The following attorneys represent the named plaintiffs and the class ("Class Counsel"):

Transcription

1 NOTICE OF PROPOSED CLASS ACTION SETTLEMENT AND FAIRNESS HEARING Linda S. Kagan, on behalf of plaintiff and a class v. Waldheim Cemetery Co., Zion Gardens, Inc., Rosemont Park, Inc., Bank of America National Association, successor to LaSalle Bank N.A., and David B. Gail, Case No. 11-CH-22722, and Elliot Samuels acting as the trustee for the Abe Samuels Trust and as the executor of the Estate of Diane Samuels, and on behalf of all others similarly situated v. Rosemont Park, Inc., David Gail, Waldheim Cemetery Co., Bank of America, N.A. (successor in interest to LaSalle Bank N.A.), and Zion Gardens, Inc., Case No. 11-CH (consolidated) (Circuit Court of Cook County, Illinois) (The Plaintiffs and Defendants named above are hereinafter referred to as the Parties ) TO: All person or entities, including without limitations estates, trusts, heirs, descendants, next of kin and other relatives, who prior to March 1, 2011 entered into endowed care (popularly known as perpetual care) contracts, or who otherwise paid any money for endowed care that should have been deposited in the Cemetery Care Trusts held by Bank of America, N.A. (successor in interest to LaSalle Bank, N.A.) as Trustee, and/or who made additional payments for the same services after March 1, 2011 that were previously paid for prior to that date for the care of lots and/or gravesites and/or appurtenances thereto in any of the former cemeteries of Rosemont Park, Mt. Mayriv-Isaiah Israel, B nai Joshua Beth Elohim, and/or B nai Brith at 3600 North Narragansett Avenue, Chicago, Illinois 60634, now currently collectively known as Zion Gardens Cemetery. This notice may affect your legal rights if you purchased, or are a legal successor to the purchaser of, an endowed or perpetual care contract (hereafter, referred to as endowed care ) for the care of lots, gravesites, and/or appurtenances thereto in Rosemont Park, Mt. Mayriv- Isaiah Israel, B nai Joshua Beth Elohim, or B nai Brith cemeteries, located at 3600 North Narragansett Avenue, Chicago, Illinois 60634, prior to March 1, 2011, and/or who made additional payments for the same services after March 1, 2011 that were previously paid for prior to that date at any of said cemeteries. The following attorneys represent the named plaintiffs and the class ("Class Counsel"): Daniel A. Edelman Matthew Hurst EDELMAN, COMBS LATTURNER HEFFNER HURST & GOODWIN, LLC 30 N. LaSalle Street, Suite S. Clark Street, Suite 1500 Chicago, Illinois Chicago, Illinois (312) ext. 3 (312) (312) (fax) (312) (fax) A settlement has been preliminarily approved by the Circuit Court of Cook County, Illinois, in a consolidated class action against Waldheim Cemetery Co., Zion Gardens, Inc., Rosemont Park, Inc., David Gail and Bank of America, N.A. (successor in interest to LaSalle Bank, N.A.), Case Nos. 11-CH and 11-CH (consolidated), referred to herein as the Kagan/Samuels Action or Action.

2 Plaintiffs Litigation Position Plaintiffs have alleged in the pending Third Amended Consolidated Class Action Complaint, among other things, that one or more Defendants knowingly violated the Illinois Cemetery Care Act and, as such, violated the Illinois Consumer Fraud Act by disbursing the corpus of the Cemetery Care Trusts held by Bank of America, N.A. as Trustee for endowed care at Rosemont Park and the other three cemeteries listed above (which cemeteries now collectively comprise and are known as Zion Gardens Cemetery), failing to deposit proceeds into the Cemetery Care Trusts held by Bank of America, N.A., repudiating the endowed care contracts, and requesting additional payments for the same services, including but not limited to purchasing second endowed care contracts and/or paying annual maintenance fees in order to receive a semblance of the endowed care services they initially contracted and paid to be performed. Defendants Litigation Positions Each of the Defendants vigorously denies Plaintiffs allegations and disputes both the legal and allegedly factual foundations of the claims. Further, each of the Defendants has specific legal and factual defenses, including those described below as they pertain to some of the Defendants. For purposes of settlement only, none of the Parties admit the accuracy or validity of any position asserted by any other party, except that Rosemont does not agree with certain of the below statements. Zion Gardens, Inc. and Waldheim Cemetery Co. Defendants Zion Gardens, Inc. and Waldheim Cemetery Co. contend, among other matters, (a) Zion Gardens, Inc. was not formed and did not exist at the time of the dissipation of the Cemetery Care Trust funds; (b) Waldheim Cemetery Co. had no knowledge of any of the wrongdoing at the time it took place; (c) that prior to March 1, 2011, the Comptroller, an Illinois official regulating cemeteries, found that Rosemont Park, Inc. and its managed cemeteries were insolvent, and pursuant to her powers under an Illinois statute known as the Cemetery Care Act, requested Waldheim Cemetery Co. to assume control of those Cemeteries; (d) that in pursuit of complying with the Comptroller s request, Waldheim Cemetery Co. formed Zion Gardens, Inc.; (e) Zion Gardens, Inc. entered into an agreement as of March 1, 2011 succeeding to the ownership of all assets of Rosemont Park, Inc. and its three associated cemeteries, collectively renamed Zion Gardens, free of their respective liabilities (including those contained in its endowed care contracts), on certain conditions, including that Zion Gardens, Inc. restore the approximately $1.2 million loss of the principal of the endowed care fund held in trust by the Bank of America within 8 to 10 years and was permitted to solicit lot and grave owners for new funds (including in the form of new endowed care contracts) in order so to do; (f) that in no event was the amount dissipated from the Cemetery Care Trust funds adequate to perform the endowed care contracts as originally entered into, thereby rendering the endowed care contracts impossible to perform in any event, and further, because the Cemetery Care Act provides that care is limited to the net income, Zion Gardens, Inc. effectively could not perform the original endowed care contracts because there was not sufficient principal so to do; (g) the Comptroller specifically approved the agreement and issued a license to Zion Gardens, Inc., thereby absolving Zion Gardens, Inc. of any liability; (h) prior to communicating the proposal resulting in her approval of the transfer to Zion Gardens, Inc., 2

3 the Comptroller had exhausted all other statutory means at her disposal to remedy the loss in question, and (i) after taking ownership and possession pursuant to the conditions approved by the Comptroller, Zion Gardens, Inc. restored the aforesaid loss in approximately 3 years. Upon assuming ownership and possession, Zion Gardens, Inc. discovered that substantially all of the predecessor Cemeteries records were missing. Waldheim Cemetery Co. was never a party to the transaction. Bank of America, N.A. Defendant Bank of America, N.A. (the Bank ), contends that it fully complied with its obligations under Illinois law and the trust agreement, and did not improperly disburse trust principal. The Bank also contends that neither any Plaintiff nor any member of the Class has suffered any recoverable damages due to any act or omission by the Bank. After Rosemont Park, Inc. ("Rosemont") failed to file its annual reports for several years, its financial difficulties were identified by the Illinois Comptroller. The Illinois Comptroller's Office ("the Comptroller") audited Rosemont and determined that the purchase of the cemeteries by a new operator with a larger care fund was in the best interest of the public and those whose loved ones are interred at the cemeteries. Pursuant to its authority under the Cemetery Care Act ("the Care Act"), 760 ILCS 100/1 et seq., the Comptroller brokered the sale of the cemeteries to Zion Gardens, Inc. ("Zion") in exchange for a commitment from Zion that Zion would restore the cemeteries' care funds. Zion has replenished the cemeteries' depleted care funds and is currently operating and maintaining the cemeteries. As a result, the Bank contends that the Plaintiffs are in no worse position than they would be if trust principal had not been disbursed. Due to the Comptroller's successful handling of the situation pursuant to its authority under the Care Act, as intended by the legislature, the Bank maintains there is no identifiable harm to any of the Plaintiffs or to any Class member. It is also not disputed that most if not all of the withdrawn funds were used for the care and maintenance of the cemeteries, a further reason that the Bank contends that neither any of the Plaintiffs nor any member of the Class has suffered any recoverable harm. The Settlement Agreement Plaintiffs and Defendants in this Action have negotiated a class settlement in this case, more particularly set forth in the Class Action Settlement Agreement and Release ( Settlement Agreement ), a full and complete copy of which is on file with the Circuit Court of Cook County, Chancery Division, as well as available on the website identified below. By entering into the Settlement Agreement, Defendants do not admit any liability to Plaintiffs, the Class, or any other person or entity including but not limited to any Defendant herein, and expressly deny all such liability. However, in the event the Court does not approve the Settlement Agreement and/or a triggering event in the Settlement Agreement takes place, including but not limited to vacating, terminating or withdrawing from the Settlement Agreement, the Settlement Agreement will be vacated without prejudice to any Party s position on any of the issues in this Action and the Parties shall be restored to their litigation positions existing immediately before the execution of the Settlement Agreement; the facts and terms of the Settlement Agreement shall not be used in any way or be admissible in any subsequent proceedings in this Action or in any other action, and Defendants will retain all rights to oppose, appeal, or otherwise challenge, legally or procedurally, 3

4 class certification or any other issue in this Action, including, but not limited to, contesting certification of the class provided for in this Action. The consideration for this Settlement Agreement constitutes a benefit for damage alleged in this Action. Accordingly, the Settlement Agreement is intended to the extent practicable, to remedy the effects of such alleged damage by expending the consideration for capital improvements at Zion Gardens Cemetery. As such, except for the Service Awards described in the next section, the Settlement Agreement does not provide for the payment of money to or the personal benefit of any affected party, but rather for improvement of Zion Gardens Cemetery so as to benefit all interested parties. Defendants Bank of America, N.A. and David Gail have agreed to pay an aggregate $1.02 million into a settlement fund (the cash settlement fund ), consisting of $990,000 by the Bank and $30,000 by David Gail. As the Settlement Agreement provides, once the Bank has paid its share of the cash settlement fund, the Bank shall have no role, or any responsibility or liability, in or for how the cash settlement fund is administered, disposed of, or spent by anyone. After deducting Court-awarded attorney s fees, expenses, service awards, and notice costs, the net cash settlement fund will be promptly turned over by Class Counsel to Zion Gardens, Inc. These funds will be held in a separate account and placed in a safe investment vehicle (the Zion Gardens Trust ). The funds in the Zion Gardens Trust will be used for capital improvements at Zion Gardens Cemetery. These capital improvement projects must be approved by Class Counsel, whose consent is not to be unreasonably withheld, after documentation of the cost is submitted by Zion Gardens, Inc. Upon approval of Class Counsel (approval by one of Co-Lead Class Counsel is sufficient), and at the start of each individual capital improvement project, Zion Gardens, Inc. will remove the funds from the Zion Gardens Trust for that project. Zion Gardens, Inc. has agreed to contribute (provided the net cash settlement fund exceeds at least $600,000), $150,000 of its own money to the capital improvement projects at Zion Gardens Cemetery. Zion Gardens, Inc. will have three years from the Final Judgment as defined in the Settlement Agreement to exhaust the Zion Gardens Trust. If any funds remain in the Zion Gardens Trust after the three-year time period has expired, Class Counsel and/or counsel for Zion Gardens, Inc. will petition the Court in order for the Court to determine how these funds should be applied. Zion Gardens, Inc. s parent, Waldheim Cemetery Co., will guarantee that any funds transferred to Zion Gardens, Inc. will be maintained and applied in accordance with this settlement. The total gross recovery for the class is $1.17 million. Based on the allegations in the Third Amended Complaint, this represents approximately 93.6% of Plaintiffs estimated actual damages for funds depleted from the Cemetery Care trusts held by the Bank of America as Trustee prior to March 1, Since the amounts that were not deposited into the Cemetery Care Trusts held by Bank of America as Trustee prior to March 1, 2011 are not known, this recovery percentage may not entirely represent the total losses. Request for Attorney s Fees, Notice Costs, Expenses, and Service Awards Class Counsel will petition the Court for an award of attorney s fees not to exceed 33.3% of the total settlement value of $1.17 million. Additionally, Class Counsel will seek reimbursement of expenses of no more than $30,000. Notice costs, expected to be less than $10,000, shall be paid 4

5 solely from the cash settlement fund and the Bank of America shall advance the publication costs, not to exceed $10,000. Finally, Class Counsel will petition the Court for a Service Award of $5,000 for each of the two Named Plaintiffs, Linda S. Kagan and Elliot Samuels, for their efforts serving as class representatives. If the Service Awards, notice costs, expenses, and attorney s fees would reduce the Net Settlement Fund below $600,000, Co-Lead Class Counsel agree to reduce their fee request to ensure that a minimum of $600,000 is transferred to Zion Gardens, Inc. so, along with the $150,000 contributed by Zion Gardens, Inc. directly toward the capital improvement projects, there would be a minimum of $750,000 available for capital improvements at Zion Gardens Cemetery. If there is a determination that the fund is taxable, the amount available for capital improvements will be reduced. Effect of Settlement If the Settlement Agreement is approved, in exchange for the benefits provided under the Settlement Agreement, Plaintiffs, individually, and on behalf of the Settling Class Members will release Defendants and their affiliates from all claims asserted in the Third Amended Complaint. The Release is fully set forth in the Settlement Agreement in Section 15 on file with the Clerk of the Circuit Court of Cook County, Illinois and available at the website identified below. Nothing in the Settlement Agreement affects the obligations of Zion Gardens, Inc. with respect to agreements entered into by it subsequent to the execution and Comptroller approval of Zion Gardens, Inc. s agreement to purchase the assets of the Cemeteries, free of their respective liabilities, with an operative date of March 1, Further, nothing in the Settlement Agreement releases the Bank of America, N.A., from any legal obligation arising from agreements unrelated to the Cemetery Care Trusts at issue herein. Option to Exclude or Object You have the choice of remaining in, or excluding yourself from, the Class. Each choice has certain benefits, detriments, risks, or consequences. You have the right to discuss your decision with Class Counsel or your own attorney. You need not take any action to be INCLUDED in the settlement. The sole owner, or if multiple owners then all owners, of a given lot, grave and/or appurtenance thereto have the right to EXCLUDE the parcel and/or appurtenance thereto from the Kagan/Samuels Action by opting out. In order so to opt out, the owner or owners of a given parcel and/or appurtenance thereto must, within forty (40) days from the first publication of the Class Notice file a written request for exclusion with the Clerk of the Circuit Court of Cook County, Chancery Division, Daley Center, 50 West Washington Street, 8 th Floor, Chicago, Illinois, on or before November 22, All file-stamped requests for exclusion must be postmarked and mailed to all counsel of record in accordance with the attached service list within the same forty (40) days from the first publication of Class Notice to be excluded from the Class. A written request for exclusion must include the following information: (i) the Class Member s full name, current address and phone number; (ii) the name and case number identified above for this Action; (iii) identification of the lot, grave and/or appurtenance thereto for which perpetual or endowed care was purchased; (iv) when any perpetual or endowed care contract was purchased; 5

6 (v) identification of how the person seeking exclusion is connected to the payment of any prior, or any subsequent, perpetual or endowed care contract for that lot, grave and/or appurtenance thereto; (vi) a statement that all of the above are made under the penalties of perjury, and (vii) unequivocally state an intention not to participate in the settlement. If a Class Member timely and properly requests exclusion from the Class in accordance herein, that Class Member shall be excluded from the Settlement Agreement herein. Any Class Member who does not submit a request for exclusion that meets the requirements herein (defined in the Settlement Agreement in Section 8), or as required by the Court, shall be bound by the Settlement Agreement and the Release. If you wish to OBJECT to the Settlement Agreement, instead of excluding yourself from the Class, you may assert one or more written Objections to the fairness, reasonableness, or adequacy of the Settlement Agreement, the proposed Settlement, the appointment of Named Plaintiffs Linda S. Kagan and Elliot Samuels as Class Representatives, the requested Attorney Fee Award and/or the Service Awards to Named Plaintiffs Linda S. Kagan and Elliot Samuels. In order so to object, you must file your Objection in writing with the Clerk of the Court, Circuit Court of Cook County, Chancery Division, Daley Center, 50 West Washington Street, 8 th Floor, Chicago, Illinois, within forty (40) days from the first publication of Class Notice. To be considered by the Court, the Objection must be file-stamped by the Clerk of the Court on or before November 22, The Objection must include the following information: (i) the Class Member s full name, current address and phone number; (ii) the name and case number identified above for this Action; (iii) identification of the lot, grave and/or appurtenance thereto for which perpetual or endowed care was purchased; (iv) when any perpetual or endowed care contract was purchased; (v) identification of how the person making the objection is connected to the payment of any prior, or any subsequent, perpetual or endowed care contract for that lot, grave and/or appurtenance thereto; (vi) a statement that all of the above are made under the penalties of perjury; and (vii) a statement of the objection or objections, as well as the specific legal and factual reasons, if any, for each Objection, including any evidence or other material the objecting Settling Class Member wishes to introduce in support of such Objection and a statement of the reasons why you believe that the Court should find the proposed settlement is not in the best interest of the Class. Any Settling Class Member who has not timely submitted an Objection in accordance with the requirements herein (pursuant to Section 10 to the Settlement Agreement) shall be forever barred from raising an Objection, and shall be treated as having consented to the Settlement and the Settlement Agreement. You also must mail a copy of the filed Objection to each of the attorneys of record for the Parties herein in accordance with the attached Service List postmarked within the same forty (40) days from the first publication of Class Notice. Any Settling Class Member who has filed an Objection to the Settlement Agreement and who wishes to appear at the Final Approval Hearing to argue in favor of such Objection, whether in person or through counsel, must file an appearance and a notice of intention to appear in person to argue at the Final Approval Hearing with the Court and mail a file-stamped copy of such notice on all counsel of record in accordance with the attached service list no later than ten (10) days before the Final Approval Hearing or as the Court may otherwise direct in accordance with Section 11 of the Settlement Agreement. Any other Party may file a response to any Objection and serve all counsel of record as well as the Objector no more than 7 days before the Final Approval Hearing, unless otherwise directed by the Court. Further proceedings in connection with any and all Objections may take place pursuant to the Illinois Civil Practice Act and the Rules of the Illinois Supreme Court. 6

7 For a copy of the full Class Action Settlement Agreement and Release, please visit The Final Approval hearing is set for December 14, 2017, at 10:30 a.m. in Room 2502 of the Daley Center, 50 West Washington Street, Chicago, Illinois PLEASE DO NOT CALL OR OTHERWISE CONTACT THE JUDGE, THE COURT, THE CLERK OF THE COURT, OR THE INDIVIDUAL DEFENDANTS REGARDING THIS SETTLEMENT. THEY ARE NOT PERMITTED TO ANSWER QUESTIONS. 7

8 SERVICE LIST All notices required or permitted herein shall be transmitted in a writing to counsel of record as follows: Co-Lead Class Counsel: Daniel A. Edelman EDELMAN, COMBS, LATTURNER Matthew T. Hurst HEFFNER HURST & GOODWIN, LLC 30 North LaSalle Street - 12th Floor 20 South Clark Street - Suite 1500 Chicago, Illinois Chicago, Illinois And to Counsel for Bank of America, N.A. David A. Baker Jared R. Cloud MCDERMOTT WILL & EMERY LLP 444 West Lake Street Suite 4000 Chicago, Illinois And to Counsel for Waldheim Cemetery Co. and Zion Gardens Inc.: Jack Joseph Sarah J. Isaacson 161 North Clark Street Suite Shenstone Road Chicago, Illinois Riverside, Illinois And to Counsel for Rosemont Park, Inc. and David Gail: William J. Factor THE LAW OFFICE OF WILLIAM J. FACTOR 105 West Madison Street Suite 1500 Chicago, Illinois Any notice given hereunder, or any other document or thing referring or relating to this Agreement, served by electronic means or by personal, office, or residential delivery is complete the day of transmission; service by delivery to a third-party commercial carrier or courier is complete on the third court day after delivery of the package to the third-party carrier; and service by U.S. mail is complete four days after mailing.