Judge Refuses to Vacate Ruling Against Bank of America

Bank of America is not going to get off easy, if a bankruptcy court judge has
anything to say about it. Photo: Tero Vesalainen / Shutterstock.com

“Hero judge” Christopher Klein, who took Bank of America to task for its treatment of a couple over a foreclosure, has declined a request to vacate the scathing ruling against the bank. In doing so, Klein, a U.S. Bankruptcy Judge based in Sacramento, said it was important to “name and shame” the company in order to shed light on practices that affect consumers, according to Bloomberg.

The drama began in March of 2017, when Klein issued a ruling that Erik and Renee Sundquist be awarded $1 million in actual damages and $45 million in punitive damages after they sued Bank of America for what they describe as “a Kafkaesque nightmare” around modifying their mortgage.

Klein did say Bank of America could have a remittitur of the $40 million in punitive damages awarded to various law schools and consumer legal services organizations if it agrees to give them 75 percent of the pretax designated amounts.

In the original March ruling, Klein said Bank of America’s “high degree of reprehensibility” in the case and its “cynical disregard for the law” merited the punitive award.

Bank of America had “willfully violated” a bankruptcy court stay by foreclosing on the Sundquists’ home after it had told the couple they needed to default on their mortgage in order to obtain a mortgage modification.

Klein also said that the ban had conducted harassing inspections of the couple’s home, forced them to move and then secretly rescinded the foreclosure, and failed to protect the property from being looted—thus allowing people inside to steal all the Sundquists’ major appliances.

Between the bank’s actions and the stress of the thefts and other factors, the stress became too much for the couple. Erik Sundquist attempted suicide and his wife was hospitalized with heart attack symptoms.

Fast forward to January 2018: Bank of America said it would pay the Sundquists several million dollars more than the $6 million they won in the trial…if Klein’s opinion were expunged from the record.

“This was a naked effort to coerce this court to erase the record,” Klein wrote in his January 19 opinion. “No chance. No dice.”

Klein also said that although he agreed to vacate the damages, the litigation is no longer a two-party dispute, but has now been entered into by nonprofit consumer advocacy groups and law schools that had intervened. He said that the public had a “potent point” when they said that Bank of America “has shown no remorse, made no apology, and promised no reform of the corporate culture practices illustrated by this case.”

“To name and shame Bank of America on the public record in an opinion that stays on the books serves a valuable purpose casting sunlight on practices that affect ordinary consumers,” Klein wrote in his opinion.“Other persons dealing with Bank of America will be able to gauge their experiences against what has been revealed in this case.”