Arkansas judge orders expedited hearing for class certification against Nationwide

Michelle Massey, East Texas Bureau Feb. 12, 2009, 4:57am

Judge Kirk Johnson

TEXARKANA, Ark. – Believing that Nationwide Insurance intentionally withheld information regarding a Pennsylvania lawsuit dealing with allegations of an overhead and profit scheme, Miller County Circuit Court Judge Kirk Johnson granted an order providing for an expedited class certification hearing. The hearing is set for 9 a.m. Feb. 19.

In the order Judge Johnson wrote that "an expedited hearing will not prejudice the Defendant, Nationwide, since it has consented to class certification in Pennsylvania to all necessary elements to be considered by this Court."

The Pennsylvania lawsuit mirrors a Miller County Class action filed Sept. 8, 2004, that accuses insurance companies of not disclosing or paying to their insured the general contractors' overhead and profit, whenever the repair of an insured's loss required the services of at least three trades. Although the insurance companies paid previous damage claims, the plaintiffs argue they are entitled to the additional general contractors' overhead and profit.

The Pennsylvania case was filed May 1, 2003, as a statewide class action but did not initially include the wording regarding the services of at least three trades. However, the plaintiffs amended the complaint which also allowed the defendants to remove the case to federal court. Shortly after the removal, the parties filed the preliminary settlement notice.

The proposed settlement will give eligible class members 100 percent of insurance benefits. Those class members will receive a cash payment representing 20 percent of his or her property damage claim.

According to the court documents, an estimated 700,000 people are eligible and total payments are estimated over $540 million. The named representative class members will receive a $5,000 cash incentive award and the proposed settlement will require the defendants to pay $9.5 million in attorney fees.

At a hearing held in December, the Arkansas judge was informed of the pending settlement negotiations and asked to be kept current. However, the Judge stated that he believed the pending settlement was a means for Nationwide to circumvent the Arkansas court's jurisdiction.

At the plaintiffs' request, the judge has ordered discovery of the Nationwide attorneys to determine possible violations. Depositions were scheduled to start Jan. 7.

On Feb. 4, Judge Johnson responded to plaintiffs' request for an expedited class certification hearing for Nationwide. The Judge found that there is "substantial evidence that the Defendant has failed to keep this Court apprised of similar litigation that would impact the instant case and comply with disclosure."

With regard to the Pennsylvania litigation, the order stated, "this amended complaint was clearly filed with the intent to immediately remove the case to Federal Court to thwart the jurisdiction of the Miller County Circuit Court."

Judge Johnson said he will delay a ruling on an order of contempt or impose a sanction for two weeks to allow the plaintiffs time to conduct discovery in the Pennsylvania litigation.

The plaintiffs are represented by Texarkana attorneys Matt Keil and John Goodson of the Keil and Goodson and Texarkana attorneys Michael B. Angelovich, Cary Patterson, Brady Paddock, Christopher Johnson and Anthony Bruster of Nix, Patterson and Roach LLP.

Other class counsel includes Jason Roselius, Derrick Morton, and Chad Ihrig of the Oklahoma City law firm Nelson, Roselius, Terry, O'Hara, and Mortion.

Chivers v State Farm Case No: 2004-294-3
Schaffroth v Nationwide Case No: 08-5741

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