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Agnone v. Camden County

United States District Court, S.D. Georgia, Brunswick Division

March 26, 2019

STEPHEN AGNONE & ENZO AGNONE; DOUGLAS & CYNTHIA PORCELLI; BRIDGE POINTE AT JEKYLL SOUND COMMUNITY ASSOCIATION, INC., et al., Plaintiffs,
v.
CAMDEN COUNTY, GEORGIA; WILLIS R. KEENE, JR.; JIMMY STARLINE; CHUCK CLARK; TONY SHEPPARD; GARY BLOUNT; DAVID L. RAINER; KATHERINE NISI ZELL; CHARLENE SEARS; STEPHEN L. BERRY; STEPHEN L. HOWARD; O. BRENT GREEN; JOHN MCDILL; DAVID KEATING; SCOTT BRAZELL; LEXON INSURANCE COMPANY; THOMAS A. DIERUF; DAVID E. CAMPBELL; JEKYLL SOUND DEVELOPMENT COMPANY, LLC; and CAMDEN COUNTY DEVELOPMENT, LLC, Defendants.

          FINAL REPORT AND RECOMMENDATION

          BRIAN K. EPPS, UNITED STATES MAGISTRATE JUDGE SOUTHERN DISTRICT OF GEORGIA.

         Pending before the Court are Class Representatives' Motion for Final Approval of Class Settlement, Original and Amended Requests for Attorneys' Fees and Service Awards, as supplemented, and Petition for Approval of Qualified Settlement Fund. (Docs. 96, 110, 111, 112 & 117). On February 28, 2019, this Court held a hearing on the motions (“Fairness Hearing”). After careful consideration of the same, the materials and evidence submitted in support thereof and a previously filed Motion for Preliminary Approval of Class Settlement and for Certification of Settlement Class, as supplemented (Docs. 78, 82, 84 & 91), and the positions of the Parties expressed in writing and at the Fairness Hearing, this Court is of the opinion and recommends the motions be granted as follows:

1. The proposed non-opt out Class Settlement, as provided in the Settlement Agreement, should be finally approved in the form of a Final Order as to the claims of the Class Members against the Lexon Defendants.[1]
2. Final certification of the non-opt out Settlement Class should be granted pursuant to Fed.R.Civ.P. 23(a), 23(b)(1), and 23(b)(2).
3. The previous appointment of Douglas Porcelli, Joseph Moronese, Jr., and Richard Mumford as Class Representatives should be finally approved.
4. The previous appointment of Robert Aitkens and John Sparks and their respective law firms as Class Counsel should be finally approved.
5. The requested Service Awards for Douglas Porcelli and Richard Mumford should be granted.
6. Class Counsel's Amended Request for Attorneys' Fees, as supplemented, should be granted.
7. The Plaintiffs' and Petitioner's Petition for Petitioner Qualified Settlement Fund should be granted.

         In support if its recommendation to grant the motions, this Court makes the following findings of fact and conclusions of law:

         I. Introduction

         A. Background

         This action arises from a failed subdivision in Camden County, Georgia (“Camden County” or the “County”) known as Bridge Pointe at Jekyll Sound (the “Subdivision”) and bonds issued by Lexon Insurance Company (“Lexon”) to secure completion of infrastructure improvements in the Subdivision (the “Bonds”). The original developer bankrupted before constructing the infrastructure improvements. A company owned in part by Lexon executives acquired unsold lots and amenity parcels in the Subdivision through a bankruptcy sale. A subsequent developer, BPJS Investments, LLC (“BPJSI”), negotiated a release of the Bonds with the County in return for (i) payment by Lexon of $4 million that BPJSI committed to use to construct infrastructure improvements in the Subdivision, (ii) a transfer of a nearby marina to BPJSI, and (iii) transfer of unsold lots and amenity parcels in the Subdivision to BPJSI. Development of the Subdivision has been at a virtual standstill since those transactions were completed.

         B. The Lawsuits

         This case (the “Agnone Action”) was filed by owners of approximately 200 lots in the Subdivision and Bridge Pointe at Jekyll Sound Community Association, Inc. (“BPJSCA” or the “Association”), a mandatory association of lot owners in the Subdivision, against the Camden County Defendants.[2] The lot owners alleged that the Camden County Defendants failed to comply with applicable law regarding release of the Lexon Bonds. Their complaint was amended by a second amended complaint, (Doc. 80), to add Class allegations and claims on behalf of a putative class of equitable and legal owners of lots in the Subdivision against the Lexon Defendants for failing to perform their duties and obligations under the Bonds.

         Another case pending before this Court, the Camden County Action[3], filed shortly before this matter, arises from the same facts and circumstances as this case, and includes claims brought by Camden County against Lexon Insurance Company, and Lexon Insurance Company against BPJSI and principals of BPJSI.[4]

         A third matter, the Befumo Action[5] is pending in the Superior Court of Gwinnett County, Georgia, and involves claims brought by a group of owners of lots in the Subdivision against the Lexon Defendants and BPJSI and its affiliates and principals.[6]

         C. Investigation and Analysis

         Class Representatives, through their counsel, have conducted a thorough investigation of the facts, analyzed the relevant legal issues, reviewed relevant documents, and confirmed the results of their investigation through additional discovery, including thousands of pages of documents obtained from the Camden County Action. They engaged, with the Lexon Defendants, in three mediations and extensive subsequent negotiations. Class Representatives, through Class Counsel, have weighed the potential risks and costs associated with continued prosecution of the Action against the benefits of the Settlement Agreement and determined that the proposed Class Settlement is in the best interests of the Class Members.

         The Lexon Defendants have conducted their own investigation of the facts and legal issues, and, while they deny the factual allegations in the second amended complaint and deny any and all liability with respect to the claims alleged therein, they have weighed the potential risks and costs associated with continued litigation of the Action against the benefits of the Settlement and determined that the proposed Class Settlement is in the best interests of the Lexon Defendants.

         The Settlement Agreement provides for settlement of all claims of a class of legal and equitable owners of lots in the Subdivision against the Lexon Defendants, and settlement of all claims of named Plaintiffs against the Camden County Defendants in this Action. If finally approved, the Settlement will resolve, in addition, Camden County's claims against the Lexon Defendants in the Camden County Action, the Plaintiff-Intervenor's claims against the Lexon Defendants in the Camden County Action, and the claims of all Plaintiffs against the Lexon Defendants in the Befumo Action.

         II. The Proposed Settlement

         An executed copy of the Settlement Agreement is attached as an Exhibit to the Third Supplement to Motion for Preliminary Approval and Certification of Class. (Doc. 91). It is incorporated by reference as if fully set forth herein. In summary, the Settlement Agreement provides, inter alia, that the Settlement Class will receive from the Lexon Defendants, subject to the terms and conditions of the Agreement, a total of $11.75 million with which to construct infrastructure improvements in the Subdivision, to pay Class Counsel's attorneys' fees approved by the Court, and to pay Class Representatives up to $5, 000 each[7] for their service as representatives of the Class (“Service Award”). The terms of payment are described below.

         A Benefits to the Class

         The Settlement will collectively benefit Class Members by providing them with funds to construct infrastructure improvements, such as roads, curbs and gutters, walkways, utility connections, sewers, and other infrastructure improvements. The Lexon Defendants have paid or will pay all costs of Notice to the Settlement Class. A description of how and when the Settlement Proceeds will be paid and disbursed is included in the Agreement and summarized below.

. Lexon has paid $3.75 million (the “Camden Settlement Fund Payment”) into the Registry of the United States District Court for the Southern District of Georgia (the “Registry of the Court”). Upon receipt by the Registry of the Court, those funds were transferred to an interest bearing account in the Court Registry Investment System (“CRIS”).
. Lexon has paid at the direction of Camden County $250, 000 (the “Camden Payment”) into the IOLTA Escrow Account of Aitkens & Aitkens, P.C., for the benefit of the Association for use as determined by the Association.
. Within ten (10) business days of a final order approving the Class Settlement without material change and the exhaustion of any appeal (“Final Approval Order”), the Lexon Defendants shall pay an additional $7, 750, 000 (“Lexon Settlement Fund Payment”) into the Registry of the Court for immediate transfer to the CRIS. The Camden Settlement Fund Payment and the Lexon Settlement Fund Payment (totaling $11.5 million), together with accrued interest (the “Final Settlement Fund”) shall remain in the CRIS subject to the terms of the Settlement Agreement and the Final Order.
. The Association as representative of the lot owners in the Subdivision, has also received from the Camden County Defendants (1) the above-described Camden Payment from Lexon by assignment from the County, (2) $25, 000 from other Defendants in the Befumo Action by direction from the County of its entitlement under the Amended Memorandum Regarding Settlement by and between the Camden County Defendants, the Lexon Defendants, and George L. “Boog” Potter, Mike Martinez, BPJSI, Robert Steven Williams, Sr. and Robert Steven Williams, Jr. filed August 29, 2017, in the Camden County Action (“AMRS”), (3) an assignment of all right and interest in any lien (excluding tax liens) or security interest of Camden County in any real property in the Subdivision owned by any one or more of George L. “Boog” Potter, Mike Martinez, BPJSI, Robert Steven Williams, Sr. or Robert Steven Williams, Jr. or any transferee from any one or more of these defendants, and (4) an assignment of all right and interest of the County in that certain obligation of BPJSI, Robert Steven Williams, Sr., and Robert Steven Williams, Jr. under the AMRS to pay $100, 000.[8]

         B. Benefit to the Lexon Defendants

         Pursuant to the Settlement Agreement, each member of the Settlement Class will be deemed to have, and will have, released each of the Lexon Defendants from all claims, whether known or unknown, related to or arising from the Subdivision or the Bonds, to be effective on the date the Lexon Settlement Fund Payment is paid into the Registry of the Court as follows:

Plaintiffs and each and every Settlement Class member fully releases and forever discharges each of the Lexon Defendants, any past or present parent, affiliate, or sister company of any of the Lexon Defendants, any past or present direct or indirect subsidiary of any of the Lexon Defendants, any successor and/or assign of any of the Lexon Defendants, and all of the past and present employees, agents, representatives, attorneys, insurers, officers, and directors of each of them of and from any and all liability, rights, claims, actions, causes of action, demands, and remedies, known or unknown, present or future, liquidated or unliquidated, legal, statutory, or equitable, that result from, arise from, are based upon, or relate in any way to the Subdivision, the Bonds, and any conduct, omissions, duties, allegations, or matters alleged in any of the Lawsuits related thereto.

         C. The Settlement Class

         On October 10, 2018, this Court reported and recommended that a Settlement Class of:

All persons or entities who hold legal or equitable title as of the date of preliminary approval of the Class Action Settlement to any Unit or Parcel in the Bridge Pointe at Jekyll Sound Subdivision and any transferees of any Unit or Parcel following preliminary approval of the Class Action Settlement, except for BPJS Investments, LLC; Robert Steven Williams, Sr.; Robert Steven Williams, Jr.; and any related entities or persons, as these entities are obligated to release any and all claims against Lexon Insurance Company and any related entities or persons (together the “Lot Owners”)

be preliminarily certified. (Doc. 102).

         This Court found that the proposed Settlement Class met the requirements of Fed.R.Civ.P. 23(a), (b)(1) and (b)(2) and that the proposed Settlement Class should be preliminarily ...


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