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Horn v. Bank of America, N.A.

United States District Court, Ninth Circuit

January 7, 2014

RICHARD M. HORN, an individual and as Trustee of the Richard M. Horn Trust Dated June 16, 2003, and MARIA GUREVICH, fka Mary Bordetsky, an individual, on behalf of themselves, and on behalf of the class of all others similarly situated, Plaintiffs,
v.
BANK OF AMERICA, N.A., a national banking association, Defendant.

ORDER GRANTING PRELIMINARY APPROVAL TO SETTLEMENT, PRELIMINARILY CERTIFYING SETTLEMENT CLASSES, APPOINTING CLASS COUNSEL AND REPRESENTATIVES, AND DIRECTING DISSEMINATION OF CLASS NOTICE (ECF NOS. 56, 58)

GONZALO P. CURIEL, District Judge.

On behalf of themselves and others similarly situated, Plaintiffs Richard M. Horn and Maria Gurevich have moved this Court for an order preliminary approving a settlement in this case against Defendant Bank of America, N.A. ("BANA"). In connection with their motion, Plaintiffs have also moved for preliminary certification of two settlement classes with them as class representatives: one under Federal Rule of Civil Procedure 23(b)(3) and the other under Federal Rule of Civil Procedure 23(b)(2). In addition, Michael R. Brown and David J. Vendler of Morris Polich & Purdy LLP, along with Jeffrey D. Poindexter of the Law Offices of Jeffrey D. Poindexter, have moved for preliminary appointment as counsel for the proposed settlement classes.

The Parties have set forth the terms of their agreement in the Settlement Agreement and Release, and the Confidential Supplemental Agreement to the Settlement Agreement and Release (collectively, the "Settlement Agreement"). The parties executed both agreements on December 13, 2013, and filed them with this Court on the same day, with the Supplemental Agreement filed under seal because of its confidential nature.

After reviewing the Settlement Agreement, record in this matter, and applicable law to determine, among other things, whether to preliminarily certify the proposed settlement classes and whether the Settlement Agreement is sufficiently fair, reasonable, and adequate to warrant notice of the proposed settlement being sent to the members of the proposed settlement classes, the Court orders as follows:

1. Settlement Agreement Incorporated By Reference. This Order incorporates by reference the definitions in the Settlement Agreement. All capitalized terms used herein shall have the same meanings as set forth in the Settlement Agreement, unless otherwise set forth herein.

2. Jurisdiction. The Court has personal jurisdiction over the parties and subject-matter of this case under 28 U.S.C. §§ 1331 and 1367.

3. Preliminary Certification of Settlement Classes. The Court preliminarily finds that the class action prerequisites of Federal Rule of Civil Procedure 23(a), (b)(2), and (b)(3) have been satisfied. See Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003) ("[I]n the context of a case in which the parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement.").

As to Rule 23(a), the Court preliminarily finds that the settlement classes are so numerous that joinder would be impractical, as each of the settlement classes are estimated, based on BANA's records, to be over 100, 000 each.

The Court preliminarily finds that common questions of law and fact that can be answered on a classwide basis exist, to wit, (1) whether payment of previously deferred interest is "mortgage interest" under 26 U.S.C. § 6050H that should have been included on the Forms 1098 that BANA sent to Class Members, and (2) whether BANA was legally required to provide notice to borrowers when it stopped reporting payments of deferred interest on Forms 1098.

The Court preliminarily finds the claims of the named plaintiffs, Horn and Gurevich, are typical of the claims of the settlement classes because the named plaintiffs were subjected to BANA's Form 1098 reporting practices.

The Court preliminarily finds, based on their continued litigation of this case to date, that the named plaintiffs will fairly and adequately protect the interests of the class. The Court further preliminarily finds that the named plaintiffs have no conflicts of interest with the settlement classes. The Court further preliminarily finds, based on their briefing and other filings with the Court, that the named plaintiffs' attorney are experienced and generally able to conduct this litigation and that there is no evidence of collusion or other misconduct that would harm or prejudice the settlement classes. Thus, finding the requirements of Rule 23(a) satisfied, the Court turns to the requirements of Rule 23(b).

As to the proposed Monetary Settlement Class, the Court preliminarily finds "the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." See Fed.R.Civ.P. 23(b)(3).

As to predominance, the Court preliminarily finds the only significant individualized question is the amount of deferred interest paid to BANA. The Court preliminarily finds that, given the relative ease of answering this individualized question be resort to, among other things, BANA's records, that the common questions described above predominate over this individualized question.

As to superiority, the Court preliminarily finds that there is little incentive or interest in class members individually controlling the prosecution of separate actions. This is likely due in large part to most members of the settlement classes being unaware of BANA's Form 1098 reporting practices. The Court further preliminarily finds that, given the proposed claims process set forth by the parties, that there will be little difficulty in managing a ...


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