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THE STATE OF NEW HAMPSHIRE HILLSBOROUGH, SS.

SOUTHERN DISTRICT FREDRICK AMOCHE, JON VALLIERE, and DIANE DAUPHINAIS; on behalf of themselves and all others similarly situated; Plaintiffs; v. GUARANTEE TRUST LIFE INSURANCE COMPANY; Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) C.A. NO. 04-C-255

PLAINTIFFS MEMORANDUM IN SUPPORT OF MOTION FOR AN ORDER SPECIFYING THE PROPER MEASURE AND CALCULATION OF DAMAGES INCLUDING PREJUDGMENT INTEREST

Plaintiffs Frederick Amoche, Jon Valliere, and Diane Dauphinais, hereby submit this memorandum in support of their Motion for an Order Specifying the Proper Measure and Calculation of Damages Including Prejudgment Interest. The Court has entered its Order granting summary judgment to the plaintiffs and class members on their breach of contract claim. Plaintiffs now seek an order establishing that each class member is entitled to compensatory damages, and to prejudgment interest thereon, pursuant to the law of the state wherein his or her transaction occurred. INTRODUCTION When plaintiffs and thousands of other consumers across the country purchased cars and had the financing arranged through the car dealerships, their loan papers already contained charges for Guarantee Trust Life Insurance Company (GTL)s single premium (i.e., paid-inadvance) credit life and credit disability insurance for lengthy coverage terms. Since the entire insurance premium was deducted from their loan proceeds, state lawas well as GTLs own insurance contractsrequired GTL to refund unearned premiums to those borrowers who paid

off their car loans prior to the expiration of their prepaid coverage terms. However, GTL disregarded its legal and contractual obligations and failed to make refunds of unearned premiums to plaintiffs and countless thousands of other consumers. GTL continues to wrongfully retain the unearned premiums that rightfully belong to these consumers. GTL continues to make the plaintiffs and class members engage in protracted, contentious and costly litigation to recover monies that GTL knows full well belong to them. As class representatives, these plaintiffs have had to endure six years of obfuscation and delay at the hands of GTL, including a series of frivolous motions and briefs unsupported by citations to competent legal authority, an improvident removal to federal court and a futile appeal to the First Circuit. Moreover, they have had to subpoena their own finance companies to obtain payoff dates, since GTL has insisted that each of its insureds provide proof of the early payoff. Moreover, even when presented with individualized proof, GTL has still refused to make the refunds. Instead, it has raised technical evidentiary objections in its ongoing campaign to keep money that does not belong to it. It will not make a single refund until it is satisfied that it has received documentary proof of the early loan payoff in a form that is admissible in a Court of Law under applicable Rules of Evidence. So, it has been six years, and still no refunds. 1

I.

GTLS LIABILITY TO ALL CONSUMERS LATER DETERMINED TO BE CLASS MEMBERS HAS ALREADY BEEN DETERMINED. In 2006, plaintiffs sought, and received, an order that defendant is liable to them and all

consumers later determined to be class members, on their breach of contract claim, for its failure to refund their unearned premiums to them when they paid off their motor vehicle loans early. In relevant part, this Order reads:

Of course, GTLs contracts do not require its insureds to submit documentation sufficient to withstand

When viewing the contract with the corrected term, credit insurer, the Court concludes that the defendant has breached its standard COI with the named plaintiffs and the class members. GTL, the credit insurer, promised that it would refund unearned premiums to insured debtors who prepaid their loan indebtedness in full prior to the scheduled termination date. The named plaintiffs and class members have done so. The named plaintiffs have not yet received a refund of their unearned premiums. Further, because a class member would not qualify as such if he or she already received a refund of his or her unearned premiums, the class members also have not received their refunds. Therefore, GTL has breached its contracts with the named plaintiffs and the class members. A copy of the Courts Order on Summary Judgment Motions (Classwide PSJ Order below) is attached hereto as Exhibit A. Then, in 2009, the plaintiffs sought, and received, a modification of the class definition, such that consumers in four additional states could be included within it. In its order modifying the class definition by including the four additional states (albeit as to just three particular creditors), the Court found that certification of the multistate class was warranted, in part, because no conflicts exist between the relevant law of New Hampshire, on the one hand, and the analogous laws of Maine, Connecticut, Ohio, and Michigan, on the other hand, as to the substantive law pertaining to whether GTLs alleged breach of contract for failing to refund unearned premiums, and that GTLs contracts were substantially identical in the five states. Id. A copy of the Courts Order [on Proposed Modification to Class Definition] (Order Modifying Class Definition) is attached hereto as Exhibit B.

this level of legal scrutiny.

Finally, in late 2009, plaintiffs moved for an order extending the partial summary judgment ruling to all consumers whose transactions occurred not only in New Hampshire, but also in Maine, Connecticut, Ohio and Michigan, who are later determined to be class members. 2

II.

EACH CLASS MEMBERS ENTITLEMENT TO DAMAGES, INCLUDING PREJ UDGMENT INTEREST, IS GOVERNED BY THE LAW OF THE STATE WHEREIN HIS OR HER TRANSACTION OCCURRED. The damages inquiry, as to each class member, is governed by the laws of the state in

which that class members transaction occurred. This is because the law of damages is substantive. Carota v. Johns Manville Corp., 893 F.2d 448, 450 (1st Cir. 1990) (The law of damages . . . is substantive since it prescribes what, if any, money a plaintiff will receive as compensation for injury. Barbier v. Shearson Lehman Hutton Inc., 948 F.2d 117, 122 (2nd Cir. 1991) (the measure of damages is a matter of state substantive law). Damages are an element of plaintiffs case); Henderson v. Natl Fid. Life Ins. Co., 257 F.2d 917, 919 (10th Cir. 1958) (The measure of damages for breach of contract is undoubtedly substantive law). Here, since the Court has decided that the laws of the states in which the transactions occurred shall govern the parties substantive rights, it necessarily follows that the laws of these respective states will likewise govern the damages inquiry. Chesapeake & Ohio Rail-way Co. v. Kelly, 241 U.S. 485, 491 (1916) (The question of the proper measure of damages is inseparably connected with the right of action); Harlan Feeders v. Grand Lab., 881 F. Supp. 1400 (N.D. Iowa 1995) (applying Iowa law) (since damages constitute a matter of substantive law, damages are governed by the law of the state that has been selected, by application of the conflict-of-laws rules, to govern the parties substantive rights). Under virtually all American choice-of-law regimes, . . . the same states law that governs whether a cause of action exists (and what its elements are) will also

Plaintiffs Motion for Partial Summary Judgment as to Class Members Whose Transactions Occurred in ME, CT, OH, and MI is pending before this Court. Plaintiffs respectfully request the Court rule on that

govern the measure of damages. Caleb Nelson, The Persistence of General Law, 106 Colum. L. Rev. 503, 544 (2006), citing Anthony J. Bellia Jr., Federal Regulation of State Court Procedures, 110 Yale L.J. 947, 984 (2001) (As a matter of conflicts law, the measure of damages ... is governed by the law under which the right of action arose . . .). See generally, Leflar, McDougal & Felix, American Conflicts Law 346-48 (1986) (measure of damages is substantive issue). 3

A.

Under The Law Of Each Of The Four Affected States, The Class Member s Ar e Entitled To Compensator y Damages In The Amounts Of The Unear ned Pr emiums That Defendant Wr ongfully Withheld Fr om Them. In each of the additional states (and in all states, period), an aggrieved consumer who

proves breach of contract is entitled to his or her actual, or compensatory, damages. City of Hartford v. International Assn. of Firefighters, Local 76, 49 Conn. App. 805, 815, 717 A.2d 258, cert. denied, 247 Conn. 920, 722 A.2d 809 (1998) (In an action for breach of contract, the general rule is that the award of damages is designed to place the injured party, so far as can be done by money, in the same position as that he would have been in had the contract been performed. Such damages are known as compensatory damages) [internal citations omitted]; Lee v. Scotia Prince Cruises, Ltd., 2003 ME 78, *4 (Me. 2003) (As a general rule, the purpose of an award of compensatory damages for a breach of contract is to place the plaintiff in the same position that he or she would have enjoyed had there been no breach. An injured party is entitled to recover for all losses actually suffered as a result of the breach) [internal citations omitted]; Henderson v. Rosewicz, 2002 Ohio 1266, *10 (Ohio Ct. App., 2002) ([A] party alleging a breach of contract is entitled to compensatory damages . . . which will compensate for actual

motion first, as this motion is predicated upon the allowance of that motion. Again, this argument presumes the Court chooses to apply the substantive laws of the respective states, as requested by plaintiffs, in its resolution of the plaintiffs pending Motion for Partial Summary Judgment as
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losses so that the aggrieved party will be placed in as good a position as he would have been in had the contract been performed) [internal citations omitted]; Kewin v. Mass. Mut. Life Ins. Co., 409 Mich. 401, 295 N.W.2d 50, 52-53 (Mich. 1980) ([C]ompensatory damages recoverable for breach of contract are the losses sustained or the gains negated that arise naturally from the breach or were contemplated by the parties at contract formation) (citing Hadley v. Baxendale, 156 Eng. Rep. 145 (1854) and 5 CORBIN ON CONTRACTS 1007). 1. Maine Computes Unear ned Pr emium Refunds By The Rule of Anticipation.

In Maine, the Rule of Anticipation is used to calculate premium refunds for single premium credit life, and for credit accident and health, coverage. CMR 02-031-220 11(D)(2) (Exhibit __) (Emphasis added). 2. Connecticut Computes Unear ned Pr emium Refunds By The Rule of 78s.

In Connecticut, the Rule of 78s is used to calculate premium refunds for single premium credit life, and for credit accident and health, coverage where, as here, the credit insurer has not obtained a rate deviation. State of Connecticut, Department of Insurance, Bulletin Number C-3, available at http://www.ct.gov/cid/lib/cid/BullC3.pdf, visited February 17, 2010. (Exhibit __ is a copy of the bulletin obtained from the website) (Emphasis added). 3. Ohio Computes Unear ned Pr emium Refunds By The Rule of Anticipation.

In Ohio, the Rule of Anticipation is used to calculate premium refunds for single premium credit life, and credit accident and health, coverage. OAC Ann. 3901-1-14(D)(3)(d) (Exhibit ___) (Emphasis added).

to Class Members Whose Transactions Occurred in ME, CT, OH, and MI.

4.

Michigan Computes Unear ned Pr emium Refunds By The Rule of 78s.

In Michigan, the Rule of 78s is used to calculate premium refunds for single premium credit life, and for credit accident and health, coverage. MICH. ADMIN. CODE R 550.213 Rule 13(1)(b) (Exhibit __) (Emphasis added).

B.

Under The Relevant Law Of Each Of The Four Affected States, The Class Member s Should Be Awar ded Pr ejudgment Inter est. As shown below, those consumers who are later identified as class members and whose

transactions occurred in Maine, Ohio or Michigan are entitled to prejudgment interest as a matter of law, during the periods and at the interest rates tabulated below. The Court, in its discretion, should award prejudgment interest to those consumers who are later identified as class members and whose transactions occurred in Connecticut. 1. Maines Pr ejudgment Inter est Law: 3% Per Annum Over The One-Year US Tr easur y Bill, Measur ed Fr om The Date Complaint Was Filed.

The Maine class members are entitled to prejudgment interest measured from February 13, 2009 (the date upon which the operative amended complaint was field), and computed at the statutory rate which is based on the US Treasury Bill index. Maine statutory law entitles prevailing civil plaintiffs to prejudgment interest as a matter of right. 14 M.R.S. P 1602-B. EnQueue, Inc. v. Data Mgmt. Group, 566 F. Supp. 2d 13, 23 (D. Me. 2008). Section 1602-B reads, in relevant part: 3. OTHER CIVIL ACTIONS; RATE. In civil actions other than those set forth in subsections 1 and 2, prejudgment interest is allowed at the one-year United States Treasury bill rate plus 3%. A. For purposes of this subsection, one-year United States Treasury bill rate means the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last full week of the calendar year immediately prior to the year in which prejudgment interest begins to accrue. .... 7

5. ACCRUAL; SUSPENSION; WAIVER. Prejudgment interest accrues . . . from the date on which the complaint is filed. 14 M.R.S. P 1602-B. Thus, Maine consumers determined to be class members are entitled to prejudgment interest computed as follows: RATE

TIME PERIOD February 17, 2009December 31, 2009 January 1, 2010December 31, 2010

per annum

3.40% 3.41%

See, Prejudgment Interest Rates, Maine Judicial Branch Website, available at


http://www.courts.state.me.us/citizen_info/legal_prof/2010%20CHART-Pre-Jdmt%20Int.pdf, visited

February 17, 2010. (Exhibit __ is a copy of the pdf table obtained from the website). 2. Connecticuts Pr ejudgment Inter est Law: 10% Per Annum, Measur ed Fr om The Date The Money Is Due Until The Money Is Paid, As A Discr etionar y Element of Damages.

The Connecticut class members should be awarded prejudgment interest measured from their loan payoff dates and computed at ten percent (10%) per annum. In Tang v. BouFakhreddine, 75 Conn. App. 334 (Conn. App. Ct. 2003), the Connecticut appellate court explained why that states prejudgment interest statute anticipates an award of prejudgment interest in precisely such a case as this one: The allowance of prejudgment interest as an element of damages is an equitable determination and a matter lying within the discretion of the trial court. General Statutes 37-3a provides in relevant part that interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable. . . . Prejudgment interest is awarded in the discretion of the trial court to compensate the prevailing party for a delay in obtaining money that rightfully belongs to him. . . . The detention of the money must be determined to have been wrongful. . . . Its detention can only be wrongful, however, from and after the date on which the court, in its discretion, determines that the money was due and payable. (Citations omitted; internal quotation marks omitted.) 8

Northrop v. Allstate Ins. Co., 247 Conn. 242, 254-55, 720 A.2d 879 (1998). Prejudgment interest pursuant to 37-3a is appropriate only where the essence of the action itself involves the wrongful withholding of money due and payable to the plaintiff. The prejudgment interest statute does not apply when the essence of the action is the recovery of damages to compensate a plaintiff for injury, damage or costs incurred as a result of a defendants negligence. It ordinarily does not apply to contract actions in which the plaintiff is not seeking the recovery of liquidated damages or the recovery of money advanced under a contract and wrongfully withheld after a breach of that contract. The prejudgment interest statute does not apply to such actions because they do not advance claims based on the wrongful withholding of money, but rather seek damages to compensate for losses incurred as a result of a defendants negligence. Moreover, such damages are not considered due and payable until after a judgment in favor of the plaintiff has been rendered. Id., at 346-349. [Emphasis added] See also, Lauder v. Peck, 11 Conn. App. 161, 166 (Conn. App. Ct. 1987) (In affirming the trial courts decision, the appellate court stated that prejudgment interest on money wrongfully withheld from the owner is a proper, albeit discretionary, element of a plaintiff damages). Because the essence of this action itself involved GTLs wrongful withholding of money due and payable to the plaintiffs and class members, the Court should, in its discretion, make an award of prejudgment interest under Connecticut General Statutes 37-3a, accruing as of the respective loan payoff dates at ten percent (10%) per annum. The Court, in its discretion, should award Connecticut consumers determined to be class members prejudgment interest computed as follows: RATE

TIME PERIOD February 17, 2003judgment date

per annum

10%

3.

Ohios Pr ejudgment Inter est Law: 3% Per Annum Over The Feder al Shor t Ter m Rate Defined Each Year By The Ohio Tax Commissioner , Measur ed Fr om The Date The Money Came Due Until The Date The Money Is Paid.

The Ohio class members are entitled to prejudgment interest measured from the dates of their respective early loan payoffs at the statutory rate. In Lyons v. Advantage Contrs., LLC., 2006 U.S. Dist. LEXIS 55747 (D. Ohio 2006), Ohios federal district court explained that: Under Ohio Revised Code 1343.03, a plaintiff that recovers under a breach of contract claim is entitled to the accrual of prejudgment interest from the date the money is due until the date the money is paid. Royal Elec. Constr. Corp. v. Ohio State Univ., 73 Ohio St.3d 110, 117, 1995 Ohio 131, 652 N.E.2d 687 (1995) ([T]o make the aggrieved party whole, the party should be compensated for lapse of time between the accrual of the claim and judgment); accord, The Scotts Co. v. Central Garden & Pet Co., 256 F.Supp.2d 734, 743 (S.D. Ohio 2003). As of June 2, 2004, the rate the interest accrues is the rate stated in the contract, or, if no rate is indicated, the rate defined in Ohio Revised 5703.47. Ohio Revised Code 1343.03(A). Id., **10-11. ORC Ann. 1343.03(A) reads, in full: 1343.03. Interest when rate not stipulated (A) In cases other than those provided for in sections 1343.01 and 1343.02 of the Revised Code, when money becomes due and payable upon any bond, bill, note, or other instrument of writing, upon any book account, upon any settlement between parties, upon all verbal contracts entered into, and upon all judgments, decrees, and orders of any judicial tribunal for the payment of money arising out of tortious conduct or a contract or other transaction, the creditor is entitled to interest at the rate per annum determined pursuant to section 5703.47 of the Revised Code, unless a written contract provides a different rate of interest in relation to the money that becomes due and payable, in which case the creditor is entitled to interest at the rate provided in that contract. Notification of the interest rate per annum shall be provided pursuant to sections 319.19, 1901.313 [1901.31.3], 1907.202 [1907.20.2], 2303.25, and 5703.47 of the Revised Code. .... Id. ORC Ann. 5703.47 reads, in full: 10

5703.47. Federal short-term rate defined; computation of statutory interest rate for following year; notice to county auditors. (A) As used in this section, federal short-term rate means the rate of the average market yield on outstanding marketable obligations of the United States with remaining periods to maturity of three years or less, as determined under section 1274 of the Internal Revenue Code of 1986, 100 Stat. 2085, 26 U.S.C. 1274, for July of the current year. (B) On the fifteenth day of October of each year, the tax commissioner shall determine the federal short-term rate. For purposes of any section of the Revised Code requiring interest to be computed at the rate per annum required by this section, the rate determined by the commissioner under this section, rounded to the nearest whole number per cent, plus three per cent shall be the interest rate per annum used in making the computation for interest that accrues during the following calendar year. For the purposes of sections 5719.041 [5719.04.1] and 5731.23 of the Revised Code, references to the federal short-term rate are references to the federal short-term rate as determined by the tax commissioner under this section rounded to the nearest whole number per cent. (C) Within ten days after the interest rate per annum is determined under this section, the tax commissioner shall notify the auditor of each county in writing of that rate of interest. Id. Finally, prior to June 2, 2004, Ohio Revised Code 1343.03(A) read, in relevant part: [W]hen money becomes due and payable upon any ... note ... the creditor is entitled to interest at the rate of ten per cent per annum, and no more, unless a written contract provides a different rate of interest in relation to the money that becomes due and payable, in which case the creditor is entitled to interest at the rate provided in that contract. See, id. [Exhibit __ is a copy of the first few pages of current 1343.03; the annotation therein titled EFFECTS OF AMENDMENTS described the prior version of it (emphasis added)]; see also, Terry v. Dowdell, CASE NO. 3:04CV00067 (W.D. Va. 2004) (magistrates report and recommendation containing findings and rulings as to former and current statutory language) (Exhibit __). Thus, Ohio consumers determined to be class members are entitled to prejudgment interest computed as follows:

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TIME PERIOD January 1, 2000June 1, 2004 June 2, 2004December 31, 2004 January 1, 2005December 31, 2005 January 1, 2006December 31, 2006 January 1, 2007December 31, 2007 January 1, 2008December 31, 2008 January 1, 2009December 31, 2009 January 1, 2010December 31, 2010

per annum

RATE

10% 4% 5% 6% 8% 5% 5% 4%

See, Ohio Department of Taxation Interest Rate Certification letter, for each year from 2004 through 2009 (Exhibit C comprises this compilation); Terry v. Dowdell, supra [Exhibit __] (recommending that prejudgment interest accrues at 10% per annum up until June 2, 2004). 4. Michigans Pr ejudgment Inter est Law.

The Michigan class members are entitled to prejudgment interest measured from February 13, 2009, and computed at the statutory rate. As their federal district court explained in Baum Research & Dev. Co. v. Univ. of Mass. at Lowell, 2009 U.S. Dist. LEXIS 113592 (D. Mich. 2009): Under Michigan law, [i]nterest is allowed on a money judgment recovered in a civil action, as provided in Michigan Compiled Laws 600.6013. Michigan courts have indicated that [a]n award of interest is mandatory in all cases in which [Mich. Comp. Laws 600.6013] applies. . . . [P]rejudgment interest is awarded from the date of filing the complaint and is calculated on the entire amount of the money judgment, including attorney fees and other costs. Mich. Comp. Laws 600.6013(8). Interest under this subsection is calculated at 6-month intervals from the date of filing the complaint at a rate of interest equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually. Mich. Comp. Laws 600.6013(8). Id., at 5-6. [Internal citations omitted]

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Thus, Michigan consumers determined to be class members are entitled to prejudgment interest computed as follows: RATE

TIME PERIOD February 17, 2009June 30, 2009 July 1, 2009December 31, 2009 January 1, 2010June 30, 2010 July 1, 2010December 31, 2010

per annum

3.695% 3.101% 3.480% TBD

See, Interest Rates For Money Judgments Under MCL 600.6013, Michigan Judicial Branch Website, available at http://courts.michigan.gov/scao/resources/other/interest.pdf, visited February 17, 2010. (Exhibit __ is a copy of the pdf table obtained from the website). CONCLUSION All of the consumers later determined to be class members in the additional states of Maine, Connecticut, Ohio and Michigan, should be awarded compensatory damages in the amounts of their unearned premiums, together with prejudgment interest computed in accordance with the above tables.

Respectfully submitted, _______________________ Edward K. OBrien OBrien Law Firm, PC One Sundial Avenue, 5th Floor Manchester, NH 03103 (603) 672-3800 Charles G. Douglas, III Jason R.L. Major Douglas, Leonard and Garvey, PC 6 Loudon Road Concord, NH 03301 (603) 224-1988 13

Dated: May 12, 2009

Certificate Of Service
I hereby certify that on this day I served a true copy of the above document upon all counsel of record by email and first-class mail delivered to the following:

Christopher Cole Sheehan Phinney Bass & Green 1000 Elm Street Manchester, NH 03105 Francis A. Citera Greenberg Traurig, LLP 77 West Wacker Drive Suite 2500 Chicago, IL 60601

DATE: May 12, 2009

____________________ EDWARD K. OBRIEN

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