Wartick v. United Servs. Auto. Ass'n
| Decision Date | 24 May 2017 |
| Docket Number | No. CV-16-393.,CV-16-393. |
| Citation | 525 S.W.3d 38 |
| Parties | Kenneth L. WARTICK, Thomas Meadows, and Paul Siedsma, Appellants v. UNITED SERVICES AUTOMOBILE ASSOCIATION; USAA Casualty Insurance Company; USAA General Indemnity Company; Garrison Property and Casualty Insurance Company ; Mark L. Adams ; and Katherine S. Adams, Appellees |
| Court | Arkansas Court of Appeals |
Trammell Law Firm, Little Rock, by: Robert D. Trammell ; and Walas Law Firm, PLLC, by: Breean Walas, Little Rock, for appellants.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Little Rock, by: John Keeling Baker, and Megan D. Hargraves, for appellees.
This appeal arises from a class-action lawsuit filed by appellees Mark and Katherine Adams against appellees United Services Automobile Association and related companies (collectively "USAA"). In 2015, the Adamses and USAA entered into a class-action settlement. Appellants Kenneth Wartick, Thomas Meadows, and Paul Siedsma objected to the settlement and attempted to intervene in the case. The Polk County Circuit Court denied intervention and approved the settlement. Appellants now appeal the court's rulings. We affirm.
The Adamses were insureds under a USAA homeowners policy when they suffered a covered loss in 2009. They made a claim under the policy, and USAA paid them the actual cash value (ACV) of their loss, meaning the cost of repairs minus an amount attributable to age and wear and tear. However, in calculating the ACV, USAA depreciated not only the cost of the materials that would be used in the repairs but the cost of labor as well.
In 2013, our supreme court held that an insurer cannot depreciate labor when calculating ACV. Adams v. Cameron Mut. Ins. Co. , 2013 Ark. 475, 430 S.W.3d 675. After that ruling, the Adamses filed a class-action lawsuit against USAA in Polk County Circuit Court asking that they and all others similarly situated recover the labor costs that USAA improperly depreciated. The case was removed to federal court, where the Adamses and USAA engaged in negotiations and eventually entered into a class-action settlement. The settlement provided, inter alia , that payments would be made to those class members who timely submitted a claim form; that USAA could pay "as much as" $3,445,598 to the class members; and that class counsel would receive, without objection, $1,850,000 in fees, expenses, and costs.
After reducing their settlement agreement to writing, the Adamses and USAA voluntarily nonsuited their case in federal court, refiled the case in Polk County Circuit Court, and asked that court to approve the settlement pursuant to Ark. R. Civ. P. 23(e)(1) (2016).1 The Polk County Circuit Court preliminarily approved the settlement in August 2015 and set forth requirements for those who wished to object to the settlement, opt out of the settlement, or intervene in the case. Included among the requirements was that objections must be exercised individually and not as a member of a group or subclass.
On November 16, 2015, appellants filed an "Objection to Settlement Terms" both as individuals and as representatives of a group of veterans.2 They asserted, among other things, that USAA had violated its fiduciary duty to the veterans by entering into the settlement; that discovery should be permitted; that the settlement was moving too quickly; that the claim form for class members was too lengthy and complex; that USAA had not committed to paying any particular amount to the class members; and that the entire process had simply produced a large attorney's fee. Appellants did not mention intervention, other than to describe the lawyer who signed the pleading as the "Attorney for Intervenor."
At the final-approval hearing on December 16, 2015, appellants argued that they should be allowed to intervene in the class action as a matter of right. The court noted, "You have not filed a motion to intervene, is that correct?" Appellants responded that, to the contrary, their motion to intervene was contained in paragraph twenty-three of their "Objection to Settlement Terms." That paragraph reads as follows:
MOTION: A subclass of veteran [sic] should be recognized, constituting all the residents of Arkansas that are not members of this class, but rather, are all insureds of USAA during the years of the settlement and therefore legal "owners." USAA is a member-owned company. USAA does not have the liberty to deny the truth to the member. Background: 25 Army officers form USAA in 1922, deciding to insure each other's automobiles. Their motto: "Service to the Services." By 1933, those officers exceeded the reserves required of the Texas regulator, and $230,000 was given back to its members. That is why the sub-class deserves recognition. Today's members are seeing their money spent unwisely, or, they are entitled to hear USAA say, "Yes we did it, and let us explain." The members do not need a Little Rock trial lawyer insist [sic] the agreement is entered into with no admission of anything. Five of six active duty officers in Arkansas are USAA members. They are entitled to petition and be heard.
The court ruled that appellants had not in fact moved to intervene, citing the lack of an actual motion to intervene and the absence of a pleading setting forth a claim in intervention as required by Rule 24(c) of the Arkansas Rules of Civil Procedure. The court went on to overrule appellants' objections to the settlement, approve the settlement, and dismiss the class action with prejudice.
After the dismissal, appellants filed an "Amended Motion to Intervene," which the court treated as a postjudgment motion for intervention. Upon considering the motion, the court ruled that it did not meet the standards for postjudgment intervention under Arkansas law. Intervention was therefore denied a second time. Appellants filed this appeal.
We first address appellants' contention that the circuit court erred in rejecting their attempts to intervene in this case. Intervention is the threshold issue before us—our supreme court has held that unnamed class members such as appellants, whose request to intervene has not been granted, have no standing to appeal the final approval of a class-action settlement, even if they objected to the settlement. See Hunter v. Runyan , 2011 Ark. 43, 382 S.W.3d 643 ; DeJulius v. Sumner , 373 Ark. 156, 282 S.W.3d 753 (2008) ; Ballard v. Advance Am., Cash Advance Ctrs. of Ark., Inc. , 349 Ark. 545, 79 S.W.3d 835 (2002) ; Luebbers v. Advance Am., Cash Advance Ctrs. of Ark., Inc. , 348 Ark. 567, 74 S.W.3d 608 (2002) ; Haberman v. Lisle , 317 Ark. 600, 884 S.W.2d 262 (1994). Thus, pursuant to these holdings, our initial inquiry is whether either of appellants' two attempts to intervene met the requirements of Rule 24 of the Arkansas Rules of Civil Procedure. If the requirements were met, appellants may challenge the class-action settlement on appeal. If not, appellants lack standing to proceed further.
Intervention of right is governed by Ark. R. Civ. P. 24(a), which provides as follows:
Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of this state confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
In addition to its substantive requirements, Rule 24 imposes procedural demands on a potential intervenor. The rule requires that the application for intervention be timely; that the applicant file a motion to intervene stating the grounds therefor; and that the motion be accompanied by a pleading setting forth the claim or defense for which intervention is sought. Ark. R. Civ. P. 24(a) & (c). The purpose of the pleading requirement is to inform the trial court of the right asserted by the would-be intervenor. Lowell v. Lowell , 55 Ark. App. 211, 934 S.W.2d 540 (1996).
With these requirements in mind, we examine appellants' attempts to intervene in this case.
Appellants argue that they first moved to intervene in paragraph twenty-three of their "Objection to Settlement Terms," quoted earlier in this opinion. We disagree that paragraph twenty-three constitutes a motion to intervene.
At the outset, we observe that paragraph twenty-three, by its language, is not an attempt by these appellants to intervene in the class action. Rather, the paragraph seeks recognition of a "subclass" of veterans—a subclass that is not part of this appeal. Appellants state in their brief that they have abandoned their request to intervene as a subclass and are appealing solely as individuals. That being the case, they have no grounds to complain of the denial of a motion that was directed solely to the interests of the subclass.
In any event, paragraph twenty-three simply does not meet the requirements of a motion to intervene. It does not state that intervention is requested, does not explain the grounds for intervention, and is not accompanied by a pleading setting forth the claims for which intervention is sought as mandated by Rule 24(c). Despite these deficiencies, however, appellants urge us to liberally construe their motion pursuant to Ark. R. Civ. P. 8(f), and to follow a line of cases in which our courts have allowed intervention despite the lack of strict compliance with Rule 24(c). See, e.g. , Ark. Best Corp. v. Gen. Elec. Cap. Corp. , 317 Ark. 238, 878 S.W.2d 708 (1994) ; Winn v. Bonds , 2013 Ark. App. 147, 426 S.W.3d 533 ; Lowell , supra ; Bradford v. Bradford , 52 Ark. App. 81, 915 S.W.2d 723 (1996). We decline to do so.
As mentioned, the purpose of the pleading requirement in Rule 24(c) is to inform the...
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