all of the Settlement Class Member loans, (b) the amount of any incentive award made to the
Named Plaintiffs by the Court, and•lc) the amount of any attorney's fees and expense awards
made to Plaintiffs • by the Co]Yn•t•
2.5 Defendants' Counsel. "Defendants' Counsel" means, collectively, Reed Smith
LLP, 435 Sixth Avenue, Pittsburgh, Pennsylvania 15219.
2.6 Effective Date. The "Effective Date" of this Agreement.means the date when all
of the conditions set forth in Paragraph 12 have occurred, provided, however, that the HomEq
Defendants have not exercised their right of rescission under Paragraph 9.
2.7 Final Approval Order. "Final Approval Order" means an Order of the Court
finally approving this Agreement and the settlement provided herein, under Rule 52.08 of the
Missouri Rules of Civil Procedure, substantially similar to Exhibit C to this Agreement and made
a part hereof.
2.8 Final Hearing Date. "Final Hearing Date" means the date set by the Court for the
hearing on final approval of the class action settlement embodied in this Agreement.
2.9 Final Judm•ent. "Final Judgment" means a Judgment of the Court, substantially
similar to Exhibit D to this Agreement and made a part hereof.
2.10 Final Settlement Amount. "Final Settlement Amount" means the "Settlement
Funds" less any reduction pursuant to •uu-Pmagiapn ••• T•- .• .... •.• •:m.+ •
the "Settlement ru•_ct• and the "Final Settlement Amount" will be the same.
2.11 Initial Settlement Class Member Payment. "Initial Settlement Class Member
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Payment" means the amount $1,188,032.
2.12 Master Financial Defendants. "Master Financial Defendants" means Master
Financial, Inc., Master Financial Asset Securitization Trust 1997-1, Master Financial, Inc.,
Master Financial Asset Securitization Trust 1998-1, Master Financial Asset Securitization Trust
1998-2, and their joint or respective parents, subsidiaries, affiliates, predecessors, successors or
assigns.
2.13 Net Settlement Funds. 'q',let SettIement Funds" means the "Settlement Funds,"
(or the Final Settlement Amount, if different) less (a) any incentive award approved by the Court
and paid to the Named Plaintiffs; (b) the amount of .any attorneys' fees, litigation expenses
and/or costs approved by the Court and awarded to Plaintiffs' Counsel; (c) the amounts of the
claims shown on Schedule A for those members of the Settlement Class, if any, who timely opt
out of this Settlement pursuant to Sub-Paragraph 9(a); and (d) any interest earned and
attributable to these three sums, respectively while in escrow.
2.14 Non-HomEq Plaintiff Borrowers. The "Non-HomEq Plaintiff Borrowers"
includes plaintiffs in the class certified by the Court in the Litigation who obtained a loan from
Barm-Cor but whose loan was not_ purchased by and assigned to TMS Mortgage, Inc. d/b/a The
Money Store. This includes, but is not limited to, James Wong, and Daniel and Wanda Jensen,
who are also named plaintiffs in the Litigation.
el" 2.15 Plaintiffs' Counsel. "Plaintiffs' Couns means, collectively, Waiters Bender
Strohbelm & Vaughan, P.C., 2500 City Center Square, 1100 Main Street, Kansas City, Missouri
6410•.
2.! 6 Preliminarg Approval Order. "Preliminary Approval Order" means an Order of
Court preliminarily approving the settlement set forth in this Agreement, conditionally or
preliminarily certifying a class for settlement purposes, directing the issuance of a class notice
and scheduling a settlement hearing in accordance with Rule 52.08 of the Missouri Rules of Civil
Procedure, substantially similar to Exhibit B to this Agreement and made a part hereof.
2.17 Released Persons. "Released Persons" shall be defined to include the HomEq
Defendants and each of their parmers, affiliates, parent companies, subsidiaries, divisions or
other organizational units of any kind doing business in their own names, and doing business
under any other names, any entity now or in the past controlled by, controlling or under the
common control with any of the foregoing and doing business under any other names, including
but not limited to Wachovia Corporation and Wells Fargo &. Co., and any and all of their
respective affiliates and subsidiaries, and each of their respective predecessors, successors and
assigns, and each of their past and present officers, directors, partners, shareholders, associates,
trustees, employees, agents, attorneys (including any consultants hired by counsel), accountants,
representatives, beneficial owners, investment advisors, investment bankers, insurers,
independent contractors, heirs, executors, and administrators, and each of their respective
predecessors, successors, and assigns. Notwithstanding the above, the term "Released Persons"
does not include (a) Bann-Cor Mortgage, (b) the Master Financial Defendants, (c) any former
defendant named in the Litigation and/or the companion case entitled John A. and Jeanette A.
Schwartz• et al. v. Bann-Cor Mortgage, et al., Case No. 03 CV 224614, other than the HomEq
Defendants, (d) or any other person, association or entity who is not a Released Party including,
but not limited to, Residential Funding Company, LLC, Franklin Credit Management
of the Non-HomEq Plaintiff Borrowers, and/or any person, association or entity to whom the
loans of any of the Non-HomEq Plaintiff Borrowers were sold, assigned or otherwise transferred
or conveyed.
2.18 Releasors. "Releasors" means the Named Plaintiffs, all Settlement Class
Members, and each of their respective heirs, executors, administrators, assigns, predecessors, and
successors, and any other person claiming by or through any or all of them. The Reteasors shall
not include any members of the Settlement Class who opt out of the Settlement Class in
accordance with Paragraph 9 below.
2.19 Released Claiz•.. "Released Claims" means any and all claims, demands, actions,
causes of action, rights, offsets, setoffs, suits, damages, lawsuits, liens, costs, surcharges, losses;
attorneys' fees, expenses or liabilities of any kind whatsoever, in law or in equity, for any relief
whatsoever, including monetary, injunctive or declaratory relief, rescission, general,
compensatory, special, liquidated, indirect, incidental, consequential or punitive damages, as
weI1 as any and all claims for treble damages, penalties, attorneys' fees, costs or expenses,
whether known or unknown, alleged or not alleged in the Litigation, suspected or unsuspected,
contingent or vested, accrued or not accrued, liquidated or unliquidated, matured or unmatured,
that in any way concern, relate to, or arise out of the Class Members' Bann-Cor Loans, and
which any of the Releasors have, had, or now have, from the begirming of time up through and
including the Effective Date, against the Released Persons ("Claims"), including but not limited
to, any and all Claims arising out of or relating to: (1) allegations that were or could have been
asserted in the Litigation in any way relating to the Class Members' Bann-Cor Loans; (2) the
Fifth Amended Petition or the facts and circumstances giving rise thereto; (3) any activities the
/'d• .qP.V or•nrl,•ot
undertaken by any of the Released Persons to defend the Litigation, including but not Iimited to,
any alleged improper discovery conduct and/or any request for sanctions in this Litigation;
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and/or (5) any alleged representations, misrepresentations, disclosures, incorrect disclosures,
failures to disclose,.acts (legal or illegal), omissions, failures to act, deceptions,acts of
unconscionability, unfair business practices, breaches of contract, usury, unfulfilled promises,
breaches of warranty or fiduciary duty, conspiracy, excessive fees collected, or violations of any
consumer protection statute, any state unfair trade practice statute, or any other body of case,
statutory or common law or regulation, federal or state, including but not limited to the Missouri
Second Mortgage Loan Act, R.S. Mo. § 408.231, et seq., or any other similar state statute; Truth
in Lending Act, 15 U.S.C. § 1601, et seq., and its implementing regulations, 12 C.F.R. part 226;
the Home Ownership and Equity Protection Act, 15 U.S.C. § 1639, et seq., and its implementing
regulation, 12 C.F.R. part 226.31-32; the Real Estate Settlement Procedures Act 12 U.S.C.
§ 2601, and its implementing regulation, 24 C.F.R. part 3500; the Equal Credit Opportunity Act,
15 U.S.C. § 1691, et seq., and its implementing regulation, 12 C.F.R. part 202; the Home
Mortgage Disclosure Act, 12 U.S.C. § 2801, et seq., and its implementing regulation, 12 C.F.R.
part 203; the Fair Housing Act, 42 U.S.C. §§ 3601, et seq.; the Fair C•'edit Reporting Act,
15 U.S.C. § § 1681, et seq.; the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq.;
and the Federal Trade Commission Act, 15 U.S.C. §§ 45, et seq. Released Claims also include,
without limitation, any allegation that any Released Party has conspired with, aided and abetted,
or otherwise acted in concert with any other third parties, including, but not limited to, Bann-Cor
Mortgage, with regard to any of the facts, acts, events, transactions, occurrences, courses of
conduct, business practices, representations, omissions, circumstances or other matters related to
general release of all Released Claims against the Released Persons; provided, however, that, to
the extent a Settlement Class Member obtained another loan originated by a third-party other
10
than Barm-Cor Mortgage, which was subsequently purchased by and assigned to one or both of
the HomEq Defendants, this Release does not apply as to that loan and/or loan transaction. To
the extent a Settlement Class Member does not have such a "'non-Bann-Cor Loan," all of his, her
or its Released Claims against the Released Persons are released. Notwithstanding the above, the
term "Released Claims" does not include (a) any existing or future claims, causes of action,
remedies, motions for sanctions and/or rights to relief that James Wong, Daniel and Wanda
Jenson, and any of the other Non-ttomEq Plaintiff Borrowers are asserting or may hereafter
assert in the Litigation against any person, association or entity who is not a Released Person as
defmed above; (b) any claims or causes of action by any person or entity other than a Releasor
including, without limitation, the claims, causes of action, remedies, motions or requests for
sanctions and/or any other rights to relief arising from, related to or based on the alleged
improper discovery conduct, fraud on the court, representations, misrepresentations, disclosures,
incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, and/or
deceptions of the Released Persons, or any one or more of them, by the plaintiffs and/or the
plaintiffs' class in the lawsuit entitled Steven R. and Ruth E. Mitchell v. Residential Funding
Company LLC, et al., Case No. 03 CV220489 (currently on appeal), or any lawsuit or
proceeding other than this Litigation.
2.20 Settlement Class. "Settlement Class" shall have the meaning set forth in
Sub-Paragraph 3(a) hereof. "Settlement Class" does not inciude James Wong, Daniel Jensen,
Wanda Jensen, or any of the other "Non-HomEq Plaintiff Borrowers"
-•: --,, r•- .•.•.•, "Sett!ement Class M•mb•r" '•ea,,.q •-v member of the
Settleme_nX Class (as defined herein), who does not timely opt out of this Settlement pursuant to
Sub-Paragraph 9(a) below.
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2.22 Settlement Funds. "Settlement Funds" means the amount to be delivered to
Plaintiffs' Counsel by the HomEq Defendants in accordance with Sub-Paragraph 4(a).
2.23 Settlement Hearing. "Settlement Hearing" means the hearing on final approval of
the class action settlement embodied in this Agreement.
3. Certification of Settlement Class
a. The Named Plaintiffs and Plaintiffs' Counsel shall file a motion requesting that
the Court approve the settlement for a class (referred to and defined herein as the "Settlement
Class") for settlement purposes defined as follows:
All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a deed of trust on residential real property located in
the State of Missouri, originated by Bann-Cor Mortgage, and purchased by and assigned to TMS Mortgage, Inc., d/b/a The Money Store.
b. A list of all members of the Settlement Class shall be made a part of this
Agreement as Exhibit E, but said Exhibit shall be filed under seal with the Court pursuant to the
terms of the Stipulated Protective Order dated April 8, 2003 to protect the privacy of the names
and addresses of the members of the Settlement Class.
c. If this Agreement is not approved by the Court pursuant to the proposed Final
Approval Order and Final Judgment, this Agreement, the conditional class certification provided
herein, the settlement proposed herein (including any modifications made with the consent of the
Parties), and any action taken or to be taken in connection therewith shall be terminated and shall
become null and void and have no further force or effect, the Preliminary Approval Order shall
be vacated, the Parties shall be restored to their respective positions existing prior to the
execution of this Agreement, and the Parties' rights and obligations with respect to the use of this
Agreement and the settlement contemplated hereby will be subject to Paragraph 1 hereof. In
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addition, neither this Agreement, the preliminary certification of the Settlement Class, the
Preliminary Approval Order, nor any other document in any way relating to any of the foregoing,
shall be relied on, referred to or used in any way for any purpose in connection with any further
proceedings in this Litigation or any related action. In such case, or in the event that this
Agreement shall terminate or the settlement embodied herein does not become effective for any
reason, the Agreement and all negotiations, court orders and proceedings relating thereto shall be
without prejudice to the rights of the Parties, and each of them, who shall be restored to their
respective positions existing prior to the execution of this Agreement, and evidence relating to
the Agreement and all negotiations shall not be discoverable or admissible in the Litigation or
otherwise,
4. Settlement Consideration to the Settlement Class and Distribution of the Settlement Funds
a. Within three (3) business days after entry of the Final Approval Order and receipt
by Defendants' Counsel in writing of appropriate wiring instructions and a completed W-9 Tax
Form from Plaintiffs'Counsel, the HomEq Defendants shall detiver four million dollars
($4,000,000), subject to Sub-Paragraph 4(d) below (referred to and defined herein as the
"Settlement Funds") to the Escrow Agent, as defined below, by wire transfer at their own
expense.
b. The Settlement Funds shall be wired into an interest-bearing escrow account that
the Parties shall establish, pursuant to mutually agreeable terms, at Missouri Bank & Trust, 1044
Main Street, Kansas City, Missouri, or some other insured depository institution in Missouri
selected by Plaintiffs' Counsel (the "Escrow Agent"). All interest edmed on the Settlement
Funds while in escrow shall be added to and included within the definition of "Settlement
Funds" and shall be allocated to each person or entity on Schedule A in proportion to his, her or
13
its share of the Settlement Funds. The Settlement Funds, including any interest earned in
escrow, shall be returned to the HomEq Defendants in the event that the settlement is rescinded,
terminated, vacated, or the Effective Date does not arrive for any other reason. The Settlement
Funds while in the escrow account shall be invested in a manner that generates the highest remm
that can be obtained without risk to the principal.
c. The Parties' escrow agreement shall provide that the Settlement Funds will be
released to Plaintiffs' Counsel from escrow the first business day after the Effective Date.
Plaintiffs' Counsel, subject to such supervision and direction of the Court as may be necessary,
shall be responsible for and shall administer and oversee the distribution of the Settlement Funds
in accordance with the terms of this Agreement and Schedule A, which also shall be filed under
seal with the Court pursuant to the terms of the Stipulated Protective Order dated April 8, 2003
to protect the privacy of the members of the Settlement Class.
d. If any member of the Settlement Class opts out of the Settlement Class but the
HomEq Defendants do not terminate this Agreement pursuant to Sub-Paragraph 9(b), then the
Settlement Funds shall be reduced by the amount(s) allocated on Schedule A to the member(s) of
the Settlement Class who opted out of the Settlement. If such a reduction occurs, the Parties
shall submit a revised Schedule A to the Court under seal prior to the Final Hearing Date, and the
mount to be wire-transferred to the Escrow Agent pursuant to Sub-Paragraph 4(a) above shall
reflect the reduction. If such a reduction occurs, the remaining balance shall be the Final
Settlement Amount and shall be treated as the •Settlement Funds." If no such reduction occurs,
interest earned in escrow.
e. Upon release of the Settlement Funds by the escrow agent, Plaintiffs' Counsel
14
shall distribute the Net Settlement Funds (plus any interest earned in escrow) to the Settlement
Class Members (i.e., those members of the Settlement Class, if any, who did not timely opt-out)
in the amounts and to the payees at the addresses as shown on Schedule A, or as the Court may
otherwise determine and approve. Plaintiffs' Counsel shall distribute the Net Settlement Funds
to the Settlement Class within 30 days of the Effective Date by checks mailed to the Settlement
Class Members or, in the event of a Settlement Class Member bankruptcy under Chapter 7, to the
Chapter 7 bankruptcy trustee with notice of said mailing to said Settlement Class Member.
Plaintiffs' Counsel will re-mail any returned checks to any new address disclosed. To the extent
any check is returned a second time, Plaintiffs' Counsel shall undertake reasonable efforts to
locate a current address for said Settlement Class Member. If any Settlement Class Member
refuses to accept receipt of a distribution check, or does not cash a distribution check within 30
days of receipt, Plaintiffs' Counsel shall undertake reasonable efforts to locate and/or contact the
Settlement CIass Member and inquire about receiving and/or cashing the check. Within 210
days of the Effective Date, Plaintiffs' Counsel shall file a report with the Court conftm•ing that
the entirety of the Net Settlement Funds have been distributed to the Settlement Class Members
pursuant to Schedule A and checks cashed or, if such a confirmation cannot be provided,
outlining the steps that remain to distribute any unclaimed portion of the Net Settlement Funds.
Plaintiffs' Counsel shall reallocate the amounts of any unclaimed checks to the paid Settlement
Class Members pro rata based on their allocable share of their total paid distributions of claimed
checks at such time as Plaintiffs' Counsel determines appropriate in their sole discretion, but
which in any event shall be prior to ul• •,•l•lra•it)l• u• an•. •,•.•iuu
f. Plah•tiffs' Counsel shall be responsible for preparing, filing and addressing any
requisite IRS Form 1099s. Settlement Class Members shall be responsible for any taxes due or
15
any tax liability arising out of the distribution of the Settlement Funds.
g. The Released Persons shall have no responsibility for, interest in, or Iiability
whatsoever with respect to or arising out of the investment, allocation or distribution of the
Settlement Funds, the determination, administration, calculation, or payment of claims, the
payment or withholding of taxes, or any losses incurred in connection therewith.
h. Any Settlement Class Member who receives a payment under this Settlement
Agreement shall be solely responsible for distributing or allocating such payment between or
among all co-borrowers on his, her, or its Bann-Cor Loan, regardless of whether a payment
check has been made out to all or only some of the Settlement Class Member's co-borrowers.
i. No person shall have any claim against the Released Persons, Plaintiffs' Counsel,
or other agent designated pursuant to this Agreement based upon the distributions made
substantially in accordance with this Agreement or any Orders of the Court.
5. Incentive Award and Attorneys' Fees and Costs
a. The Named Plaintiffs may petition the Court for the payment of an incentive
award in a total amount not to exceed $18,000 in recognition of services rendered for the benefit
of the Settlement Class throughout the course of the Litigation, which shall be in addition to the
amount to be paid on their individual claims. The amount of any incentive award approved by
the Court, and any interest attributable to said amount while in escrow, shall be deducted from
the Settlement Funds held in escrow pursuant to Paragraph 4 above in determining the Net
Settlement Funds to be distributed to the Settlement Class Members. The HomEq Defendants
in the above-stated amount. To the extent the Court approves an incentive award in an amount
less than $18,000, Plaintiffs' Counsel shall reallocate the difference to the Settlement Class per
16
Schedule A.
b. Plaintiffs' Counsel may petition the Court for an award of attomeys' fees and
litigation expenses not to exceed the following: (a) $1,875,000 as reimbursement for actual
attorney and paraprofessional time expended in connection with the Litigation, plus 35% of the
"Common Fund Recovery" which Fund is estimated to be $768,968; and (b) $150,000 for the
litigation expenses and court cost that Settlement Class Counsel has also incurred and advanced
in connection with the Lawsuit. The amount of any fee and/or expense awards approved by the
Court, and any interest attributable to said amount(s) wtiile in escrow, shall be deducted from the
Settlement Funds held in escrow under Paragraph 4 above in determining the Net Settlement
Funds to be distributed to the Settlement Class Members. The HomEq Defendants wiIl not
object to Plaintiff's Counsel applying to the Court for, and receiving, an award of attorneys' fees,
litigation expenses and court costs in the above-stated amounts. To the extent the Court awards
attorneys' fees, litigation expenses and/or court costs in amounts less than the not to exceed
amounts for which Plaintiffs' Counsel can apply, Plaintiffs' Counsel shall reallocate the
difference to the Settlement Class per Schedule A.
c. Except as provided in this Paragraph 5, each party shall bear its own attorneys'
fees, costs, and expenses incurred in the prosecution, defense, or settlement of the Litigation, and
specifically, without limitation, the HomEq Defendants shall bear no other attorneys' fees, court
costs or expenses.
6. Releases
c•.. +•.• •¢¢•,.,•,,• Date, •,, •vo•,,•,o f•r the l-lc, m•.a Defendants' a_m:eement to
make available and pay the Settlement Funds pursuant to the terms and conditions of this
Agreement, and for other good and valuable consideration, Releasors, including but not limited
17
to the Named Plaintiffs, on their own behalf and on behalf of each Settlement Class Member, by
operation of this Release and the judgment set forth in the Final Order and Judgment, do hereby
and shall be deemed to have fully, finally and forever released, settled, compromised,
relinquished, and discharged any and all of the Released Persons of and from any and all
Released Claims and, without further acl•ion by any person or the Court, will be deemed (i) to
have consented to dismiss with prejudice the Litigation as against the HomEq Defendants and
any and all Released Claims; (ii) to have released and forever discharged any and all Released
Claims; and (iii) to be forever barred and enjoined from instituting or further prosecuting, in any
forum whatsoever, including but not limited to any state, federal, or foreign court, or regulatory
agency, each and every Released Claim. The Parties agree that the Released Persons will suffer
irreparable harm if any Settlement Class Member takes action inconsistent with this
Sub-Paragraph 6(a), and that in that event the Released Persons may seek an injunction as to
such action without further showing of irreparable harm.
b. The Releasors acknowledge and agree that they are aware that they may hereafter
discover material or immaterial facts in addition to or different from those which they now know
or believe to be true with respect to the subject matter of this Release, but that it is their intention
to, and they do hereby, upon the Effective Date of this Agreement, fully, finally and forever
settle and release each and every of the Released Persons from each and every Released Claim,
known or unknown, suspected or unsuspected, accrued or not accrued contingent or matured,
which now exist, may hereafter exist, or may heretofore have existed, without regard to the
subsequent discovery or existence
c. Subject to Court approval, each Settlement Class Member shall be bound by this
Agreement and all of their claims shall be dismissed with prejudice and released even if they
18
never received actual, prior notice of the Litigation or its settlement in the form of the Class
Notice or otherwise. The Release and agreements contained in this Paragraph 6 shall apply to
and bind all Settlement Class Members, including those Settlement Class Members whose Class
Notices are returned as undeliverable, and those for whom no current address can be found, if
any.
d. On the Effective Date, Releasors hereby release the Released Persons from each
and every Released Claim.
7. Representations and Stipulations
a. The HomEq Defendants, and each of them, represent, warrant and declare that: (i)
they have acted in good faith and have used their best efforts in identifying the Members of the
Settlement Class and in producing the loan documents and loan payment and payoff information
on which the distribution of the Net Settlement Funds is based; and (ii) there are no Members of
the Settlement Class other than those identified on Exhibit E.
b Upon the Effective Date, the following stipulations shall be made:
i. Stipulation as to the Claims of Non-HomEq Plaintiff Borrowers. The
Named Plaintiffs and Plaintiffs' Counsel stipulate that the Non-HomEq Plaintiff Borrowers, that
is the remaining members of the Litigation Class (excluding the Settlement Class Members as
defined herein), certified by the Court in the Litigation pursuant to the Court's Order dated
March 25, 2008 are not asserting any claims against the HomEq Defendants in the Litigation and
cannot recover any damages from the HomEq Defendants as a result of the Bann-Cor Loans and
that a finding and/or conclusion to this effect, consistent with the Court's March 26, 2008 Order,
shall be included in the Final Approval Order.
ii. No Privilege Waiver. Each Party stipulates and acknowledges that neither
this Agreement nor a Party's decision to negotiate and/or execute the Agreement can be used to
19
show or establish that a Party' s conduct, including that of counsel, during this Litigation gives
rise to or constitutes a waiver of the attorney-client, common interest or joint defense privilege or
work product doctrine.
iii. Use of Discove• Information. The Parties agree to comply with the terms
of the Stipulated Protective Order entered April 8, 2003 except as the Parties have previously
agreed or may hereafter agree.
8. Preliminary Approval Order
The Parties shall promptly move the Court in the pending Litigation for a Preliminary
Approval Order substantiaIly similar to .Exhibit B that accomplishes the following:
a. Certifying the proposed Settlement Class under Rule 52.08 of the Missouri Rules
of Civil Procedure for settlement purposes;
b. Preliminarily approving this Agreement as fair, reasonable and adequate under
Rule 52.08 of the Missouri Rules of Civil Procedure subject to final determination by the Court;
c. Approving the appointment of the Named Plaintiffs as representatives of the
Settlement Class for settlement purposes;
d. Approving the appointment of Plaintiffs' Counsel as counsel for the Settlement
Class for settlement purposes;
e. Approving a form of mailed notice substantially similar to the Class Mail Notice
to be sent to the Settlement Class as shown on Exhibit E;
f. Directing Plaintiffs' Counsel to mail the Class Mail Notice promptly after entry
last known address of such persons•
g. Schedulin• a hearing on final approval of•his AgreementB
2O
h. Establishing a procedure for members of the Settlement Class to opt out and
setting a date, approximately thirty (30) days after the mailing of Class Notice, after which no
member of the Settlement Class shall be allowed to opt out of the Settlement Class;
i. Establishing a procedure for the Settlement Class Members to appear and/or
object to the Settlement and setting a date, approximately thirty (30) days after the mailing of
Class Notice, after which no Settlement Class Member shall be allowed to object;
j. Containing such other and further provisions consistent with the terms and
provisions of this Agreement as the Court may deem advisable.
9. Opt Outs and Obiections Bv Members of the Settlement Class
a. Procedure for Opt Outs. The deadline for opt-out requests shall be set forth in the
Preliminary Approval Order. Any request to opt out must be in writing and must include the
name, address, telephone number, and last four digits of the Social Security Number of the class
member seeking to opt out and a statement that the class member and all other borrowers named
on the class member's promissory note are seeking exclusion. The opt out request must be
personally signed by each person who was a party to the promissory note in connection with the
cIass member's Barm-Cor Loan, unless such person is deceased. In the event a party to the
promissory note is deceased, a copy of the death certificate for such person shall be submitted
with the opt out request. Any opt out request must include a reference to "Schwartz v. Bann-Cor
Mortgage, Case No. 00 CV 226639" and be mailed to
R. Fredrick Walters, Esquire Walters Bender Strohbehn & Vaughan, P.C.
1100 Main Street Kansas City., MO 64105 (on behalf of the Settlement Class)
and
21
Mary J. Hackett, Esquire Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 (on behalf of the HomEq Defendants)
To be considered timely and effective, any opt out request must be received on or prior to the
date established by the Court in the Preliminary Approval Order. No member of the Settlement
Class may opt out by having a request to opt-out submitted by an actual or purported agent or
attorney acting on behalf of the class member. No opt-out request may be made on behalf of a
group of class nembers." Each member of the Settlement Class who does not submit an opt-out
request substantially in compliance with this Paragraph 9 shall be included in the Settlement
Class and deemed a Settlement Class Member. For purposes of determining timeliness, an opt
out request shall be deemed to have been submitted when received by either Class Counsel or
Defendants' Counsel. Class Counsel shall provide to the Court, on or before the date of the Final
Approval Hearing, a list of all persons who have timely and adequately filed a request to be
excluded from the Settlement.
b. Effect of Opt Outs By Members of the Settlement Class. If class member opt-
outs result in the exclusion from the settlement of 5% (five percent) of the number of loans that
would otherwise be included within the settlement, at the HomEq Defendants' option, each and
every of the HomEq Defendants' obligations under this Agreement shall cease to be of any force
and effect, and this Agreement and any orders entered in connection therewith shall be vacated,
rescinded, canceled, and annulled. If the HomEq Defendants exercise this option, the Parties
ig shall return to the status quo in the Lit ation as ix •il•
Agreement. In addition, in such event, the Agreement and all negotiations, court orders and
proceedings relating thereto shaIl be without prejudice to the rights of the Parties, and each of
22
them, and evidence relating to the Agreement and all negotiations shall not be admissible or
discoverable in the Litigation or otherwise. The HomEq Defendants must exercise its option
pursuant to this Sub-Paragraph 9(b) at least five (5) business days prior to the Final Hearing
Date, by giving written notice of such exercise to Plaintiffs' Counsel.
c. Bm•mptcv Trustees. In instances where a member of the Settlement Class has
filed for bankruptcy under Chapter 7 after obtaining his or her Bann-Cor Loan, if the class
member opts out of the Settlement, the Chapter 7 bankruptcy trustee shall be deemed to have
opted out of the Settlement. Conversely, if the Chapter 7 b•ptcy trustee opts out of the
Settlement, the member of the Settlement Class shall be deemed to have opted out of the
Settlement. If neither the member of the Settlement Class nor the Chapter 7 bankruptcy trustee
opts out of the Settlement, both shall be bound by the Release provisions of Paragraph 6.
d. Procedure for Obiections to Settlement. Settlement Class Members who wish to
object to the Settlement provided for in this Agreement or the incentive award or the award of
attorneys' fees and reimbursement of costs and expenses must file a notice of objection,
including supporting papers as described further below (hereinafter collectively referred to as the
"Notice of Objection"), with the Court on or prior to the date established by the Court in the
Preliminary Approval Order. For purposes of determining timeliness, a Notice of Objection
shall be deemed to have been submitted when received and filed by the Clerk of Court. Copies
of the Notice of Objecti0n must also be mailed to the following on or prior to the date established
by the Court in the Preliminary Approval Order, which shall be no later than ten (10) days prior
to the ginai Hearing Date:
R. Fredrick Walters, Esquire Walters Bender btronbehn & Vau•,han, P.C. 2500 City Center Square 1100 Main Street
23
Kansas City, MO (54105 (on behalf of the Settlement Class)
and
Mary J. Hackett, Esquire Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219 (on behalf of the HomEq Defendants)
The Notice of Objection shall specifically include:
(i) A statement of each objection asserted;
(ii) A detailed description of the facts underlying each objection;
(iii) Any loan documents in the possession or control of the objector and relied
upon by the objector as a basis for the objection;
(iv) If the objector is represented by counsel, a detailed description of the legal authorities supporting each objection;
(v) If the objector plans to utilize expert opinion and/or testimony as part of
the objection(s), a written expert report from all proposed experts;
(vi) If the objector plans to call a witness or present other evidence at the hearing, the objector must state the identity of the witness and identify any documents by attaching them to the objection and provide any other evidence that the objector intends to present;
(vii) A statement of whether the objector intends to appear at the hearing; and
(viii) A copy of any exhibits which the objector may offer during the hearing.
Attendance at the final hearing is not necessary. Any Settlement Class Member who does not
make his or her objection in the manner provided shall be deemed to have waived such objection
and shall forever be foreclosed from making any objection to the fairness, adequacy, or
reasonableness of the proposed settlement or any other provision of this Agreement.
10. Final Approval Order and Final Judgment
a. The Named Piaintiffs and Plaintiffs' Counsel agree that they will request the
24
Court to enter, after the hearing on final approval of this Agreement, an order substantially in the
form of attached Exhibit C. In accordance with Exhibit C, the Final Approval Order will certify
the Settlement Class and find that this Agreement is fair, reasonable, and adequate and in the best
interest of the Settlement Class. The Final Approval Order will require the Parties to carry out
the provisions of this Agreement.
b. The Named Plaintiffs and Plaintiffs' Counsel agree that they will request the
Court to enter, after the hearing on final approval of this Agreement, a Final Judgment in the
Litigation substantially in the form of attached Exhibit D. In accordance with Exhibit D., the
Final Judgment will dismiss all cIaims and motions of the Settlement Class Members, including
without limitation Plaintiffs' Motion for Sanctions, pending against the HomEq Defendants in
the Litigation on the merits with prejudice as to the Releasors; find and/or conclude that the Non-
HomEq Piaintiff Borrowers are not asserting any claims against the HomEq Defendants in the
Litigation, cannot recover any damages from the HomEq Defendants as a result of the Bann-Cor
Loans, and that the Non-HomEq Plaintiff Borrowers are forever barred from recovering damages
from the HomEq Defendants as a result of the Bann-Cor Loans; declare that the Settlement Class
Members are bound by the Releases set forth in Paragraph 6 of this Agreement; contain an
express determination by the Court that "there is no just reason for delay"; and reserve
continuing jurisdiction over the enforcement of this Agreement and the administration and
distribution of the Settlement Funds.
11. Certifications To The Court
3, •n or o•lOl• LII• r•lai iiearlng
in the Litigation an affidavit verifying that the Court-approved Class Mail Notices have been sent
by first-class mail.
25
b. On or before the Final Hearing Date, Plaintiffs' Counsel shall file with the Court
an affidavit verifying that they have complied with the procedures described in Sub-Paragraph
14(a) with respect to all Class Mail Notices returned as undeliverable.
12. Effectiveness of Settlement Agreement
The "Effective Date" of this Agreement shall be the date when each and all of the
following conditions have occurred:
a. This Agreement has been signed by the Named Plaintiffs, Plaintiffs' Counsel, and
the HomEq Defendants;
b. A Preliminary Approval Order has been entered by the Court, in substantially the
form of attached Exhibit B., granting preliminary approval of this Agreement, and approving a
form of Class Mail Notice, as provided in Paragraph 8;
c. The Court-approved Class Mail Notices have been duly mailed to the Settlement
Class as ordered by the Court in the Litigation;
d. A Final Approval Order has been entered by the Court, in substantially the form
of attached Exhibit C, as provided in Sub-Paragraph 10(a);
e. A Final Judgment has been entered by the Court, in substantially the form of
attached Exhibit D, as provided in Sub-Paragraph 10(b); and
f. The Final Approval Order and the Final Judgment entered as provided in
Sub-Paragraphs 10(a) and 10(b) have become final because of (i) the expiration of the time for
appeals therefrom without any appeal having been taken or, (ii) if review of the order, or any
portion thereof, is sought by any person, the •" •"'" :
appe!!ate couP(s) and the time for seeking any higher level of appellate review has expired.
g. If any material portion of the Agreement, the Final Approval Order, or the Final
26
Judgment is vacated, modified, or otherwise altered on appeal, any Party may, in its sole
discretion, within seven calendar days of such appellate ruling, declare that the Agreement has
failed to become effective, and in such circumstances the Agreement shall cease to be of any
force and effect as provided in Paragraph 13.
13. Failure of Condition
If, for any reason, this Agreement fails to become effective pursuant to Paragraph 12, the
orders, judgment, and dismissal to be entered pursuant to this Agreement shall be null and void
or otherwise vacated, and the Parties will be returned to the status quo prior to entering into this
Agreement with respect to the Litigation as if this Agreement had never been entered into. In
addition, in such event, the Agreement and all negotiations, court orders and proceedings relating
thereto shall be without prejudice to the rights of any and all parties hereto, and evidence relating
to the Agreement and all negotiations shall not be admissible or discoverable in the Litigation or
otherwise.
14. Class Notice Forms
a. Plaintiffs' Counsel has a list of the members of the Settlement Class to whom
notice pursuant to this Agreement shall be provided. Prior to mailing, Plaintiffs' Counsel will
update the addresses by use of the United States Postal Service's National Change of Address
database or another address database service (e.g., Accurint, Intelius). Plaintiffs' Counsel will
re-mail any returned notices tO any new address disclosed. To the extent any notice is returned a
second time, Plaintiffs' Counsel shall undertake reasonable efforts to locate current addresses for
Approval Order.
b. Subject to Court approval, all Settlement Class Members shall be bound by this
27
Agreement and the Released Claims shall be dismissed with prejudice and released, even if they
never received actual notice of the Litigation or its settlement. Further, the Parties expressly
acknowledge and agree that a Final Judgment shall be entered by the Court dismissing all
Released Claims and barring the relitigation of any Released Claims as provided herein,
regardless of whether they were actually asserted, to the fullest extent of the law and that any
dismissal order or judgment shall be entitled to Full Faith and Credit in any other court, tribunal,
forum, including arbitration fora, or agency.
15. General Provisions
a. Entire A•reement. This. Agreement constitutes the full, complete and entire
understanding, agreement and arrangement of and between the Named Plaintiffs and Settlement
Class Members on the one hand and the HomEq Defendants on the other hand with respect to the
settlement of the Litigation and the Released Claims against the Released Persons. This
Agreement supersedes any and all prior oral or written understandings, agreements, and
arrangements between the Parties with respect to the settlement of the Litigation and the
Released Claims against the Released Persons. Except those set forth expressly in this
Agreement, there are no other agreements, covenants, promises, representations or arrangements
between the Parties with respect to the settlement of the Litigation and the Released Claims
against the Released Persons.
b. Modification in Writing. This Agreement may be •/ltered, amended, modified or
waived, in whole or in part, only in a writing signed by all Parties to this Agreement. This
Agreement may no• be m'•e•,• •:•- :..^• •1• :_ ..,_•_• •_m•
c. Ongoing Cooperation. The Parties hereto shall execute all documents and
perform all acts necessary and proper to effectuate the terms of this Agreement. The execution
28
of documents must take place prior to the date scheduled for hearing on final approval of this
Agreement.
d. Triplicate Originals/Execution in Counterpart. All Parties and Plaintiffs' Counsel
shall sign three copies of this Agreement and each such copy shall be considered an original.
This Agreement may be signed in one or more counterparts. All executed copies of this
Settlement Agreement, and photocopies thereof (including facsimile copies of the signature
pages), shall have the same force and effect and shall be as legally binding and enforceable as the
original.
e. No Reliance. Each Party to this Agreement warrants that he, she or it is acting-
upon his, her, or its independent judgment and upon the advice of his, her, or its own counsel and
not in reliance upon any warranty or representation, express or implied, of any nature or kind by
any other parry, other than the warranties and representations expressly made in this Agreement.
f. Governing Law. This Agreement shall be interpreted, construed, enforced, and
administered in accordance with the laws of the State of Missouri, without regard to conflict of
laws rules. This Agreement shall be enforced in the Circuit Court of Jackson County, Missouri.
The HomEq Defendants and Settlement Class Members waive any objection that each such party
may now have or hereafter have to the venue of such suit, action, or proceeding and irrevocably
consent to the jurisdiction of the Jackson County court in any such suit, action or proceeding, and
agree to accept and acknowledge service of an)• and all process which may be served in any such
suit, action or proceeding.
entw of final judgment, the Court shall retain jurisdiction for purposes of enforcing the terms of
this Agreement.
29
h. Written Press Releases. Plaintiffs' counsel agrees not to issue any written press
releases concerning the Settlement. Plaintiffs' Counsel also agrees that to the extent they speak
with any media about the Settlement and/or post content or material concerning the Settlement
on the WBSV website, Plaintiffs' Counsel will not refer to or identify any Wachovia entities not
named in the Litigation, as well as any and all Wells Fargo & Co. entities, as being involved in
the Litigation. Plaintiffs' Counsel shall not be constrained in any other way in making comments
to the media.
i. :Binding on Successors. This Agreement shall be binding on and shall inure to the
benefit of the Pai•ies and their respective successors, ass.igns, executors, administrators, heirs and
legal representatives.
j. Mutual Preparation. This Agreement shall not be construed more strictly against
one party than another merely by virtue of the fact that it may have been prepared by counsel for
one of the Parties, it being recognized that because of the arm's length negotiations between the
Parties, all Parties have contributed to the preparation of this Agreement.
k, Gender Neutrality. All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall
include the plural and vice versa.
i. Taxes. All Settlement Class Members shall be responsible for paying and/or
reporting any and all federal, state and local income taxes due on the payments made to them
pursuant to the settlement provided herein.
be !iable or obligated to pay any fees, expenses, costs or disbursements to the Named Plaintiffs,
Plaintiffs' Counsel or Settlement Class Members, either directly or indirectly, in connection with
3O
the Litigation or the administration of this Agreement, other than the amounts expressly provided
for herein. Any miscellaneous settlement administration expenses of any kind shall be advanced
by Plaintiffs' Counsel and reimbursed from the Settlement Funds, subject to the Court's
approval.
n. Use of Settlement. Neither this Agreement, nor any related negotiations,
statements or court proceedings, shall be construed as, offered as, received as, used as or deemed
to be evidence or an admission or concession of any liability or wrongdoing whatsoever on the
part of any person or entity, including but not limited to the HomEq Defendants, or as a waiver
by the HomEq Defendants of any applicable defense, including without Iimitation any applicable
statute of limitations or statute of frauds.
o. Authori•. With respect to themselves, each of the Parties to this Agreement
represents, covenants and warrants that (a) they have the fuIl power and authority to enter into
and consummate all transactions contemplated by this Agreement and have duly authorized the
execution, detive• and performance of this Agreement and {b) the person executing this
Agreement has the fall right, power and authority to enter into this Agreement on behalf of the
party for whom he/she has executed this Agreement, and the full right, power and authority to
execute any and all necessary instruments in connection herewith, and to fully bind such party to
the terms and obligations of this Agreement.
31
• WITt•SS ••OF•,. •he und•igr•ed, being/duly a•thoi•i•i have caused this.
Agreement to be executed as o•fthi:s
Dated: May __,,
2009
JOHN A, SCHWARTZ
)ohn ka Schwartz, on his o•vn b•half aad on behalf, of the S•tlemem Class
Dated•' May ,2009
JEANETTE A. SCHWARTZ
Jeanette A• Sohwartz, on.her own behalf and on b•half of t•he S:etflerhent C•ass
Dated: iMay •_, 200•
W•fghovta :EqmtyServmmg, LLC
Dated: May___., 2009
The Money St0re, LLC
By•
Titte.•
Dated,: May ,2009
Plaintiffs CotmseI
Title:
2009 •ated, May __•
Defendant' Counsel
By:.
Title:
IN WITNESS WHEREOF, the undersigned, being duly authorized, have caused this
Agreement to be executed as of this I lth day of May, 2009.
JOHN A. SCHWARTZ
Dated: May ___,
2009 John A. Schwartz, on his own behalf and behalf of the Settlement Class
on
JEANETTE A. SCHWARTZ
Dated: May__, 2009 Jeanette A. Schwartz, on her own behalf and on behalf of the Set•ement Class
Dated: May ___,
2009
Wachovia Equity Servicing, LLC
By:
Title:
Dated: May j_£_, 2009 The Mon• Store LLC
Title:
Dated: May__, 2009
Plaintiffs' Counsel
By:.
Title:
Defends_is' c,• o!
Dated: May.___, 2009 By:.
Title:
32
1N WITNESS WHEREOF, the undersigned, being duly authorized, have caused this
Agreement to be executed as of this lth day of May, 2009.
Dated: May __,
2009
Dated: May •,
2009
JOHN A. SCHWARTZ
John A. Schwartz, on his own behalf and behalf of the Settlement Class
JEANETTE A. SCHWARTZ
on
Jeanette A. Schwartz, on her own behalf and on
behalf of the Settlement Class
Wachovia Equity Servicing, LLC
Dated: May __,
2009 By:
Dated: May__., 2009
Dated: May ,2009
Dated: May •//,
2009
Title:
The Money Store, LLC
By:
Title:
Plaintiffs' Counsel
By:
Title:
Defendants'•Couns•k'• • {
32
Dated: May __,
2009
IN WITNESS WHEREOF, the undersigned, being duly authorized, have caused this
Agreement to be executed as of this• day of May, 2009.
on
Dated: May__, 2009
JEANETTE A. SCHWARTZ
• A. Schwartz, o•a her own
behalf and on
behalf of the Plaintiff Class
Dated: May__, 2009
Wachovia Equity Servicing, LLC
By:
Title:
Dated: May__, 2009
The Money Store, LLC
By:
Title:
Dated: May///f,
2009
Dated: May__, 2009
Defendants' Counsel
By:.
Title:
32
EXHIBITS AND SCHEDULES
Schedule A Proposed Distribution Schedule of Settlement Funds/Final Settlement Amount
Exhibit A Class Mail Notice
Exhibit B Preliminary Approval Order
Exhibit C Final Approval Order
Exhibit D Final Judgment
Exhibit E Class List
EXHIBIT A: PROPOSED NOTICE
IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT INDEPENDENCE
JOHN AND JEANETTE SCHWARTZ, et al.,
Plaintiffs,
V.
BANN-COR MORTGAGE, et al.,
Defendants.
) ) ) CaseNo. 00 CV 226639 ) CaseNo. 00 CV 226639-01 ) CaseNo. 00 CV 226639-02 ) CaseNo. 00 CV 226639-03 ) ) Division 14 )
NOTICE OF PROPOSED CLASS ACTION SETTLEMENT AND OF SETTLEMENT HEARING
A Court has authorized this Notice. This is not a solicitation from a lawyer. Please read this Notice carefully and completely.
THIS NOTICE AND ANNOLrNCEMENT APPLIES TO YOU BECAUSE YOU ARE AMONG
A CLASS OF PERSONS WHO, ON OR AFTER OCTOBER 31, 1994, OBTAINED A
"SECOND MORTGAGE LOAN" AS DEFINED UNDER MISSOURI LAW, THAT WAS
SECURED BY A MORTGAGE OR A DEED OF TRUST ON RESIDENTIAL REAL
PROPERTY LOCATED IN THE STATE OF MISSOURI, ORIGINATED BY BANN-COR
MORTGAGE AND PURCHASED BY AND ASSIGNED TO TMS MORTGAGE, INC., D/B/A THE MONEY STORE.
YOU MAY BE ENTITLED TO RECEIVE A SUBSTANTIAL PAYMENT IN CONNECTION WITH THE SETTLEMENT. CLASS MEMBERS WHO DO NOT EXCLUDE THEMSELVES FROM THE SETTLEMENT WILL RECEIVE A SETTLEMENT PAYMENT RANGING
FROM AN ESTIMATED $6,737 TO $82,069 ($32,459 ON AVERAGE) PURSUANT TO A
SETTLEMENT REACHED WITH WACHOVIA EQUITY SERVICING, LLC, AS
SUCCESSOR IN INTEREST TO HOMEQ SERVICING CORP. (FORMERLY TMS
MORTGAGE, INC.) AND THE MONEY STORE, LLC. CLASS MEMBERS CAN REVIEW
WHAT PLAINTIFFS' COUNSEL CURRENTLY ESTIMATES THE AMOUNT OF THE
SETTLEMENT PAYMENT TO BE BY VISITING THE WEBSITE OF PLAINTIFFS' COUNSEL, www.wbsvlaw.com, AND CLICKING ON THE LINK "SCHWARTZ SETTLEMENT."
THIS NOTICE MAY AFFECT YOUR RIGHTS. PLEASE READ IT CAREFULLY!
1. WHY SHOULD I I-tLEAD THIS NOTICE?
This Notice has been mailed to you because the parties' records show that you obtained a second
mortgage loan that was originated by Barm-Cor Mortgage on or after October 31, 1994, which
was purchased by and assigned to TMS Mortgage Inc.• doing business as "The Money Store." Your second mortgage loan is currently the subject of a class action lawsuit filed in the Circuit Court of Jackson County, Missouri styled John and Jeannette Schwartz, et al. v. Bann-Cor Mortgage, et al., Case No. 00-CV-226639 (the "Lawsuit" or "Litigation"). You (and any co-
borrower(s) on your second mortgage loan) may be eligible to receive money from a proposed settlement (the "Settlement") that John and Jeanette Schwartz, two of the named plaintiffs in the Lawsuit, and Wachovia Equity Servicing, LLC, as successor in interest to HomEq Servicing Corp. (f/k/a TMS Mortgage Inc.) and The Money Store, LLC (collectively, the "HomEq Defendants") reached on May 8, 2009. Please share this Notice with any co-borrower(s) on your loan(s).
This Notice generally describes the class action lawsuit; your fights under the proposed Settlement, which has been preliminarily approved by the Circuit Court of Jackson County, Missouri (the "Court"); and the date and time of a public Fairness Hearing that will be held by the Court to consider the fairness of the proposed Settlement:
2. WHAT IS THE LAWSUIT ABOUT?
A class action lawsuit was commenced on October 31, 2000 in the Circuit Court of Jackson County, Missouri, at Kansas City, styled John and Jeannette Schwartz, et al. v. Bann-Cor Mortgage, et at., Case No. 00-CV-226639. The plaintiffs filed the lawsuit on their own behalf, and on behalf of a proposed class of other borrowers who also obtained junior or "second"
mortgage loans secured by Missouri residential real estate from Baun-Cor Mortgage ("Barm- Cor").
In the Lawsuit, the plaintiffs allege that Bann-Cor violated the Missouri Second Mortgage Loan
Act, R.S. Mo. §§ 408.231, et seq, by directly or indirectly charging, contracting for and/or receiving a number of different settlement charges or loan fees in connection with its Missouri second mortgage loans. The plaintiffs also allege in the Lawsuit that Bann-Cor sold and assigned its Missouri second mortgage loans after making them, and that the entities that purchased and/or serviced the loans also violated the Missouri Second Mortgage Loan Act by directly or indirectly charging, contracting for and/or receiving the illegal settlement charges and loan fees, as well as interest on the loans. The plaintiffs also allege that the entities that purchased and/or serviced the Missouri loans are derivatively liable as the assignees and holders of the second mortgage loans for Barm-Cor's violations of Missouri law. The defendants deny these allegations.
On March 25, 2008, the Court certified a litigation class in the Lawsuit comprised of those
persons •no obtained a second mor•g•tgw ioan •rom •a,-,.•u• ivioi•gag• on ux •c• ,J•u•.• •,
1994 (the "Litigation Class"). Notice was provided to the members of the Litigation Class of their opporttmity to opt out or exclude themselves from the Litigation Class that had been
certified. No class members timely elected to exercise his, her, or its right to opt out of the Litigation Class.
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On March 26, 2008, the Court separated or "severed" the claims of those members of the Litigation Class whose Barm-Cor Loans were purchased by and assigned to TMS Mortgage, Inc, (doing business as "The Money Store") (hereinafter referred to as the "Settlement Class") from those members of the Litigation Class whose Bann-Cor Loans were purchased or assigned to
someone other than TMS Mortgage, Inc. (hereinafter referred to as the "Non-HomEq Plaintiff Borrowers").
Plaintiffs John and Jeannette Schwartz (as members and representatives of the Litigation Class whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc. d/b/a The Money Store) and the HomEq Defendants have now agreed to settle and resolve the Lawsuit as
between them on certain terms that are summarized in this Notice. The complete details of the proposed Settlement are contained in a "Settlement Agreement and Release" (the "Settlement Agreement")• which the Schwarztes and the HomEq Defendants (hereinafter, the "Parties") filed with the Court.
On May 11, 2009, the Court preliminarily approved the proposed Settlement as fair, reasonable, and adequate. The Court will conduct a "fairness hearing" on ••.• to consider, among other things, whether the Settlement should be finalls: approved. The proposed Settlement will become effective only if it is finally approved by the Court.
3. WHO IS COVERED BY THE PROPOSED SETTLEMENT?
According to the parties' records, you are a member of the Settlement Class and will be covered by the Settlement. The Settlement Class includes all persons who, on or after October 31, 1994 obtained a "Second Mortgage Loan" as defined in R.S. Mo. § 408.231.1 that was secured by a
mortgage or a deed of trust on residential real property located in the State of Missouri, originated by Bann-Cor Mortgage, and purchased by and assigned to TMS Mortgage, Inc., d/b/a The Money Store.
4. WHAT ARE THE TERMS OF THE PROPOSED SETTLEMENT?
The following is only a summary of some of the terms and conditions of the proposed Settlement. For more information, you may obtain a copy of the executed Settlement Agreement by contacting Plaintiffs' Counsel at the address listed in Section 6 of this Notice, or by visiting the website of Plaintiffs' Counsel, www.wbsvtaw.com, and clicking on the link "Schwartz Settlement."
If the Court approves the proposed Settlement, the members of the Settlement Class who do not exclude themselves from the Settlement will receive a settlement payment ranging front an estimated $6,737 to $82,069 ($32,458 on average). The amount of each Settlement Payment is determined per as ) .,-,! •_o_.,_•. loan the s-tm• of (a me --ii•.i•ti k•lgS• .tv.tcltluct
Payment" per loan; and (b) the Settlement Class Member's pro rata share of 65% of the "Conmaon F•und Re•overyo The "Initial Class Member Payment" per loan is the sum of the following: (a) all of the ailegedly illegal loan fees that were charged, contracted for or
received in connection with the loan: (b) all of the interest paid on the loan; (c) "prejudgment" interest at a yearly rate of 9% on the total amount of the allegedly itlegal
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loan fees from the date of the loan through May 11, 2009; (d) "'prejudgment" interest at a
yearly rate of 9% on the interest paid amounts from the date of each interest payment through May 11, 2009. The ""Common Fund Recovery" is the amount by which the Final Settlement Amount exceeds (a) the "Initial Class Member Payment" for all of the Settlement CIass Member loans, (b) the amount of any incentive award made to the Named Plaintiffs by the Court, and (c) the amount of any attorney's fees and expense awards made
to Plaintiffs' Counsel by the Court. The Common Fund Recovery is estimated to be $768,968. The amount of the incentive award and the amount of the awards of attorney's fees and expenses that the Named Plaintiffs and Plaintiffs' Counsel will ask the Court to
make are explained below in Section 10 of this Notice. Class Members can review what Plaintiffs' Counsel currently estimates the amount of their Settlement Payment to be by visiting the website of Plaintiffs' Counsel, www.wbsvlaw.com, and clicking on the link ""Schwartz Settlement."
No If the Court approves the Settlement, the members of the Settlement Class who do not exclude themselves from the Settlement will receive the Settlement Payment for the loan by check. The check will be mailed iby first-class mail, postage prepaid, to the Settlement Class Members, or to the bankruptcy trustee if a Chapter 7 bankruptcy was filed. The check will be mailed by Plaintiffs' Counsel and will not come from the HomEq Defendants directly. Joint borrowers, such as a husband and wife, will receive a single payment per loan. Any Settlement Class Member who receives a payment under the Settlement is solely responsible for distributing or allocating the payment between or among any co-
borrower(s), regardless of whether the check is made payable to all or only some of the Settlement Class Member's co-borrowers. Settlement Class Members will also be responsible for paying any taxes due on the Settlement Payment received. Settlement Class Members are strongly encouraged to consult with their own tax advisor •concerning the tax effects of any money received pursuant to this Settlement. Plaintiffs' Counsel cannot provide you with any tax advice.
Co The proposed Settlement will only become effective if approved by the Court. If the proposed Settlement is approved, the Court will enter a judgment that releases and discharges the HomEq Defendants and certain other persons from certain claims that were
or could have been asserted against them. The release is further discussed below, in Section 11 of this Notice.
5. WHAT DO I NEED TO DO TO PARTICIPATE IN THE SETTLEMENT?
Nothing. You are currently a member of the Settlement Class and will participate in the Settlement and will receive the estimated sum as stated above unless you exclude yourself from the Settlement as described in Section 6, below. If you filed for Chapter 7 bankruptcy protection after you received the loan, you wiii stiii be a member of the m• •ememem •iass, out--• b•mcm•m
Payment will be made payable to you and/or your Chapter 7 bankruptcy trustee, who will also receive this Notice. If you filed for bankruptcy protection, you should consult with a bankruptcy attorney about this Notice.
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If you change your address, please contact Plaintiffs' Counsel by contacting them at the address provided in Section 7 below.
6. CAN I EXCLUDE MYSELF FROM THE SETTLEMENT?
Yes. If you exclude yourself from the Settlement, you will no__•t receive any payment from the Settlement Funds, and you will no__.tt be bound by any Final Order and Judgment that may be entered in the case with respect to the Settlement Class. You will be free to continue pursuing whatever legal rights you may have.
To exclude yourself from the Settlement, you must send a request for exclusion by first-class mail, postage prepaid, to Plaintiffs' Counsel and Defendants' Counsel (names and addresses provided in Section 7, below). To be effective, your request for exclusion must be in writing and be received by Plaintiffs' Counsel an__•d Defendants' Counsel at the addresses belov¢•'•• ••2009 The request for exclusion must include: (a)your name, address, telephone number and the last four digits of your social security number; (b) your Bann-Cor (or The Money Store or HomEq Servicing Corp.) loan number(s) (if known); (c) a statement that you and all other borrowers named on your promissory note are seeking exclusion from the Settlement; (d) your signature and the signature of any other borrower(s) named on the promissory note for
your loan; and (e) a reference to "Schwartz v. Bann-Cor Mortgage, Case No. 00 CV 226639." The request for exclusion must be signed personally by each Class Member who seeks to be excluded from the Settlement, or the personal representative of any deceased Class Member. No request for exclusion may be made on behalf of a group of Class Members. No Class Member
may opt-out or exclude himself or herself by having a request to exclude submitted by an actual
or purported agent or attorney acting on behalf of the Class Member.
If the request for exclusion is not timely received, or if you choose not to exclude vourseff from the Settlemen L you will be included in the Settlement Class and will be bound by any, Final Order and Judgment entered with respect to the Settlement Class. You also will be legally bound by the proposed Settlement if it is approved, including the provisions releasing the HomEq Defendants and certain other entities for the Released Claims, as more fully described in the Settlement Agreement.
If you want to receive a Settlement Payment as described above in Section 4.A of this Notice, DO NOT submit a request for exclusion.
7. WI-Pt', WHEN, AND WHERE WILL A FAIRNESS HEARING BE HELD?
A hearing on whether to grant final approval of the Settlement will be heId before the Honorable John M. Torrence of the Circuit Court of Jackson County, Missouri (Division 14) on July
__,
2009, at .m., in the Jackson County Courthouse (independence), 308 w. i•,an•as
Independence, MO 64050 (the "Fairness Hearing"). There is no need for you to attend the Fairness Hearing if you simply wish to benefit from the proposed Settlement. The purpose of the Fairness Hearing is to determine, among other things: (a) whether the terms and conditions of the Settlement are fair, reasonable and adequate; (b) whether named plaintiffs John and Jeanette Schwartz (the "Named Plaintiffs") are adequate representatives of the Settlement Class; (c)
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whether Plaintiffs' Counsel are entitled to attorneys' fees and expenses and, if so, how much; (d) whether the Named Plaintiffs should be entitled to a payment for their services and, if so, how much; and (e) whether the Final Order and Judgment should be entered dismissing the Lawsuit with prejudice on the merits as to the HomEq Defendants.
The Court has the power to adjoum or reschedule the Fairness Hearing from time to time without further notice of any kind.
At the Fairness Hearing, the Court will consider the statements of the parties and any objections that may have been made. Any Class Member who has not filed a timely written Request for
Exclusion has the right to object to the proposed Settlement. If you want to object, you must file
a written objection with the Clerk of Court, Jackson County Courthouse (Independence), 308 W,
Kansas, Independence, MO 64050, no later than •, .••, 21)1)9. All persons wishing to
object must also send a copy of their written objection to Plaintiffs' Counsel and Defendants' Counsel (identified below). The objection must include: (a) your name, address, and telephone number; (b) a statement that you object to the proposed Settlement; (c) a specific statement
explaining why you object to the proposed Settlement• (d) copies of all documents you wish the
Court to consider; (e) the names of all witnesses, and the report from any proposed ekperts you intend to call at the Fairness Hearing; (f) copies of any other loan documents upon which you rely for your objection; and (g) a reference to "Schwartz v. Barm-Cor Mortgage, Case No. 00 CV
226639."
Any Settlement Class Member who has not filed a timely written Request for Exclusion has the
right to appear and/or enter an appearance at the Fairness Hearing. If you wish to appear at the
hearing you or your attorney must: (a) file a Notice of Appearance with the Clerk of Court no
later than ••, 2009; and (b) serve the Notice of Appearance on Plaintiffs' Counsel
and Defendants' Counsel. Any subjects to be raised at the Fairness Hearing must be contained in
a written objection filed with the Court in the manner set out above. If you wish to call witnesses
or present other evidence at the Fairness Hearing, you must state the identity of the witnesses and
identify any documents or other evidence you intend to present in your Notice of Appearance.
The addresses for Plaintiffs' Counsel and Defendants' Counsel are as follows:
Plaintiffs' Counsel R. Frederick Walters Kip D. Richards Walters Bender Strohbehn & Vaughan, P.C, 2500 City Center Square 1100 Main Street Kansas City, MO 64105
Defendants' Counsel Mary J. Hackett Reed Smith LLP 435 Sixth Avenue Pittsburgh, PA 15219
Any Settlement Class Member who has not filed a timely written Request for Exclusion also
may request to irXervene in the Lawsuit, in person or ti-•rough an attorney reta•ed at tt'•e
Settlement Class Member's own expense. A request or motion to intervene must be in writing and reference "Schwartz v. Bann-Cor Mortgage, Case No. 00 CV 226639" and otherwise comply with the Missouri Rules of Civil Procedure and applicable law. A request to intervene must be
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filed with the Clerk of Court, Jackson County Courthouse (Independence), 308 W. Kansas, Independence, MO 64050, no later than ••, 201)9. Any persons wishing to
intervene must also send a copy of their written request to intervene to Plaintiffs' Counsel and Defendants' Counsel as identified above,
Any Settlement Class Member who does not comply with the above requirements shall be deemed to have waived all objections to and shall be forever foreclosed from challenging the proposed Settlement.
8. WHO REPRESENTS THE PLAINTIFFS?
The Settlement Class is represented by Plaintiffs' Counsel: R. Frederick Walters, Kip D. Richards, David M. Skeens, J. Michael Vaughan, and Garrett M. Hodes of the law firm Walters Bender Strohbehn & Vaughan, P.C.. If you have questions regarding the Settlement, this Notice
or your options, you can contact Plaintiffs' Counsel without charge by writing to them at the
address provided above, or by calling 1-877-472-6620 or 816-421-6620 (KC Metro Area) or by visi?ting the website of Plaintiffs' Counsel, www.wbsvlaw.com and clicking on the link "Schwartz Settlement."
9. WHAT ARE THE REASONS FOR SETTLEMENT?
The Named Plaintiffs and the HomEq Defendants have agreed to the Settlement after
considering, among other things, (i) the substantial benefits available to the Settlement Class
under the terms of the Settlement Agreement; (ii) the attendant risks and uncertainty of litigation, especially in complex Iitigation such as this, as well as the difficulties and considerable delays inherent in such litigation; (iii) the vigorousness of the defenses asserted by the HomEq Defendants; and (iv) the desirability of consummating the Settlement promptly to provide effective relief to the Settlement Class.
The Court has not ruled on the merits of the claims or defenses in this case, and the HomEq Defendants have denied and continue to deny each and every claim asserted against them. The
HomEq Defendants have denied and continue to deny all charges of wrongdoing or liability against them arising out of or relating to any of the conduct, statements, acts, or omissions alleged, or that could have been alleged in the Lawsuit. Nonetheless, the HomEq Defendants have concluded that further litigation would be protracted and expensive, and that it is desirable that the lawsuit be fully and finally settled.in the manner and upon the terms and conditions set
forth in the Settlement Agreement.
10. WILL THE NAMED PLAINTIFFS OR PLAINTIFFS' COUNSEL RECEIVE COMPENSATION?
Yes. The Named Plaintiffs, as representatives of the Settlement Class, will make an application to the Court for approval of what is called an "incentive award." Such awards are used and made in class action lawsuits to provide an "incentive" to individuals like the Mr. and Mrs. Schwartz to
file and prosecute class action lawsuits for the benefit of a class or people they do not know. The
award also compensates the representatives of a class for their work and time (in this case over
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nine years of service) as class representatives (being interviewed and deposed, reviewing documents, meeting and conferring with class counsel, etc.) The Named Plaintiffs will ask the Court to approve and make an incentive award to them in this case of up to $18,000 for their, time, services and expenses throughout the course of the Lawsuit. The HomEq Defendants will not object to the Named Plaintiffs' application, but the Court must still determine and approve the amount of any incentive award to be made. Any incentive award made to the Named Plaintiffs will be paid from the Final Settlement Amount before distribution to the Settlement Class.
Plaintiffs' Counsel has prosecuted this litigation on a contingent basis and has incurred or
advanced all of the costs associated with the lawsuit since its inception in 2000. Plaintiffs' Counsel has not yet been paid for their work or received reimbursement for the expenses incurred or advanced on behalf of the Plaintiffs and the Class. The Court must also determine and approve the amount of any awards to be made to Plaintiffs' Counsel for attorneys' fees and litigation expenses. The amount of any such award must be reasonable based on a number of factors including, but not limited to, the nature and extent of the work involved, the difficulty of the case and the issues presented, the skill needed to conduct the case properly, the experience, •reputation and ability of the lawyers, the contingency or certainty of compensation, the
customary charges for similar work, and the amount involved in the controversy and the benefits resulting to the client.
Based on these and other factors, and as a part of the Settlement, Plaintiffs' Counsel will request the Court to approve an award of attorneys' fees and litigation expenses not to exceed the following: (a) $1,875,000 as reimbursement for actual attorney and paraprofessional time expended in connection with the Lawsuit over the past nine (9) years, plus 35% of the "Common Fund Recover)"' as defined above in Section 4 of this Notice; and (b) $150,000 for the litigation expenses and court cost that Plaintiffs' Counsel has also incurred and advanced in connection with the Lawsuit over the past nine (9) years. The amounts of any attorneys' fees and expense awards made to Plaintiffs' Counsel will be paid from the Final Settlement Amount before distribution. The Common Fund Recovery is that amount that remains after the Settlement Class and Plaintiffs' Counsel have been made whole as to 100% of the alleged actual damages for the Settlement Class by payment of the Initial Pavment ($1,188,032) and Plaintiffs Counsel have been paid 100% of their actual time investment (not to exceed $1,875,000) and expense investment (not to exceed $150,000). The Common Fund Recovery is estimated to be $768,968. The Settlement Class will receive 65% or $499,829 and Plaintiffs Counsel will receive 35% or
$269,139 from the estimated Common Fund Recovery.
The HomEq Defendants will no• object to the above application for attornev's fees and expenses by Plaintiffs' Counsel but the Court must still determine and approve the amount of any attorney's fee and expenses awards to be made. Any attorney's fee and expenses awards made
to Piaintiff%' Counsel also will be paid from the semen-lore
Settlement Class.
debc•u•u above in Section 4 of tkds Notice The range and average of the Settlement Payments have been estimated with the expectation that the Court will approve the applications for an
incentive award and an award of attorney's fees and expense as reasonable given, among other
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things, the Named Plaintiffs' years of service, the complexity of the case, the nature and extent
of the legal work provided by Plaintiff's Counsel since 2000, and the extraordinary results obtained for the Settlement Class. If the Court approves an incentive award or an award of attorneys' fees and expenses in an amount less than that applied for, the difference shall be reallocated to the Net Settlement Funds.
11. WHAT CLAIMS WILL BE RELEASED UNDER THE SETTLEMENT?
If approved by the Court, the proposed Settlement will be legally binding upon all Settlement Class Members who did not timely request exclusion from the Settlement Class. The Settlement will fully, finally and forever release, settle, compromise relinquish and discharge any and all of the Released Persons of and from any and all Released Claims.
This means that you could not bring any lawsuit against the HomEq Defendants, or any other Released Persons identified in the Settlement Agreement, for any reason whatsoever relating to
the Released CIaims. You would still be able to enforce your rights under the Settlement Agreement, if necess.ary. If you or someone acting on your behalf are currently Iitigating similar claims against the HomEq Defendants, either individually or as part of a Plaintiff Class, you may be barred from pursuing such claims if you do not timely exclude yourself from the Settlement Class. You should consult with an attorney concerning your rights.
"Released Persons" shall be defined to include the HomEq Defendants and each of their partners, affiliates, parent companies, subsidiaries, divisions or other organizational units of any kind doing business in their own names, and doing business under any other names, any entity now or
in the past controlled by, controlling or under the common control with any of the foregoing and doing business under any other names, including but not timited to Wachovia Corporation and Wells Fargo & Co., and any and all of their respective affiliates and subsidiaries, and each of their respective predecessors, successors and assigns, and each of their past and present officers, directors, partners, shareholders, associates, trustees, employees, agents, attorneys (including any consultants hired by counsel), accountants, representatives, beneficial owners, investment advisors, investment bankers, insurers, independent contractors, heirs, executors, and administrators, and each of their respective predecessors, successors, and assigns, Notwithstanding the above, the term "Released Persons" does not include (a) Batm-Cor Mortgage, (b) the Master Financial Defendants, (c) any former defendant named in the Litigation and/or the companion case entitled John A. and Jeanette A. Schwartz, et al. v. Bann-Cor Mortgage, et al., Case No. 03 CV 224614, other than the HomEq Defendants, (d) or any other
person, association Or entity who is not a Released Party including, but not limited to, Residential Funding Company, LLC, Franklin Credit Management Corporation, Bank One, and any other
person, association or entity that serviced the loans of any of the Non-HomEq Plaintiff Borrowers, and/or any person, association or entity to whom the loans of any of the Non-HomEq PiaintiffBorrowers were soid, assigned or otherwise transfer•ed or conveyed.
'°Releasors" means the Named Plaintiffs, all Settlement Class Members, and ea'ch of their respective heirs, executors, administrators, assigns, predecessors, and succ.essors, and any other
person claiming by or through any or all of them. The Releasors shall not include all members of the Settiement Class who opt out of the Settlement Class.
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"Released Claims" means any and all claims, demands, actions, causes of action, rights, offsets, setoffs, suits, damages, lawsuits, liens, costs, surcharges, losses, attorneys' fees, expenses or
liabilities of any kind whatsoever, in law or in equity, for any relief whatsoever, including monetary, injunctive or declaratory relief, rescission, general, compensatory, special, liquidated, indirect, incidental, consequential or punitive damages, as well as any and all claims for treble damages, penalties, attorneys' fees, costs or expenses, whether known or unknown, alleged or
not alleged in the Litigation, suspected or unsuspected, contingent or vested, accrued or not
accrued, liquidated or unliquidated, matured or unmatured, that in any way concern, relate to, or
arise out of the Class Members' Bann-Cor Loans, and which any of the Releasors have, had, or
now have, from the beginning of time up through and including the Effective Date, against the Released Persons ("Claims"), including but not limited to, any and all Claims arising out of or
relating to: (1) allegations that were or could have been asserted in the Litigation in any way relating to the Class Members' Bann-Cor Loans; (2) the Fifth Amended Petition or the facts and circumstances giving rise thereto; (3) any activities the Released Persons took with respect to the
Class Members' Bann-Cor Loans; (4) any conduct undertaken by any of the Released Persons to
defend the Litigation, including but not limited to, any alleged improper discovery conduct and/or any request for san6tions in this Litigation; and/or (5)any alleged representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, deceptions, acts of unconscionability, unfair business practices, breaches of contract, usury, unfulfilled promises, breaches of warranty or fiduciary duty, conspiracy, excessive fees collected, or violations of any consumer protection statute, any state
unfair trade practice statute, or any other body of case, statutory or common law or regulation, federal or state, including but not limited to the Missouri Second Mortgage Loan Act, R,S. Mo. § 408.231, et seq., or any other similar state statute; Truth in Lending Act, 15 U.S.C. § 1601, et
seq., and its implementing regulations, 12 C.F.R. part 226; the Home Ownership and Equity Protection Act, 15U.S.Co 8 1639, et seq., and its implementing regulation, 12C.F.R. part226.31-32; the Real Estate Settlement Procedures Act 12U.S.C. 82601, and its implementing regulation, 24 C.F.R. part 3500; the Equal Credit Opportunity Act, 15 U.S.C. 8 1691, et seq., and its implementing regulation, 12 C.F.R. part202; the Home Mortgage Disclosure Act, 12 U.S.C. 8 2801, et seq., and its implementing regulation, 12 C.F.R. part 203; the Fair Housing Act, 42 U.S.C. 88 3601, et seq.; the Fair Credit Reporting Act, 15 U.S.C. 88 1681, etseq.; the Fair Debt Collection Practices Act, 15 U.S.C. 88 1692, et seq.; and the Federal Trade Commission Act, 15 U.S.C. §§ 45, et seq. Released Claims also include, without limitation, any allegation that any Released Party has conspired with, aided and abetted, or
otherwise acted in concert with any other third parties, including, but not limited to, Bann-Cor Mortgage, with regard to any of the facts, acts, events, transactions, occurrences, courses of conduct, business practices, representations, omissions, circumstances or other matters related to
the Litigation or to discovery in the Litigation. It is the intention of Releasors :to provide a
general release of all Released Claims against the Released Persons; provided, however, that, to
than Bann-Cor Mortgage, which was subsequently purchased by and assigned to one or both of the HomEq Defendants, this Release does not apply as to that loan and/or loan transaction. To the extent a Settlement brass Member does not have such a •o•-Bann•Co, Loan," all of his, her
or its Released Claims against the Released Persons are released. Notwithstanding the above, the
term "Released Claims" does not include (a) any existing or furore claims, causes of action,
-10-
remedies, motions for sanctions and/or rights to relief that James Wong, Daniel and Wanda Jenson, and any of the other Non-HomEq Plaintiff Borrowers are asserting or may hereafter assert in the Litigation against any person, association or entity who is not a Released Person as
defined above; (b) any claims or causes of action by any person or entity other than a Releasor including, without limitation, the claims, causes of action, remedies, motions or requests for sanctions and/or any other rights to relief arising from, related to or based on the alleged improper discovery conduct, fraud on the court, representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to act, and/or deceptions of the Released Persons, or any one or more of them, by the plaintiffs and/or the plaintiffs' class in the lawsuit entitled Steven R. and Ruth E. MitcheI1 v. Residential Funding Company LLC, et al., Case No. 03 CV220489 (currently on appeal), or any lawsuit or
proceeding other than this Litigation.
12. WHAT IF THE SETTLEMENT IS NOT APPROVED BY THE COURT?
If the proposed Settlement is not approved by the Court as being fair, reasonable, and adequate, the Settlement Agreement will be null and void and the Named Plaintiffs will proceed with their claims in the Lawsuit. In that event, no payments will be made under the terms of the Settlement Agreement. The HomEq Defendants and the Named Plaintiffs could also attempt to enter into another settlement.
13. WHERE DO I GET _•DDITIONAL INFORMATION?
This Notice is only a summary of the proposed Settlement and does not describe all of the details of the Settlement Agreement. Accordingly, Settlement Class Members are referred to the Settlement Agreement and the other documents filed with the Court in the lawsuit, all of which
are available upon request from Plaintiffs' Counsel, or by visiting the website of Settlement Class Counsel, www.wbsvlaw.com and clicking on the link "Schwartz Settlement."
14. WHAT ARE THE RELEVANT DATES?
If you wish to request exclusion from the Settlement Class or appear at the Fairness Hearing, these are the relevant dates:
Deadline for mailing a request for exclusion (must be received by): June__, 2009
Deadline for filing and serving notice of appearance, motion to intervene or
written objection (must be received by the court by): June__, 2009
Date and time of Fairness Hearing: July__, 2009 at .m.
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORM_ATION. This Notice provides only a surrkrnary of matters about the lawsuit. You
may also contact Plaintiffs' Counsel at the address listed in Section 7 of this Notice. if you have
any questions, please contact Plaintiffs' Counsel in writing at the address provided above or call 816-421-6620.
-11-
This notice is sent pursuant to Rule 52.08 of the Missouri Rules of Civil Procedure and BY ORDER OF THE COURT
DATED:
-12-
EXHIBIT B: PROPOSED PRELIMINARY APPROVAL ORDER
IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT INDEPENDENCE
JOHN AND JEANNETTE SCHWARTZ, et al.
Plaintiffs.
VS.
BANN,COR MORTGAGE, et al.,
Defendants.
Case No. 00 CV 226639 Case No. 00 CV 226639-01 Case No. 00 CV 226639-02 Case No. 00 CV 226639-03
Division 14
[PROPOSED] ORDER PRELIMINARILY APPROVING T• CLASS ACTION SETTLEMEI'•I
WHEREAS, a Class Action Petition has been filed in this Court on behalf of John and
Jeannette Schwartz, et al., against Barm-Cor Mortgage, et al., Case No. 00-CV-226639 (the
"Litigation"); and
WHEREAS, on March 25, 2008, the Court certified a litigation class in the Litigation
comprised of those persons who obtained a second mortgage loan from Bann-Cor Mortgage on
or after October 3 I, 1994 (the "Litigation CIass"); and
WHEREAS, notice was provided to the members of the Litigation Class of their
opportunity to opt out or exclude themselves from the Litigation Class and no class members
timely elected to exercise his, her, or its right to opt out of the Litigation Class; and
WHEREAS, on March 26, 2008, the Court severed the claims of those members of the
Litigation Class whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc.,
twoney Store e "• .... -, •__ ,a^_ •'•'• Litigation Class
whose Barm-Cor Loans were purchased or assigned to someone other than TMS Mortgage, Inc.
d/b/a The Money Store ("Non-HomEq Plaintiff Borrowers"); and
WHEREAS, Plaintiffs John and Jeannette Schwartz (as members of the Litigation Class
whose Barm-Cor Loans were purchased by and assigned to TMS Mortgage, Inc. dJb/a The
Money Store) (the "Named Plaintiffs") and Defendant Wachovia Equity Servicing, LLC, as
successor in interest to HomEq Servicing Corp. (f/k/a TMS Mortgage Inc.) and Defendant The
Money Store, LLC (collectively, '•he HomEq Defendants") have entered into a "Settlement
Agreement and Release" dated May 11, 2009 (the "Agreement"), in which said parties have
agreed upon a settlement of the Litigation as between them and the members of a proposed
Settlement Class, subject to the approval of the Court; and
WHEREAS, the Named Plaintiffs have filed a Motion for Preliminary Approval of
Settlement with the Court.
NOW THEREFORE, upon careful consideration of the Motion for Preliminary Approval
of Settlement, and after review of the Agreement executed by Named Plaintiffs John and
Jeannette Schwartz and the HomEq Defendants (hereinafter the "Parties"), and for good cause
shown,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:
1. The terms of the Agreement, and the Settlement provided therein, are approved
preliminarily as fair, reasonable and adequate to the Settlement Class as defined in the
Agreement, subject to further consideration at the Fairness Hearing described in paragraph 12 of
this Order,
2. The definitions set forth in the Agreement are hereby incorporated by reference
3. The Parties have executed the Agreement in order to settle and resolve the
Litigation as between them and the members of the Settlement Class, subject to the approval of
the Court.
4. Accordingly, for the purpose of a settlement in accordance with the Agreement,
and upon review of the Named Plaintiffs' Motion for Preliminary Approval of Proposed
Settlement, this Court hereby preliminarily certifies the following class of persons as a settlement
class (the "Settlement Class"):
"All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as
defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a deed of trust on
residentiai real property located in the State of Missouri, originated by Barm-Cor
Mortgage, and purchased by and assigned to TMS Mortgage, Inc. d/b/a The Money
Store."
5. Pursuant to the Agreement, and for settlement purposes only, the Court finds
preliminarily as to the Settlement Class that:
a. The Settlement Class is so numerous that joinder of all members is
impracticable;
b. There are questions of law or fact common to the Settlement Class which
predominate over questions affecting only individual members of the Settlement Class;
The claims of the Named Plaintiffs are typical of those of the Settlement Co
Class;
d. The Named Plaintiffs and their counsei will fairly and adequately protect
the interests of each of the members of the SettIement Class; and
e. Certification of the •e•tiemem t•ass is axi appropriate m•,•'-• •- •c •'•:-•
and efficient adjudication of the controversies between the Settlement Class Members
and the HomEq Defendants.
6. For the purpose of this preliminary approval and all matters relating to the
Settlement •and the Litigation, until further order of the Court, the Court appoints the Named
Plaintiffs, John and Jeannette Schwartz, as Representatives of the Settlement Class and R.
Frederick Walters, Kip D. Richards, David M. Skeens, J. Michael Vaughan, and Garrett M.
Hodes of the law firm Walters Bender Strohbehn & Vaughan, P.C., as Counsel for the
Settlement Class ("Class Counsel").
7. By this Order, the Court hereby exercises subject matter and personal jurisdiction
over the Settlement Class for purposes of evaluating the final certification of the Settlement
Class and the fairness and adequacy of the Settlement.
8. The Class Mail Notice, as set forth in Exhibit A to the Agreement, is approved.
9. The Class Mail Notice, in substantially the form set forth in Exhibit A, shall be
mailed by Class Counsel to all persons on the Settlement Class list, and any known Chapter 7
bankruptcy trustees of any Settlement Class member for a Chapter 7 bankruptcy filed after
origination of the Settlement Class member's loan, by first-class mail, postage prepaid. Such
mailing shall be completed within five (5) days of this Preliminary Approval Order.
10. The Agreement contemplates a notice methodology that protects the interests of
the Settlement Class and the Parties, is the best notice practicable under the circumstances and is
reasonably calculated to apprise the members of the Settlement Class of the pendency of the
Litigation, the Agreement, and the right to opt out and exclude themselves from or object to the
proposed Settlement. In addition, the Court finds that the notice methodology is reasonable and
proposed Settlement and meets all applicable requirements of law, including, but not limited to,
Mo. R. Civ. P. 52.08 and the Due Process Clause of the Fourteenth Amendment of the United
States Constitution.
11. Prior to the Fairness Hearing, Class Counsel shall serve and file a sworn statement
of a person with knowledge, evidencing compliance with the provisions of this Order concerning
the mailing of the Class Mail Notice.
12. Any member of the Settlement Class wishing exclusion from the Settlement Class
shall mail a request for exclusion ("Request for Exclusion") to the Parties' respective counsel.
To be valid, the Request for Exclusion must be received on or before June 2009. Such
Request for Exclusion shall include: (a) the name, address, telephone number and the last four
digits of the class member's social security number; (b) the applicable loan number(s) of the
class member's loan (if known); (c) a statement that the class member and all other borrowers
named on the class member's promissory note are seeking exclusion; (d) the signature of each
person who was a party to the promissory note made in connection with the class member's loan
(unless any such person shall be deceased, in which case the opt out submission shall include a
copy of such person's death certificate); (e) a reference to "John and Jeannette Schwartz, et al., v.
Barm-Cor Mortgage, et al., Case No. 00-CV-226639"; and (f) the signature of the class member.
Any member of the Settlement Class who does not properly and timely request exclusion from
the Settlement Class shall be included in the Settlement Class and be bound by any judgment
entered in this Action with respect to said Class.
13. Within a reasonable period after the deadline for submitting Requests for
Exclusion, but before the Final Approval Hearing, Class Counsel shall file with the Court a
sworn statement listing those persons who _, ,. ....... •,• .... ._.,_h_: si.ioiiil•eu tlnieiy •eques• r•xciubi•xl. 1
originals of all Requests for Exclusion shall be retained by the parties.
14. A hearing (the "Fairness Hearing") shall be held before the undersigned at
.m. on July __,
2009, in Division 14 at the Jackson County Courthouse, 308 W.
Kansas, Independence, MO 64050. At the Fairness Hearing, the Court will consider: (a) the
fairness, reasonableness, and adequacy of the proposed Settlement; (b) the entry of any final
order or judgment in the Litigation with respect to the Settlement Class; (c) the application for
attorney's fees and for reimbursement of expenses by Class Counsel; (d) the application for an
incentive award for the services rendered by the Named Plaintiffs; and (e) other related matters.
The Fairness Hearing may be postponed, adjourned or continued by Order of the Court without
further notice to the Settlement Class.
15. To be considered at the Fairness Hearing, any person.desiring to file an objection
or other comment on the Settlement shall be required to file all such objections and comments
and all supporting pleadings on or before June w,
2009, with service upon Class Counsel and
Defendants' Counsel. In his/her Objection, an objecting Settlement Class Member must (a) set
forth his&er full name, current address, and telephone number; (b) state that the Settlement Class
Member objects to the Settlement in whole or in part; (c) set forth a specific statement of the
legal and factual basis for the Objection; (d) provide copies of any and all documents that the
objector wishes the Court to consider in connection with the Objection; (e) provide the names of
any witnesses, and, provide a •¢itten expert report from all proposed experts who may be offered
at the Fairness Hearing; (f) provide copies of any other loan documents on which the objector
relies as a basis for the objection; (g) if the objector is represented by counsel, provide a detailed
description of the legal authorities supporting each objection; and (h) reference "John and
Jeannette Schwartz, et ai., v. •-cor iviortgage, e• al., •ase •'•o.
Objection to or other comment concerning the Settlement shall be heard unless timely filed in
accordance with the guidelines specified above and in the Agreement. Class Counsel and
6
Defendants' Counsel shall promptly furnish each other with copies of any and all objections or
written requests for exclusion that come into their possession.
16. Any Settlement Class Member who does not make his or her objection in the
manner provided in this Order shall be deemed to have waived any such objection and shall
forever be foreclosed from making any objection to Settlement, including but not limited to, the
propriety of class certification, the adequacy of any notice, or the fairness, adequacy or
reasonableness of the Settlement.
17. Submissions of the Parties relative to the Settlement, including memoranda in
support of the Settlement, applications for attorneys' fees and reimbursement of expenses by
Plaintiffs' Counsel, and any applications for the payment of services rendered by the Named
Plaintiffs, shall be filed with the Clerk of the Court on or before June __,
2009. Any attorney
hired by a Settlement Class Member at the Class Member's expense for the purpose of objecting
to the Settlement, or to any application for an incentive award, attorney's fees or expenses shall
file with the Clerk of Court and serve upon Class Counsel and Defendants' Counsel a written
notice of appearance no later than __,
2009.
18. Any Settlement Class Member may appear at the Fairness Hearing in person, or
by counsel if an appearance is filed and served as provided in the Notice, and such person will be
heard to the extent allowed by the Court. No person shall be permitted to be heard unless, on or
before •,
2009, such person (a) has filed with the Clerk of the Court a notice of such
person's intention to appear, and (b) has served copies of such notice upon Class Counsel and
Defendants' Counsel,
19. Any Settlement Class Member may intervene in the Litigation in person, or by
counsel if a motion to intervene is filed and served as provided in the Notice. No person shall be
permitted to intervene unless, on or before •,
2009, such person (a) has filed with the CIerk
of the Court a valid motion to intervene; and (b) has served copies of such notice upon Class
Counsel and Defendants' Counsel.
20. All other events contemplated under the Agreement to occur after this Order and
before the Fairness Hearing shall be governed by the Agreement, and the Class Mail Notice, to
the extent not inconsistent herewith. Class Counsel and Defendants' Counsel shall take such
further actions as are required under the Agreement.
21. The Parties shall be authorized to make non-material changes to the Class Mail
Notice so long as Class Counsel and Defendants' Counsel agree, and one of the Parties files a
notice thereof with the Court prior to the Fairness Hearing.
22. All claims against and motions involving the HomEq Defendants in the
Litigation, other than such as may be necessary to carry out the terms and conditions of the
Agreement or the responsibilities related or incidental thereto, are stayed and suspended until
•rther order of this Court.
23, The claims of Plaintiffs James Wong, Daniel and Wanda Jensen and/or any of the
other Non'HomEq Plaintiff Borrowers against Bann-Cor Mortgage, the Master Financial
Defendants and any other person, association or entity other than a Released Person are not
stayed or suspended by the Agreement, this Order, or otherwise. The claims and causes of action
of Plaintiffs James Wong, Daniel and Wanda Jensen and the other Non-HomEq Plaintiff
Borrowers against Bann-Cor Mortgage, the Master Financial Defendants and any other person,
as ictenii[leO, in i•u association or entity other fnax• a Released Person
by the Agreement
24. If Final Approval of the Settlement does not occur, or if the Settlement is
terminated for any reason whatsoever, the Settlement and all proceedings had in connection
therewith shall be null and void and without prejudice to the rights of the Parties before the
Settlement was executed and made, and all Orders issued pursuant to the Settlement shall be
vacated.
25. Neither this Order, the Agreement, nor any of its terms or provisions, nor any of
the negotiations between the Parties or their counsel (nor any action taken to carry out this
Order), is, may be construed as, or may be used as an admission or concession by or against any
of the Parties or the Released Persons of the validity of any claim or liability, any alleged
violation or failure to comply with any law, any alleged breach, of contract, any legal or factual
argument, contention or assertion. Entering into or carrying out the Agreement, and any
negotiations or proceedings related to it, shall not in any way be construed as, or deemed
evidence of, an admission or concession as to the HomEq Defendants' denials, defenses, or
factual or legal positions, and shall not be offered or received in evidence in any action or
proceeding against any party in any court, administrative agency or other tribunal for any
purpose whatsoever, except as is necessary in a proceeding to enforce the terms of this Order and
the Agreement, or to prove or show that a compromise in settlement of the Released Claims per
the Agreement, in fact, was reached; provided, however, that this Order and the Agreement may
be filed in any action filed against or by the HomEq Defendants or the Released Persons to
support a defense of resjudicata, collateral estoppel, release, Waiver, good faith settlement,
judgment bar or reduction, full faith and credit, or any other theory of claim preclusion, issue
preciusion or similar defense or counterci'•m, ine •omEq Defendants expressly reserve all
rights and defenses to any claims and do not waive any such rights or defenses in the event that
the Agreement is not approved for any reason.
IT IS SO ORDERED
Date
John M, Torrence, Circuit Judge
10
EXHIBIT C: PROPOSED FINAL APPROVAL ORDER
IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT KANSAS CITY
JOHN AND JEANETTE SCHWARTZ, et al., ) )
Plaintiffs, ) )
v. ) )
BANN-COR MORTGAGE, et al., ) )
Defendants. )
Case No. 00 CV 226639 Case No. 00 CV 226639-01 Case No. 00 CV 226639-02 Case No. 00 CV 226639-03
Division 14
[PROPOSED] O•ER FINALLY APPROVING THE CLASS ACTION SETTLEMENT AND CERTIFYING A CLASS FOR SETTLEMENT PURPOSES
Upon careful review and consideration of the Settlement Agreement and Release dated
May 11, 2009 (the "Agreement") that has been entered into by the Parties; the evidence and
arguments of counsel presented at the Fairness Hearing held on July __,
2009; the memoranda
filed with this Court; and the timely objections to, and other filings in connection with, the
settlement between the Parties memorialized in the Agreement (the "Settlement"); and for good
cause shown,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED as foltows:
1. Incorporation of Other Documents. This Order hereby incorporates and makes
a part hereof:
a.
b.
The Agreement filed with this Court on or about May 11, 2009;
The following exhibits to the Agreement: (i) Exhibit A (Class Mail
Se•Iement); (iii) E•ibit C (Proposed Order Finally Approv•g the Class Action
Se•iement and Ce•i•ing a Class for Se•lement P•oses); (iv) ExMbit D (Proposed
Final Judgment); (v) Exhibit E (list of Settlement Class members, filed under seal);
(vi) Schedule A @roposed Distribution Schedule of Settlement Funds, flied under seal).
Unless otherwise provided herein, all capitalized terms in this Order shall have the same
meaning as those terms in the Agreement.
2. Jurisdiction. Because adequate notice has been disseminated and all potential
members of the Settlement Class (as defined below) have been given notice and the oppommity
to opt-out of this class action, the Court has personal jurisdiction over all members of the
Settlement Class. The Court has subject matter jurisdiction over this Litigation, including,
without limitation, jurisdiction to approve the proposed Settlement, to grant final certification of
the Settlement Class, and to dismiss this Litigation on the merits with prejudice as against the
HomeEq Defendants.
3. Final Class Certification. The Settlement Class, which this Court previously
certified preliminarily, is hereby finally certified for settlement purposes under Rule 52.08 of the
Missouri Rules of Civil Procedure, the Court findir•g that the Settlement Class fully satisfies all
the applicable requirements of Rule 52.08 and due process. The Settlement Class is defined as
follows:
All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan"
as defined in R.S. Mo. § 408.231,1, that was secured by a mortgage or a deed of trust on residential real property located in the State of Missouri, originated by Bann-Cor Mortgage and purchased by and assigned to TMS Mortgage, Inc., d/b/a The Money Store.
[No members of the Settlement Class timely requested to be excIuded from or "opted out" of the
Settlement Class, and who therefore are not bound by the Settlement and the accompanying
2
Final Judgment, is attached hereto as Exhibit 1, and is incorporated herein and made a part
hereof.]
4. Adequacy of Representation. There are no apparent conflicts of interest
between the Named Plaintiffs, John and Jeanette Schwartz and the Settlement Class or among
the class, and the Representative Plaintiffs and their counsel will fairly and adequately protect
the interests of the Settlement Class. Accordingly, the Named Plaintiffs, John and Jeanette
Schwartz, and their counsel, R. Frederick Walters, Kip D. Richards, David M. Skeens, J.
Michael Vaughan, and Garrett M. Hodes of the law firm Waiters Bender Strohbehn & Vaughan,
P.•C., have satisfied the requirements of Rule 52.08 and are appointed and approved as
representatives of the Settlement Class and as :Counsel for the Settlement Class ("Plaintiffs'
Counsel" or "Class Counsel").
5, Class Notice. The Court finds that the Class Mail Notice and its distribution to
the Settlement Class implemented pursuant to the Agreement and this Court's Preliminary
Approval Order:
a. constituted the best practicable notice to the members of the Settlement
Class under the circumstances of this Litigation;
b. constituted notice that was reasonably calculated, under the circumstances,
to apprise the members of the Settlement Class (i) the pendency of this Litigation,
(ii) their right to exclude themselves from the Settlement Class and the proposed
Settlement, (iii) their right to object to any aspect of the proposed Settlement (including
proposed settlement; the adequacy of the Named Plaintiffs' or Class Counsel's
representation of the Settlement Class; and/or the award of attorneys' fees), (iv) their
right to appear at the Fairness Hearing if they did not exclude themselves from the
Settlement Class, and (v) the binding effect of the Orders and Judgment in this Litigation
on all Class Members who did not request exclusion from the Settlement Class,
c. constituted notice that was reasonable and constituted due, adequate and
sufficient notice to all persons and entities entitled to be provided with notice; and
d. constituted notice that fully satisfied the requirements of Rule 52,08, due
process, and any other applicable law.
6. Final Settlement Approval. The terms and provisions of the Agreement,
including all exhibits, have been entered into in good faith and as a result of arm's length
negotiations and are hereby fully and finally approved as fair, reasonable and adequate as to, and
in the best interests of, each of the Parties and members of the Settlement Class, and in full
compliance with all applicable requirements of the laws of the State of Missouri, the United
States Constitution (including the Due Process Clause), and any other applicable law. The
Parties are hereby directed to implement and consummate the Agreement according to its terms
and provisions.
7. Bindin• Effect. The terms of the Agreement, this Order and the accompanying
Final Judgment shall be forever binding on the Named Plaintiff and all other members of the
Settlement Class, as well as their respective heirs, executors, administrators, assigns,
predecessors, and successors, and any other person claiming by or through any or all of them.
The terms of the Agreement, this Order and the accompanying Final Judgment shall have res
judicata and other preclusive effect as to the Reieasors •or me i•eieasea •io.,•1•.
8. Releases. The Named Plaintiff and all other Settlement Class Members (defined
as those members of the Settlement Class who did not timely opt out of the Settlement) shall be
bound by the release provided in Paragraph 6 of the Agreement, which is incorporated herein in
all respects, regardIess of whether such persons received any compensation under the
Agreement. The Releases are effective as of the date of this Final Approval Order and the
accompanying Final Judgment. The Court expressly adopts all defined terms in paragraph 6 of
the Agreement, including but not limited to the following definition of the claims subject to the
Release (which is set forth at Paragraph 2.19 of the Agreement):
"Released Claims" means any and all claims, demands, actions, causes of action, rights, offsets, setoffs, suits, damages, lawsuits, liens, costs, surcharges, losses, attorneys' fees, expenses or liabilities of any kind whatsoever, in law or in equity, for
any relief whatsoever, including monetary, injunctive or declaratory relief, rescission, general, compensatory, special, liquidated, indirect, incidental, consequential or
punitive damages, as well as any and all claims for treble damages, penalties, attorneys' fees, costs or expenses, whether known or unknown, alleged or not alleged in the Litigation, suspected or unsuspected, contingent or vested, accrued or not
accrued, liquidated or unliquidated, matured or unmatured, that in any way concern, relate to, or arise out of the Class Members' Bann-Cor Loans, and which any of the Releasors have, had, or now have, from the beginning of time up through and including the Effective Date, against the Released Persons ("Claims"), including but
not limited to, any and all Claims arising out of or relating to: (1) allegations that
were or could have been asserted in the Litigation in any way relating to the Class Members' Barm-Cor Loans; (2) the Fifth Amended Petition or the facts and circumstances giving rise thereto; (3) any activities the Released Persons took with
respect to the Class Members' Bann-Cor Loans; (4) any conduct undertaken by any of the Released Persons to defend the Litigation, including but not limited to, any alleged improper discovery conduct and/or any request for sanctions in this Litigation; and/or (5) any alleged representations, misrepresentations, disclosures, incorrect disclosures, failures to disclose, acts (legal or illegal), omissions, failures to
act, deceptions, acts of unconscionabiIity, unfair business practices, breaches of
contract, usury, unfulfilled promises, breaches of warranty or fiduciary duty, conspiracy, excessive fees collected, or violations of any consumer protection statute,
any state unfair trade practice statute, or any other body of case, statutory or common
law or regulation, federal or state, including but not limited to the Missouri Second Mortgage Loan Act, R.S. Mo. § 408.231, et seq., or any other similar state statute; -Truth in Lending Act, t5 U.S.C: § 1601, et seq., and its implementing regulations, 12 C.F.R. part 226; the Home Ownership and Equity Protection Act, i5 U.S.C. § t639, et seq., and its implementing regulation, 12 C.F.R. part 226.31-32; the Real Es•uate Settlement Procedures Act 12 U.S.C. § 260 !, and its implementing regulation, 24 C.F.R. part 3500; the Equal Credit Opportunity Act, 15 U.S.C. § 169i, et seq., and its implementing regulation, 12 C.F.R. part 202; the Home Mortgage Disclosure Act, 12 U.S.C. § 2801, et seq., and its implementing regulation, 12 C.F.R. part 203; the
Fair Housing Act, 42 U.S.C. §§ 3601, et seq.; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq. ;the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq.; and the Federal Trade Commission Act, 15 U.S.C. §§ 45, et seq. Released Claims also include, without limitation, any allegation that any Released Party has conspired with, aided and abetted, or otherwise acted in concert with any other third parties, including, but not limited to, Bann-Cor Mortgage, with regard to any of the facts, acts, events, transactions, occurrences, courses of conduct, business practices, representations, omissions, circumstances or other matters related to the Litigation or
to discovery in the Litigation. It is the intention of Releasors to provide a general release of all Released Claims against the Released Persons; provided, however, that, to the extent a Settlement Class Member obtained another loan originated by a
third-party other than Barm-Cor Mortgage, which was subsequently purchased by and assigned to one or both of the HomEq Defendants, this Release does not apply as to
that loan and/or loan transaction. To the extent a Settlement Class Member does not
have such a "non-Bann-Cor Loan," all of his, her or its Released Claims against the Released Persons are released. Notwithstanding the above, the term "Released Claims" does not include (a) any existing or future claims, causes of action, remedies, motions for sanctions and/or rights to relief that James Wong, Daniel and Wanda Jenson, and any of the other Non-HomEq Plaintiff Borrowers are asserting or may hereafter assert in the Litigation against any person, association or entity who is not a
Released Person as defined above; (b) any claims or causes of action by any person or
entity o•er than a Releasor including, without limitation, the claims, causes of action, remedies, motions or requests for sanctions and/or any other rights to relief arising from, related to or based on the alleged improper discovery conduct, fraud on the
court, representations, misrepresentations, disclosures, incorrect disclosures, failures
to disclose, acts (legal or illegal), omissions, failures to act, and/or deceptions of the Released Persons, or any one or more of them, by the plaintiffs and/or the plaintiffs' class in the lawsuit entitled Steven R. and Ruth E. Mitchell v. Residential Funding Company LLC, et al., Case No. 03 CV220489 (currently on appeal), or any lawsuit or
proceeding other than this Litigation.
9. Enforcement of Settlement. Nothing in this Final Approval Order or the
accompanying Final Judgment shall preclude any action to enforce the terms of the Agreement.
10. Attorneys' Fees and Expenses. Plaintiffs' Counsel are hereby awarded
attorneys fees and reimbursement of their disbursements and expenses to be paid out of the
Settlement Funds as foilowS: (a) $ as reimbursement for actual attorney and
professional time expended in connection with the Litigation, plus 35% of the $
"Common Fund Recovery" (as defined in the Agreement): and (b) $. for the
litigation expenses and court costs that Plaintiffs' Counsel has incurred and advanced in
connection with the Litigation. The Court finds and concludes that the award of such attorneys'
fees and expenses to Plaintiffs' Counsel for their work in this case is reasonable. [Plaintiffs may
propose additional language for the Court to consider including in the final order in support of
Plaintiffs' fee award.]
11. Additional Payment to Named Plaintiffs. The Court hereby awards $I 8,000 to
be paid from the Settlement Funds to the Named Plaintiffs as an incentive award for their
services as representative plaintiffs in this Litigation.
12. No Other Payments. The preceding paragraphs of this Final Approval Order
cover, without limitation, any and all claims for attorneys fees and expenses, costs or
disbursements incurred by Plaintiffs' Counsel or any other counsel representing the Named
Plaintiffs or the Settlement Class, or incurred by the Named Plaintiff or the Class Members, or
any of them, in connection with or related in any manner to this Litigation, the Settlement of this
Litigation, the administration of such Settlement, and/or the Released Claims except to the extent
otherwise specified in this Final Approval Order or the Agreement.
13. Retention of Jtwisdiction. The Court has jurisdiction to enter this Final
Approval Order and the accompanying Final Judgment. Without in any way affecting the
finality of this Final Approval Order and the accompanying Final Judgment, this Court expressly
retains jurisdiction as to all matters relating to the administration, consummation, and
enforcement of the Agreement and of this Final Approval Order and the accompanying Final
Judgment, and for any other necessary purpose, including, without Iimitation:
disputes, claims or causes of action that, in whole or in part, are related to or arise out of
the Agreement, this Finai Approval Order or the Final Judgment (including, without
limitation, whether a person or entity is or is not a Settlement Class Member; whether
claims or causes of action allegedly related to this case are or are not barred by this Final
Approval Order and the Final Judgment);
b. entering such additional Orders as may be necessary or appropriate to
protect or effectuate the Court's Final Approval Order and the Final Judgment, and
dismissing all claims on the merits and with prejudice, or to ensure the fair and orderly
administration of this Settlement; and
c. entering any other necessary or appropriate Orders to protect and
effectuate this Court's retention of continuing jurisdiction.
14. No Admissions. Neither this Final Approval Order, nor the accompanying Final
Judgment, nor the Agreement, nor any of its terms or provisions, nor any of the negotiations
between the Parties or their counsel, nor any action taken to carry out this Order or the Final
Judgment, is, may be construed as, or may be used as an admission or concession by or against
any of the Parties or the Released Persons of the validity of any claim or !iability, any alleged
violation or failure to comply with any law, any alleged breach of contract, any legal or factual
argument, contention or assertion. Entering into or cm•ing out the Agreement, and any
negotiations or proceedings related to it, shall not in any event be construed as, or deemed
evidence of, an admission or concession as to the HomEq Defendants' denials, defenses, factual
or legal positions, and shall not be offered or received in evidence in any action or proceeding
against any party in any court, administrative agency or other tribunal for any purpose
whatsoever, except as necessa-y in a
Agreement or to prove or show that a compromise in settlement of the Released Claims per the
Agreement, in fact, was reached; provided, however, that this Order and the Agreement may be
filed in any action against or by the HomEq Defendants or the Released Persons to support a
defense of resjudicata, collateral estoppel, release, waiver, good faith settlement, judgment bar
or reduction, full faith and credit, or any other theory of claim preclusion, issue preclusion or
similar defense or counterclaim.
15. Dismissal of Litigation. This Litigation against the HomEq Defendants,
including all individual and class claims resolved in it and Plaintiffs' pending motions for
sanctions, is hereby dismissed on the merits and with prejudice as to the Named Plaintiffs and all
other Settlement Class Members, without fees or costs to any party except as otherwise provided
in this Order and the Final Judgment.
16. Bar Order Regarding Severed Claims. On March 25, 2008, this Court certified
a litigation class that included certain borrowers whose loam were originated by Barm-Cor
Mortgage but were never purchased by, or otherwise assigned to The Money Store (such
borrowers, collectively, are the '•Non-HomEq Plaintiff Borrowers"). On March 26, 2008, this
Court severed the claims of the Non-HomEq Plaintiff Borrowers from those of the Settlement
Class Members. This Court finds and concludes consistent with its order of March 26, 2008, that
the Non-HomEq Plaintiff Borrowers are not asserting any claims against the HomEq Defendants
in the Litigation, and cannot recover any damages from the HomEq Defendants as a result of the
Barm-Cor Loans. This Court hereby Orders that the Non-HomEq Plaintiff Borrowers are forever
barred from reCovering damages from the HomEq Defendants as a result of the Barm-Cor Loans.
17. Separate Judgment. The Court will separately enter the accompanying Final
DATED: July __,
2009
John M. Torrence, Circuit Judge
l0
EXHIBIT D: PROPOSED FINAL JUDGMENT
IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT INDEPENDENCE
JOHN AND JEANNETTE SCHWARTZ, et al.
Plaintiffs.
VS.
BANN-COR MORTGAGE, et aI.,
Defendants.
Case No. 00 CV 226639 Case No. 00 CV 226639-01 Case No. 00 CV 226639-02 Case No. 00 CV 226639-03
Division 14
[PROPOSED] FINAL JUDGMENT
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The settlement of this class action on the terms set forth in the parties' Settlement
Agreement and Release (the "Agreement"), dated May 11, 2009, is approved, and the following
Settlement Class is granted final certification for settlement purposes under Mo. R. Cir. P. 52.08:
"All persons who, on or after October 31, 1994,-obtained a "Second Mortgage
Loan" as defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a
deed of trust on residential real property located in the State of Missouri,
originated by Bann-Cor Mortgage, and purchased by and assigned to TMS
Mortgage, lnc. d/b/a The Money Store.
If applicable, a list of those persons who have excluded themselves from the Settlement Class,
and who therefore are not bound by this Final Judgment, is attached hereto as Exhibit 1, and is
incorporated herein and made a part hereof.
2. Individual notice complying with Rule 52.08 was sent to the Iast-known address
of each member of the Settlement Class. 1he court finds aii members of the bememen• t_,•as- to
be Settlement Class Members who are bound by this Final Judgment, except those Class
Members who have been timely excluded from the Settlement Class.
3. The claims in this Litigation against the HomEq Defendants, including Plaintiffs'
motions for sanctions, are dismissed on the merits and with prejudice according to the terms set
forth in the parties' Agreement and in the Court's Order Finally Approving the Class Action
Settlement and Certifying a Class for Settlement Purposes, dated this same
date ,2009 (the "Approval Order"), without costs to any party except as
provided therein.
4. On March 25, 2008, this Court certified a litigation class that included certain
borrowers whose loans were originated by Bann-Cor Mortgage but were never purchased by, or
otherwise assigned to The Money Store (such borrowers, collectively, are the "Non-HomEq
Plaintiff Borrowers"). On March 26, 200.8, this Court severed the claims of the Non-HomEq
Plaintiff Borrowers from those of the Settlement Class Members. This Court finds and
concludes that the Non-HomEq Plaintiff Borrowers are not asserting any claims against the
HomEq Defendants in the Litigation and cannot recover any damages from the HomEq
Defendants as a result of the Barm-Cor Loans. This Court hereby Orders that the Non-HomEq
Plaintiff Borrowers are forever barred from recovering damages from the HomEq Defendants as
a result of the Bann-Cor Loans.
5. The Named Plaintiffs and all Settlement Class Members who have not been
timely excluded from the Plaintiff Class shall be bound by the release provided in Paragraph 6 of
the Agreement. Persons requesting exclusion are listed in Exhibit A to the Approval Order.
6. The Court will retain continuing jurisdiction over this Litigation for the reasons
and purposes set forth in this Court's Approval Order. The Court expressly determines there is
no just reason for delay under Rule 74.01.
7. Unless otherwise provided herein, all capitalized terms in this Order shall have
the same meaning as those terms in the Agreement.
DATED: ,2009
John M. Torrence, Circuit Judge
EXHIBIT B: PROPOSED PRELIMINARY APPROVAL ORDER
IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT INDEPENDENCE
JOHN AND JEANNETTE SCHWARTZ, et al.
Plaintiffs.
VS.
BANN-COR MORTGAGE, et al.,
Defendants.
Case No. 00 CV 226639 Case No. 00 CV 226639-01 Case No. 00 CV 226639-02 Case No. 00 CV 226639-03
Division 14
[PROPOSED] ORDER PRELIMINARILY APPROVING THE CLASS ACTION SETTLEMENT.
WHEREAS, a Class Action Petition has been filed in this Court on behalf of John and
Jeannette Schwartz, et al., against Bann-Cor Mortgage, et al., Case No. 00-CV-226639 (the
"Litigation"); and
WHEREAS, on March 25, 2008, the Court certified a litigation class in the Litigation
comprised of those persons who obtained a second mortgage loan from Bann-Cor Mortgage on
or after October 31, 1994 (the "Litigation Class"); and
WHEREAS, notice was provided to the members of the Litigation Class of their
opportunity to opt out or exclude themselves from the Litigation Class and no class members
timely elected to exercise his, her, or its right to opt out of the Litigation Class; and
WHEREAS, on March 26, 2008, the Court severed the claims of those members of the
Litigation Class whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc.,
d/b/a The Money Store (the "Settlement Class") from those members of the Litigation Class
whose Bann-Cor Loans were purchased or assigned to someone other than TMS Mortgage, Inc.
d/b/a The Money Store ("Non-HomEq Plaintiff Borrowers"); and
WHEREAS, Plaintiffs John and Jeannette Schwartz (as members of the Litigation Class
whose Bann-Cor Loans were purchased by and assigned to TMS Mortgage, Inc. d/b/a The
Money Store) (the "Named Plaintiffs") and Defendant Wachovia Equity Servicing, LLC, as
successor in interest to HomEq Servicing Corp. (f/k/a TMS Mortgage Inc.) and Defendant The
Money Store, LLC (collectively, "the HomEq Defendants") have entered into a "Settlement
Agreement and Release" dated May 11, 2009 (the "Agreement"), in which said parties have
agreed upon a settlement of the Litigation as between them and the members of a proposed
Settlement Class, subject to the approval of the Court; and
WHEREAS, the Named Plaintiffs have filed a Motion for preliminary Approval of
Settlement with the Court.
NOW THEREFORE, upon careful consideration of the Motion for Preliminary Approval
of Settlement, and after review of the Agreement executed by Named Plaintiffs John and
Jeannette Schwartz and the HomEq Defendants (hereinafter the "Parties"), and for good cause
shown,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:
1. The terms of the Agreement, and the Settlement provided therein, are approved
preliminarily as fair, reasonable and adequate to the Settlement Class as defined in the
Agreement, subject to further consideration at the Fairness Hearing described in paragraph 12 of
this Order.
2. The definitions set forth in the Agreement are hereby incorporated by reference
into this Order (with capitalized terms as set forth in the Agreement).
3. The Parties have executed the Agreement in order to settle and resolve the
Litigation as between them and the members of the Settlement Class, subject to the approval of
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the Court.
4. Accordingly, for the purpose of a settlement in accordance with the Agreement,
and upon review of the Named Plaintiffs' Motion for Preliminary Approval of Proposed
Settlement, this Court hereby preliminarily certifies the following class of persons as a settlement
class (the "Settlement Class"):
"All persons who, on or after October 31, 1994, obtained a "Second Mortgage Loan" as
defined in R.S. Mo. § 408.231.1, that was secured by a mortgage or a deed of trust on
residential real property located in the State of Missouri, originated by Bann-Cor
Mortgage, and purchased by and assigned to TMS Mortgage, Inc. d/b/a The Money
Store."
5. Pursuant to the Agreement, and for settlement purposes only, the Court finds
preliminarily as to the Settlement Class that:
The Settlement Class is so numerous that joinder of all members is go
impracticable;
b. There are questions of law or fact common to the Settlement Class which
predominate over questions affecting only individual members of the Settlement Class;
The claims of the Named Plaintiffs are typical of those of the Settlement
Class;
d. The Named Plaintiffs and their counsel will fairly and adequately protect
the interests of each of the members of the Settlement Class; and
e. Certification of the Settlement Class is an appropriate method for the fair
and efficient adjudication of the controversies between the Settlement Class Members
and the HomEq Defendants.
6. For the purpose of this preliminary approval and all matters relating to the
Settlement and the Litigation, until further order of the Court, the Court appoints the Named
Plaintiffs, John and Jeannette Schwartz, as Representatives of the Settlement Class and R.
Frederick Walters, Kip D. Richards, David M. Skeens, J. Michael Vaughan, and Garrett M.
Hodes of the law firm Walters Bender Strohbehn & Vaughan, P.C., as Counsel for the
Settlement Class ("Class Counsel").
7. By this Order, the Court hereby exercises subject matter and personal jurisdiction
over the Settlement Class for purposes of evaluating the final certification of the Settlement
Class and the fairness and adequacy of the Settlement.
8. The Class Mail Notice, as set forth in Exhibit A to the Agreement, is approved.
9. The Class Mail Notice, in substantially the form set forth in Exhibit A, shall be
mailed by Class Counsel to all persons on the Settlement Class list, and any known Chapter 7
bankruptcy trustees of any Settlement Class member for a Chapter 7 bankruptcy filed after
origination of the Settlement Class member's loan, by first-class mail, postage prepaid. Such
mailing shall be completed within five (5) days of this Preliminary Approval Order.
10. The Agreement contemplates a notice methodology that protects the interests of
the Settlement Class and the Parties, is the best notice practicable under the circumstances and is
reasonably calculated to apprise the members of the Settlement Class of the pendency of the
Litigation, the Agreement, and the right to opt out and exclude themselves fi'om or object to the
proposed Settlement. In addition, the Court finds that the notice methodology is reasonable and
constitutes due, adequate and sufficient notice to all persons entitled to receive notice of the
proposed Settlement and meets all applicable requirements of law, including, but not limited to,
Mo. R. Civ. P. 52.08 and the Due Process Clause of the Fourteenth Amendment of the United
4
States Constitution.
11. Prior to the Fairness Hearing, Class Counsel shall serve and file a sworn statement
of a person with knowledge, evidencing compliance with the provisions of this Order concerning
the mailing of the Class Mail Notice.
12. Any member of the Settlement Class wishing exclusion from the Settlement Class
shall mail a request for exclusion ("Request for Exclusion") to the Parties' respective counsel.
To be valid, the Request for Exclusion must be received on or before June 11, 2009. Such
Request for Exclusion shall include: (a) the name, address, telephone number and the last four
digits of the class member's social security number; (b) the applicable loan number(s) of the
class member's loan (if known); (c) a statement that the class member and all other borrowers
named on the class member's promissory note are seeking exclusion; (d) the signature of each
person who was a party to the promissory note made in connection with the class member's loan
(unless any such person shall be deceased, in which case the opt out submission shall include a
copy of such person's death certificate); (e) a reference to "John and Jeannette Schwartz, et al., v.
Bann-Cor Mortgage, et al., Case No. 00-CV-226639"; and (f) the signature of the class member.
Any member of the Settlement Class who does not properly and timely request exclusion from
the Settlement Class shall be included in the Settlement Class and be bound by any judgment
entered in this Action with respect to said Class.
13. Within a reasonable period after the deadline for submitting Requests for
Exclusion, but before the Final Approval Hearing, Class Counsel shall t•le with the Court a
sworn statement listing those persons who submitted timely Requests for Exclusion. The
originals of all Requests for Exclusion shall be retained by the parties.
14. A hearing (the "Fairness Hearing") shall be held before the undersigned at 1:30
5
p.m. on July 6, 2009, in Division 14 at the Jackson County Courthouse, 308 W. Kansas,
Independence, MO 64050. At the Fairness Hearing, the Gou• will consider: (a) the fairness,
reasonableness, and adequacy of the proposed Settlement; (b) the entry of any final order or
judgment in the Litigation with respect to the Settlement Class; (c) the application for attorney's
fees and for reimbursement of expenses by Class Counsel; (d) the application for an incentive
award for the services rendered by the Named Plaintiffs; and (e) other related matters. The
Fairness Hearing may be postponed, adjourned or continued by Order of the Court without
further notice to the Settlement Class:
15. To be considered at the Fairness Hearing, any person desiring to file an objection
or other comment on the Settlement shall be required to file all such objections and comments
and all supporting pleadings on or before June 11, 2009, with service upon Class Counsel and
Defendants' Counsel. In his/her Objection, an objecting Settlement Class Member must (a) set
forth his/her full name, current address, and telephone number; (b) state that the Settlement Class
Member objects to the Settlement in whole or in part; (c) set forth a specific statement of the
legal and factual basis for the Objection; (d) provide copies of any and all documents that the
objector wishes the Court to consider in connection with the Objection; (e) provide the names of
any witnesses, and, provide a written expert report from all proposed experts who may be offered
at the Fairness Hearing; (f) provide copies of any other loan documents on which the objector
relies as a basis for the objection; (g) if the objector is represented by counsel, provide a detailed
description of the legal authorities supporting each objection; and (h) reference "John and
Jeannette Schwartz, et al., v. Bann-Cor Mortgage, et al., Case No. 00-CV-226639". No
Objection to or other comment concerning the Settlement shall be heard unless timely filed in
accordance with the guidelines specified above and in the Agreement. Class Counsel and
6
Defendants' Counsel shall promptly furnish each other with copies of any and all objections or
written requests for exclusion that come into their possession.
16. Any Settlement Class Member who does not make his or her objection in the
manner provided in this Order shall be deemed to have waived any such objection and shall
forever be foreclosed from making any objection to Settlement, including but not limited to, the
propriety of class certification, the adequacy of any notice, or the fairness, adequacy or
reasonableness of the Settlement.
17. Submissions of the Parties relative to the Settlement, including memoranda in
support of the Settlement, applications for attorneys' fees and reimbursement of expenses by
Plaintiffs' Counsel, and any applications for the payment of services rendered by the Named
Plaintiffs, shall be filed with the Clerk of the Court on or before June 26, 2009. Any attorney
hired by a Settlement Class Member at the Class Member's expense for the purpose of objecting
to the Settlement, or to any application for an incentive award, attorney's fees or expenses shall
file with the Clerk of Court and serve upon Class Counsel and Defendants' Counsel a written
notice of appearance no later than June 11, 2009.
18. Any Settlement Class Member may appear at the Fairness Hearing in person, or
by counsel if an appearance is filed and served as provided in the Notice, and such person will be
heard to the extent allowed by the Court. No person shall be permitted to be heard unless, on or
before June 11, 2009, such person (a) has filed with the Clerk of the Court a notice of such
person's intention to appear, and (b) has served copies of such notice upon Class Counsel and
Defendants' Counsel.
19. Any Settlement Class Member may intervene in the Litigation in person, or by
counsel if a motion to intervene is filed and served as provided in the Notice. No person shall be
permitted to intervene unless, on or before June 11, 2009, such person (a) has filed with the
Clerk of the Court a valid motion to intervene; and(b) has served copies of such notice upon
Class Counsel and Defendants' Counsel.
20. All other events contemplated under the Agreement to occur after this Order and
before the Fairness Hearing shall be governed by the Agreement, and the Class Mail Notice, to
the extent not inconsistent herewith. Class Counsel and Defendants' Counsel shall take such
further actions as are required under the Agreement.
21. The Parties shall be authorized to make non-material changes to the Class Mail
Notice so long as Class Counsel and Defendants' Counsel agree, and one of the Parties files a
notice thereof with the Court prior to the Fairness Hearing.
22. All claims against and motions involving the HomEq Defendants in the
Litigation, other than such as may be necessary to carry out the terms and conditions of the
Agreement or the responsibilities related or incidental thereto, are stayed and suspended until
further order of this Court.
23. The claims of Plaintiffs James Wong, Daniel and Wanda Jensen and/or any of the
other Non-HomEq Plaintiff Borrowers against Bann-Cor Mortgage, the Master Financial
Defendants and any other person, association or entity other than a Released Person are not
stayed or suspended by the Agreement, this Order, or otherwise. The claims and causes of action
of Plaintiffs James Wong, Daniel and Wanda Jensen and the other Non-HomEq Plaintiff
Borrowers against Bann-Cor Mortgage, the Master Financial Defendants and any other person,
association or entity other than a Released Person as identified in the Agreement are not affected
by the Agreement
24. If Final Approval of the Settlement does not occur, or if the Settlement is
terminated for any reason whatsoever, the Settlement and all proceedings had in connection
therewith shall be null and void and without prejudice to the rights of the Parties before the
Settlement was executed and made, and all Orders issued pursuant to the Settlement shall be
vacated.
25. Neither this Order, the Agreement, nor any of its terms or provisions, nor any of
the negotiations between the Parties or their counsel (nor any action taken to carry out this
Order), is, may be construed as, or may be used as an admission or concession by or against any
of the Parties or the Released Persons of the validity of any claim or liability, any alleged
violation or failure to comply with any law, any alleged breach of contract, any legal or factual
argument, contention or assertion. Entering into or carrying out the Agreement, and any
negotiations or proceedings related to it, shall not in any way be construed as, or deemed
evidence of, an admission or concession as to the HomEq Defendants' denials, defenses, or
factual or legal positions, and shall not be offered or received in evidence in any action or
proceeding against any party in any court, administrative agency or other tribunal for any
purpose whatsoever, except as is necessary in a proceeding to enforce the terms of this Order and
the Agreement, or to prove or show that a compromise in settlement of the Released Claims per
the Agreement, in fact, was reached; provided, however, that this Order and the Agreement may
be filed in any action filed against or by the HomEq Defendants or the Released Persons to
support a defense of resjudicata, collateral estoppel, release, waiver, good faith settlement,
judgment bar or reduction, full faith and credit, or any other theory of claim preclusion, issue
preclusion or similar defense or counterclaim. The HomEq Defendants expressly reserve all
rights and defenses to any claims and donot waive any such rights or defenses in the event that
the Agreement is not approved for any reason.
IT IS SO ORDERED
Date
John M. Torrence, Circuit Judge
10