Settlement likely in axles and wheels case, attorneys could get $15M

By Michelle Massey, East Texas Bureau | Mar 26, 2009

TEXARKANA, Ark. � With only a small percentage of potential class members objecting to the pending settlement, the class action against a seller of manufactured homes for allegedly reselling the homes' wheels and axles will likely be approved by Miller County Circuit Court Judge Jim Hudson.

Plaintiffs will receive vouchers or in-kind awards ranging from $250 to $1,250 in value.

Attorneys will receive $15 million in fees.

The settlement provides for class members to receive a voucher to recover either wheels and axles from the defendant, a discount voucher for a new manufactured home or a credit for the purchase of an extended warranty and service contract.

On behalf of the potential class, Texarkana attorney Matt Keil of the Keil and Goodson law firm filed the original class complaint on Feb. 17, 2005, against Clayton Homes Inc. and CMH Homes, Inc.

The complaint accused the defendants of charging for the manufactured homes' wheels and axles but never disclosing the charge to the purchaser.

The charge for the wheels and axles "appears nowhere on any of the documents the plaintiffs are asked to sign during the purchase of the home," the complaint states.

The plaintiffs argued that the defendants represented that purchasers were not buying the wheels and axles. Then the defendants allegedly took the wheels and axles and resold them to an outside company and kept the profit.

The plaintiffs accused the defendants of fraud, unjust enrichment and conversion.

The proposed class includes all persons who from Jan. 1, 2001, to Nov. 25, 2008, purchased a new manufactured home from the defendants.

Excluded from the settlement are those who purchased a home with a mortgage insured by Federal Housing Administration, those who signed a retail closing agreement where the box "were purchased and will be retained by buyer" was checked, and any who has previously filed suit with this claim or similar claims against the defendants and signed a general and full release.

As described by the settlement, the class benefit allows for class members to choose one of three options.

Class members may elect to receive a voucher allowing them to regain the wheels and axles alleged removed from the manufactured home previously purchased by the class member. The voucher must be presented at a company�owned retail location and the class member is responsible for transporting the wheels and axles from the defendant's premises. The average value of this in-kind benefit is $627.75 per class member.

Class members may elect to receive a discount purchase voucher on the future purchase of a new Clayton Manufactured home from a company-owned retailer. If the previously purchased home had one floor, the class member will receive a voucher for $750. If the previously purchased home had two or more floors, then the class member will receive a voucher for $1250. The vouchers are freely transferable.

Class members may elect to receive a $250 credit toward the purchase of a warranty and service contract. If determined to be ineligible, class members may select one of the previous two options.

The agreement provides class representatives, Chris McClure, Ronald Baird, Alex and Mayela Cruz an incentive award of $5,000 each.
Plaintiffs' class counsel will receive an award of $15 million for costs and attorney fees.

The third-party administrated direct mail notice reached approximately 96.1 percent of those potential class members and costs the defendants approximately $253,000 in administrative fees.

In response to the notice, the parties received objections arguing the plaintiffs would rather have straight cash payment than physical wheels and axles and how some homes are set in permanent foundation.

Other class members objected to the available voucher options because they did not foresee buying another manufactured home.

Although receiving only a small percentage of objections, focusing on not wanting the wheels and axles, the defendant states it "does not undermine the fairness of the settlement; rather, it undermines the merits of the plaintiffs' claims at trial."

"The very premise of plaintiffs' suit is that they should have been able to keep the wheels and axles on which their homes were delivered. To the extent plaintiffs did not in fact wish to keep the wheels and axles, there is no basis for their lawsuit," the defendant state.

The defendants, Clayton Homes and CMH, Inc., believe the lawsuit is meritless and continue to deny any "wrongdoing, liability, actual, or potential fault in connection with any of the allegations made by plaintiffs in this lawsuit."

Class counsel includes Michael Angelovich and Jeffrey Angelovich of the Nix, Patterson, and Roach, L.L.P law firm, Richard Norman and Martin Weber, Jr. of the Crowley Norman L.L.P law firm, Arkadelphia, Ark., attorney W.H. Dub Arnold and Texarkana attorneys John Goodson and Matt Keil of the Keil and Goodson law firm.

Circuit Court Judge Jim Hudson is presiding over the litigation.

Case No. cv-2005-72-2

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