Sundquist v. Bank of America: $45 Million for violations of Automatic Stay

by the LendingLies Team

In most cases, the damages awarded to homeowners are so paltry that they do little to punish unlawful conduct or to deter future behavior by servicers.  The banks continue their crime spree unabated.  Those days may be over.  A bankruptcy court in Sacramento, California recently issued a $45 million dollar punishment in a case of a wrongful home foreclosure and eviction in a deliberate violation of the automatic stay.

The court described the plaintiff-debtors’ treatment by defendant Bank of America as “Kafkaesque”, and found the homeowner’s deeply emotional testimony (one of them attempted suicide during the ordeal) completely credible, awarding more than $1 million in actual damages for the loss of their home and subsequent emotional distress. The court noted that Bank of America had repeatedly settled cases with federal and state regulators for hundreds of millions, and even billions, of dollars, in recognition of serious and repeated compliance failures, including some related directly to servicing home mortgages.

The homeowners didn’t bring up the issue that Bank of America via Reconstruct Trust likely had no standing to have filed a Proof of Claim in the bankruptcy in the first place.  Filing a false proof of claim in bankruptcy is an additional $500k penalty.  The bank may think twice about violating state and federal law if penalties, fines, sanctions and awards are enacted for such egregious and unconscionable behavior.

The fascinating 107-page opinion discusses at length with the dilemma of awarding enough punitive damages to effectively deter the defendant while avoiding an unseemly windfall to the plaintiffs. The decision resulted in a $40 of the $45 million punitive award to consumer advocacy organizations and the five public California law schools. Citing an Ohio case, state statutes and several law review articles, the court proposes this split award technique as an appropriate step forward in the federal common law of §362(k) punitive damages. A vicious appeal is sure to follow.

Read the Sundquist-opinion here.

9 Responses

  1. Have a look at Shaw Vs Citimortgage. The tide has turned and the Judges are getting it right!

  2. Neidermeir- exactly. Seems as though practically none of the hundreds of billions in settlements the last 9-10 years has gone to the homeowners who have been foreclosed or those in the process of being foreclosed.
    Everyone here remember the Independent Foreclosure Review? It was shut down after being a complete failure. They gave $300 to thousands of homeowners whose houses had been stolen. They had tens of thousands of their checks bounce. And when you cashed whatever check you received, you had to agree to drop any legal defenses in the future. This outfit was a story unto itself, not just a sidebar to the overall fraud going on.

  3. The decision resulted in a $40 of the $45 million punitive award to consumer advocacy organizations and the five public California law schools.
    That’s how the Democrats fund their advocacy groups , communist front groups like the Sierra club , ACLU and others. The courts shouldn’t be playing politics ,, just award the money to the harmed party.

  4. We are undergoing tremendous amount of stress related problems due to “missing document” saga, one time rejection of mortgage payment and refusal to modify after making three trial payments, while BAC and B of A were allegedly servicing our mortgage. We asked an attorney in Rhode Island whether we could file a law suit for damages for these wrong doings and he told us that no damages be awarded in these foreclosure related matters and advised us talking to our political representative.

    I am glad to hear that more than $1 million in actual damages was awarded for the loss of the home and subsequent emotional distress to a family. Awarding damages directly to homeowners must be the standard practice to stop illegal foreclosures. ( which is known world wide)

    We didn’t get anything when Bank of America was ordered to Pay $16.65 Billion in historic Justice Department settlement for financial fraud leading up to and during the financial crisis. The government got it all, I suppose, and that was it.

  5. Who hired Bank of America?

    Bank of America is a player/partner in “The GSE Business Model” and was working for Fannie Mae. Where are the sanctions against Fannie Mae for their role in hiring this errant servicer?

  6. How can it be “unseemly” to award homeowners’ who have been strung up by the Big Banks (that they bailed out,) losing their homes, their “pursuit of happiness” and all else, when the banks have committed what can only be described as highway robbery?

  7. Vicious? Beyond driving people to suicide? Or serious health problems from unrelenting stress?

  8. ‘A vicious appeal is sure to follow.’ I don’t think the appeal will focus on the behavior of BAC in the instance, which is as vicious as I have encountered in the mortgage servicing business, but is more likely to focus on the enormity of the punitive damages. The judge set aside a few million dollars to go toward education of more lawyers, and delivery of more consumer law resources, which is very welcome. The question remains, how do you make a dent in a megabank and discourage predatory behavior. I can drive around town in Sacramento and see plenty of REO properties that have been acquired by banks for little or no investment, other than attorney fees (banks don’t lack for educated legal resources), and I can drive around town in Sacramento and see plenty of homeless people. Connect the dots, appellate panel.

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