Jay Merrill, V Pemco Mutual Insurance Company ( 2017 )

FILED
COURT OF APPEALS DIV I
011
STATE OF WASHINGT
2011 - 1 AM 9:36
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
JAY MERRILL, individually and as the ) No. 75637-1-1
representative of all persons )
similarly situated, )
)
Appellant, )
) DIVISION ONE
v. )
)
PEMCO MUTUAL INSURANCE )
COMPANY and PEMCO INSURANCE )
COMPANY, )
) UNPUBLISHED OPINION
Respondents. )
) FILED: May 1, 2017
MANN, J. — This case involves the interpretation of a settlement agreement
(settlement) reached between members of a certified class of PEMCO Insureds (class)
and PEMCO Mutual Insurance Company. Jay Merrill, on behalf of the class, appeals
the trial court's decision to incorporate an updated class list into the settlement for the
purposes of calculating the "total repair cost payments of the class." The settlement
defined the class list to be "the revised class notice list furnished to Class Counsel by
the Defendants on March 31, 2015." However, both parties contemplated, and
subsequently approved, adding additional claimants to the class list. We affirm the trial
court's decision holding that the revised class list applies throughout the settlement.
No. 75637-1-1/2
On April 15, 2015, the trial court ordered the preliminarily approval of a stipulation
of settlement between PEMCO and the class. The settlement required PEMCO to pay
$15 million into a common settlement fund. Class members could then submit a claim
to receive a pro rata share of the common settlement fund. The settlement provided for
the creation of a "class list" that contained:(1) a list of all "class members,"(2) the
"individual class member repair cost payments"(the amount each class member
actually paid for repair costs), and (3) the "total repair cost payments"(the sum of all of
the individual repair costs). The settlement set up a payment formula designed to
ensure that each class member would be entitled to a pro rata share of the $15 million
common settlement fund after subtraction of attorney fees and expenses. Paragraph
44.2 of the settlementl contains the payment formula2 and may be expressed as
follows:
(Individual Class Member Repair Cost Payment)
(15 mm - $ 4.572 mm)x Total Repair Cost Payments
1 Paragraph 44.2 Provides:
44. Payment to eligible Class Members ("Settlement Payment") shall be calculated
as follows:
(2) Each Class Member who has submitted a timely Valid Claim Form and who is eligible
for payment shall receive payment from Defendants to be calculated as follows:
($15,000,000.00— attorney's fees and costs awarded to Class Counsel pursuant to
Paragraph 56 and Class Representatives Service fees pursuant to paragraph 45)x
(Individual Class Member Repair Cost Payment divided by the Total Repair Cost Payments).
2 The first bracket, $15 mm — $4.572 mm, represents the common settlement fund ($15 mm)
less attorney's fees and expenses($ 4,572 mm). This number is multiplied by the fraction representing
each individual member repair cost payment(the numerator) divided by the total repair costs (the
denominator).
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No. 75637-1-1/3
The following provisions of the settlement are significant to its construction:
9: "Class List" means the revised class notice list furnished to Class
Counsel by the Defendants on March 31, 2015.
11: "Class Period" means the period from October 8, 2007 to March 31,
2015, inclusive.
• •
44.1: Defendants will use the total amount of payments under the
Collision and/or Comprehensive and/or UIM PD coverages as
shown on the Class List (excluding payments to Opt Outs) as the
"Total Repair Cost Payments." That amount will be the total repair
costs shown for any member of the class who submits a valid
exclusion request. The individual amounts listed as having been
paid for each Class Member on that list shall be considered the
"Individual Class Member Repair Cost Payment."
51: As soon as practicable after the Preliminary Approval of this
Settlement the Claims Administrator shall have sent a copy of the
Individual Notice and a Claim Form, by first-class mail, to each
Person on the Class List.
83: The exhibits to this Stipulation are an integral part of the Settlement
and are hereby incorporated into and made a part of this
Stipulation.3
Exhibit C to the settlement provides:
The Individual Notice shall be mailed per the Stipulation of Settlement
using the Class List provided to Class Counsel on March 31, 2015 or as
updated by Defendants.[4]
In February 2015, before reaching settlement, class counsel estimated that the
class size was 17,607. When the parties agreed to the common settlement fund of $15
million, they did not have the March 31, 2015, class list. The class list PEMCO provided
on March 31, 2015, included 17,050 class members and a total repair cost payment for
those 17,050 class members of $59,132,793.10. The class list sent by PEMCO to class
3(Emphasis added.)
4(Emphasis added.)
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No. 75637-1-1/4
counsel on March 31, 2015, was not final. As PEMCO's counsel explained: "Here is an
updated list through the end of February." Because under the settlement, the "class
period" extended to March 31, 2015, PEMCO's counsel informed the class counsel that
PEMCO would send a revised class list as soon as the March data was gathered.
In the order granting preliminary approval of the Settlement, the trial court
directed that "the Individual Notice shall be mailed per the Stipulation of Settlement
using the Class List provided to Class Counsel on March 31, 2015 or as updated by
Defendants."5 At this time, both parties understood that more class members would be
added to the list provided on March 31, 2015. Indeed, while class counsel believed the
number of additions would be smaller, counsel conceded to the trial court that the
original list was missing a month of claims and both parties contemplated the class list
would be supplemented.6
On April 22, 2015, PEMCO e-mailed the class counsel a revised class list that
included 17,873 class members. After class counsel conducted confirmatory discovery
on the new list, that number was reduced to 17,863 class members. Class counsel
approved the new list of 17,863 class members on May 19, 2015. As a result of the
5(Emphasis added.)
6 As class counsel explained:
This order, which was [Exhibit] C to the settlement and is incorporated in the
settlement which you signed, the preliminary approval order, was changed for this case
and it reads,"The individual notice shall be mailed per the stipulation of settlement using
the class list provided to class counsel on March 31, 2015, or as updated by the
defendants."
So there's no doubt, your Honor, that both parties contemplated that the
settlement documents themselves were changed to reflect the fact that who's in the class
for purposes of the notice and for purposes of class membership might change, in fact,
would change after March 31st, 2015. Mr. Phillips[PEMCO's Counsel] is absolutely
correct in the sense that he told us, and his e-mail said, that when he gave us the original
list on March 31st, he said this is missing a month of claims, but as he also doesn't
dispute, and this is before we signed the settlement, Your Honor, the claims that were
anticipated were a month of UIM claims, which would have been about 60 claims.
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No. 75637-1-1/5
increased number of class members the sum of the repair costs for the 17,863 class
members amounted to a total repair cost payment of $60,040,671.19. On June 20,
2015, PEMCO mailed notices to all class members on the revised class list.
On September 23, 2015, the trial court entered the "Final Judgment and Order
Approving the Settlement and Dismissing Claims of Class Members with Prejudice." On
October 2, 2015, PEMCO informed class counsel that they sent an additional notice to
1,395 existing class members that had two valid claims within the class period. This
increase meant there was a total of 19,258 individual class member repair cost
payments and a total repair cost payment of $64,577,010.19.
After the addition of the new class members to the class list, PEMCO filed a
motion with the trial court to determine the proper calculation for payment to eligible
class members. PEMCO argued that the settlement should add the new class
members' individual class member repair cost payments to the total repair cost payment
amount. Under PEMCO's position, because the denominator (total repair cost
payment) in the payment formula would increase each class member would receive
slightly smaller payments.
Merrill, representing the class, opposed the motion. While Merrill agreed that the
claimants added after March 31, 2015, should be compensated, Merrill's position was
that the payment formula denominator (total repair cost payment) should be frozen at
$59,132,793.10—the amount identified in the original March 31, 2015, class list. Merrill
argued that if both the number of class members total repair cost were increased, the
result would be decrease in the amount received by each individual class member from
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No. 75637-1-1/6
$610.99 to $559.42. Merrill contends that the settlement was not ambiguous and
therefore the court should not reinterpret or modify the terms.
The trial court ruled in favor of PEMCO stating:
I think I agree on this with Mr. Phillips[PEMCO's Counsel]. It makes more
sense if you're going to increase the numerator, which I think is good,
more claims, more individuals get paid. They will get paid somewhat less,
but it only makes sense to increase the denominator also.
The trial court ordered, "Individual payments will be calculated in accordance with the
final Class List used in sending Initial and Supplemental Notice to the class, and based
on Total Repair Cost Payments of $64,523,387.26."
Merrill, on behalf of the class, appeals.
II
Merrill argues that the trial court erred in interpreting the settlement to allow the
addition of new class members that were not identified in the original March 31, 2015,
list. We disagree.
We review the interpretation of a settlement agreement de novo. Aguirre v.
AT&T Wireless Servs., 118 Wash. App. 236, 240, 75 P.3d 603(2003); Tyrrell v. Farmers
Ins. Co. of Wash., 140 Wash. 2d 129, 132-33, 994 P.2d 833(2000).
The principles of the law of contracts apply to the review of settlement
agreements. In re Estate of Harford, 86 Wash. App. 259, 262, 936 P.2d 48 (1997).
Washington follows the objective manifestation theory of contracts. "Under this
approach, we attempt to determine the parties' intent by focusing on the objective
manifestations of the agreement, rather than on unexpressed subjective intent of the
parties." Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wash. 2d 493, 503, 115 P.3d
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No. 75637-1-1/7
262(2005). "We generally give words in a contract their ordinary, usual, and popular
meaning unless the entirety of the agreement clearly demonstrates a contrary intent."
Hearst, 154 Wash. 2d at 504. "And we view the contract as a whole, interpreting particular
language in the context of other contract provisions." Viking Bank v. Firgrove Commons
3 LLC, 183 Wash. App. 706, 713, 334 P.3d 116 (2014). If the language is clear and
unambiguous, we "must enforce it as written and may not modify it or create ambiguity
where none exists." Black v. Nat'l Merit Ins. Co., 154 Wash. App. 674, 679, 226 P.3d 175
(2010). Generally, "In the absence of anything in the context of a contract clearly
indicating a contrary intent, when the same word is used in different parts of the
contract, it will be presumed to be used in the same sense throughout the contract."
Black, 154 Wash. App. at 681-82.
Merrill is correct that the term "class list" is defined in paragraph 9 of the
settlement as meaning "the revised class notice list furnished to Class Counsel by the
Defendants on March 31, 2015." Thus, viewed in isolation, the term class list is
unambiguous. But because the term class list is used in multiple places in the
settlement, we must examine the context of the settlement as a whole and presume that
the term class list is used in the same sense throughout. Black, 154 Wash. App. at 681-
82.
The term "class list" is used in paragraph 44.1 of the settlement to determine
both the "Total Repair Cost Payments"(the denominator in the payment formula) and to
identify "Individual Class Member Repair Cost Payment[s]"(the numerator in the
payment formula). Merrill argues that the denominator ("Total Repair Cost Payments")
is defined by reference to the class list. But Merrill ignores that the numerator
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No. 75637-1-1/8
("Individual Member Repair Cost Payment") is also defined by reference to the same
class list. Thus, if Merrill is correct that the class list was final on March 31, 2015, then it
necessarily means that both the number of class members and the total repair cost
payments must be held constant—at the amounts supported by the original March 31,
2015, class list. This interpretation would necessarily lead to the exclusion of 813
otherwise valid class members identified after March 31, 2015. Indeed, when asked by
the trial court if those 813 people should be excluded, Merrill responded "no." Exclusion
of otherwise valid class members would be detrimental to the class and contrary to the
intent the objective manifestations of the agreement. Hearst, 154 Wash. 2d at 503.
Thus, we agree with the trial court that when viewed as a whole, the settlement
contemplated that the class list would be updated to ensure that it captured all claims
filed by March 31, 2017. The settlement specifically incorporates Exhibit C which
provides that the "class list" would be revised "as updated by Defendants" so that no
claims would be artificially excluded. The trial court recognized this in its preliminary
approval and directed that "the Individual Notice shall be mailed per the Stipulation of
Settlement using the Class List provided to Class Counsel on March 31, 2015 or as
updated by Defendants."7 The Class List "updated by Defendants" was then used to
send the class notice.
Because the trial court and parties agreed that the class list should be updated
for the purpose of notice, it is only logical that it would also be updated for the purpose
of determining the number of class members and for determining the total repair cost
7(Emphasis added.)
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No. 75637-1-1/9
payments in the payment formula denominator. This result is consistent with the intent
and the objective manifestations of the agreement. Hearst, 154 Wash. 2d at 503.
We affirm.
WE CONCUR:
e.‘
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