Landlord and tenant – Settlement – Claim form requirement

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Where a settlement agreement has been reached in a class action regarding a residential apartment complex, the agreement should not be approved because its terms, including a requirement that each class member submit a valid claim form in order to obtain a settlement payment, are not “fair, adequate and reasonable” for the class members.

“This is a putative class action brought on behalf of the tenants of the residential apartment complex located at 650 Ocean Avenue, Revere, Massachusetts (‘650 Ocean Avenue’), against the purported owner of the complex, defendant The Realty Associates Fund X, L.P. (‘RAFX’). Plaintiffs allege that, in the 2012-2018 timeframe, RAFX unlawfully billed tenants for sub-metered water and sewer charges and failed to properly handle tenant security deposits as required by Massachusetts law. The litigation has been protracted and hard-fought on both sides.

“After much discovery and a round of unsuccessful dispositive motion practice, RAFX agreed to a class-wide settlement in the summer of 2020. The parties’ first proposed settlement agreement (the ‘First Agreement’) called for a privately-retained administrator to mail each of the class members, whose names and addresses are known to the parties, a check in an amount exceeding the member’s actual losses to each member. The First Agreement further provided that any residual settlement funds (i.e., settlement payments that remained unclaimed or uncashed after 60 days) would be returned to RAFX.

“The parties’ First Agreement was rejected by the Court at a virtual final settlement approval hearing conducted on December 10, 2020, based on the Massachusetts IOLTA Committee’s (‘IOLTA Committee’) objection that the settlement provision calling for the return of all residual funds to RAFX violated Mass. R. Civ. P. 23(e). …

“The parties subsequently huddled and prepared a revised proposed settlement agreement (the ‘Revised Agreement’), which was filed with the Court in late December 2020. … The only material difference between the First Agreement and the Revised Agreement is that, rather than simply mailing out settlement checks to all of the known class members, the Revised Agreement requires each class member to ‘submit a valid Claim Form’ to the settlement administrator in order to obtain his or her settlement payment (the ‘Claim Form Requirement’). …

“Specifically, the Court finds that imposition of the proposed Claim Form Requirement on the class members would subject them to a meaningless and unwarranted burden. Where, as here, the names and addresses of the qualifying class members already are known, there is ‘no need for [a] claim[s] process.’ … As the parties’ First Agreement demonstrates, the settlement administrator already is fully capable of distributing appropriate settlement payments to all of the class members without the additional effort and complexity posed by the Claim Form Requirement. The only ‘benefit’ to be gained by imposing such a requirement in this case would be to potentially reduce RAFX’s total settlement outlay to something less than it has agreed to pay. But that is not, in the estimation of this Court, an ‘adequate’ or ‘fair’ reason to burden the otherwise deserving class members with additional and unnecessary red tape. …

“For the foregoing reasons, the parties’ Joint Motion for Preliminary Approval of Revised Class Action Settlement (Docket Entry No. 50) is denied. This ruling is made without prejudice to the parties’ right to submit a further revised settlement agreement to the Court for its consideration and possible approval.”

Marks, et al. v. The Realty Associates Fund X, L.P., et al. (Lawyers Weekly No. 09-019-21) (3 pages) (Davis, J.) (Suffolk Superior Court) (Docket No. 1884CV00056-BLS1) (Feb. 9, 2021).

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