) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) THIS MATTER came before the Court on Plaintiff s motion for preliminary approval of
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1 STATE OF SOUTH CAROLINA COUNTY OF BEAUFORT ANTHONY AND BARBARA GRAZIA, individually and on behalf of all other similarly situated Plaintiffs, Plaintiffs, vs. SOUTH CAROLINA STATE PLASTERING, LLC, Defendant. SOUTH CAROLINA STATE PLASTERING, LLC, Third-Party Plaintiff, vs. DEL WEBB COMMUNITIES, INC., PULTE HOMES, INC., and KEPHART ARCHITECTS, INC., Third-Party Defendants. IN THE COURT OF COMMON PLEAS FOURTEENTH JUDICIAL CIRCUIT CASE NUMBER: 2007-CP ORDER GRANTING PLAINTIFFS MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT OF CLASS ACTION, DESIGNATION OF CLASS REPRESENTATIVES AND COUNSEL, CERTIFICATION OF A SETTLEMENT CLASS, DIRECTION OF NOTICE TO CLASS, DESIGNATION OF CLAIMS ADMINISTRATOR, AND SETTING OF HEARING FOR FINAL APPROVAL THIS MATTER came before the Court on Plaintiff s motion for preliminary approval of a class action settlement. The Court held a hearing on October 30, Plaintiffs appeared and were represented by Michael S. Seekings and John T. Chakeris. Defendant South Carolina State 1
2 Plastering, LLC ( SCSP appeared and was represented by Everett A. Kendall, II. Third Party Defendants Del Webb Communities, Inc. and Pulte Homes, Inc. (together, Del Webb appeared and were represented by A. Victor Rawl, Jr. and Henry W. Frampton, IV. In addition, though not parties to the action, various insurers sent representatives to the hearing. The insurers represented by counsel were: various insurers affiliated with American International Group; American Guarantee and Liability Insurance Company (Zurich; Liberty Mutual Fire Insurance Company; The Burlington Insurance Company; and Everest National Insurance Company. Those attending on behalf of insurers were permitted to address the Court and to provide the Court with any information they so desired. By their motion, Plaintiffs request that the Court enter an Order (1 certifying a settlement class in place of the class currently certified, (2 appointing the Grazias as class representatives and their counsel as class counsel, (3 approving the settlement reached by the Parties, (4 directing notice to the class, (5 appointing the claims administrator, and (6 setting a date for the final approval hearing. SCSP and Pulte do not oppose the request, and none of the insurers in attendance voiced any objection to the motion. For the reasons that follow, the Court grants the motion. BACKGROUND On December 8, 2011, the Court certified a class on a preliminary basis. Notice was then provided to the preliminarily certified class, and certain members of the putative class excluded themselves from the preliminary class. The Right to Cure Process took place thereafter. At the conclusion of the Right to Cure process, SCSP made thousands of settlement offers to members of the putative class, some of which were accepted. The settling members of the putative class have received the settlement funds and have released SCSP and Del Webb. 2
3 On September 9, 2016, this Court issued a class certification order certifying the following class: All individuals, corporations, unincorporated associations, or other entities that currently own stucco-clad homes in Sun City Hilton Head to which SCSP applied the exterior stucco in whole or in part prior to July 31, 2007, which allegedly are damaged due to (a the lack of head flashing above doors and windows, (b the failure to install stucco control joints, and/or (c the presence of moisture encapsulation by the failure to leave a gap between the stucco exterior and the structure slab. Since that time, the Parties have reached an agreement to resolve this case, subject to the Court s review and approval. The Parties agreement has been filed with the Court, and the Court has reviewed it carefully. In addition, the Court has heard argument from counsel for all Parties and has permitted the insurers present at the hearing to present any argument or information they so desire. CERTIFICATION OF THE SETTLEMENT CLASS In their motion, Plaintiffs request that the Court certify a modified class definition to promote fairness, efficiency, and finality. Upon careful review, the Court agrees that it is appropriate to define the class as set forth on the Final Class List included with Plaintiffs motion. This modification will, in the Court s view, provide certainty as to who is and is not in the class and will substantially promote the fairness and manageability of the proposed settlement. The Court, therefore, hereby certifies the following class in place of the class previously certified: All persons who owned a house on the Final Class List on or before October 30, 2018 and/or who received notice of the preliminarily certified class. The Court hereby finds and concludes that the Final Class List is a good-faith effort to set forth the physical addresses owned by class members. Further, to promote finality and avoid 3
4 disputes, the Court hereby concludes that the class in this case is and shall be defined solely by reference to the Final Class List and not to any other criteria. In addition, the Court has defined the class to include anyone who received notice of the preliminarily certified class so as not to inadvertently remove anyone from the class who was previously notified that they were in the class. The Court finds and concludes that the class as defined herein meets the Rule 23, SCRCP requirements for a settlement class because (1 the class is so numerous that joinder of all such persons would be impractical, (2 the members of the class have a common interest in the rights and benefits created by this settlement, (3 the class representatives are typical of the class inasmuch as they own a house on the Final Class List and will recover under the same formula as other class members (with a stipend for their efforts as class representatives, (4 the class representatives and class counsel can adequately represent the class members in the consummation of this settlement, and (5 the amount in controversy exceeds $100. The Court notes that it is certifying the above class for purposes of this settlement only. SCSP and Del Webb specifically maintain and have not waived their various arguments against this Court s prior class certification orders. Moreover, the Court notes that SCSP and Del Webb do not consent to certification of a class for any purpose whatsoever except the settlement set forth in the settlement agreement attached to Plaintiffs motion. The class certification contained in this fully replaces and supersedes all prior preliminary and/or final class certifications issued in this case. APPOINTMENT OF CLASS REPRESENTATIVES AND COUNSEL The Court hereby appoints Anthony and Barbara Grazia as representatives of the settlement class and W. Jefferson Leath, Michael S. Seekings, John T. Chakeris, and Phillip W. 4
5 Segui, Jr. as counsel for the settlement class. The Court is familiar with all of their qualifications and finds that they are qualified and will adequately represent the settlement class. APPROVAL OF SETTLEMENT The Court has carefully reviewed the settlement agreement presented by Plaintiffs and signed by the Parties. In brief, the settlement involves the creation of a settlement fund in the amount of $43,034, This amount does not include $2,653,000 previously paid out as part of the Right to Cure process in this action. The Court agrees that the proposed Settlement Agreement is best for all Settlement Class Members because it gives them a way to get a monetary payment without the delays, risks, and expenses of a trial, appeal and efforts to recover on a judgment (if any. The Court recognizes that SCSP is out of business and possesses no assets. Its only assets are insurance policies. Those insurers have repeatedly urged defenses to their insurance policies, and have either denied coverage to South Carolina State Plastering, or have reserved the right to deny coverage. In spite of the above, this Settlement represents payment of not only substantially all of the insurance coverage possibly available to SCSP, but also a significant settlement contribution by Del Webb and its insurers. A trial in this matter would most likely lead to an uncertain result, and if favorable to the Class, would result in additional lengthy appeals and Declaratory Judgment actions by insurers seeking to avoid payment. For all of these reasons, the Court believes that this settlement is in the best interests of the Class. Under the proposed settlement, after payment of case costs, the costs of claims administration, and an attorneys fee of 1/3 of the recovery, the settlement funds will be distributed to current owners of houses on the Final Class List based on the exterior square footage of the stucco on the house. Prior owners of such houses will receive $50 each. 5
6 The Court understands that the exterior square footage figures set forth on the Final Class List are estimates provided by Del Webb based on the model of the home. The figures are not based on individual house measurements; therefore, individual variations are expected. Class members who believe the figures are incorrect will be provided an opportunity to obtain their own measurements from a licensed architect or engineer and submit such measurements to a neutral claims administrator with appeal rights to this Court. In return for the substantial settlement payment, class members will give SCSP, Del Webb, Kephart, Peter Conley, and their affiliated companies a complete release as to stuccorelated claims. The release will run with the land, and a memorandum summarizing the release will be recorded with the Beaufort County Register of Deeds office to give subsequent owners notice that stucco-related claims are hereby barred. The summary set forth above does not contain all of the details of the settlement and is merely intended to summarize certain elements thereof. The Court, however, has reviewed the settlement agreement in its entirety and is fully aware of all of the details of the settlement rendering the instant Order. The Court finds and concludes that the settlement is fair and reasonable under the circumstances. The Court believes that the recovery obtained by this settlement is the most that would reasonably be available to the class. Because of the continued depletion of the insurance policies at issue, the Court further believes that the recovery here likely exceeds any recovery the class would obtain following a successful trial and likely appeal and further concludes that the various insurer payments exhausting certain insurance policies are proper, appropriate, and in good faith. The Court is also aware of the significant defenses advanced by SCSP and the substantial value to the class of bringing this decade-old matter to a resolution now, rather than 6
7 awaiting the outcome of a trial and the appeals likely to be filed thereafter. Thus, the Court approves the settlement. In light of the amounts being paid by the various insurance carriers and the Court s knowledge of the claims at issue, the Court hereby 1 declares and holds that the various insurers paying the amounts set out in the Settlement Agreement under their policies (including payments in exhaustion of the limits of one or more of the policies are paid to address potentially covered property damage only and are proper, appropriate and in good faith, despite the existence of other existing claims; and 2 declares and holds that the Exhausted Policies (as defined in the Settlement Agreement will be properly and fully exhausted by payments including the settlement payments herein, and that the coverage obligations (including defense and indemnity obligations to any insured or potential insured (named or otherwise under the Exhausted Policies with respect to other existing or future claims have ended as of the date of payment of the limits of the Exhausted Policies, with the exception of and expressly excluding any Existing Defense Claims (as defined in the Settlement Agreement, which Existing Defense Claims are not precluded, eliminated, released, terminated, limited or settled. NOTICE TO THE CLASS Under Rule 23, SCRCP, it is the Court s duty to determine and direct the manner and scope of notice to the class upon approval of a settlement. Having reviewed the matter carefully, the Court finds and concludes that the notice methodology set forth in the Parties settlement agreement is appropriate and the best practicable means of giving notice to the class. By way of a summary, notice will be provided by direct mailing to all of the addresses on the Final Class List, all of the addresses to which notice was originally sent, and addresses available from the Sun City Homeowners Association. In addition, notice will be published on a dedicated 7
8 settlement website maintained by class counsel and in two Beaufort County newspapers. The Court also expects there to be media coverage of the settlement in Beaufort County. The Court specifically approves the Class Notice attached hereto as Exhibit A (which includes the 13-page mailing notice and the one-page newspaper notice, which must be mailed out by November 29, 2018; the Objection and Exclusion forms attached hereto as Exhibits B and C respectively, the return of which must be postmarked by January 14, 2019 to be effective. The Court further approves the Claim and Challenge Forms attached hereto as Exhibits D and E, respectively, which, if the settlement received final approval on March 21, 2019, the return of must be postmarked by August 3, 2019 to be effective. The Court recognizes that there may be prior owners who do not receive direct mailing because they did not leave a forwarding address with the HOA and who may not see a notice in Beaufort County newspapers. However, because there is no practical or cost-effective means of locating such people, and because the settlement funds are limited, the Court has determined that notice through direct mailing, local publication, the creation of a settlement website, and local media coverage amply satisfies the requirements of Rule 23, SCRCP and of due process. APPOINTMENT OF THE CLAIMS ADMINISTRATOR The Court hereby appoints Total Class Solutions, LLC ( TCS as Claims Administrator. The Court has reviewed TCS s past experience and concludes that TCS is a well-known and widely regarded settlement administrator with experience administering settlements far larger and more complex than this one. FINAL APPROVAL HEARING 8
9 The Court shall conduct a Final Approval hearing on March 21, 2019, at 10:00 a.m. in Courtroom #1 of the Beaufort County Courthouse, 102 Ribaut Road, Beaufort, SC The Court directs that this date be communicated to the Settlement Class via the class notice set forth above and that it be posted on the settlement website. AND IT IS SO ORDERED., 2018, South Carolina Edgar W. Dickson Presiding Judge, Fourteenth Judicial Circuit / v.2 9
10 Beaufort Common Pleas Case Caption: Anthony Grazia VS South Carolina State Plastering, defendant, et al Case Number: 2007CP Type: Order/Approval Of Settlement So Ordered s/ Edgar W. Dickson #2153 Electronically signed on :42:21 page 10 of 10
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