ACCEPTED

03-15-00436-CV 6512011 THIRD COURT OF APPEALS AUSTIN, TEXAS 8/14/2015 5:04:13 PM JEFFREY D. KYLE CLERK NO. 03-15-00436-CV ___________________________________________________ FILED IN 3rd COURT OF APPEALS IN THE COURT OF APPEALS AUSTIN, TEXAS THIRD JUDICIAL DISTRICT COURT 8/14/2015 5:04:13 PM JEFFREY D. KYLE AUSTIN, TEXAS Clerk

___________________________________________________

CHARLES O. “CHUCK” GRIGSON, APPELLANT VS.

THE STATE OF TEXAS, THE TEXAS DEPARTMENT OF INSURANCE, THE TEXAS COMMISSIONER OF INSURANCE; and FARMERS GROUP, INC. ET AL., APPELLEES ___________________________________________________

On Appeal from the 261st Judicial District Court of Travis County, Texas Cause No. D-1-GV-02-002501 ___________________________________________________ APPELLANT GRIGSON’S MOTION FOR LEAVE TO FILE SUR-REPLY IN OPPOSITION TO APPELLEES’ REPLY AND JOINT MOTIONS TO DISMISS APPELLANTS’ APPEALS FOR LACK OF APPELLATE JURISDICTION ___________________________________________________

Joe K. Longley Philip K. Maxwell LAW OFFICES OF JOE K. LAW OFFICE OF PHILIP K. LONGLEY MAXWELL State Bar No. 12542000 State Bar No. 13254000 1609 Shoal Creek Blvd. #100 1609 Shoal Creek Blvd #100 Austin, Texas 78701 Austin, Texas 78701 512-477-4444 512-947-5434

Attorneys for Appellant Grigson TO THE HONORABLE COURT OF APPEALS:

Appellant Grigson files this Motion for Leave to File a Sur-Reply in Opposition to Appellees’ Reply and Joint Motions to Dismiss Appellants’ Appeals for Lack of Appellate Jurisdiction to show the Court the following:

Appellees’ Reply necessitates a Sur-Reply by Grigson to address the Appellees’ errors and omissions in their Reply relating to both the Order made the subject of this appeal, and the record regarding the law applicable to his case.

CONCLUSION AND PRAYER

For these reasons, Grigson respectfully requests that the Court grant him leave to file the accompanying Sur-Reply, consider the attached Sur-Reply, and further grant all other relief to which Grigson may show himself justly entitled. Date: August 14, 2015 Respectfully submitted,

CHARLES O. “CHUCK” GRIGSON APPELLANT LAW OFFICES OF JOE K. LONGLEY _______/s/ Joe K. Longley__________ Joe K. Longley State Bar No. 12542000 1609 Shoal Creek Blvd. #100 Austin, Texas 78701 512-477-4444 PHONE 512-477-4470 FAX

Appellant Motion for Leave 2

LAW OFFICE OF PHILIP K. MAXWELL

_______/s/ Philip K. Maxwell_________ Philip K. Maxwell State Bar No. 13254000 1609 Shoal Creek Blvd #100 Austin, Texas 78701 512-947-5434 PHONE ATTORNEYS FOR APPELLANT, CHARLES O. “CHUCK” GRIGSON

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true and correct copy of the above and foregoing document was served on the following counsel of record by eFile.TXCourts.gov electronic filing system on August 14, 2015.

Joshua Godbey Marcy Greer Office of the Attorney General of Alexander Dubose Jefferson & Texas Townsend, LLP P. O. Box 12548 515 Congress Ave., Suite 2350 Austin, TX 78711-2548 Austin, TX 78701 Sara Waitt Michael J. Woods General Counsel 8620 N. New Braunfels, Ste. 522 Texas Department of Insurance San Antonio, TX 78217 P. O. Box 149104 Austin, TX 78714-9104 Joseph C. Blanks PO Box 999 M. Scott Incerto Doucette, TX 75942 Norton Rose Fulbright 98 San Jacinto Blvd #1100 Austin, TX 78701

_______/s/ Joe K. Longley__________ Joe K. Longley

Appellant Motion for Leave 3

CERTIFICATE OF CONFERENCE

Grigson’s counsel has conferenced with Scott Incerto, Lead Counsel for the Farmers Parties; and Ryan Mindell, Counsel for the State of Texas, about the merits of the foregoing motion, pursuant to Texas Rule of Appellate Procedure 10.1(a)(5), and counsel for Farmers Parties does not oppose the Motion, while counsel for the State does.

_______/s/ Joe K. Longley__________ Joe K. Longley

CERTIFICATE OF COMPLIANCE WITH TEX. R. APP. P. 9.4(i) I certify that the foregoing document contains 115 words and complies with the word limit set forth in Texas Rule of Appellate Procedure 9.4(i).

_______/s/ Joe K. Longley__________ Joe K. Longley

NO. 03-15-00436-CV

___________________________________________________

IN THE COURT OF APPEALS

THIRD JUDICIAL DISTRICT COURT

AUSTIN, TEXAS

___________________________________________________

CHARLES O. “CHUCK” GRIGSON, APPELLANT VS.

THE STATE OF TEXAS, THE TEXAS DEPARTMENT OF INSURANCE, THE TEXAS COMMISSIONER OF INSURANCE; and FARMERS GROUP, INC. ET AL., APPELLEES ___________________________________________________

On Appeal from the 261st Judicial District Court of Travis County, Texas Cause No. D-1-GV-02-002501 ___________________________________________________ APPELLANT GRIGSON’S SUR-REPLY IN OPPOSITION TO APPELLEES’ REPLY AND JOINT MOTIONS TO DISMISS APPELLANTS’ APPEALS FOR LACK OF APPELLATE JURISDICTION ___________________________________________________

Joe K. Longley Philip K. Maxwell LAW OFFICES OF JOE K. LAW OFFICE OF PHILIP K. LONGLEY MAXWELL State Bar No. 12542000 State Bar No. 13254000 1609 Shoal Creek Blvd. #100 1609 Shoal Creek Blvd #100 Austin, Texas 78701 Austin, Texas 78701 512-477-4444 512-947-5434

Attorneys for Appellant Grigson TO THE HONORABLE COURT OF APPEALS:

Appellant Grigson files this Sur-Reply in Opposition to Apellees’ Reply and Joint Motions to Dismiss Appellants’ Appeals for Lack of Appellate Jurisdiction and in further support of his Emergency Motion to Stay the Sending of Class Notice, filed on July 16, 2015.

Argument

The State and Farmers refuse to acknowledge what is in plain sight. The 2003 certification order is expressly conditioned on approval of one, specific settlement agreement—the 2003 settlement.1 Nothing in that order says or suggests that the certification applies to anything else, let alone a new settlement agreement proposed for approval 12 years in the future, a settlement containing different terms and negotiated under different and troubling circumstances not addressed in 2003. In fact, the 2003 Settlement Agreement expressly prohibits the 2003 agreed certification to be used for any other purpose. 2

1 See EXHIBIT 1 (2003 Order).

2 The 2003 certification applied exclusively to the 2003 Settlement Agreement. In the 2003 Settlement Agreement, the State and Farmers agreed that “The Parties will seek, and the Farmers Parties agree to, conditional certification of the Settlement Classes pursuant to this Settlement Agreement. The Farmers Parties do not agree to certification of the Settlement Classes for any purpose other than to effectuate this Settlement Agreement.” EXHIBIT 2. (Emphasis added). Thus Farmers and the State agreed—in 2003—that the 2003 conditional certification could not be used for any purpose other than to effectuate the 2003 settlement. The same language appeared in the 2013 settlement, and drew the attention of the trial court at the September 4, 2014 hearing on Farmers’ Motion to Strike Grigson’s Intervention. In an exchange with the trial court, Scott Incerto, confirmed that this language means the certification applies only to effectuating the settlement then before the court and nothing else. Cont’d on next page.

Appellant’s Sur-Reply 2

There is likewise nothing in the law of class actions—and certainly nothing in the 16 cases that the State and Farmers make us read—that says or suggests that a 2003 settlement-only, conditional certification can be severed from the 2003 settlement agreement that is its sole reason for existence, a settlement that the parties themselves terminated years later by entering a new and different 2013 settlement agreement that expressly supersedes and replaces all agreements before it, and that this severed 2003 certification can then be stitched onto yet another new and different 2015 settlement agreement that expressly supersedes and replaces all others before it. The 2003 certification is neither Dracula nor Frankenstein. It cannot be brought back to life to serve the interests of the State and Farmers in attempting to destroy this Court’s statutory jurisdiction.

THE COURT: Well, does that mean if I decline to approve a settlement, this settlement, and you’re now going to litigate it--* * * In other words, you are agreeing to a class action trial or not?

MR. INCERTO: No, your honor, we agreed for purposes of this settlement agreement— THE COURT: Exactly.

EXHIBIT 3 at 56. (Emphasis added). The plain meaning of the contractual language, confirmed by Farmers’ lawyer, is that an agreed certification can only be used to effectuate the settlement then before the court. There is accordingly no contractual room for the State and Farmers to argue today that a 2003 conditional certification can be used to effectuate a 2015 settlement.

Appellant’s Sur-Reply 3

That to abrogate this Court’s jurisdiction is the goal of the State and Farmers is obvious. And yet not one word of their reply do the State and Farmers devote to convincing the Court that an alternate, less malignant purpose lays behind their last minute switch of orders, from the order attached to and required by the 2015 settlement (with the Rule 42 and Insurance Code findings and the words “hereby certifies”) to the order now before the Court (with the Rule 42 and Insurance Code findings and “hereby certifies” redacted) and its missing paragraphs 3 and 4.3 The State and Farmers could hardly have been worried that the trial court, if they dared present it with the “hereby certifies” order, would not have signed it. The trial court repeatedly remonstrated Grigson’s counsel during his objections to the switched order that “I’m going to sign the order they presented;” “I’m not going to entertain any substantive differences” [in their order]; and “It’s going to be the (iii) All Texas homeowners or automobile insurance policyholders of the Exchanges or the Automobile Insurance Providers who according to Farmers' records were provided or should have been provided a Credit Usage Notice from October 1, 1999, through February 28, 2003 (the "Credit Usage Notice Class").

J such objection and shall forever be foreclosed from making any objection to the fairnes.s, adequacy, or reasonableness of the Settlement Agreement and the proposed Final Judgment.

REPORTER'S RECORD

VOLUME 1 OF 1 VOLUME

TRIAL COURT CAUSE NO. D-1-GV-02-002501

STATE OF TEXAS, THE TEXAS ) IN THE DISTRICT COURT DEPARTMENT OF INSURANCE, ) AND THE TEXAS ) COMMISSIONER OF ) INSURANCE, ) Plaintiffs, ) ) VS. ) ) ) FARMERS GROUP, INC., ) FARMERS UNDERWRITERS ) TRAVIS COUNTY, TEXAS ASSOCIATION, FIRE ) UNDERWRITERS ASSOCIATION, ) FARMERS INSURANCE ) EXCHANGE, FIRE INSURANCE ) EXCHANGE, TEXAS FARMERS ) INSURANCE COMPANY, ) MID-CENTURY INSURANCE ) COMPANY OF TEXAS, AND ) FARMERS TEXAS COUNTY ) MUTUAL INSURANCE COMPANY, ) Defendants. ) 261ST JUDICIAL DISTRICT

-------------------------------------------------

HEARING ON MOTIONS TO STRIKE

AND MOTION TO LIFT STAY ON DISCOVERY

-------------------------------------------------- On the 4th day of September, 2014, the following proceedings came on to be heard in the above-entitled and numbered cause before the Honorable Scott H. Jenkins, Judge presiding, held in Austin, Travis County, Texas;

Proceedings reported by machine shorthand.

judgment on the settlement that went up through appeals. That has not occurred at this point. This language was brought forward and, you know --

THE COURT: What am I to make of the language farther up the page, though, that he didn't cite, Farmers parties do not agree to certification of the settlement classes for any purpose other than to effectuate this settlement agreement?

Well, I haven't approved this settlement agreement. In fact, I rejected it. So you are now in a posture where you don't agree with the class action. And in fact, you were the party who wanted the class action 12 years ago. So it seems to me we're back at square one with no settlement agreement, no certified class, because no party -- I mean, you were the party who asked for it, and now you don't agree to it, according to your own signed document, and the State really wasn't the one who asked for it to begin with. So what am I to make of all that?

MR. INCERTO: Well, I have to respectfully disagree with the Court's analysis on that. I think we do have a class action. I believe it's law in the case from the Supreme Court. I believe that this particular provision --

THE COURT: Well, then is this just gratuitous? You put it in this -- this is the one you signed, and you put it as part of your motion filed in August of 2013 that you wanted me to read and consider to approve the settlement and to approve -- well, to approve the settlement, get preliminary approval. Now that I have declined to do that, I mean, this is the language that you kept in there. And you obviously gave it a lot of attention because I looked at the changes you made.

MR. INCERTO: Your Honor, we tried to change as little as possible and carried forward everything from the prior agreement except what absolutely needed to be changed because of I said the problem with the credit notice -- credit reports not being --

THE COURT: Well, does that mean if I decline to approve a settlement, this settlement, and you're now going to litigate it -- because I went back and read what now Justice Boyd said at the time when he was a witness, we'll have to decide how to structure this trial in this case. In other words, you are agreeing to a class action trial or not?

MR. INCERTO: No, Your Honor. We agreed for purposes of this settlement agreement --

THE COURT: Exactly.

REPORTER'S CERTIFICATE

(b) who received a notice at any time after November 14, 200 I, that their HO-B policy would not be renewed (the "Rate Class''):

(ii) All of the Exchanges' Texas homeowners insurance policyholders ,.vho according to Farmers' records were eligible to receive discounts for FPRA. age of home, or territory from November 16, 2000. through and including December I0, 2002 (the "Discount Class"): and

(iii) All Texas homeowners or automobile insurance policyholders of the Exchanges or the Automobile Insurance Providers who according to Farmers' records had a homeowners or automobile insurance policy in effect with Fanners from October 1, 1999. through February 28, 2003 (the "Credit Usage Notice Class").

3. The Court hereby acknowledges and confirms the State. through the Oftice of the Attorney General, to fultill the role of the Settlement Classes' Counsel. The Court finds that the Attorney General's office is authorized to bring this class action by the parens patriae authority granted in sections 541 .251 and 541.256-57 of the Insurance Code and Rule 42 of the Texas Rules of Civil Procedure. See Farmers Group, Inc. v. Lubin, 222 S. W.3d 417 (Tex. 2007).

4. This Court additionally tinds and concludes that each of the requirements of Rule 42(a) & (b) and §§ 541.256 and 541.257 of the Texas Insurance Code has been met, specifically: (a) each of the Settlement Classes is so numerous that joinder of all members is impracticable: (b) there arc questions of law or fact common to the Settlement Classes which predominate over any individual questions; (c) the claims or defenses brought by the State on behalf of Farmers' policyholders are typical of the claims or defenses of the Settlement Classes and the State is authorized to bring claims on behalf of the Settlement Classes; (d) in negotiating and entering into the Settlement Agreement, the State has fltirly and adequately represented and protected the interests or the Settlement Classes; (e) the questions of law or fltct common to the Settlement Classes predominate over any questions affecting only individual members: and (I) certifying this Action as a class action for settlement purposes is superior to other available methods for the 1~1ir and enicient adjudication of the controversy. ;\;\<JI-IX0:\.2

-.1 -

5. Th~ Court further tinds that there has been no collusion between the State and the Fanners Parties with respect to negotiating the Settlement Agreem~nt and that the State has represented. and will continue to represent, the interests of the Farmers' policyholders fairly and adequately and without a contlict of interests. Accordingly, the Court preliminarily approves: (a) the Second Amended Settlement Agreement, including the terms and the releases set forth therein, as being fair, just, reasonable, and adequate as to each of the parties thereto, and (b) the Settlement Funds described therein, including the Prospective Rate Reduction, Retrospective Rate Reduction, Individualized Discount Adjustment, and Credit Usage Notice Adjustment Fund, and the proposed additional consideration, su~ject to the right of any member of the Settlement Classes to exclude himself or herself from the Settlement Classes in accordance with the terms set forth in the Settlement Agreement, and to show cause, if any exists, why a Final Judgment should not be entered in accordance with the terms of the Settlement Agreement.

6. A hearing (the ''Settlement Hearing'') shall be held before this Court on January 22, 2014, at 9:00 a.m. in the 53rd Judicial District Court Room: (a) to determine whether the proposed Second Amended Settlement Agreement is l~lir, reasonable, and adequate and should be approved, and whether the Final .I udgment should be entered as to claims asserted therein, or which could have been asserted, against the Released Parties on the merits; (b) to c.ktermine whether the Settlement Classes members' right to adequate representation has been satisfied; and (c) to reserve jurisdiction to effect and enforce the Settlement Agreement.

7. The Farmers Parties sha ll disseminate notice of the proposed Second /\mendcc.l Settlement Agreement and Settlement Hearing to putati ve members of the Settlement Classes within thirty (30) days or the date of this Order. !\ copy of the Notice or Pmpnsed Class Settlement (the .. Notice''). tllgcther with n copy of the Claim Form. substantiall y in the form attached hereto as Exhibit I. shall be mailed by first-class U.S. mail, postage prepaid, to all members of the Settlement Classes at the address of each such person as set forth in the records of the Released Parties or as otherwise may be idcntitied through reasonable effort. In addition, commencing within seven (7) days of the date of this Order and continuing until the date of the Settlement Hearing. the Ofticc of the Attorney General, the Texas Department of Insurance, and the Farmers Parties shall post on their respective Internet web-sites (www.oag.state.tx.us, www.tdi.state.tx.us and www.farmers.com), as well as at www.TexasFarmersSettlement.com, the Notice and a Summary Notice of Settlement, substantially in the form attached hereto as Exhibit B (''Summary Notice").

8. The Court approves the form of Notice, the Summary Notice, and the Claim Form, and finds that the procedures established for mailing and distributing such notices substantially in the manner and form set forth in paragraph 7 of this Order meet the requirements of Rule 42 of the Texas Rules of Civil Procedure and §§ 541.261 and 541.267(b) of the Texas Insurance Code and due process, and constitute the best notice practicable under the circumstances.

9. To etiectuate the provision of notice provided in paragraph 7 hereof~ the Farmers Parties shall be responsible for the receipt of all responses from the members of the Settlement Classes and, until further order or this Court, shall preserve all entries of appearance, Claim Forms, requests for exclusion. and any and all other written communications from members or the Settlement Classes or any other person in response to the Notice. ·rhe costs of notification of the Settlement Classes as provided herein. including printing. mailing, and posting on the Internet of all required notices. sha ll be borne by the party charged with the responsibility for such actions in paragraph 7 of this Order.

I 0. Three (3) days before the date lixcd by this Court for the Settlement Hearing. the State and the Farmers Parties shall cause to be filed with the Clerk of the Court affidavits or declarations of the person or persons under whose general direction the mailing or the Notice and the distribution of the Summary Notice by posting on the web-sites identified in paragraph 7 shall have been mack. showing that such mailing and publication have been made in accordance with this Order.

I l. Each member of the Settlement Classes will be bound by the proposed settlement provided for in the Settlement Agreement. and by the Final Judgment or any other determination by this Court affecting the Settlement Classes, unless such member shall mail, by tirst-class U.S. maiL a written request for exclusion from the Settlement Classes, post-marked no later than December 23, 2013, addressed to State v. Farmers Settlement Administrator. Rust Consulting, Inc.: P.O. Box 9348; Minneapolis, MN 55440-9348. Such request for exclusion must state (a) the name. address and telephone number of the person seeking exclusion: (b) whether such person has a homeowners or automobile insurance policy from the Farmers Parties. or both; (c) the date of inception of such policy(ies) and the most recent date of renewal for such policy(ies), if available; (d) the policy number(s), if available: and (e) that the person making the request wishes to be excluded from the Settlement Classes. Because the Settlement Agreement is intended to be a resolution of all Released Claims. any person requesting exclusion must either exclude himself or herself from the Settlement Agreement in its entirety. or submit to the Settlement Agreement in its entirety. J\ request for exclusion shall not be cfl\::ctivc unless it is made in the manner and within the time set forth in this parng.raph and in the Notice. If a member of the Scttkmcnt Classes requests to be excluded. tlwt person \viii not n:ceivc any bcnclit from the Retrospective Rate Reduction. the Individualized Discount ;\djustmcnt. or the Credit Usage Notice Adjustment fund pro\'ided for in the Settlement Agreement. in the event the Settkment Agreement is approved by the Court, nor will such person be permitted to participate further in the Action. Any Class Member who docs not request exclusion in the manner provided for herein may, but need not. enter an appearance in this Action at his or her own cost through counsel of his or her own choice. If a member of the Settlement Classes does not enter an appearance, that person's interests will be represented by the State in the Action.

12. Any member of the Settlement Classes who has not requested exclusion from the Settlement Classes may appear at the Settlement Hearing, in person or through counsel, to object and be heard in opposition to any of the matters to be heard at the Settlement Hearing, including (a) the requested approval of the Settlement Agreement as fair, adequate, and reasonable, and/or (b) the requested entry of the Final Judgment. A member of the Settlement Classes cannot request exclusion from the Settlement Classes AND object to the Settlement Agreement. For any objection to be considered by the Court, the objector must mail a valid written objection, and it must be postmarked by no later than December 23, 2013. ln order to be valid, the written objection must set forth (a) a reference. at the top, to ··state of Texas v. rarmers. Cause No. GV202501," (b) a statement as to whether the objector intends to appear at the Settlement Hearing. either in person or through counsel. (c) a detailed statement of the spccitic basis for the objection, (d) the name that is set rorth on the Notice that was sent to the objector. (e) the objector's current name, if different from the name set l~)rth on the Notice. (t) the objector's current address. (g) the objector's current telephone number and. if' available, tclecopier number, (h) the objector's type or policy and policy number. and (i) the objector' s signature or that of his or her authori1.ed representative. Three copies of' the written objection must be sent. the first addressed to the District Clerk of Travis County. T~..!xas. I000 Cluadalupc Street. Austin. Texas

~5'1· 1·1X0~ . 2 7870 I, the second addressed to David C. Mattax, Director of Defense Litigation. Office of the Attorney General. P.O. Box 12548. Austin, Texas 78711-2548, and the third addressed to Marcy Hogan Greer. Fulbright & Jaworski L.L.P., 98 San Jacinto Boulevard, Suite II 00. Austin, Texas 78701. If an objection does not include all of the required information or if it is not timely mailed to the three correct addresses. then it shall be invalid and it ·will not be considered by the Court. Any member of the Settlement Classes who does not object in the manner provided shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness, adequacy, or reasonableness of the Settlement Agreement and the proposed Final Judgment.

13. If the Court gives final approval to the Settlement Agreement and enters a final judgment, in order to be entitled to participate in the Credit Usage Notice Adjustment Fund portion of the Settlement Agreement, a member of the Credit Usage Notice Class who has not requested exclusion from the Settlement Classes must submit a Claim Form, substantially in the f~mn attached as Exhibit C hereto, to the Claims Administrator at the address set forth in the Notice. Such Claim Form must be completed and postmarked on or before March 24, 2014. Any member of the Credit Usage Notice Class who does not submit a completed Claim Form shall not be entitled to share in the Credit Usage Notice Adjustment Fund but nonetheless shall be bound by the terms of the Second Amended Settlement Agreement and by the Final .Judgment and any other Order of this Court approving the Second Amended Settlement Agreement. including all releases therein , and shall be barred and enjoined in this or any other action from asserting any Rcknscd Claims.

14. M~:mbers or the Rate and Discount Classes shall automatically receive their share or Settlement Funds upon final approval or the Second Amended Settlement Agreement and and if any party to the Second Amended Settkment Agreement thereafter I.:!Xercises its right to terminate the Settlement Agreement as provided therein, then the Second Amended Settlement Agreement and any actions to be taken in connection therewith shall be vacated and terminated and shall become null and void for all purposes, and all negotiations, transactions and proceedings connected \Vith it (a) shall be vvithout prejudice to the rights of any party hereto; (b) shall not be deemed or construed as evidence or an admission by any party of any fact, matter or thing; and (c) shall not be admissible in evidence or used for any purpose in any subsequent proceeding in the Action, or any other action or proceeding in this or any other forum, judicial, administrative, or otherwise, except proceedings to enforce the Settlement.

SIGNED_ _ _ _ __ _ __ __, 2013.

PRESIDING JUDGE

~ -''>· llS11~ . 2 -l 0- EXHIBIT 5 REPORTER'S RECORD

VOLUME 2 OF 2 VOLUMES

TRIAL COURT CAUSE NO. D-1-GV-02-002501

STATE OF TEXAS, THE TEXAS ) IN THE DISTRICT COURT DEPARTMENT OF INSURANCE, ) AND THE TEXAS ) COMMISSIONER OF ) INSURANCE, ) Plaintiffs, ) ) VS. ) ) ) FARMERS GROUP, INC., ) FARMERS UNDERWRITERS ) TRAVIS COUNTY, TEXAS ASSOCIATION, FIRE ) UNDERWRITERS ASSOCIATION, ) FARMERS INSURANCE ) EXCHANGE, FIRE INSURANCE ) EXCHANGE, TEXAS FARMERS ) INSURANCE COMPANY, ) MID-CENTURY INSURANCE ) COMPANY OF TEXAS, AND ) FARMERS TEXAS COUNTY ) MUTUAL INSURANCE COMPANY, ) Defendants. ) 261ST JUDICIAL DISTRICT -------------------------------------------------

HEARING ON JOINT MOTION FOR PRELIMINARY APPROVAL OF SECOND AMENDED

SETTLEMENT AGREEMENT

-------------------------------------------------- On the 2nd day of July, 2015, the following proceedings came on to be heard in the above-entitled and numbered cause before the Honorable Scott H. Jenkins, Judge presiding, held in Austin, Travis County, Texas;

Proceedings reported by machine shorthand.

THE COURT: Well, I asked questions because of the very -- for the very same reason I'm asking now, does anybody know that answer, and I think --

MR. LONGLEY: I don't know of any empirical evidence that's in this record.

COURT'S RULING

THE COURT: Okay. Thank you. That answers my question. You both answered my question the same way. Thank you. And that's my only question.

All right. You need to submit to my staff proposed orders. I know your proposed order will be to grant the joint motion for preliminary approval.

And I know your motion -- or your order will be to deny the joint motion for preliminary approval. It might even have more in it such as to sign an order that decertifies the class. I don't know.

But do you, as you sit here now, have in your possession the very proposed order that you wish for this Court to sign after I go back and think about whether I'm prepared to sign your proposed order? Do you have your order?

MS. GREER: We do, Your Honor.

THE COURT: Would you hand that to my court operations officer? And I assume you've already tendered that to the opposing parties.

MS. GREER: No, we weren't presuming at this point.

THE COURT: That's okay. Please do that now.

MS. GREER: And I have provided it to the State.

THE COURT: Thank you. Do the intervenors have a proposed order to conclude this hearing?

MR. LONGLEY: No, Your Honor. We were relying upon the form of the order that was attached to their moving motion, which is obviously far different from this order.

THE COURT: Okay. That's great. Well, let's just take a moment to look at it and see what it is they're asking the Court to do at the conclusion of this hearing.

This question is directed to the moving parties. Exhibits 1, 2 and 3 to this order are identical to the forms that were already submitted in your joint motion materials, correct?

MS. GREER: Yes, Your Honor.

THE COURT: Thank you. I'm not going to go reread --

MS. GREER: Although I did note, being completely detail oriented here, one typographical error in the notice that we might as well address now.

THE COURT: On which exhibit is this?

MS. GREER: That would be Exhibit 1, Your Honor.

THE COURT: Yes, the notice.

MS. GREER: There's a reference -- THE COURT: What page are you on?

MS. GREER: I am on Page 5 under Question No. 9. At the end of that first paragraph, it says see Question 14, and that actually should be Question 13. Since we're here I thought we could correct it.

THE COURT: Oh, I see. At the end of the first paragraph?

MS. GREER: Yes, Your Honor.

THE COURT: Question 14 is a mistake. It should be Question 13.

MS. GREER: Yes, sir.

THE COURT: Okay. Otherwise, these are identical to what you submitted before?

MS. GREER: Correct.

THE COURT: And in fact, it is identical, but it contains a mistake, and so it now needs to be corrected.

MS. GREER: Correct.

THE COURT: I get it.

MS. GREER: And, Your Honor, the State has pointed out a couple of small nits in the order itself just with website names on Page 4.

THE COURT: At the bottom?

MS. GREER: Yes, Your Honor. The Texas Attorney General has changed its website to www.texasattorneygeneral.gov. THE COURT: All spelled out?

MS. GREER: All spelled out. And the next --

THE COURT: And then it's still dot state dot TX, et cetera?

MR. GODBEY: No, Your Honor.

THE COURT: Okay. So it's just www.texasattorneygeneral --

MS. GREER: Dot gov. THE COURT: -- dot gov. Yes, we changed ours here in the County also, which causes no end to problems, although most of it's seamless, but not entirely.

MS. GREER: And Your Honor, there's a typo in the next website, and I apologize because it's mine. It should be TDI.state.tx.

THE COURT: I'm sorry. It should be -- MS. GREER: TDI, Texas Department of Insurance.

THE COURT: Of course, instead of just TI.

MS. GREER: Correct.

THE COURT: Got that.

MR. MINDELL: Your Honor, actually the TDI website is now www.TDI.Texas.gov. MS. GREER: We got the Norton Rose one right.

THE COURT: Well, that's nice. That's good. All right. Anybody else find any other typos?

I mainly wanted to make sure -- because I did not take the time to reread Exhibits 1, 2 and 3, because I've already read those things. I only wanted to read with some care the proposed order that you want me to sign, and I've done that.

And so I'm prepared to tell you -- because I've spent a lot of time on this, we all have, for many, many years. I've read everything you've asked me to read, every case you've asked me to read, and thought about everything you wanted me to think about, and I really do appreciate what you said, but I'm now about to rule in a way that the intervenors are asking me not to. I'm about to grant this joint motion for preliminary approval.

And there are some blanks that will have to be filled in which will involve all of us. Certainly it will involve the moving parties and the Court. And so -- and you're going to get out the notice within 60 days of the signature on this order. And I'll be signing it with corrections no later than Monday, maybe sooner if I finish this work today, but I've got other work to do, and so we'll just see. But I'd like to get this done. So we need to figure out what date this will be set. I need to ask them that question first. Thank you, Mr. Longley.

MR. INCERTO: We have proposed dates if the Court wants to --

THE COURT: Would you hand that to the court operations officer with a copy to the -- do you have copies for the other side?

MR. INCERTO: It's a little confusing. The yellow highlighted are --

THE COURT: Well, I always like to walk back -- begin with the end in mind.

MR. INCERTO: Right.

THE COURT: Walk back to the end, just like we do on a trial scheduling order, and figure out what needs to be done in advance of that and how far in advance it needs to be accomplished.

MR. INCERTO: I think the end -- THE COURT: Do we need to discuss all these time periods on the record or may I give the court reporter a break now?

MR. LONGLEY: I want to make an objection on the record before we go off the record, Your Honor, regarding the form of the order that you're about to sign. We object to the form.

THE COURT: Then tell me what the defect is in the form of the order.

MR. LONGLEY: The defect is that, number one, we were just handed this order. It was not attached as part of the moving papers. The one that was attached to the moving papers in Paragraph 2 says this Court hereby certifies classes, and this is the first time we've seen an order that does not certify classes.

THE COURT: That's because their position, as you know, all along in this joint motion has been that the class was previously certified -- or the Court gave preliminary approval before, it's come back to the Court and that the class has never been decertified. That's -- has that been your argument?

MS. GREER: Yes, Your Honor.

MR. GODBEY: Yes, Your Honor.

THE COURT: And so what you like about that other order is that it suggests that I have to go back and recertify the class, and that's what you'd like me to put in the order, right?

MR. LONGLEY: Either that or that you refuse to certify a class in this particular order for the reason that you're adopting their view that it's already been certified and you're applying that certification in 2003 to this new 2015 settlement.

THE COURT: No, I understand what they're doing in this order, and I thought about that very thing as I read it, just as you did, and I am going to sign the order as they've presented it.

MR. LONGLEY: And -- THE COURT: But I understand why you don't like that.

MR. LONGLEY: Well, the point -- the reason we don't like it is it's an attempt through collusion to deny these -- let me finish, please.

THE COURT: Well, I'm not going to morph into argument. I'm only going to talk about the form of the order. And I understand why you don't want me to sign the order, but I don't want to morph into argument now, which it sounds like you want to do, and I understand that, but we're not going to do that.

Is there any other defect in the form of the order, that is, errors, bad grammar, misstatement of the record? I don't believe that does misstate the record, and I am going to sign that.

MR. LONGLEY: I have not had time to read the new order, and I would request respectfully that we have a red lined copy of what the differences are between the order they just handed us and the order they attached to their moving papers for this hearing, because I've seen nothing except what I've just told the Court, and I want to see what's been added, what's been subtracted, because I went through this whole hearing without having a copy of this.

THE COURT: I understand.

MR. LONGLEY: And I object to it as a matter of form.

THE COURT: I understand. But I had read it so thoroughly before, things jumped out at me just as they jumped out to you because you and I have both read this so carefully. I understand it. Let me ask them if they have a red lined copy. And if they do, I will certainly ask them to give you one. And if they don't, I will give you this afternoon to read this and compare it to the previous one and send electronically to the Court by, I would say, 3:00 or 4:00 -- I mean, you're going to need to work now side by side and compare it, what form errors there are -- I know you have substantive disagreements; I'm not going to go backwards on that -- form errors you have on the form of the order given your comparison of the previous form and this form, and I will certainly read that, if not today then tomorrow, if not tomorrow then Saturday, because I want to get this done before I start a trial on Monday.

MR. LONGLEY: Well, I respectfully request that they provide us with a red lined because they have these documents on their computers.

THE COURT: I just mentioned I'm going to ask them that. And if not, I'll let you do the green eye shade work of looking back and forth, but let's see if they have it.

MR. LONGLEY: Okay.

THE COURT: Thank you. Do you have that?

MS. GREER: No, Your Honor, we haven't created that.

THE COURT: Okay. Never have created it. They say they haven't created it. And I know you take them at their word that they've never created that. This is simply -- this is their new and improved proposed order. And I understand that you see differences. I do, too. But that's why I wanted to take enough time so that I felt comfortable knowing what's in this that was not in the previous order. Amazingly I do. I guess I'm still able to move that quickly. And so I'll keep reading it, though, but I wanted to let you know while you're all here that having read it, though I discerned some differences too, I'm prepared to approve it. But I want to give you the next two or three hours to go through it yourself and see if you find any other errors in it and submit that electronically simultaneously copying the other side, because I would like to get this, you know, out of the court along with all the other findings of fact and conclusions of law on other trials I've got that I'm going to be working on today and this weekend. Okay.

MS. GREER: Your Honor -- THE COURT: Anything else?

MS. GREER: Your Honor, the document that has the colored lines on it that has the dates is in the form of an Excel spreadsheet, and we can manipulate those numbers if the Court --

THE COURT: Let's talk about the final fairness hearing and work back from that, okay?

MS. GREER: Okay.

THE COURT: Because you need me for that.

MS. GREER: Correct.

THE COURT: And you only get me at certain times. Can we now go off the record and give the court reporter a break? I don't want to do that if you want to keep the scheduling discussions on the record. I can go back and repeat it on the record what we've agreed to, but I thought I'd give her a break if we can be conversational for a moment about scheduling the final fairness hearing. Is that okay or do you want to keep -- do you want to stay on the record about discussing our calendars?

MR. LONGLEY: We can go off the record for a few minutes, Your Honor.

THE COURT: Okay. Great. You should enjoy that.

All right. Let's talk about my calendar and your calendar.

(Discussion off the record) THE COURT: All right. We're back on the record, Counsel. We've had a discussion about timing and giving everyone ample time in advance of the final fairness hearing to file objections and to file any briefing about those objections so that the Court can thoroughly consider that. And having consulted and worked collegially about this, I think everyone's in agreement that we can give more than ample time for all of that to be accomplished if we set the final fairness hearing for February 1st. And if no one says they disagree with that, I think I just summarized correctly what everyone has worked together to ensure that the Court is going to do, and that is to have a thorough opportunity to consider any objections to final fairness in advance of that hearing and to begin that hearing on February 1st. So that date will be put in this order, and then you will back up from that date and put briefing -- you're going to add a briefing schedule to this order, correct?

MR. INCERTO: That's correct.

THE COURT: And you're going to add, are you, a subpoena deadline to this order, or do you want to think about that?

MR. INCERTO: I think we'll add the subpoena deadline and we'll add the briefing deadline as the 14th of December.

THE COURT: All right. Well, I want to review that order. And if there's some -- and I ask you to send that to Mr. Longley and his colleagues so that you can, again, collegially discuss any deadlines to make sure that everyone's had an opportunity to think about who they want to subpoena. But then, for everyone's sake, and especially the witnesses, so we don't have the last-minute subpoenas we've had in this preliminary fairness hearing, I would like to cook some deadlines in there. Do you have any questions about what I'm going to do?

MR. LONGLEY: No, Your Honor, I don't. What I would request is that the nits that you have requested, that they be included in whatever they send over to us so that we don't -- I haven't written all these down as we've gone through here informally. So just correct whatever it is they're going to correct and send it over to us. As to form, we have no objection with the date the Court has said that you want to have the final fairness hearing. We're not agreeing to it.

THE COURT: I understand.

MR. LONGLEY: Yeah.

THE COURT: But you have no objection to --

MR. LONGLEY: We have no objection to the setting.

THE COURT: To the setting. And you have no objection to baking into this order deadlines for subpoenas, deadlines for briefing provided those are reasonable. And we've talked about roughly six or more weeks before the final fairness hearing having the final briefs submitted. Given how far in advance we're setting this final fairness hearing, you have during our discussions offered no objections to the idea that we would bake in some deadlines so that the Court has an ample opportunity to have us all prepared for the final fairness hearing.

MR. LONGLEY: We understand thoroughly, Your Honor, the need for dates to be in there, and as to that part of the form we have no objection.

THE COURT: Thank you for saying that. And I know you're speaking on behalf of the other intervenors, too. Thank you.

Anything else we need to say on the record about this so that I can then review this order you're going to get to me hopefully later today and I can sign it sometime today or over the weekend? The next time it'll be filed if it's not filed by 5:00 p.m. today -- the clerk's office shuts down, so they won't be filing it until Monday no matter what I'm signing, but I will get it signed no later than Monday. And you're going to be getting that to me this afternoon; is that correct?

MR. INCERTO: That is correct.

THE COURT: And Mr. Longley requested just now, could you -- when you redo this, correcting the nits, could you shoot that over to his office and his co-intervenors in a form that allows them to quickly see -- MR. INCERTO: We'll red line -- THE COURT: -- the nit corrections you've done?

MR. INCERTO: We'll red line the original order to show the corrections and the nits.

THE COURT: Thank you. I know he appreciates that. Anything else we need to say on the record?

MR. INCERTO: Nothing further, Your Honor.

MR. GODBEY: Nothing, Your Honor.

MR. LONGLEY: I think we're finished, Your Honor. Do we need to report back to you tomorrow? Is that what you were asking?

THE COURT: First I need to let the court reporter know she's through. Is there anything else we need to say on the record? No?

MR. LONGLEY: Only when you want us to report back to you with regard to what they're going to send to us so that we know the deadline that we've got to get you something, objections or something about this order.

THE COURT: Well, they're not going to give you a red line comparing this order today with the previous order.

MR. LONGLEY: I understand that.

THE COURT: They're only going to give you a little red line with the nit corrections.

MR. LONGLEY: Right.

THE COURT: So your job now is to go back now, which you're already doing, and I am too -- I've already compared it in my mind because I remember what was in the previous order, and that's why you and I both knew one of the changes in this order. You now need to go back and compare this to the previous order, and you also need to let me know by the end of the day what corrections, even before you get the nit red lines, you are finding in this order. Then if there's something about their -- so you'll need to do that this afternoon also. I suggest at 4:00 o'clock that you need -- but I would like it no later than 4:00. I'd prefer it earlier.

How long is it going to take you to go back and read the order that you already argued on the record is different from this order in some material way, especially as it references the certification of the class? You know what I'm referring to now.

MR. LONGLEY: Yes, sir, I do.

THE COURT: Anything else like that you want me to understand that you think I might not have understood -- I believe I have, but if you don't think I have, I want to know by what time this afternoon you're going to put that in an e-mail to the Court so I can give one last thought to that. I'm not going to rethink my decision, but I am thinking about the form of the order.

MR. LONGLEY: I think I can meet that timetable so long as I get what they're going to send over to me reasonably soon.

THE COURT: Well, that's just nit corrections with dates. I need to know anything in addition to the thing that you said earlier such as, well, this changes what you're saying about the class certification. Yes, yes it does, in some respects, and I'm signing it. If there's anything else like that, I need to know by 3:00, 4:00 at the latest. I would hope by 3:00. I would hope you could go back right now and compare it and tell me anything else that you couldn't -- because I know you've read this thoroughly before.

MR. LONGLEY: I guess what I need to know is the Court is not going to entertain any alternative order to refuse with regard to what we might want to submit?

THE COURT: I'm not going to entertain any substantive differences, that's correct.

MR. LONGLEY: Such as the certification.

THE COURT: That's correct. That's exactly right.

MR. LONGLEY: We're addressing that right now.

THE COURT: Exactly, we are addressing that right now. And I understood that from the briefing you gave me in advance of this hearing that you were each trying to spin my prior comments on the record to be a "oh, we need to recertify this class" from your perspective and "no we don't" from their perspective. I understood that completely.

MR. LONGLEY: And I think I do, too, Your Honor, that this particular settlement that you're approving will not have a separate certification or refusal to certify.

THE COURT: It's going to be the order they've proposed.

MR. LONGLEY: I gotcha. And I can get back to you by 5:00 o'clock today or to e-mail Ms. Daniel.

THE COURT: No.

MR. MAXWELL: 4:00 o'clock, Joe.

THE COURT: No, by 4:00 o'clock.

MR. LONGLEY: 4:00 o'clock. Okay. Sorry.

THE COURT: Okay. Good. All right. Any other questions or statements on the record before I let the court reporter get a well-deserved break?

MR. INCERTO: Nothing further.

MR. GODBEY: Nothing further, Your Honor.

MR. LONGLEY: Nothing further.

MR. BLANKS: Nothing from the Hooks, Your Honor.

MR. WOODS: Nothing.

THE COURT: All right. Thank you all.

(Court adjourned) REPORTER'S CERTIFICATE

THE STATE OF TEXAS )

COUNTY OF TRAVIS )

I, Chavela V. Crain, Official Court Reporter in and for the 53rd District Court of Travis County, State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription of all portions of evidence and other proceedings requested in writing by counsel for the parties to be included in this volume of the Reporter's Record, in the above-styled and numbered cause, all of which occurred in open court or in chambers and were reported by me.

I further certify that this Reporter's Record of the proceedings truly and correctly reflects the exhibits, if any, offered in evidence by the respective parties.

WITNESS MY OFFICIAL HAND this the 12th day of July, 2015.

/s/ Chavela V. Crain Chavela V. Crain Texas CSR 3064, RMR, CRR Expiration Date: 12/31/2015 Official Court Reporter 53rd District Court Travis County, Texas P.O. Box 1748 Austin, Texas 78767 (512) 854-9322 EXHIBIT 6

CAUSE NO. GY202501

THE STATE OF TEXAS, THE TEXAS § IN THE DISTRICT COURT DEPARTMENT OF INSURANCE. and § THE TEXAS COMMISSIONER OF ss INSURANCE, § § Plaintiffs, § ~ s V. § § FARMERS GROUP, INC., FARMERS § UNDERWRITERS ASSOCIATION, FIRE § OF TRAVIS COUNTY, TEXAS UNDERWRITERS ASSOCIATION, § FARMERS INSURANCE EXCHANGE, § FIRE INSURANCE EXCHANGE, TEXAS § FARMERS INSURANCE COMPANY, § MID-CENTURY INSURANCE COMPANY § OF TEXAS, MID-CENTURY INSURANCE § COMPANY, FARMERS TEXAS COUNTY § MUTUAL INSURANCE COMPANY, § TRUCK INSURANCE EXCHANGE, and § TRUCK UNDERWRITERS § ASSOCIATION, § § Defendants. § 261 ST JUDICIAL DISTRICT

FINAL .JUDGMENT

The Court held an evidentiary hearing in this action on the day of January 22, 2014. After considering the Second Amended Settlement Agreement and Stipulation ("Settlement Agreement"), the releases contained therein and the exhibits thereto, objections received regarding the proposed settlement, pleadings and record in this case, the evidence presented at the hearing. and arguments of counsel and applicab le authorities, the Court rules as follows:

1. The Court has jurisdiction over the subject matter of this Action and over the parties to the Action, including the State of Texas, the Texas Department of Insurance, and the

Second Amended Settlement Agreement and Stipulation

EXHIBIT K

·,.

Texas Commissioner of Insurance (collectively. the " State''), as well as the Settlement Class Members, as plaintiffs, and Fire Underwriters Association, Farmers Group, Inc. d/ b/a Farmers Underwriters Association, farmers Insurance Exchange, Fire Insurance Exchange. Texas Fam1ers Insurance Company, Mid-Century Insurance Company of Texas, Mid-Century Insurance Company, Farmers Texas County Mutual Insurance Company, Truck Insurance Exchange, and Truck Underwriters Association, as defendants (collectively, the " Farmers Parties");

2. The Settlement Agreement is reasonable, fair, just, and adequate and satisfies

Texas Rule of Civil Procedure 42 and Texas Insurance Code§ 541.266(a);

3. The State has satisfied the Settlement Class Members' rights to adequate representation;

4. The Court hereby acknowledges and confirms the State, through the Office of the Attorney General, to fulfi ll the role of the Settlement Classes ' Counsel. The Court finds that the Attorney General's office is authorized to bring this class action by the parens patriae authority granted in sections 541.251 and 541.256-.257 of the Texas Insurance Code and Rule 42 of the Texas Rules of Civil Procedure;

5. This Court additionally finds and concludes that each of the requirements of Rule

42(a) and (b) and sections 541.256 and 541.257 of the Texas Insurance Code has been met, specifically: (a) each of the Settlement Classes is so numerous that joinder of all members is impracticable; (b) there are questions of law or fact common to the Settlement Classes which predominate over any individual questions; (c) the claims or defenses brought by the State on behalf of Farmers ' policyholders are typical of the claims or defenses of the Settlement Classes and the State is authorized to bring claims on behalf of the Settlement Classes; (d) in negotiating

55944l!41 .2 and entering into the Settlement Agreement, the State has fairly and adequately represented and protected the interests of the Settlement Classes; (e) the questions of law or fact common to the Settlement Classes predominate over any questions affecting only individual members; and (f) certifying this Action as a class action for settlement purposes is superior to other available methods for the fair and efficient adjudication of the controversy;

6. The Court further finds that there has been no collusion between the State and the Farmers Parties with respect to negotiating the Settlement Agreement and that the State has represented, and will continue to represent, the interests of the Farmers' policyholders fairly and adequately and without a conflict of interests.

7. The Notice provided pursuant to the Court's Order of Preliminary Approval signed the day of October 18, 2013, provided the best notice practicable to all persons within the definition of the Settlement Classes under the circumstances, and fully complies with Tex. R. Civ. P. 42(c)(2), sections 541.261 and 541.267(b) of the Texas Insurance Code, and the Texas and United States Constitutions;

8. At the time Farmers Insurance Exchange and Fire Insurance Exchange ("Exchanges") ceased offering HO-B form policies in Texas, they were not subject to the withdrawal requirements found in former art. 21.49-2C of the Texas Insurance Code pursuant to former Texas Insurance Code Article 19.12;

9. The Farmers Parties have no statutory or regulatory duty nor any contractual obl igation under fonns approved by the Texas Department of Insurance, either to renew or offer 1-10-B policies to policyholders in the State of Texas; and

5S944841.2 I 0. The decision to discontinue the Exchanges' HO-B policy offerings, and offer. us an alternative to the HO-B policy, an amended HO-A policy, was accepted by the Commissioner of Insurance.

The Court ORDERS as follows:

1. The Settlement Agreement, including the definitions contained therein and the exhibits thereto, is approved and shall be consummated in accordance with the terms and provisions thereof: and the Court orders the Parties to comply with the Settlement Agreement. The terms "Released Parties," "Released Claims," "Settlement Classes," "Settlement Class Members," and all other terms in this Final Judgment are defined in accord with the terms in the Settlement Agreement.

2. This Final Judgment is binding on all parties to the Settlement Agreement and on all Settlement Class Members. Settlement Class Members, as defined in the Settlement Agreement, include all of the following who did not timely request exclusion from the Settlement Classes:

(a) All of the Exchanges' Texas homeowners insurance policyholders (a) whose homeowners insurance policy incepted (including renewals) from December 28, 2001, through and including December 27, 2002, or (b) who received a notice at any time after November 14, 200 1, that their l ·I 0-8 policy would not be renewed (the "Rate Class");

(b) All of the Exchanges' Texas homeowners insurance policyholders who according to Farmers' records were eligible to receive discounts for FPRA, age of home, or territory from November 16, 2000, through and including December I 0, 2002 (the "Discount Class"); and

(c) All Texas homeowners or automobile insurance policyholders of the Exchanges or the Automobile Insurance Providers who according to Farmers' records had a homeowners or automobile insurance policy in effect with Farmers from October I, 1999, through February 28, 2003 (the "Credit Usage Class").

559.J4841.2 -4-

3. In accordance with and pursuant to the tenns of the Settlement Agreement, the Released Parties shall make available to eligible Settlement Class Members the Prospective Rate Reduction , the Retrospective Rate Reduction, the Individualized Discount Adjustment, and the Credit Usage Notice Fund.

4. Entry of this Final Judgment approves the Settlement Agreement and settles all Released Claims. As of the Effective Date of the Settlement Agreement, the State and Settlement Class Members shall be forever barred from bringing or prosecuting any action or proceeding that involves or asserts any of the Released Claims, as defined in the Settlement Agreement against the Released Parties, and shall be deemed to have released and forever discharged the Released Parties from all Released Claims.

5. As of the Effective Date of the Settlement Agreement, the State and Settlement Class Members shall be conclusively deemed to have acknowledged the release of all Released Claims, including but not limited to claims, rights, demands, causes of action, liabilities or suits that are not known or suspected to exist as of November 30, 2002.

6. The Settlement Funds, Revised Credit Usage Notices, and payment of attorney's fees and costs provided in the Settlement Agreement are the only consideration, fees, and expenses the Farmers Parties shall be obligated to give the State and Settlement Class Members in connection with the Settlement Agreement.

7. All Released Claims, as defined 111 the approved Settlement Agreement. are dismissed in their enti rety, with prejudice.

The Court DECLARES as follows:

559-1-ll!-112 -5-

1. The Released Parties were under no obligation- whether statutory, regulatory or under forms approved by the Texas Department of Insurance-to renew or offer HO-B policies to policyholders in the State of Texas;

2. The HO-B policy nonrenewal endorsements contained in the HO-B insurance policies issued by the Released Parties impose no renewal obligation on Released Parties; and

3. The Texas Department of Insurance's nonrenewal endorsement, H0-350, does not limit the Released Parties' ability to cease offering HO-B policies to policyholders in the State of Texas.

The Court further ORDERS as follows:

I. The Court reserves and retains exclusive and continuing jurisdiction over this Action, the State, the Settlement Class Members, and the Released Parties, to the fullest extent allowed by Texas law, for the purposes of supervising the enforcement, construction, and interpretation of:

(a) the Settlement Agreement, (b) the Court's Protective Order signed the lOth day of February, 2003, and (c) this Final Judgment.

2. The Court' s Protective Order entered on February 10, 2003, shall continue in effect by its terms;

3. This Final Judgment and the Settlement Agreement, and all papers related thereto, are not, and shall not be construed to be, an admission by any Party of any liability or wrongdoing whatsoever; and

5594-1841 .2 -6-

4. This Final Judgment incorporates all other orders and resolves all claims in this case made by all parties. All other relief not expressly granted herein to the State or the Settlement Class Members, or to the Farmers Parties as counter-plaintiffs, is hereby DENIED.

SIGNE D - - - - - - ' 2014.

JUDGE PRESIDING

55944114 1.2 -7-