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In re Household Lending

May 27, 2005

IN RE: HOUSEHOLD LENDING LITIGATION


The opinion of the court was delivered by: Claudia Wilken United States District Judge

ORDER DENYING MOTION TO OPT OUT

Misty and Daniel Brannon, Hope and Leonard Dunn, Robert Penny and Susan and Danny Reeves (collectively, Movants) filed a motion to opt out of the class settlement of this case or, in the alternative, for an enlargement of time to opt out. Defendants oppose the motion. Having considered the papers filed by the parties, the Court denies the motion to opt out.

BACKGROUND

In the fall of 2003, Movants retained attorney Breean Beggs to represent them in private suits against Defendants Household International, Inc., Household Finance Corporation II, Household Finance Corporation III, Household Realty Corporation, Beneficial Finance, Beneficial of Washington, Inc. and other related Household Finance corporate entities (collectively, HFC). Beggs Decl. ¶ 1. Movants chose not to participate in an opt-in class action brought by the Attorney General for the State of Washington. See, e.g., Dunn Decl. p. 2.

On December 12, 2003, this Court issued a preliminary order approving a class action settlement of some of Movants' claims and providing for notice to the class. That order required any person who wanted to be excluded from the settlement to mail a request for exclusion to the Settlement Administrator no later than twenty-one days prior to the April 30, 2004 fairness hearing, that is, no later than April 9, 2004. Despite their desire to pursue individual suits against HFC, Movants did not follow the procedure for requesting exclusion from the class. On April 30, 2004, this Court issued a final order approving the class settlement and a judgment.

On February 17, 2004, HFC and Mr. Beggs on behalf of Movants entered into a "tolling agreement" "for the purpose of allowing the parties to negotiate plaintiff's [sic] claims without filing suit." Penny Decl., Ex. A. According to the agreement, [HFC] and the plaintiff[s] agree to toll any and all statute of limitations for the period of 45 days beginning on January 23, 2004, in relation to any claims that the plaintiff[s] could have brought against [HFC] under federal or state statute, state common law, or contract. In consideration of the tolling, plaintiffs agree not to file suit within that 45-day period.

Id. On March 26, 2004, the parties agreed to extend the tolling agreement for another forty-five days. Id. at 2. On May 3, HFC informed Movants that it would no longer engage in settlement negotiations and cited the class action settlement.

Prior to May 3, 2004, Mr. Beggs was not informed of the existence of the class action. Beggs Decl. ¶ 6. On May 17, 2004, at the end of the second forty-five day tolling agreement, Movants filed suit against HFC in Whatcom Superior Court. Id. ¶ 7.

Movants Daniel Brannon and Susan Reeves claim that they never received written notice of the proposed settlement and opt-out opportunity. According to Mr. Brannon, he and his wife had remained at the same mailing address for over six years, and received several other documents from HFC at that address. Brannon Decl. p. 2. According to Susan Reeves, she and her husband also have remained at the same mailing address throughout their dealings with HFC, and have received other mail from Defendants at that address. Reeves Decl. p. 2. Both Mr. Brannon and Ms. Reeves claim that had they received notice of the California class action, they would have immediately opted out of the class.

The Settlement Administrator's records, however, reflect that notice was mailed on December 22, 2003, to all of the Movants. Redell Decl. ¶ 8. None of the notices mailed to Movants were returned as undeliverable. Id. ¶ 10.

Movant Leonard Dunn believes that he did receive the notice. However, Mr. Dunn states that he is severely disabled, due to depression, post-traumatic stress disorder, chronic pain and an organic brain disorder, and therefore was unable to understand or respond to the opt-out provisions. Dunn Decl. p. 2. According to Mr. Dunn, his wife also suffers from major depression and post-traumatic stress disorder, though she provided no affidavit of her own to support that contention.

Movant Robert Penny states that he "may" have received the notice but "relied on Mr. Budisch's [HFC local counsel] agreement that he would engage in direct settlement negotiations with us, so didn't mail anything further in the Acorn case." Penny Decl. p. 2. Based on HFC's conduct, including Mr. Budish's promise to review the files after the Acorn opt-out deadline had passed, Mr. Penny believed that he was not part of the class action in this Court. Id.

Upon learning on May 3 that HFC considered Movants' claims to be covered by the class action settlement, Mr. Beggs sought an attorney who was a member of the California Bar for the purpose of filing a motion to opt out for his clients, but was unable to do so until January, 2005. Beggs Decl. ΒΆ 9. On February 14, 2005, Movants ...


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