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Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 1 of 54 PageID 1802 U.S. DISTRICT COURT l NORTHERN DISTRICT OF TEXAS I FTLFD IN THE UNITED STATES DISTRICT CO RT FOR THE NORTHERN DISTRICT OFT s r-:-············ ""l ! FORT WORTH I JUL - 6 2016 I STEVE SOUTH, AS TRUSTEE FOR, § AND ON BEHALF OF THE SOUTH § Ci;,~t:Zr!fC~URT puty ""'1 LIVING TRUST, PHILIP M. GARNER, § MICHAEL ARNOLD, JANET ARNOLD, § JOHNS. FERRIS, M.D., CHRISTINE § DUNCAN, AND ALL OTHERS § SIMILARLY SITUATED, § § CASE NO. 4:16-cv-00212-A PLAINTIFFS, § § ~ § § LIFE PARTNERS, INC., § § DEFENDANT. § Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 2 of 54 PageID 1803 THE PARTIES' APPENDIX IN SUPPORT OF THEIR JOINT MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT H. Thomas Moran II (the "Trustee"), as chapter 11 trustee for Life Partners Holdings, Inc. ("LPHI"), 1 Life Partners, Inc. ("LPI"), and LPI Financial Services, Inc. ("LPIFS," and together with LPI, the "Subsidiary Debtors," and together with LPHI, the "Debtors" or "Life 2 Partners") ; Plaintiffs Philip Garner, Michael Arnold, Janet Arnold, Christine Duncan, Dr. Jobn Ferris, and Steve South as Trustee for the South Living Trust (the "Lead Plaintiffs"), on behalf of themselves and all those similarly situated (altogether, the "Class Action Plaintiffs" or "Class Members"); and the Official Committee of Unsecured Creditors (the "Committee") (collectively, the "Parties") file this appendix in support of their joint motion for final approval of the class action settlement. The appendix contains the following materials: TABLE OF CONTENTS FOR APPENDIX EXHIBIT DESCRIPTION OF EVIDENTIARY MATERIAL APP.PAGES 1 Langston Declaration APP. 1-57 2 Settlement Agreement APP. 58-117 3 Schmidt Declaration APP. 118-120 4 Miller Declaration APP. 121 -192 Case No. 15-40289-RFN-11. 2 The Trustee is serving as the sole director ofLPI and LPIFS pursuant to the Trustee's authority under the Bankruptcy Court's Order Authorizing the Trustee to Amend the Governing Documents and To File Voluntary Chapter 11 Petitions For Debtor's Subsidiaries (the "Subsidiary Filing Order") [Case No. 15-40289-RFN-11, Dkt. No. 261]. Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 3 of 54 PageID 1804 5 Silver Declaration APP. 193-239 6 Cornerstone 2014 Review & Analysis APP. 240-269 7 Cornerstone 2015 Review & Analysis APP. 270- 299 8 Skelton Declaration APP. 300- 303 9 Cain Declaration APP. 304- 306 10 Baker & McKenzie Hourly Detail APP. 307- 399 11 LPID Press Release APP. 400-401 12 Leininger Declaration APP. 402- 404 13 Sternk:lar Declaration APP. 405 408 14 NERA 2015 Full Year Review APP. 409- 452 15 Ragan Declaration APP. 453 - 456 Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 4 of 54 PageID 1805 Dated: July 5, 2016 Respectfully submitted, Keith L. Langston Texas BarNo. 24015196 Langston Law Firm 109 W. Tyler Street Longview, Texas 75601 Telephone: (903) 212-3922 Facsimile: (903) 212-3892 [email protected] Attorneys For Lead Plaintiffs and Class Action Plaintiffs By: ____________ David M. Bennett Texas Bar No. 02139600 Nicole L. Williams Texas Bar No. 24041726 Jennifer R. Ecklund Texas Bar No. 24045626 Thompson & Knight LLP 1722 Routh Street, Suite 1500 Dallas, Texas 75201 Telephone: (214) 969-1700 Facsimile: (214) 969-1751 [email protected] [email protected] [email protected] Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 5 of 54 PageID 1806 CERTIFICATE OF SERVICE I hereby certify that on July 5, 2016, the foregoing Motion was served on all parties entitled to service via the Court's Electronic Filing System ("ECF"). One of Counsel Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 6 of 54 PageID 1807 I Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 7 of 54 PageID 1808 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION In re: § § LIFE PARTNERS HOLDINGS, § Jointly Administered Under INC. ETAL., § Case No. 15-40289-RFN § Debtors. § Chapter 11 PHILIP M. GARNER § STEVER SOUTH, AS TRUSTEE § FOR AND ON BEHALF OF § THE SOUTH LIVING TRUST § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED, § Plaintiffs, § § v. § Adversary No. 15-4061 § LIFE PARTNERS, INC. § Defendant § MICHAEL ARNOLD, JANET ARNOLD § STEVE SOUTH, AS TRUSTEE FOR, § AND ON BEHALF OF § THE SOUTH LIVING TRUST § JOHNS. FERRIS, M.D. § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED § Adversary No. 15-4062 Plaintiffs, § § ~ § § LIFE PARTNERS, INC. § Defendant. § DECLARATION OF KEITH L. LANGSTON IN SUPPORT OF: PLAINTIFFS' MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND PLAINTIFFS' MOTION FOR AWARD OF ATTORNEYS' FEES 1 App.1 Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 8 of 54 PageID 1809 Table of Contents I. INTRODUCTION II. THE SETTLEMENT AGREEMENT-SUMMARY OF BENEFITS TO THE CLASS III. THE CLASS WAS GIVEN APPROPRIATE NOTICE OF THE PROPOSED SETTLEMENT AGREEMENT IV. FACTORS SUPPORTING APPROVAL OF THE SETTLEMENT AGREEMENT A. Evidence that the Settlement was not Obtained by Fraud or Collusion B. The Complexity, Expense, and Likely Duration of the Litigation C. The Stage of the Litigation and Available Discovery D. The Probability of Plaintiffs' Prevailing on the Merits E. The Range of Possible Recovery and Certainty of Damages F. The Opinions of Class Counsel, Class Representatives, and Absent Class Members V. THE CASE REQUIRED EXTRAORDINARY EFFORT AND DILIGENCE BY CLASS COUNSEL A. Investigation, Preparation of Pleadings and Filing of the Petitions and LPI's Special Exception Thereto B. Protective Order, Scheduling Order and Discovery C. Motions for Summary Judgment D. Appeal to the Court of Appeals E. Appeal to the Texas Supreme Court F. LPI files Chapter 11 bankruptcy in the Northern District of Texas-Fort Worth Division 2 App.2 Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 9 of 54 PageID 1810 VI. THE RECORD FULLY SUPPORTS THE ATTORNEYS' FEE AWARD A. The Class Representatives Retained Class Counsel on a Contingent Fee Basis B. The Risk of Non-Payment Supports the Reasonableness of the Agreed Fee C. The Quality of Performance Supports the Reasonableness of the Agreed Fee D. The Amount of Work Necessary to Resolve the Litigation Supports the Reasonableness of the Agreed Fee E. The Parties' Stakes in the Litigation Support the Reasonableness of the Agreed Fee F. Rates Reflected in Negotiated Fee Agreements Support the Reasonableness of the Agreed Fee G. Fee Awards in Similar Cases Support the Reasonableness of the Agreed Fee H. To the Extent the Court Wishes to Conduct "Lodestar Cross check," the Lodestar in this Case Supports the Agreed Fee VII. CONCLUSION 3 App.3 Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 10 of 54 PageID 1811 Pursuant to 28 U.S.C. § 1746, Keith L. Langston ("Langston'' or "Class Counsel") declares as follows: I. INTRODUCTION 1. I am an attorney licensed by the Supreme Courts of Texas, Oklahoma, Arkansas and Missouri. I have been deeply involved in this case for more than five years. I respectfully submit this Declaration in Support of The Parties' Joint Motion for Final Approval of Class Action Settlement and Brief in Support and the Motion for Approval of Attorneys' Fees. 2. The purpose of this Declaration is to (a) submit and identify for the Court true and correct copies of certain documents and evidence referenced in the Final Approval Motion and (b) describe the history of the litigation efforts in this case, as referenced in the Final Approval Motion and the Fee Motion. 3. A true and correct copy of the Class Action Settlement Agreement (the "Settlement Agreement") can be found at Exhibit 2 of this Appendix.1 See Ex. 2 at App. 58-117. A true and correct copy of the Class Notice sent to the Class Members can be found in the Appendix to the Motion for Final Approval. See Final Approval Appendix Ex. 1 at App. 111-119. 4. Along with my co-counsel, Scott Skelton of Skelton Slusher Barnhill Watkins Wells, formerly of the Zeleskey Law Firm, and Robert Cain of Alderman Cain & Neill, also formerly of the Zeleskey Law Firm, I initiated this case when several Life Partners, Inc. ("LPI") investors contacted me regarding their 1 Any capitalized terms not herein defined have the meanings ascribed to them by the Settlement Agreement or the Final Approval Motion. 4 App.4 Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 11 of 54 PageID 1812 investments in LPI's life settlements. I have been involved with the investigation, preparation, filing, prosecution, appeals, and bankruptcy plan negotiations as a member of the Plan Support Group ("PSG") and in relation to settlement of this action. I make this declaration based on my personal know ledge and information available to me to the best of my recollection, and I am competent to testify to the matters set out herein. II. THE SETTLEMENT AGREEMENT-SUMMARY OF BENEFITS TO THE CLASS 5. The Settlement Agreement, if given final approval, would result in the release of all ownership claims against LPI for the fractional policy positions purchased by the Class Members, and fully and finally resolve those claims. In the Bankruptcy Cases, LPI has claimed that it is the owner of the life insurance policies underlying the securities the Settlement Class Members purchased and that those policies are property of the bankruptcy estates. The Plaintiffs dispute that the policies, their proceeds, or any rights to which the owners of such policies are entitled (including, without limitation, the cash surrender value of each such policy) are property of the bankruptcy estates pursuant to 11 U.S.