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Investors who held M.D.C. Holdings Inc. common stock and received $63 per share in cash on April 19, 2024, in the company's acquisition by SH Residential Holdings LLC may be eligible to receive a cash payment from a class action settlement.
M.D.C. agreed to pay $25 million to settle a stockholder class action lawsuit alleging Larry Mizel and David Mandarich breached their fiduciary duties in connection with the company's acquisition by SH Residential Holdings LLC. The lawsuit alleged the defendants ran a conflicted sale process driven by their estate planning and retirement goals and issued a materially incomplete and misleading proxy that omitted information about the sale process and their potential conflicts of interest.
Who can file a claim?
The settlement class includes all record holders and beneficial owners of MDC common stock who held shares at the closing of the acquisition by SH Residential Holdings LLC on April 19, 2024, and received $63 per share in cash.
Additional details
- Both individuals and entities can be class members.
- The class includes heirs, successors-in-interest, transferees and assigns of eligible holders.
- The class is certified solely for settlement purposes and is a non-opt-out class under Delaware Court of Chancery Rules 23(a), 23(b)(1) and 23(b)(2), meaning class members cannot exclude themselves from the settlement.
How much can class members get?
The total settlement fund is $25,000,000. The amount each class member receives depends on several factors:
- The number of eligible shares held at the closing of the acquisition on April 19, 2024
- The total number of eligible shares in the class (estimated at about 58 million)
- The amount of the net settlement fund after court-approved deductions
The settlement administrator will distribute payments on a pro rata basis according to the court-approved plan of allocation:
- Each class member's payment equals the number of eligible shares they held at closing times the per-share recovery.
- The per-share recovery is the settlement fund divided by the total number of eligible shares.
- For shares held in a "street name" through a broker, the settlement administrator will distribute payments to DTCC participants, who will then distribute payments on a pro rata basis to beneficial owners.
- For shares held of record outside DTCC, the settlement administrator will distribute payments directly to the record owner.
No claim form needed to receive payment
Class members do not need to submit a claim form to receive payment. The settlement administrator will distribute payments the same way class members received the original $63 per share.
Settlement administrator's mailing address: M.D.C. Stockholder Litigation, c/o Settlement Administrator, 1650 Arch St., Ste. 2210, Philadelphia, PA 19103
$25 million settlement fund
The $25,000,000 settlement fund includes:
- Settlement administration costs: To be determined
- Attorneys' fees and expenses: Up to $6,250,000
- Service award to plaintiff: Up to $10,000
- Payments to eligible class members: Remainder of the fund
Important dates
- Fairness hearing: June 18, 2026
When is the M.D.C. stockholder class action settlement payout date?
The settlement administrator will issue payments to eligible class members after the court resolves any appeals and grants final approval of the settlement.
Why did this class action settlement happen?
The class action lawsuit alleged Larry Mizel and David Mandarich breached their fiduciary duties in connection with SH Residential Holdings LLC's acquisition of M.D.C. The plaintiff claimed the defendants ran a conflicted sale process driven by their estate planning and retirement goals that did not maximize stockholder value and issued a materially incomplete and misleading proxy that omitted information about the sale process and their potential conflicts of interest.
The defendants denied all allegations of wrongdoing but agreed to settle to avoid the costs, risks and delays of continued litigation.
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