R. BROOKE JACKSON, District Judge.
The parties, having made an application for an order preliminarily approving the proposed settlement (the "Settlement") of claims asserted in the above-captioned action ("Action") against Broad & Cassel, Carl Romano and Ronald Gaché (collectively the "B&C Defendants") in accordance with the parties' Stipulation of Settlement, dated as of May 26, 2015 (the "Stipulation"), which (along with the defined terms therein) is incorporated here by reference and which sets forth the terms and conditions for conditional certification of a class, settlement of all claims against the B&C Defendants, and entry of final judgment with respect to the claims against the B&C Defendants; and the Court having read and considered the Stipulation and the accompanying documents,
IT IS HEREBY ORDERED that:
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2.
3.
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7.
They shall be deemed served on Plaintiffs' Counsel on the date they are hand delivered or postmarked, first class, postage prepaid, to:
They shall be deemed served on the B&C Defendants' Counsel on the date they are hand delivered or postmarked, first class, postage prepaid, to:
8.
10.
DONE and ORDERED.
TO: All Members of the Settlement Class, as defined below.
A FEDERAL COURT AUTHORIZED THIS NOTICE. YOU HAVE RECEIVED THIS NOTICE BECAUSE YOU MAY BE ONE OF THE PEOPLE WHOSE RIGHTS WILL BE AFFECTED BY THE ACTION AND THE PROPOSED SETTLEMENT. YOU ARE URGED TO READ THIS NOTICE CAREFULLY.
THIS NOTICE DESCRIBES A PROPOSED SETTLEMENT, ON A CLASS-WIDE BASIS, OF CLAIMS AGAINST ONE OF MANY DEFENDANTS IN THE ABOVE-TITLED ACTION. IF YOU DECIDE NOT TO PARTICIPATE IN, OR BE BOUND BY, THE ACTION AND THE PROPOSED SETTLEMENT IN THE MANNER DESCRIBED BELOW, OR IF YOU WISH TO OBJECT TO THE PROPOSED SETTLEMENT, YOU MUST DO SO IN THE MANNER DESCRIBED BELOW ON OR BEFORE
This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and the Order from the United States District Court for the District of Colorado (the "Court") granting preliminary approval of settlement dated June 16, 2015 ("Preliminary Approval Order"), to inform you that
The Court, by its Preliminary Approval Order, has conditionally approved a Settlement Class defined as follows:
If you are within the definition of the Settlement Class set forth above, then you are a Class Member.
This Notice is also being given to inform Class Members of their right to either object to, or request exclusion from, the proposed Settlement. If approved, the Settlement will affect the rights of all Class Members who do not request exclusion from the Settlement Class as described below. This Notice is not an expression of any opinion by the Court as to the merits of any claims or any defenses asserted by any party in this Action, or the fairness or adequacy of the proposed Settlement.
This case concerns allegations by the Plaintiffs of a purported advance fee loan fraud scheme operated out of Toronto and directed towards persons in the United States. The essence of the alleged fraud was the issuance of loan commitments to persons in search of financing or refinancing of real estate conditioned upon the immediate payment of substantial fees. Plaintiffs allege that following the payment of up-front fees, an excuse would be found for denial of the loans and the fees paid would not be returned.
The main actor in the alleged fraud is Sandy Hutchens (aka "Fred Hayes," aka "`Moishe Alexander," aka "Moshe Ben Avraham," aka "Frederick Merchant," aka "Mathew Kovce"). Participating with him were his wife, Tanya, and daughter, Jennifer. The Hutchens family and a series of corporations which they owned and controlled (collectively referred to hereinafter as the "Hutchens Defendants") allegedly received assistance from a number of professionals in the United States and Canada who purportedly vouched for the legitimacy of the Hutchens Defendants' loan business.
There is no claim in this case that Hutchens Defendants breached any loan commitment or otherwise breached any promise or obligation to fund any loan. Rather, Plaintiffs allege that the Hutchens Defendants were not in the lending business at all because they did not have either the capability or intent to fund any of the loans committed.
Plaintiffs believe the Hutchens Defendants were able to create and maintain the appearance of being in the lending business by concealing or obscuring the identity of Sandy Hutchens and the public links between his name and his criminal history. Plaintiffs allege that various professionals in the United States and Canada unlawfully assisted the Hutchens Defendants to conceal Sandy Hutchens' identify. Plaintiffs allege that had they, or members of the Settlement Class, known with whom they were actually dealing, they would not have paid the advance fees which they seek to recover in this case. The B&C Defendants were, from late March to September 2008, legal counsel for 308 Elgin, Inc., an entity controlled by Hutchens, and in that capacity they had dealings with certain of Hutchens' loan applicants, who are members of the Class certified in this action. The B&C Defendants deny liability.
THE COURT HAS NOT DECIDED ANY OF THE SUBSTANTIVE CONTENTIONS OF THE PARTIES AND, THEREFORE, NO INFERENCES REGARDING THE MERITS OF THE LAWSUIT SHOULD BE DRAWN FROM THE SENDING OF THIS NOTICE. THE GIVING OF THIS NOTICE IS NOT MEANT TO IMPLY THAT THERE HAVE OR HAVE NOT BEEN ANY VIOLATIONS OF LAW OR CONTRACT, OR THAT RECOVERY AFTER TRIAL COULD OR COULD NOT BE HAD IF THE LAWSUIT AGAINST THE B&C DEFENDANTS PROCEEDED THROUGH TRIAL.
1. CGC Holding Company, LLC ("CGC"), a Colorado limited liability company with its principal place of business in Parker, Colorado.
2. Crescent Sound Yacht Club, LLC ("Crescent Sound"), a Florida limited liability company with its principal place of business in Sewalls Point, Florida.
3. Harlem Algonquin LLC ("Harlem Algonquin"), an Illinois limited liability company with its principal place of business in Lincolnshire, Illinois.
4. James T. Medick ("Medick"), an individual who resides in Las Vegas, Nevada.
1. Sandy Hutchens, his wife, Tanya Hutchens, and daughter, Jennifer Hutchens.
2. Entities owned and controlled by the Hutchens family, including: First Central Mortgage Funding Inc. ("FCMF"), Canadian Funding Corporation ("CFC"), 308 Elgin Street Inc. ("308 Elgin"), Northern Capital Investments Ltd. ("`NCI") and Great Eastern Investment Fund, LLC ("Great Eastern").
3. Plaintiffs believe the Hutchens family had some 20 entities which were used to purchase Canadian real estate with the monies received as advance fees on the loan commitments that were issued.
1. Alvin Meisels, a Toronto lawyer who represented several of the Hutchens Defendants for a number of years;
2. The B&C Defendants. Broad and Cassel is a law firm based in Florida. At the time of the events alleged in the Complaint in this Action, Defendants Romano and Gaché were partners in the law firm's West Palm Beach, Florida office.
3. Jan Luistermans and Realty 1, an Ontario real estate broker and his real estate firm (collectively, "Luistermans").
Plaintiffs filed this lawsuit as a putative class action, stating the following claims:
1. Civil remedies under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO");
2. Conversion;
3. Negligent misrepresentation;
4. Constructive trust; and
5. Unjust enrichment.
The Court dismissed the claims for Constructive Trust and Unjust Enrichment.
On December, 8, 2014, the United States Court of Appeals for the Tenth Circuit reversed the District Court of Colorado's order certifying a class as to the B&C Defendants, stating as follows:
On January 27, 2015, in accord with the mandate of the Tenth Circuit, the Court ruled, "All claims asserted by the plaintiffs against Broad and Cassel, Ronald Gaché and Carl Romano are dismissed without prejudice. As the prevailing parties, these defendants are awarded their costs pursuant to Fed. R. Civ. P. 54(d)(1) and D.C.COLO.LCivR 54.1." [Doc. 513 at p. 3].
At a hearing held on April 23, 2015, the District Court indicated that it would not entertain an Amended Complaint in the Litigation. Therefore, in the absence of this Settlement, Atlas Cellars, LLC would file its Class Action Complaint against Broad in the United States District Court for the Southern District of Florida, asserting Negligent Misrepresentation claims under Florida law and invoking that court's diversity jurisdiction (the "Florida Action"). This Settlement shall be in lieu of Atlas Cellars, LLC on behalf of itself and others similarly situated, filing the Florida Action.
For purposes of this Settlement, the Court has preliminarily certified a class as defined at page 2 of this Notice and has determined that Atlas Cellars, LLC is a class representative who can adequately protect the interests of any putative class members that could assert valid causes of action vis-a-vis Broad.
Plaintiffs base their claims against Broad and Cassel law firm primarily upon principles of respondeat superior (a form of vicarious liability) for the actions of Defendants Romano and Gaché, who were Broad and Cassel partners.
Plaintiffs allege that the core facts below give rise to liability against the B&C Defendants. The B&C Defendants have denied, and would continue to deny, liability, resulting in complex, expensive, and protracted litigation.
1. The B&C Defendants began representing an entity controlled by Sandy Hutchens called 308 Elgin Street, Inc., in March 2008. Plaintiffs allege that over the course of their representation, which ended in September 2008, the B&C Defendants became aware of Hutchens' identity and criminal history.
2. Plaintiffs believe that over the course of their representation, Romano and Gaché became aware that Sandy Hutchens had previously used, and was using the alias Moishe Alexander, and Moshe Ben Avraham.
3. Plaintiffs allege that when called upon to do so by Sandy Hutchens, Romano and Gaché confirmed the legitimacy of the Hutchens Defendants' loan business. They allege as well that, by virtue of Hutchens' use of these aliases, Romano and Gachéknew, or should have known, that persons requesting assurance of Hutchens' bona fides were ignorant of Hutchens' criminal past.
4. According to Plaintiffs, at the time Romano and Gaché made these representations, they knew, or should have known that "Moishe Alexander" and "Moishe Ben Avraham" were all Sandy Hutchens, that the Hutchens' alter egos neither had the appearances of being legitimate lenders nor had closed any loans of the magnitude that were committed.
5. Plaintiffs contend Romano and Gaché did not volunteer these adverse facts in response to specific requests concerning the Hutchens Defendants.
6. The B&C Defendants terminated the Hutchens Defendants as clients in September, 2008.
7. Plaintiffs contend Romano and Gaché made the representations described above to Class Members while they were partners of B&C.
8. The B&C Defendants contend, and Plaintiffs do not have evidence to dispute, that that the B& C Defendants did not know prior to May 20, 2008 that Moishe Alexander's identity was Sandy Hutchens and that he had a criminal past [Docs. 361-5, 6, 7; 406 p. 6].
9. As a result, the B&C Defendants contend that until May 20, 2008, they could not have informed class members that Moishe Alexander was a name used by Sandy Hutchens, and that that individual had a criminal history including a conviction for fraud, as set forth in the class definition.
10. As a result, the B&C Defendants contend that they could not have caused loss to members of the class as a matter of law with respect to advance fees paid before May 20, 2008.
11. The B&C Defendants deny participating in a conspiracy and also contend that there is serious doubt as to whether Plaintiffs could successfully prevail in their claims against them. They would argue that Plaintiffs failed to present evidence of an agreement between the Hutchens Defendants and Gaché or Romano. See United States v. Smith, 413 F.43d 1253, 1265 (10th Cir. 2006) (overruled on other grounds, United States v. Hutchinson, 573 F.3d 101, 1021 (10th Cir. 2009)) (civil RICO conspiracy plaintiffs must prove that each defendant "knew about or agreed to facilitate the commission of acts sufficient to establish a § 1962(c) violation.").
12. The B&C Defendants also contend that when they terminated representing Hutchens and 308 Elgin Street in writing on September 18, 2008, these acts were (1) "[a]ffirmative acts inconsistent with the object of the conspiracy," that were (2) "communicated in a manner reasonably calculated to reach co-conspirators." United States v. United States Gypsum Co., 438 U.S. 422, 464-65, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978); Hyde v. United States, 225 U.S. 347, 369, 32 S.Ct. 793, 56 L.Ed. 1114 (1912), and that, therefore, they would not be liable as a matter of law to members of the class who paid advance fees after September 18, 2008.
13. On March 4, 2013, in its Order on Pending Motions, the Court held:
Since the entry of that order, the B&C Defendants produced thousands of pages of attorney-client communications in accord with the Court's order permitting them to produce certain attorney-client communications which the Broad Defendants contend further support that they did not know or believe that Hutchens and his companies did not have the ability and the intention to fund loans to Crescent Sound and other prospective borrowers in Florida
Conditioned on Court approval, the B&C Defendants, subject to the terms and conditions of the Stipulation of Settlement Between Plaintiffs and the B&C Defendants, will pay into the trust account of Plaintiffs' Counsel (Shepherd, Finkelman, Miller & Shah, LLP) $270,000 to reimburse Class members who entered into transactions with 308 Elgin in which the B&C Defendants represented 308 Elgin. The B&C Defendants also will reimburse certain Class members the sum of $31,000, which is the amount of the respective advances for legal fees paid by these Class members and held in trust by the B&C Defendants, in accord with the terms of the Stipulation of Settlement. Finally, the B&C Defendants will forego a payment to them of certain costs incurred in the litigation, in the amount of $23,042.75, which the Class would otherwise be required to pay.
Pursuant to the Settlement, Plaintiffs and Class Members on behalf of themselves, and their successors, heirs, and assigns, remise, release, acquit, satisfy and forever discharge the Released Parties of and from any and all, and will forever be enjoined from prosecuting, against Broad and Cassel, Gaché, Romano, including each of their past and present, predecessors, heirs, executors, successors, and assigns, parent, subsidiary, affiliates, entities, and any and all of his, her, its and/or their respective past and present officers, directors, agents, attorneys, accountants, insurers, servants, employees, shareholders, members, and partners, and their respective heirs and personal representatives ("the Released Parties"), from all manner of, claims, actions, causes of action, suits, debts, sums of money, accounts, reckonings, contracts, controversies, stipulations, promises, damages, and demands whatsoever, in law or in equity, which Releasors had or now have, or which any successor or assign of Releasors hereafter can, shall or may have, against any of the Released Parties for, upon, or by reason of any matter, cause or thing whatsoever, from the beginning of the world, whether known or unknown, direct or indirect, vested or contingent. Accruing at any time prior to [the date of the Preliminary Approval Order] (the "Settled Claims"). The Settled Claims include claims which Plaintiffs and Class Members do not know of or suspect to exist as of [the date of the Preliminary Approval Order], which if known by them might affect their settlement of the Action. Plaintiffs and all Class Members shall be deemed to have expressly waived the provisions of California Civil Code § 1542 and any similar provision of the law of any other jurisdiction that might otherwise render the release and covenant not to sue unenforceable with respect to unknown claims.
If the Court approves the Settlement, all Settled Claims will be dismissed on the merits with prejudice as to all Class Members and all Class Members will be forever barred from prosecuting any other action raising any Settled Claims against any Released Parties, unless that Class Member has taken the steps described below affirmatively to request exclusion from the Settlement Class.
The Settlement will become effective when the Court issues an Order and Final Judgment approving the Settlement (the "Effective Date").
In determining to settle the claims against the B&C Defendants, Plaintiffs and their counsel took into account: the relative weakness of the case against the B&C Defendants, who had already been dismissed from the Litigation without prejudice, and the relative strength of the B&C Defendants' defenses as compared to other defendants; the substantial expense and length of time necessary to develop arguments and prosecute through trial the claims against the B&C Defendants, the expense of post-trial motions and likely appeals; and the significant uncertainties in predicting the outcome of this complex litigation.
The Payments made pursuant to the Settlement shall be distributed to those Class members who were parties to transactions in which the B&C Defendants represented 308 Elgin. The attorneys' fees being returned pursuant to the Settlement Agreement will be returned separately to the Class members who made them.
Plaintiffs' counsel will make an application for attorneys' fees to be paid from the proceeds of the Settlement. Plaintiffs' counsel will ask that they be paid a fee equal to 1/3 of the $270,000 payment to the Class, or $90,000. Plaintiffs' counsel will not seek any attorneys' fees from the fees, in the amount of $31,000, that the B&C Defendants are returning to certain Class members in accord with the Stipulation for Settlement
The Court has conditionally approved this lawsuit to proceed as a class action. As a Class Member, you will be represented by Plaintiffs' Counsel, unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel must file an appearance on your behalf with the Court no later than (fourteen (14) calendar days prior to the Fairness Hearing), and must serve copies of such appearance on the attorneys listed below.
At the Fairness Hearing, the Court will determine whether to (i) approve the Settlement, and (ii) enter an Order and Final Judgment that would, among other things, certify a settlement class and effect a release by Plaintiffs and Class Members of all Settled Claims against the Released Parties. The Fairness Hearing may be adjourned from time to time by the Court without further written notice to the Settlement Class.
Class Members are entitled to appear in person or through counsel and present any evidence or argument that may be proper and relevant to the proposed Settlement. If you wish to object to or otherwise be heard regarding the Settlement, you must file with the Court and serve on the counsel identified below, no later than fourteen (14) calendar days prior to the Fairness Hearing, a notice of intent to appear and a written objection (including any documents and writings you wish the Court to consider). The notice and objection should be filed and served in the manner set forth in the subsection below entitled "Directions for Submitting Objections and Request for Exclusion."
The Request for Exclusion should be signed and include the Class Member's name, address, and telephone number. No person or entity may be excluded from the Class after
The notice of intent to appear and written object ion, or any request for exclusion, shall be deemed to have been filed with the Court on the date it is hand delivered or postmarked, first class, postage prepaid, to:
It shall be deemed served on Plaintiffs' Counsel on the date it is hand delivered or postmarked, first class, postage prepaid, to:
It shall be deemed served on B&C Defendants Counsel on the date it is hand delivered or postmarked, first class, postage prepaid, to:
For a more detailed statement of the matters involved in this Action, you may refer to the pleadings, the Stipulation, the Orders entered by the Court and the other papers filed in the lawsuit, which may be inspected at the Office of the Clerk of the United States District Court for the District of Colorado, 901 Nineteenth Street, Denver, CO 80294, during regular business hours. The Stipulation of Settlement has been filed and is available for Class Members to review.
If you change your address, or if this Notice was forwarded to you from a different address, you should advise Plaintiffs' Counsel of your new address to ensure that future communications reach you. Contact information for Plaintiffs' Counsel is provided above.
