According to the SEC, Home Solutions Of America, Inc. ("HSOA" or the Company) is a New Orleans-based disaster remediation and construction business, primarily focusing on hurricane restoration.
The original Complaint alleges that Defendants HSOA and certain officers and directors violated federal securities laws by issuing a series of materially false statements. Specifically, on April 11, 2006, HSOA announced that it had been awarded a contract valued at up to $20 million to provide infrastructure support for Hurricane Katrina rebuilding efforts. Subsequently, HSOA announced a string of contract awards, including substantial contracts with Home Depot Inc. and American Renaissance Homes ("ARH"), a builder that had purportedly contracted with HSOA to provide services in connection with the Katrina rebuilding efforts.
On June 20, 2006, a class action lawsuit was filed in the United States District Court for the Northern District of Texas. On June 27, 2006 and on July 6, 2006, two additional class action lawsuits were filed in the United States District Court for the Northern District of Texas. HSOA and its directors are named as Defendants in those actions. The allegations in these two additional class action lawsuits are substantially similar to those in the first lawsuit. On January 10, 2007, the Court consolidated two of the class action cases and appointed lead Plaintiffs and lead Counsel for the consolidated case. On March 12, 2007, the lead Plaintiffs filed a consolidated amended Complaint asserting claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 against the same Defendants as in the original Complaints as well as against several additional Defendants, including a member of the Company’s board of directors and Sanders Morris Harris Group, Inc. On June 13, 2007, the Court consolidated the third class action case into the existing consolidated case. The Company and the individual Defendants moved to dismiss the consolidated amended Complaint.
On March 24, 2008, the Court granted in part and denied in part Sanders Morris's motion to dismiss [40] and granted in part and denied in part HSOA's motion to dismiss [42]. Specifically, the Court dismissed Investors' section 10(b) claims against Sanders Morris, Chadwick, Mattich, O'Brien, Marshall, and McCusker. The Court further dismissed each section 10(b) claim against Fradella and the HSOA corporate entity, except the claim involving the May 23 press release. The Investors' section 20(a) claims remained viable. Furthermore, according to the Order, the Plaintiffs have 30 days to file an amended Complaint. On March 26, 2008, individual Defendant and Sanders Morris Harris Group, Inc. filed a supplemental motion to dismiss section 20(a) claims. On April 22, 2008, U.S. District Judge David C. Godbey granted Sanders Morris’ motion to dismiss section 20(a). On May 7 and 23, 2008, certain individual Defendants filed motions for judgment on the pleadings.
According to the docket, the parties entered into settlement negotiations. On October 20, 2008, the parties filed a Stipulation and Agreement of Settlement and a motion for preliminary approval of the settlement. The proposed settlement is in the amount of $3,500,000 in cash. On November 6, 2008, an Amended Stipulation and Agreement of Settlement was filed.
According to the Order dated March 13, 2009, because of the pending proposed settlement, the Court denied both Motions for Judgment on the Pleadings without prejudice.
On March 25, 2009, the Court issued the Order and Final Judgment approving the settlement. Plaintiffs’ Counsel were awarded 28.7% in fees of the amounts collected for the Gross Settlement Fund, which sum the Court finds to be fair and reasonable, and $94,783.29 in reimbursement of expenses. The civil case is terminated.
