A class-action suit brought by thousands of angry thrift depositors against the state and the local financial community more than 10 years ago has been officially settled.
But depositors, miffed over the court approving their lawyers' $3.2 million fee, are digging in their heels about how the $8.1 million should be distributed.The issue has become so tense that depositors have hired an attorney to represent their interests in sensitive negotiations with the attorneys they hired in 1987 to get their savings back.
Both sides have declined to discuss what is at issue in the negotiations until a resolution is reached.
"It's been an 11-year relationship, and it gets tense at times," said attorney Bob Stolebarger, one of three attorneys representing depositors in the class-action suit. "Hopefully reason will prevail. We are close to having it worked out."
Differences with their attorneys aside, depositors are glad to have the lawsuit, which never went to trial, over with.
"They are good settlements and they are the best everyone is going to get," said Sheila Bohard, spokeswoman for DOIT, an organization that has spearheaded the depositors' cause since their savings were seized by the state in 1986.
The $8.1 million settlement reached with several accounting firms and Utah Jazz owners Larry H. Miller, who also owned a failed thrift and loan, was approved by 3rd District Court Judge David Young on April 17.
With the settlement, depositors will have recovered 100 percent of the principal they had entrusted to five thrift and loans that the state seized on July 31, 1986. State regulators took the action after declaring that the private corporation that insured the thrift deposits was insolvent.
Failure by state regulators to find a buyer for the thrifts, whose questionable assets included a small submarine and some high-risk real estate ventures, prompted panicked depositors to galvanize. They filed a class-action lawsuit against the state and a who's who of Salt Lake financial, legal and accounting firms in 1987.
The complaint alleged depositors had been defrauded and sacrificed in the state's misguided attempt to salvage what turned out to be unsalvageable. The argument prodded the Legislature, which initially balked at bailing out depositors, to sign off on a settlement hammered out between depositors' attorneys and then-Gov. Norm Bangerter.
Eventually other parties agreed to settle. And a state Supreme Court decision in late 1996, allowing depositors to pursue claims against accounting firms and former thrift owners, brought those parties to the table.
The defendants in this last settlement are accounting firms Deloitte Touche and Coopers & Lybrand and former thrift owners Roy Moore and Miller.
The settlement is described as a blind pool, and the amounts paid by the each party were not disclosed. Depositors will receive about $4 million of the settlement. The state receives $1 million, while its former insurer, Century Indemnity, gets $2.7 million.
Miller, a car dealer who owned Commerce Financial, conducted his own court-approved liquidation of the thrift and recovered 70 percent of his depositors' money.
But depositors, who accused Miller of conspiring with the state to hide the insolvent condition of the thrifts, didn't drop their class-action claims against the high-profile businessman.
"The settlement with Mr. Miller should not be viewed as an admission of any wrongdoing. . . . Mr. Miller believes his conduct in this matter was honorable at all times," said a statement released in February, shortly before the final settlement was submitted to the court.
While the settlement brings the class-action to a close, two "minor defendants" remain - former Western Heritage Thrift directors Paul Frampton and Merrill Bean.
Claims against the men could be pursued by the state if they don't settle, Stolebarger said.
Under terms of the settlement, depositors will receive about $4 million. The state will receive $1 million and the state's insurance company, Century Indemnity, will get $2.7 million to partially recover the state settlement with depositors.
The class-action lawsuit accounted for $56 million to the total $103.4 million depositors have been able to recover. The total, which includes collections from a liquidation of thrift assets, doesn't cover more than 11 years of interest depositors have lost.
And attorneys' fees totaling more than $11 million are coming out of the class-action settlements reached over the duration of the case.
According to court documents, DOIT objected to the court awarding the attorneys' fees of $3.2 million without an evidentiary hearing.
DOIT, which had hired an attorney over the legal fees issue, also lost its objection to the court naming another attorney to represent the class in the fee dispute.