Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology, data and analytics to the mortgage and real estate industries, and KMC Information Systems (KMCIS), the leading provider of case management and integration technology to law firms and trustees, have formed a strategic alliance that will more fully integrate select LPS technologies with KMCIS’ CaseAware® platform and create an end-to-end foreclosure processing solution for loan servicers.
As part of its suite of industry solutions, LPS delivers technologies that support default servicing, including robust enterprise workflow solutions, title ordering applications, invoice management tools and other systems that help servicers, attorneys and trustees reduce expenses and increase operational efficiencies.
The CaseAware platform provides the law firms/trustees with a highly configurable case management system that allows them to rapidly adapt business processes (without programmer intervention) based on changes in regulations, client service level agreements (SLAs) or investor requirements.
The enhanced integration between LPS and CaseAware will offer improved process functionality for both the servicer and the law firm/trustee, and provide seamless connectivity from the servicer’s system into the more than 100 law firms/trustees utilizing CaseAware as their operating system of record.
“If the Justice Department were being tough on Wall Street they would be talking about bringing criminal cases against individuals who helped to perpetrate this immense crisis.” she said. Morgenson adds that the investigations into JPMorgan Chase show that it and many other financial institutions are still ‘too big to fail,’ which means taxpayers could once again be forced to bail them out.
The problem I have with this is that omitted filings are being kept confidential. Taxpayers are entitled to this information.
For Immediate Release Contact: Corinne Russell (202) 649-3032 October 25, 2013 Stefanie Johnson (202) 649-3030
FHFA Announces $5.1 Billion in Settlements with J.P. Morgan Chase & Co.
Settlements include private-label securities and representation and warranty claims
Washington, DC – The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, today announced it has reached a settlement with J.P. Morgan Chase & Co. and related companies for $ 4 billion to address claims of alleged violations of federal and state securities laws in connection with private-label, residential mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac. Under the terms of the agreement, J.P. Morgan Chase & Co. will pay approximately $2.74 billion to Freddie Mac and $1.26 billion to Fannie Mae to resolve certain claims related to securities sold to the companies between 2005 and 2007 by J.P. Morgan Chase & Co., Bear Stearns & Co., Inc. and Washington Mutual.
In separate settlements, J.P. Morgan Chase & Co. resolved representation and warranty claims with Fannie Mae and Freddie Mac related to single-family mortgage purchases by the two companies. Under the terms of the agreements, J.P. Morgan Chase Bank N.A. will pay a total of approximately $1.1 billion — $670 million to Fannie Mae and $480 million to Freddie Mac.
“The satisfactory resolution of the private-label securities litigation with J.P. Morgan Chase & Co. provides greater certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers. This is a significant step as the government and J. P. Morgan Chase move to address outstanding mortgage-related issues,” said FHFA Acting Director Edward J. DeMarco. “Further, I am pleased that a resolution of single family, whole loan representation and warranty claims could be achieved at the same time. This, too, will have a beneficial impact for taxpayers and the housing finance market.”
FHFA’s General Counsel noted, “Our lead representation by Philippe Selendy and the firm of Quinn Emanuel Urquhart & Sullivan was central to reaching this landmark settlement and their work continues in the remaining PLS cases. I want to cite the strong work of the FHFA Office of General Counsel’s litigation group under Stephen Hart and the legal and business teams at Freddie Mac and Fannie Mae.
“The settlement of the PLS litigation was initiated by U.S. District Court Judge Denise Cote’s direction to undertake mediation of the PLS cases under her jurisdiction. The settlement also is aligned with the working group of federal and state authorities addressing claims related to private-label securities and FHFA has and continues to work with all the government entities involved.”
FHFA has now settled four of the 18 PLS suits it filed in 2011, and remains committed to satisfactory resolution of the pending actions.
The settlement agreement regarding private label securities claims between FHFA and J.P. Morgan Chase & Co. involves the following cases: FHFA v. JP Morgan Chase & Co., et al., No. 121 CIV. 6188 (DLC) (S.D.N.Y.)(and other named defendants); FHFA v. Ally Financial Inc., et al., 11 CIV. 7010 (DLC) (S.D.N.Y.); FHFA v. First Horizon National Corp., et al., No. 11 Civ. 6193 (DLC)(S.D.N.Y.) and FHFA v. SG Americas, Inc., et al., No. 11 CIV. 6203 (DLC)(S.D.N.Y.)
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. mortgage marketsand financial institutions.
What if we all embraced the same underlying intent for our actions individually and collectively, personally, nationally, globally?
What if that intent was to reduce the suffering for each of us as human beings,animals and the Earth as a whole? Every action we take, with that intent in mindwould cause a shift in consciousness regardless of everyone embracing the intentor not because witnesses to it would consciously or unconsciously be affectedby it as well. Imagine, if every person in their pocket of home, communityand the bigger picture of their lives kept that intent. My intent is to reduce sufferingfor all beings. Imagine the politics from that view, imagine the state of worldhunger and those that have so much excess. Imagine communities based onthat philosophy. I know it sounds hippy dippy or (gasp) socialist. But it?s amethod of bringing peace to every situation and if you can?t bring peace, bringcomfort to alleviate, bring an open heart to sit with, bring noodle soup. Bring your best self.
We are on the verge of real change in our country and our world. So much comes down to our individual actions, judgement calls, reactions in words, deeds and intent. Suffering is unavoidable – the only thing we can change is our reaction to it.
My advocacy and activism to help homeowners fight for their rights, their homes and their sanity during this massive shift in our global economy and power structures has been dark and cavernous to say the least. Some times you can?t offer solutions, but empathy and being listened to/heard is an amazingly healing gift to someone that feels the world is crumbling all around them. Some times you can offer suggestions, tangible stepping stones toward the path of understanding complicated messy contractual legal terms and a light for where the treasure is. Some times you can?t. We are all on our own journey but we can walk with each other and we can try to diminish each other?s suffering on the road.
The road of discovery in this foreclosure madness is paved with our dreams, our struggle to keep our lives on track, and our realization that we have been abandoned by our own justice system in righting these patterns of economical and psychological harm, abuse and lawlessness, that is the soul of the matrix and the underlying significance of the metrics in attempts to “fix” it.
We have had our own law enforcement, govt. officials and judicial system working against our rights as citizens to free speech, to gather, to protest, to claim our rights and our property, to have our rights served and respected as US citizens.
At the same time I have to believe a renaissance is occurring as well to bring about a new system of being in our country and world that will serve the many not just the few. Literal, metaphorical and societal birth and death are painful messy expansive things, especially at this magnitude. So many catastrophes, so much resistance by the few to keep so many of us at bay, but the ground is shaking and the walls are breaking. We can all feel it. These are the pesky details and casualties to hopefully bring about a system that will work for all of us. Occupy was a metaphor and still exists in groups, communities and outreach in so many ways. We just need to keep showing up for each other again and again and again, speak the truth, try to set some of the emotion aside, but stand firm as to what we can no longer tolerate in a peaceful way. Assist each other, wherever and when ever in alleviating suffering, in being present where harm is being done to anyone or living thing.
A release from suffering is what we all want for ourselves and each other in life and in the battle to save our homes from a corrupt tsunami of wealth redistribution and fraud.
So we stay relentless and we stick together, we show up for each other, we share, we stay awake, we take turns, we rest and we come back again tomorrow. We do the best we can and we try and try again. We offer kindness and our willingness to show up. We wake up and be awesome.
If you get a moment – or 51 minutes – please watch this link:
Lainey Hashorva is a Social Media Activist, Investigative Journalist and Entrepreneur. Join the discussion on Facebook in her group, Fraudclosure Fighters with like minded others. Please visit her ETSY store LaineyBean.
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 13-1821
(9: ll-cv-00395-SB)
JAMES P. SCHEIDER, JR.; TAFFY G. SCHEIDER Plaintiffs – Appellants
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee of the IndyMac INDA Mortgage Loan 2006-AR2 Mortgage Pass-through Certificates, Series 2006- AR2 under the Pooling and Servicing Agreement dated August 1, 2006; INDYMAC MORTGAGE SERVICES; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INCORPORATED; ONEWEST BANK, F.S.B.; FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHARLESTON Defendants – Appellees
and
INDYMAC BANK FEDERAL BANK; MERS, INCORPORATED; MORTGAGE NETWORK INCORPORATED; INTERNAL REVENUE SERVICE; JOHN DOE 1-1000, inclusive, representing a class of unknown persons who claim or have the right to claim an interest in certain real property located in Beaufort County, South Carolina; INDYMAC MBS INCORPORATED Defendants
MOTION FOR CERTIFICATION OF QUESTIONS TO
NEW YORK STATE COURT OF APPEALS
. . .
Appeal: 13-1821 Doc: 23-1 Filed: 10/21/2013Pg: 2 of 21 Total Pages: (2 of 1019)
Pursuant to Article VI Section 3(b)(9) of the New York State Constitution, the Plaintiffs-
Appellants, James P. Scheider, Jr. and TaffY G. Scheider (hereinafter referred to as “Appellants”)
hereby move before this Court for an Order certifying the following questions to the New York
State Court of Appeals.
1. Do Appellants have standing to challenge Appellee, Deutsche National Bank
Trust Company’s (hereinafter referred to as “Deutsche Bank”) failure to honor the
specific delivery, time sensitive, and transfer requirements for notes and mortgages under
the applicable Pooling and Servicing Agreement (hereinafter referred to as “PSA”), the
governing document for the trust supposedly holding Appellants’ note and mortgage?
2. Does New York law control the enforceability of Appellants’ note and mortgage?
3. Did the delivery and transfer of the Appellants’ note to Appellee, Deutsche Bank,
as trustee, after the trust’s closing date render this transfer “void” as opposed to
“voidable’?
4. Did the assignment of the Appellants’ mortgage after the commencement of this
action and contrary to the mandates of 26 U.S.C. Section 860D, render this assignment
“void” as opposed to “voidable”?
5. Do Appellants have standing to challenge their loan with Mortgage Electronic
Registrations Systems, Inc. (hereinafter referred to as “MERS”),
6. Do Appellants have standing to challenge the securitization of their mortgage?
Appellants respectfully submit that these issues will be determinative of the pending
Appeal, may be determinative of the entire action, and have not been decided by the New York
State Court of Appeals, the jurisdiction of the controlling law.
1
_________________________
Appeal: 13-1821 Doc: 23-1 Filed: 10/21/2013Pg: 7 of 21 Total Pages: (2 of 1019)
LEGAL ARGUMENTS
POINT I THE EVILS OF SECURITIZATION UNDERLIE THE CASE AT BAR
POINT II NEW YORK LAW GOVERNS THE TRANSFERS OF THE APPELLANTS’ NOTE AND MORTGAGE
POINT III APPELLANTS’ HAVE STANDING TO CHALLENGE APPELLEES NON-COMPLIANCE WITH THE PSA
. . .
Appeal: 13-1821 Doc: 23-1 Filed: 10/21/2013Pg: 12 of 21 Total Pages: (2 of 1019)
COURT ORDER OF APRIL 11, 2013 AND SUBSEQUENT CASE LAW TO THE
CONTRARY
On April 11, 2013, the District Court dismissed the Appellants’ Complaint and their
argument with regard to standing. While the Court recognized the case of Bank of America, NA.
v. Bassman FBT, LLC, supra., which for the most part advanced Appellants’ arguments, the
District Court adopted the Bassman Court’s finding that a transfer in contravention of n trust’s
tenns is voidable rather than void. A New York court has subsequently spoken with regard to
this issue. New York law controls the governing PSA (Exhibit “22”, Section 10.03).
In the case of Wells Fargo Bank, NA. v Erobobo, supra., (a copy of said decision is
attached hereto and marked as Exhibit “23”), Judge Wayne P. Saitta of the New York Supreme
County for Kings County reasoned as follows…..
11
. . .
Even though the Erobobo case is relatively recent, having been decided on April 29,
2013, it has already been cited with approval and its reasoning is being followed.
In the case of Saldivar v. JPMorgan Chase Bank, NA., et al., United States Bankruptcy
Court, Case No. 11-10689 (S.D. Texas June 5, 2013) (a copy of which is attached hereto and
13
marked as Exhibit “24”), the Defendants moved to dismiss the Plaintiffs’ complaint on the basis
that the Plaintiffs lacked standing to challenge the validity of the assignment of their mortgage to
a securitized trust. The Plaintiffs alleged that the note was not timely transferred into the trust in
accordance with the governing PSA. The court reasoned as follows….
14
Again in Hendricks v. US Bank National Association, as Successor Trustee to Bank of
America, et aI., State of Michigan Washtenaw County Trial Court, Case No. 10-849-CH. (a copy
of which is annexed hereto and marked as Exhibit “25”), the Court held that because the
Defendants failed to strictly comply with the terms of the governing PSA, the loan at issue in that
case was not properly transferred to the trust. Consequently, New York Trust Law rendered the
conveyance of the note and mortgage a nullity. Then, on June 20, 2013, the United States
District Court for the Southern District of Texas in the case of Ortiz v. CitiMortgage, Inc., 2013
U.S. Dist. LEXIS 86484, ( a copy of which is annexed hereto as Exhibit “26”), decided that a
debtor has standing to challenge the validity of a note based on a gap in the chain of title – much
like the Appellee, Deutsche Bank’s failure, in the case of bar, to adhere to the chain of
endorsements of the note required by the governing PSA.
Most recently, on July 31, 2013, the California Court of Appeals recently decided the
case of Glaski v Bank of America, National Association, 218 Cal. App. 41h 1079, Cal. Rptr. 3d
(Cal. Ct. App. July 31,2013). The Appellants in that case argued that the foreclosing bank was
not the true owner of the land because its chain of ownership had been broken by a defective
transfer of the loan to the securitized trust established for the mortgage backed securities. This
specific defect alleged that the attempted transfers were made after the closing date of the
securitized trust and therefore the transfers were ineffective and void. Citing with approval both
the Erobobo and Saldivar cases, the Court held….
16
. . .
Appeal: 13-1821 Doc: 23-1 Filed: 10/21/2013Pg: 19 of 21 Total Pages: (2 of 1019)
GROUNDS FOR CERTIFICATION
<EXCERPT>
It is imperative that the New York State Court of Appeals determine whether Appellants
have standing to challenge the Appellees’ non-compliance with the applicable pooling and
servicing agreement. There is obviously a difference of opinion on this issue which has far
reaching consequences for the homeowners of this state. The decisions of the District Court in
this case were based on a then existing line of cases. Since those decisions, the legal landscape
This is a bunch of bull. You mean to tell me after all these years of the fraud, bribes, manipulation and money laundering etc etc etc etc these banks are now being probed. Don’t expect much of what has been done before.
How many of these banks were former AG Holders clients? When is he scheduled to leave?
Clean Sweep…………………. before the next AG steps in.
Reuters-
At least nine banks face probes by the U.S. Department of Justice into their sales of mortgage-backed securities as part of an effort by the task force that reached the $13 billion agreement with JPMorgan Chase & Co, the Financial Times reported.
Citing people familiar with the matter, the newspaper said the banks include Bank of America Corp, Citigroup Inc , Credit Suisse Group, Deutsche Bank, Goldman Sachs Group Inc, Morgan Stanley, Royal Bank of Scotland, UBS, and Wells Fargo & Co .
Document requests and discussions between the banks and government have picked up recently after Eric Holder, the U.S. attorney-general, indicated publicly that more mortgage-backed security lawsuits were coming by the end of the year, the FT said.
As if we haven’t had an inclination as to where this is heading already! Just knowing the players involved.
Reuters-
Deutsche Bank, Credit Suisse and JP Morgan will begin marketing the first-ever bond backed by US home-rental cashflows, a US$500 million trade for private-equity giant Blackstone, next Wednesday.
The banks will meet with investors in New York on October 30, and then visit Boston and Los Angeles the following two days.
Deutsche bank is the lead structurer, while Credit Suisse and JP Morgan will be acting as joint leads for the transaction.
The deal, titled Invitation Homes 2013-SFR1, will receive ratings from Kroll, Morningstar, and Moody’s. At least one of those ratings will be Triple A.
The deal will be secured by individual mortgage liens on each underlying property rather than an equity pledge in the property-owning special purpose vehicle (SPV), allowing for the creation of a so-called real estate mortgage investment conduit (Remic) structure, according to sources close to the deal.
Citigrouproup Inc., the third-biggest U.S. bank, is selling mortgage-servicing rights on $63 billion of loans, its largest potential sale of this type since the 2008 financial crisis, according to two people briefed on the offer.
The servicing rights, or MSRs, represent about 21 percent of Citigroup’s total contracts as of midyear, and could be sold in pieces, said the people, who asked not to be identified because the sale is private.
“I don’t get my authority from this preexisting paradigm which is quite narrow and only serves a few people,” Russell responded. “I look elsewhere for alternatives that might be of service to humanity.”
And with that, the first shots of Russell’s revolutionary interview were fired.
No one should be above the law, no matter how much money they pay in fines. We call on you to (1) Stop negotiating with JPMorgan Chase over what their punishment will be for securities fraud and (2) Charge JPMorgan Chase with CRIMINAL securities fraud NOW. Do not let a $13 Billion civil settlement impede or delay criminal charges for the losses they cost investors, and the economy as a whole.
“Almost a year to the day after we brought suit, a unanimous jury has found Countrywide, Bank of America, and senior executive Rebecca Mairone liable for making disastrously bad loans and systematically removing quality checks in favor of its own balance. As demonstrated at trial, they adopted a program that they called “the Hustle,” which treated quality control and underwriting as a joke.
In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That profit, however, was built on fraud, as the jury unanimously found.
In this case, Bank of America chose to defend Countrywide’s conduct with all its might and money, claiming there was no case here. The jury disagreed. This Office will never hesitate to go to trial to expose fraudulent corporate conduct and to hold companies accountable, particularly when it has caused such harm to the public.
I want to thank the members of the jury for their service in this important trial. And I commend the Assistant U.S. Attorneys in the Office’s Civil Division for their dedication, skill, and tireless efforts.”
Bank of America Corp was found liable for fraud on Wednesday on claims related to defective mortgages sold by its Countrywide unit, a major win for the U.S. government in one of the few big trials stemming from the financial crisis.
Following a four-week trial, a federal jury in Manhattan found the Charlotte, North Carolina bank liable on one civil fraud charge in connection with shoddy home loans that the former Countrywide Financial Corp sold to Fannie Mae and Freddie Mac and originated in a process called “Hustle.”
I’m telling you, the more you continue to support these criminals the more powerful they will become.
END. Of. Story.
QZ.–
Last week, Federal Reserve officials leaked to the Wall Street Journal their tentative plan to limit the ability of Goldman Sachs and big banks to own metals warehouses, power plants, and other physical commodity assets.
But experts say that, if implemented, the policy the Fed is floating would actually expand the rights of all banks to enter these physical markets, by creating an official entrance instead of locking the door shut. Presented like a deterrent, it would also be a novel enabler.
According to the Wall Street Journal, the Fed’s plan would call for balancing out the new right to hold assets with a requirement that banks hold more capital to cover the potential risks posed by these activities. The Fed declined to comment on the report but is expected to make a decision in the coming weeks.
Some experts believe that this additional cost will lead most banks to abandon these lines of business. But it’s an unsafe bet. Not only is it not clear how the Fed would structure these surcharges, there is no guarantee that a steep fee would push banks out. “When you have regulatory costs associated with highly lucrative businesses, the banks just typically pass them through to customers and end users,” said Josh Rosner, managing director of Graham Fisher & Co, who testified in July on a Senate hearing about whether banks should be doubling as oil refiners and coal miners.
The Honorable Ben Bernanke Chairman Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue, NW Washington, D.C. 20551
The Honorable Mary Jo White Chair U.S. Securities & Exchange Commission 100 F Street, NE Washington, D.C. 20549
The Honorable Thomas J. Curry Comptroller of the Currency Office of the Comptroller of the Currency 250 E Street, SW Washington, D.C. 20219
Dear Chairman Bernanke, Chair White, and Comptroller Curry:
As you know, last month marked the fifth anniversary of the 2008 financial crisis. The crisis took an enormous toll on this country’s economy. According to a recent analysis by the Federal Reserve Bank of Dallas, the crisis cost the United States up to $14 trillion in lost economic recovery, we also must look back to ensure that those who engaged in illegal activity during the crisis and its aftermath are held accountable.
Recovery? What recovery? Real Estate stabilization? What stabilization?
Perhaps when you’re about to buy $20 billion and as many as 200,000 homes.
Why are they willing to buy when they KNOW FOR A FACT that many of these homes have title defects due to fraudulent documents?
Mark my words… there is trouble on the horizon with these.
Bloomberg-
Steve Schwarzman’s Blackstone Group LP has spent $7.5 billion acquiring 40,000 houses in the past two years to create the largest single-family rental business in the U.S. The private-equity firm is now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry.
Deutsche Bank AG may start marketing almost $500 million of the securities as soon as this week, according to a person with knowledge of the transaction. The debt will include a portion with an investment grade from at least one ratings company, according to two separate people, who asked not to be identified because the deal isn’t public.
The New York Times’ spin of the tentative settlement of JPMorgan’s latest myriad felonies begins early and runs throughout the article. JPMorgan and Attorney General Eric Holder have reached a common meme on their settlement: the Department of Justice (DOJ) and Holder are stalwarts who have demonstrated their toughness and JPMorgan is a model corporate citizen. The inconvenient facts that the senior officers of JPMorgan, Bear Stearns (Bear), and Washington Mutual’s (WaMu) grew wealthy through the frauds that drove the financial crisis and that JPMorgan’s senior officers will not be prosecuted and will not even have to repay the proceeds of their crimes never appear in the article.
A word of caution is in order: I am discussing an article that is the product of leaks from DOJ and JPMorgan’s press flacks about a tentative deal, so reality is certain to differ from the spin. This article is a longer discussion of the settlement than my October 22, 2013 CNN op ed.
I am writing a side piece on the irony and implications of the civil and criminal investigation led by the U.S. Attorney for Eastern District of California, Benjamin Wagner. The NYT article suggests that his investigation is of former WaMu officers.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Placer)
—-
RICHARD BUSHELL et al., Plaintiffs and Appellants,
v.
JPMORGAN CHASE BANK, N.A., Defendant and Respondent. APPEAL from a judgment of the Superior Court of Placer County, Michael A. Jacques, Court Commissioner. Reversed.
United Law Center, John S. Sargetis and Jon L. Oldenburg for Plaintiffs and Appellants. AlvaradoSmith, Theodore E. Bacon and Ricardo Diego Navarrette for Defendant and Respondent.
In this action arising from a home foreclosure, the trial court sustained, without leave to amend, defendant lender?s demurrer to plaintiff borrowers? complaint. The complaint alleges causes of action for breach of contract, promissory estoppel, and fraud based on intentional misrepresentation or false promise. Specifically, plaintiffs allege that defendant, under a trial modification mortgage plan, offered to permanently modify the plaintiffs? mortgage loan, provided plaintiffs complied with the terms of the trial modification plan by returning certain requested documents, making timely trial modification payments, and qualifying under a federal program that seeks to reduce home foreclosures, the Home Affordable Mortgage Program (hereafter, HAMP).
Two recent appellate decisions provide guidance on this subject, one from the California Court of Appeal, Fourth Appellate District, Division Three (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780 (West)) and the other from the federal Seventh Circuit Court of Appeals (Wigod v. Wells Fargo Bank, N.A. (7th.Cir. 2012) 673 F.3d 547 (Wigod)). These two decisions, which were issued after the trial court ruled here, concluded that when a borrower has alleged that he or she has complied with all the terms of a trial modification plan offered under HAMP—including making all required payments and providing all required documentation—and if the borrower?s representations on which the modification is based remain true and correct, the lender or loan servicer (collectively hereafter, the lender) must offer the borrower a good faith permanent modification; and if the lender fails to do so, the borrower may sue the lender, under state law, for breach of contract of the trial modification plan, among other causes of action.
We conclude plaintiffs have sufficiently alleged causes of action for breach of contract, promissory estoppel, and fraud based on false promise. Therefore, we shall reverse on those bases.1
Appeal from the Circuit Court for Hillsborough County; Sam D. Pendino, Judge.
Richard A. Schlosser, Jon P. Tasso, and Michael R. Rocha of Bricklemyer Smolker, P.A., Tampa, for Appellants.
Lee D. Mackson, Stephen T. Maher, and Michelle G. Hendler of Shutts & Bowen, LLC, Miami, for Appellee.
DAVIS, Chief Judge.
The several Beaumont LLCs collectively challenge the final summary judgment of foreclosure entered by the trial court in favor of LSREF2 Oreo (Direct), LLC (herein referred to as “the Bank”).1 Because there remains a disputed issue of material fact, we reverse the final summary judgment and remand for further proceedings.
On February 12, 2004, Bank of America made a loan to Adler Group Beaumont Investors, LLC, in the amount of $16.8 million. The proceeds were used to secure a commercial complex consisting of eleven office buildings. Adler executed a mortgage on the complex in favor of the bank as security for the loan. Adler later sold the complex to the occupying tenants, the several individual Beaumont LLCs. As a part of the purchase of the business units, the Beaumont LLCs assumed the indebtedness on the buildings.
Bank of America subsequently assigned its interest in the note and mortgage to LaSalle Bank National Association as trustee for Banc of America Commercial Mortgage, Inc. The loan documents were subsequently assigned to Wells Fargo, which initiated the underlying foreclosure action.
In the initial complaint and the amended complaint, the Bank alleged that the Beaumont LLCs were in default because the note matured on March 1, 2011, and the Beaumont LLCs had failed to pay the balance of the note due on that date. The Beaumont LLCs answered the complaint by denying that the note matured on March 1, 2011, and alleging as an affirmative defense that the maturity date of the original note was actually March 1, 2012.
In October 2012, the trial court held a hearing on the Bank’s motion for summary judgment. Prior to the hearing, the Bank filed with the trial court what it alleged to be the “original” note which clearly stated on the first page that the maturity date was March 1, 2011. However, in their sworn answers to interrogatories, the Beaumont LLCs asserted that the original note actually contained a maturity date of March 1, 2012, and that the note the Bank filed as the original note was an altered note.
Attached to their answers to interrogatories was a copy of what the Beaumont LLCs argue is the original note. Also, in response to the motion for summary judgment, the Beaumont LLCs filed a memorandum in opposition to summary judgment with the same explanation, and they attempted to make the argument at the summary judgment hearing.
The Beaumont LLCs also submitted two affidavits from individuals who were members of two of the LLCs. A copy of the note the members alleged they received when they purchased their unit and assumed the debt was attached to each affidavit. These copies show a maturity date of March 1, 2012. The affidavits also included language stating that the affiant “believed” the maturity date was March 1, 2012, based on the information provided by the seller of the property at the time of purchase. The trial court struck the affidavits, concluding that the “believed” language was not relevant evidence of the actual maturity date.
The trial court also determined that because the note submitted by the Bank was not visibly altered on its face, there was no factual issue as to the validity of that note. Accordingly, the trial court found the Beaumont LLCs in default and granted final summary judgment in favor of the Bank.
On appeal, we review the granting of a final summary judgment de novo. Major League Baseball v. Morsani, 790 So. 2d 1071, 1074 (Fla. 2001). To grant summary judgment, the trial court must determine that there are no material issues of fact remaining to be resolved and that the movant is entitled to a judgment as a matter of law. Snyder v. Cheezem Dev. Corp., 373 So. 2d 719, 720 (Fla. 2d DCA 1979).
On appeal, the Beaumont LLCs argue that there is a remaining issue of fact as to the maturity date of the original note. We agree. The original note filed by the Bank in support of its foreclosure complaint is a document that consists of thirteen pages. The only handwriting on any of the pages is the signature of the borrower and the signatures of the two witnesses on the last page (signature page). As the Beaumont LLCs point out, the first twelve pages each bear a typewritten scrivener’s word processing identifier number NCLIB1 203080.4 in the lower left corner. However, the number printed on the signature page is NCLIB1 203080.3.
The copy of the note that the Beaumont LLCs allege they received upon assumption of the debt also consists of thirteen pages, but all of the pages bear the identifier number NLCIB1 203080.3. That is, the twelve pages of the note that contain the terms bear the same identifier number as the signature page, and the maturity date contained in the terms is the March 1, 2012, date.
Arguably, these facts might be explained by several different theories. However, one reasonable inference that may be drawn from these facts, as argued by the Beaumont LLCs below, is that the true original note is the note in which all the pages bear the identifier number NLCIB1 203080.3 and that the note submitted by the Bank as the original note is actually a subsequently created note—one that consists of newly typed pages one through twelve, indicating the March 1, 2011, maturity date, attached to the original signature page. As noted, there may be other explanations as to how this occurred, and the inference may be rebutted by other documents showing the maturity date to be March 1, 2011. However, because the inference put forth by the Beaumont LLCs is a reasonable one, a factual issue was presented and summary judgment was improper. See Reed v. Schutz Litig. LLC, 117 So. 3d 486, 488 (Fla. 2d DCA 2013) (” ‘[I]f material facts are conflicting, i.e., if facts permit different reasonable inferences to be drawn, . . . then summary judgment may not be granted.’ ” (quoting Hodge v. Cichon, 78 So. 3d 719, 722 (Fla. 5th DCA 2012))). We therefore reverse the final judgment and remand for further proceedings.
Reversed and remanded.
NORTHCUTT and KHOUZAM, JJ., Concur.
1The final judgment was entered in favor of foreclosure plaintiff Wells Fargo Bank, but during the pendency of this appeal, Wells Fargo sold its interest in the foreclosed property, loan documents, foreclosure judgment, and this appeal to LSREF2 Oreo (Direct), LLC. As such, we will refer to the appellee in this proceeding as “the Bank” no matter whether the action specifically being referred to was taken by LSREF2 Oreo (Direct) or Wells Fargo.
Decedent James Dollens (Decedent) purchased a home in 2003, with a loan from Wells Fargo Home Mortgage (Wells Fargo) for $133,700. Decedent’s loan was in good standing until his accidental death on August 18,2010 at his workplace.
Prior to Decedent’s death, he purchased a mortgage accidental death insurance policy in January 2010. The policy was marketed and sold through Wells Fargo, and underwritten by Minnesota Life Insurance Company (Minnesota Life). The policy premium was $15.12 monthly, and was added to Decedent’s monthly mortgage payment and collected by Wells Fargo. Wells Fargo was both the insured and the policyholder.
After Decedent’s death his son, Christopher Dollens (Dollens), notified Wells Fargo and Minnesota Life via telephone call of his death. He also made a claim under the accidental death policy to Minnesota Life, and told Wells Fargo that he would be appointed personal representative of his father’s estate. Additionally, Decedent’s widow, Dina Dollens, contacted Wells Fargo and notified them of his death and the accidental death policy.
As a result of the death of Decedent, no payments were made for several months on the mortgage. Wells Fargo sent monthly statements regarding the loan being in default. In December 2010 counsel for Wells Fargo sent a demand and cure letter regarding the missed mortgage payments. Dollens retained counsel to provide the necessary documentation to Wells Fargo showing that he was the personal representative of his father’s estate, and to notify them that a claim was being made under the accidental death policy. In a letter dated January 10,2011 Dollens’ counsel requested that Wells Fargo not pursue collections and foreclosure while the claim was pending. Wells Fargo did not respond to the letter.
In February 2011 Minnesota Life also requested that Wells Fargo delay any adverse action on the account while the claim was pending. Again, there was no response from Wells Fargo. Minnesota Life initially denied the claim under the accidental death policy, but subsequently reversed its decision and approved the claim. It sent a Notice of Death form to Wells Fargo requesting the balance due on the account. Wells Fargo completed the form on February 16, 2011 and stated that the amount due on the account at the time of Decedent’s death was $121,082.31.
Also, in February 2011, Wells Fargo initiated a foreclosure against Decedent’s home, in spite of the request by the Personal Representative’s counsel and Minnesota Life to delay adverse action on the mortgage. Wells Fargo hired foreclosure counsel, and costs and fees accrued as a result of the foreclosure action being filed.
On October 5,2011 Wells Fargo received a check for $133,559.15 from Minnesota Life for the proceeds due under the accidental death policy. Rather than post and apply the funds immediately, Wells Fargo posted the funds five days later, on October 10, 2011, placed them into a suspense account and paid costs and fees, before applying the payment to interest and the outstanding principal. Applying the Minnesota Life payment in this manner led to a balance of $4,416.45 still being owed on the account.
Although the investor, Freddie Mac, in August 2012 authorized a charge-off due to the low balance on the account, Wells Fargo continued collection efforts for some time. As part of the collection efforts, Wells Fargo demanded amounts due which were not owed or valid. Beverly DeCaro (DeCaro), a Wells Fargo employee, testified that continuing collection efforts after the charge-off and demanding amounts which were not owed, were “mistakes”. She also testified that the manner in which this account was handled was in keeping with the customary practices and procedures of Wells Fargo.
With regards to the manner in which the insurance proceeds were applied, Wells Fargo posited that because of the fees and costs which accrued due to the default and foreclosure action, it did not consider the insurance proceeds to be sufficient to payoff the account in full, thus it applied the funds as if the account were reinstated rather than being paid off. However, Wells Fargo did not notify the Estate that the account was reinstated, and, more significantly, did not dismiss the foreclosure action.
Despite the October payment of$133,559.15 and testimony that Wells Fargo considered the loan reinstated, the order of dismissal in the foreclosure action was not entered until March 20, 2012, months after the insurance proceeds were applied to the account. Wells Fargo offered no valid justification for its continuation of the foreclosure action for five months after being paid.
CLAIM FOR WRONGFUL FORECLOSURE AND BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
The Court was persuaded by Plaintiffs’ evidence as to this claim. The Court finds numerous willful breaches of the covenant of good faith and fair dealing and the Court also finds that Wells Fargo committed a wrongful foreclosure.
Plaintiffs presented significant and credible evidence that Wells Fargo marketed and sold decedent the mortgage accidental death policy. After decedent purchased the policy, Defendant sent decedent an acknowledgement letter stating that his application was approved and enclosing the policy. In addition, the letter informed decedent that the policy “helps protect your family family’s financial security”. (Stipulated Exhibit 3) There can be no doubt that the insurance policy was marketed to homeowners and created an expectation that the balance of their mortgage would be paid in the event of their death and was done to provide peace of mind to decedent and to prevent financial hardship to decedent’s heirs. There can also be no doubt that such an expectation is reasonable. Wells Fargo admitted that payment of the mortgage balance was the purpose of the insurance. (Wells Fargo’s Answer to Request for Admission No.3)
In light of the fact that Wells Fargo represented and sold the insurance policy on behalfofMLlC, collected the monthly premiums for the policy, and had proof of decedent’s death, it should have taken into consideration the policy before proceeding to foreclose on the property. Wells Fargo sold the insurance to prevent this very scenario.
In spite of the fact that Wells Fargo sold decedent the mortgage accidental death policy, and was the policyholder and insured, upon receiving news of decedent’s death, it did nothing to assist the Estate insofar as making a claim or appealing the denial of the claim. The Court finds that upon learning of the death of decedent, Wells Fargo should have made a claim with MLlC for the death benefit. Apparently, ignoring its ability to make a death benefit claim is typical of how Wells Fargo deals with such situations. DeCaro testified that while many mortgagors die prior to the expiration of the term of the mortgage, Wells Fargo has no policies or procedures in place to make claims or otherwise assist estates. This is a systemic failure on the part of Wells Fargo. Beyond the fact that it has no policies or procedures with regards to accounts with mortgage accidental death polices, it failed in this case to even take that fact into account. The evidence showed that both MLlC and counsel for the personal representative requested that Wells Fargo delay adverse action on the account while the accidental death claim was pending. Instead, Wells Fargo proceeded to foreclosure on February 9, 2011. Wells Fargo’s inability, unwillingness, and failure to take action when requested by MLlC is shocking, particularly in light of Wells Fargo’s ongoing commercial relationship with MLlC.
The Court also finds that Wells Fargo failed to follow the Freddie Mac servicer guidelines, to the detriment of the Estate. As testified to by Plaintiff’s expert, Andrew Pizor, and Wells Fargo witness DeCaro, the servicer guidelines are for the benefit of the borrower. Specifically, Wells Fargo should have granted the Estate a forbearance on the mortgage, and it failed to do so. Plaintiffs’ expert, Pizor, testified credibly that Wells Fargo should have granted forbearance based on the Freddie Mac guidelines, and had it done so, late fees, attorneys’ fees, and costs would not have been incurred, and the foreclosure would not have occurred. Furthermore, the Estate would not have had to hire counsel to represent it in the foreclosure and incur attorneys’ fees. Thus, this misconduct by Wells Fargo caused the damages to the Estate.
The Court further finds that Wells Fargo’s application of the insurance proceeds was improper and again to the detriment of the Estate. Rather than apply the proceeds to interest and principal, as required by the Note, Wells Fargo paid its fees and expenses, which led to the result of the insurance proceeds being insufficient to payoff the outstanding balance under the Note. This practice, according to Wells Fargo employees, should not have occurred.
The typical procedure when such a check is received is to only use the funds to payoff the loan. Wells Fargo employee , Luann Tupa, testified to the practice and procedure. In addition, Stipulated Exhibit 27 is a series of emails among Wells Fargo employees that discusses the practice. Apparently, the normal Wells Fargo practice is that when optional product funds (i.e., mortgage accidental death proceeds) are received, attorneys’ fees are waived so that the funds can be used to payoff the loan. As noted in the emails, the reason for the practice is because of “the incredibly high reputational risk associated with these loans. Wells Fargo actually markets these Life Insurance products with our mortgage portfolio and we service them attached to the loan itself…we are honoring those benefits and doing as much as we can to have the loan paid in full per that policy.”
Yet, in this case, that practice was not followed. Instead, Wells Fargo put its interests before the Estate and paid numerous other fees, many of which were not proper, with the result that the insurance proceeds were insufficient to payoff the loan balance. Clearly, Wells Fargo did not honor the trust and confidence decedent placed in it when he purchased the policy with the intent of avoiding this very scenario. Wells Fargo Vice President, Robert Dudacek, stated that decedent’s decision to purchase the mortgage accidental death policy ensured his “family’s financial security.” (Stip. Exhibit 3) Unfortunately, Wells Fargo took a course of action that was for its benefit rather than decedent’s family’s financial security. The conduct by Wells Fargo was a breach of the covenant of good faith and fair dealing and resulted in a wrongful foreclosure. Plaintiffs’ entitlement to damages is discussed separately.
CLAIM FOR VIOLATION OF THE UNFAIR PRACTICES ACT
The Court was persuaded by Plaintiffs’ evidence with regards to this claim. Specifically, the Court finds that Wells Fargo violated the Act by marketing and selling mortgage accidental death insurance to decedent for the purposes of protecting his “family’s financial security”, and then after it received notice of decedent’s death, attempted to collect the mortgage payments, and then instituted a foreclosure when it knew there was a mortgage accidental death policy in place, for which it had collected premiums for some months. The Court finds that because Wells Fargo was the “licensed agency representing … the insurer”, it had knowledge that the purpose of the policy was to pay the mortgage balance in the event of the mortgagor’s accidental death. The Court further finds that Wells Fargo also knew that the decedent’s Estate would not be liable for the debt unless the claim was denied, after all appeals.
Wells Fargo marketed the life insurance policy knowing at the time it sold the policy that it had no policies or procedures in place to make claims or otherwise assist estates. Wells Fargo took advantage of a lack of knowledge, ability, experience or capacity of decedent’ and his family members, and its actions tended to or did deceive decedent.
The previously set forth acts by Wells Fargo are also a violation of the UPA. In particular the improper fees and costs assessed against the account and continuing to try to collect on the account after the charge-off of the loan, and improperly claiming that the Estate owed more money than was due are violations of the UPA.
There is no doubt that Wells Fargo’s conduct was intended to take advantage of a lack of knowledge, ability, experience or capacity of decedent’s family members, and tended to or did deceive. Further, its conduct caused damages to Plaintiffs for which they are entitled to compensation.
CLAIM FOR BREACH OF CONTRACT
The previously set forth acts by Wells Fargo are also a breach of contract. Plaintiffs met their burden on this claim. The Court finds that Wells Fargo breached the terms of the Note by improperly assessing fees and costs, which resulted in assessment of additional interest, fees and costs against the account. In fact, Wells Fargo concedes that approximately $400.00 of inspections fees paid by the Estate shall be reimbursed by it. (Pretrial Order and #51 of Wells Fargo’s closing argument)
The evidence established that Wells Fargo violated the terms of the Note by using the insurance proceeds to pay its fees and costs first instead of interest and the balance due. This misapplication of the insurance proceeds caused the Note to keep a balance after the proceeds were applied, which resulted in the account going into default again, and Wells Fargo claiming a debt when none would have existed, but for its misapplication of the insurance proceeds. Plaintiffs are entitled to damages.
DAMAGES
Wells Fargo’s contention that Plaintiffs failed to mitigate their damages is unpersuasive. Wells Fargo admits that the Estate should be reimbursed approximately $400.00 for improper fees, but Wells Fargo has not paid that amount. Wells Fargo has not taken its own action that could have lowered its damages or displayed any consideration for its customer/decedent’s heirs.
Plaintiffs I presented credible evidence of damages of$15,633.42 in improper late fees, improper property preservation fees, corporate advance fees, monthly payments that would not have been due had Wells Fargo properly applied the insurance proceeds and otherwise acted in compliance with its duties to its customer. The Court finds each of these causes of action, Wrongful Foreclosure; Breach of the Covenant of Good Faith and Fair Dealing; Breach of Contract; and Unfair Trade Practices have identical damages of$15,633.42.
Undoubtedly, there was sufficient evidence presented to justify imposition of punitive damages against Wells Fargo, or treble damages under the UPA. The evidence of Wells Fargo’s misconduct was staggering. Certain evidence in particular highlights Wells Fargo’s indifference to its customers. Wells Fargo charged the Estate for lawn care of the property (i.e., cutting the grass), even though no grass was actually cut. The reason for this was that Wells Fargo claimed that pursuant to the Freddie Mac guidelines, it was required to have the grass cut every 25-30 days; thus, it believed it was appropriate to bill the Estate for this regardless of whether it was necessary. The property at issue did not have a lawn. This is but one of many facts supporting an award of punitive damages.
Compelling evidence was presented that Wells Fargo acted intentionally by improperly assessing fees and costs against the estate, misapplying the MLIC insurance proceeds check, failing to follow the Freddie Mac servicer guidelines, failing to credit the account with the MLIC check when it was received and assessing interest against the account for the five days it did not credit the MLIC check, improperly initiating a foreclosure action, misrepresenting the status of the foreclosure to the Court in pleadings, sending collection letters/monthly statements to the estate claiming amounts not due, and improperly assessing fees against the estate for inspections which were not necessary. All of Wells Fargo’s actions were designed to increase its profits without regard for the decedent or his family, and in many instances, violated the terms of the Note.
Contrary to Wells Fargo’s arguments, the mistakes were not “minor.” During the pendency of the litigation, and at trial, Wells Fargo used its computer-driven systems as an excuse for its “mistakes”. However, the evidence established that this misconduct was systematic and not the result of an isolated error, or an error because of some unique fact.
Plaintiffs expert testified that Wells Fargo has previously been assessed with significant punitive damages or fines for improper behavior similar to the conduct that occurred in this matter. No evidence was offered that Wells Fargo has changed its behavior as a result of any prior sanction or punitive damage award. Instead the evidence was of ongoing systematic misconduct that Wells Fargo prefers to label as “minor.”
The evidence in this case established that the type of conduct exhibited by Wells Fargo in this case has happened repeatedly across the country. See e.g., In re Jones, 2012 WL 1155715 (Bkrtcy.E.D.La.,2012) (Wells Fargo assessed improper fees and charges, including for property inspections and misapplied payments. Attorney fees and punitive damages awarded.); In Re Stewart, 647 F.3 553 (5th Cir. 2011) (Assessed fees and costs against account prior to applying mortgage payment, contrary to terms of the note.); Filson v. Wells Fargo Home Morg., Inc., 2008 WL 3914899 (Tenn.Ct.App., 2008) (Wells Fargo wrongfully held funds in suspense account instead of applying to mortgage balance which resulted in default and their subsequent attempt to foreclose.); In Re Nibbelink, 403 B.R. 113 (M.D.Fla. 2009) (Wells Fargo charged improper fees. Punitive damages and attorney fees awarded.); and De La Fuente v. Wells Fargo, 430 B.R. 764 (Bankr.S.D.Tex.2010) (Wells Fargo used bad accounting practices and failed to correct its loan records. Punitive damages and attorney fees awarded).
Plaintiffs expert testified to an Office of the Comptroller of the Currency’s Consent Order which found that Wells Fargo systematically mishandled foreclosures and applied payments improperly. He further testified that what happened in this case is not an isolated incident.
While the Court cannot punish Wells Fargo for being “an unsavory individual or business”, it nonetheless may consider its similar conduct when assessing reprehensibility as it relates to the imposition of punitive damages. State Farm Mut. Auto. Ins. Co., v. Campbell, 538 U.S. 408, 422-23(2003). In addition, under New Mexico law, the conduct of the Defendant towards others may be considered in the determining the nature and enormity of the wrongful conduct. UJI131827A, NMRA.
The Court is aware that it cannot punish Wells Fargo for acts in other cases, or for conduct outside this case. Likewise, Wells Fargo cannot be punished for acts for which it has already been punished. However, the Court can consider the reprehensibility of Wells Fargo’s systemic misconduct, Wells Fargo’s net worth, and the need for deterrence. The evidence of wrongful conduct in this case merits significant punitive damages.
This Court finds that Plaintiffs’ argument is persuasive that the attorneys’ fees which were incurred by them should be considered in factoring the amount of punitive damages that should be awarded. Due to the egregious nature of the conduct of Wells Fargo, the Court will consider the fees in its calculation of punitive damages.
This Court finds that but-for this misconduct by Wells Fargo, Plaintiffs would have incurred a small amount of attorney fees. Attorney fees are a recoverable damage under the UPA and under NMSA §48-7-24.
Despite having multiple opportunities to contest the reasonableness of Plaintiffs’ attorneys’ fees, Defendant raised no objection to their hourly rate or the time expended on each task. In spite of Defendant’s failure to object to the reasonableness of the fees claim, the Court reviewed each page of the Attorney Fee Affidavit and finds that the fees claimed shall be reduced by $15,164.00 due to the fact that there appeared to be duplication of work among the Plaintiffs’ counsel, or the work did not require the efforts of more than one counsel. The claimed 1470 hours was reduced by 51 hours for total hours expended of 1419 hours’. The Court denies the request for costs for electronic filing and attorney travel expenses with the exception of travel expenses incurred to depose Wells Fargo’s 30(b)(6) witnesses in St. Paul, Minnesota, but otherwise awards all fees and costs as requested by Plaintiffs for an award of $439,051.44, plus gross receipts taxes on the fees.
As for the attorneys’ travel expenses incurred for the deposition of Wells Fargo’s 30(b)(6) witnesses, the Court finds that those expenses are recoverable in this circumstance. The depositions were the subject of Plaintiffs’ Motion to Compel 30(b)(6) depositions, filed on September 10, 2012. In response to the motion, Wells Fargo filed a Response and Motion for Protective Order protesting the taking of the witnesses’ deposition in Albuquerque. The Court, at that time, decided that Plaintiffs’ counsel would travel to St. Paul, Minnesota to take the depositions. Plaintiffs’ counsel reserved the right to seek re-allocation of the costs. The Court believes that it is appropriate for these expenses to be a recoverable cost due to Wells Fargo’s unwillingness to reduce fees and expenses by objecting to the witnesses’ deposition being taken in Albuquerque, in spite of Wells Fargo’s presence in Albuquerque. Further, Wells Fargo brought two of the three witnesses to Albuquerque for trial. It was only when Plaintiffs wished to reduce the fees/expenses in the litigation that Wells Fargo objected to them traveling to New Mexico. Accordingly, the Court finds that the travel expenses of $3,071.07 for travel to St. Paul, Minnesota, are recoverable and included that amount in the award of $439,051.44. The Court finds damages of $15,633.42, plus attorneys’ fees and costs of $439,051.44, for a total of $454,684.86.
The Court awards $2,728,109.16 in punitive damages. As stated above, the Court considered attorneys’ fees and costs incurred in factoring the award of punitive damages. By the time of the completion of the briefing on the attorney fees issue and responding to Defendant’s Motion to Strike, attorneys’ fees and costs amounted to $439,051.44.
Mindful of the ratios to be considered with regards to punitive damages, the Court believes that Wells Fargo’s conduct justifies a higher ratio. In light of the repeated, systematic nature of Wells Fargo’s misconduct, the Court calculated the punitive damages at six times the compensatory damages of $454,684.86. Awarding a ratio of 6 results in a punitive damages award of $2,728,109.16. Total damages, without treble damages under the UPA, are compensatory damages of $15,633.42, attorneys’ fees and costs of $439,051.44, and punitive damages of$2,728,109.16, for a total damages award of$3,182,794.02.
If Plaintiffs elect to recover all of their relief under the UPA, the Court believes that pursuant to Atherton v. Gopin, 272 P. 3d 700 (Ct. App. 2012), the fee award may also be trebled. Thus, if Plaintiffs elect for a recovery under the UPA, the total award would be $1,364,054.58.
DEFENDANT’S MOTON TO WITHDRAW ADMISSIONS
At the time of trial, in response to Plaintiffs’ Motion for an Order Showing Admitted Facts As Uncontroverted, Wells Fargo requested that it be allowed to withdraw the following admissions:
(2) In January of2010 Wells Fargo sold Mr. Dollens mortgage accidental death insurance under the group policy with Minnesota Life. (Wells Fargo’s Answer to Plaintiffs’ Second Amended Complaint, ‘il4, 73 and 99)
(18) Wells Fargo applied the Minnesota Life payment first to fees and costs assessed on mortgage loan [sic], then to accrued interest and outstanding principal. (Wells Fargo’s Answer to Plaintiffs’ Second Amended Complaint, ‘il51 and Ill.)
With regards to (2), Wells Fargo argued that this issue was contested by it and was mistakenly admitted in its Answer. While Wells Fargo argued that its admission in the Answer to the Second Amended Complaint was a mistake, the Court believes the facts belie the admission being a mistake. For example, in the Answer to the Second Amended Complaint, Wells Fargo admitted the fact three times. Also, in its Answer to the Amended Complaint, filed on March 12, 2012, (several months earlier) it admitted the very same fact. The Court believes that due to Wells Fargo’s admission of this fact numerous times during the pendency of the litigation, Plaintiffs were entitled to rely on it. Additionally, the admissions, coupled with the last-minute request to withdraw the admissions, lead the Court to believe that Wells Fargo was attempting to place Plaintiffs at a disadvantage for trial by attempting to change its defense strategy at a time when Plaintiffs would have no opportunity to challenge the denial.
As for (18), Wells Fargo admitted the fact two separate times, and claims, yet again, that the admission was a mistake. The Court was not persuaded that the admission was a mistake, but a last-minute attempt to change strategy at trial. The Motion is denied.
DEFENDANT’S MOTION TO RECONSIDER RULING IN DUHIGG LAW FIRM V. WELLS FARGO
At the conclusion of Plaintiffs’ evidence at trial, Wells Fargo moved for reconsideration of the Court’s ruling in this companion case. 3 The Court denies the motion and its ruling stands as to its denial of Defendant’s Motion to Dismiss the Unjust Enrichment claim.
As a result of that ruling, Plaintiffs’ counsel submitted an attorney fee affidavit to establish its attorneys’ fees incurred due to pursuing the insurance proceeds under the Minnesota Life policy, and fees incurred for having to file the lawsuit for unjust enrichment. The Court overrules Wells Fargo’s objections as to the fees and concludes that the fees are reasonable, and prejudgment interest of 15% is allowed. As for the costs, the Court finds that the itemized costs are recoverable, with the exception of $26.00 in e-filing fees. Accordingly, fees and costs totaling $51,879.08 up through April 16, 2013 should be awarded to Plaintiffs for those claims.
DEFENDANT’S MOTION TO STRIKE AND FOR SANCTIONS
In response to Plaintiffs filing an Attorney Fee Affidavit for attorneys’ fees incurred as an element of damages due to Wells Fargo’s misconduct, rather than address the reasonableness of the fees, Wells Fargo’s counsel instead chose to file the above-referenced Motion. The Court deems Wells Fargo’s failure to object to the reasonableness of the fees as a waiver. For the record, Wells Fargo misconstrued the Court’s ruling as to the issue of attorneys’ fees when the matter was briefly discussed at the conclusion of trial. The Court does not believe that Plaintiffs’ counsel submission of the attorney fee affidavit is in violation of any ruling, nor does it merit sanctions.
To the extent that an argument can be made that the evidence of the attorneys’ fees incurred during the litigation was submitted after the close of evidence, the Court finds that neither of the statutes under which the Court is awarding fees limit the recovery to the time evidence closes. Even if this was the law, Plaintiffs’ counsel presented good cause for the evidence to be reopened for this limited purpose. Wells Fargo failed to establish prejudice as a result of this attorney fee affidavit being submitted during the closing argument briefing period. Moreover, prior to Plaintiffs’ counsel filing the affidavit, they offered to counsel for Wells Fargo the opportunity to file a sur-reply to the Closing Argument Reply. Wells Fargo’s counsel’s response to this offer was that they were “not interested.” Thus, Wells Fargo waived the right to provide rebuttal argument/evidence to the Court on this issue.
As for the remaining arguments that portions of Plaintiffs’ Closing Argument should be stricken, the Court was not persuaded, except with regards to Footnote 8 of the Closing Argument Reply, which Plaintiff s counsel agreed should not be considered by the Court.
The Motion to Strike and for Sanctions is denied.
EXHIBIT CE
The Court withheld ruling on the admissibility of this document to allow Plaintiffs’ counsel an opportunity to review it. Plaintiffs’ counsel has informed the Court that it does not object to the admission of the document, thus it is admitted.
Finally, the judgment that is entered in this matter should carry post-judgment interest at 15%.
A copy of this letter decision shall be placed in the Court file.
Recently a bank’s new foreclosure attorney complained to me about the now defunct Baum Foreclosure Mills files as so slovenly that, and I quote, ““The way they coded, you have no idea what this file looks like, it makes no rhyme or reason, conference-note, conference-note aom…” The documents do not exist to support the foreclosure complaints Baum filed years before that remain on the courts’ dockets. The latest set of attorneys representing the bank’s with those slovenly files apparently have marching orders to do whatever it takes, even fabricate facts, to keep the shadow docket alive. Their present attorneys defending the banks position now file affidavits attesting that they know the Bank has the Note because….well, ummm,…embarrassingly…not because the attorneys have personal knowledge but just because they are attorneys? Here’s what such an attorney’s affidavit looks like in opposition to a homeowners motion for summary judgment filed that the banks has no standing to sue:
“the Note and the Mortgage was subsequently transferred to Plaintiff (the bank) prior to the commencement of the foreclosure action pursuant to the Pooling and Servicing Agreement…”, “…your affirmant has personal knowledge that the original endorsed Note does exist.”,” “Plaintiff is in possession of the Note…prior to and at the time of commencement of the subject Action (sic)”,“…there is no question concerning Plaintiff’s possession of the original Note and the original Mortgage” and “Plaintiff is in possession of the original endorsed Note and has been since the inception of the PSA…”
The law holds an attorney’s affirmation is improper and fatal to oppose a summary judgment motion. Giaccio v. Kiamesha Concord, Inc., 22 A.D.2d 723, 253 N.Y.S.2d 168 (3d Dep’t 1964), Zuckerman v. City of New York, 49 N.Y.2d 557, 563, 427 N.Y.S.2d 595, 404 N.E.2d 718. There is a high evidentiary standard needed to oppose and someone with personal knowledge of the facts is needed, to wit:
“While, as we have held, the affidavit need not be made by the plaintiff (Sznukowski v. B. F. Goodrich Company, 18 A.D.2d 861, 236 N.Y.S.2d 413), it must be by a person having knowledge of the facts and must be as good as the kind of affidavit which could defeat a motion for summary judgment on the ground that there is no issue of fact (Sortino v. Fisher, 20 A.D.2d 25, 32, 245 N.Y.S.2d 186, 195). The only affidavit which has been submitted is the obviously hearsay affidavit of counsel. Such an affidavit is insufficient (Keating v. Smith, 20 A.D.2d 141, 245 N.Y.S.2d 909.).”
An attorney’s affidavit is accorded no probative value unless accompanied by documentary evidence that constitutes admissible proof. Zuckerman.
You will also note that the attorney affidavit example above does not assert any personal knowledge of delivery to, or possession by, either the plaintiff bank or any of the other many entities involved. What about the entities involved in the PSA, the trusts, the servicers, and the in between banks and investors, including the FDIC that acts as administrator when the original bank lenders fail. Just where did the Note pass from entity to entity and how? Or were they all transferring air when they decided the mandates of the UCC regarding proper endorsements and transfers did not exist anymore? The above affidavit does not attach nor describe any of the many entities, including the plaintiff bank’s, “regularly maintained records” nor render them admissible as evidence. JP Morgan Chase, N.A. v. RADS Group, Inc., 88 A.D.3d 766, 767, 930 N.Y.S.2d 899 [2d Dept. 2011]; HSBC Bank USA, N.A. v. Betts, 67 A.D.3d 735, 736, 888 N.Y.S.2d 203 [2d Dept. 2009]; Unifund CCR Partners v. Youngman, 89 A.D.3d 1377, 1377–78, 932 N.Y.S.2d 609 [4th Dept. 2011]; Reiss v. Roadhouse Rest., 70 A.D.3d 1021, 1024, 897 N.Y.S.2d 450 [2d Dept. 2010]; Lodato v. Greyhawk North America, LLC, 39 A.D.3d 494, 495, 834 N.Y.S.2d 239 [2d Dept. 2007]; Whitfield v. City of New York, 16 Misc.3d 1115[A], 2007 N.Y. Slip Op. 51433 [U], 2007 WL 2142300 [Sup. Ct., Kings County 2007]; aff’d 48 A.D.3d 798, 853 N.Y.S.2d 117 [2d Dept. 2008].) The affidavit does not state that any “regularly maintained records” show delivery of the Note from anyone. There is no evidence that the plaintiff bank ever had possession of the Note except for the attorney trying to win the case for his bank client saying so because,…ummm, embarrassingly, because he is an attorney so we should believe whatever he says to events that he never was present at, was never a party to and he has absolutely no personal knowledge about
The days when an attorney’s word or even a handshake were good are long gone. The practice of law has become a childish game of who can fool the court the longest based on fabricating facts and misrepresenting the law. Now attorneys’ stooping so low to testify for the very clients they represent by their own conclusory hearsay makes the practice of law just junk.
By Susan Chana Lask, Esq.
Susan Chana Lask is an author, lecturer and accomplished attorney litigating in State and Federal Courts, including the United States Supreme Court for the past 25 years. She is named by the media as “New York’s High Profile Attorney” who consistently makes headlines worldwide and changes history with her controversial dogged lawsuits. Her 2010 lawsuit shut down the country’s most notorious Foreclosure Mill in New York State for the benefit of the public suffering from fraudulent foreclosure filings. In 2011 she appeared before the Supreme Court of the United States with the support of five Attorneys General where she obtained a historical decision that strip searching non-criminal offenders is unacceptable unless they are in the general population. Her 2006 lawsuit against the makers of Ambien resulted in the FDA complying with her demands to change prescription drug warnings to protect some 26 Million consumers. Her cases are monumental and have changed history.
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