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“Franz Kafka lives… he works at Bank of America.”

Judge Christopher Klein’s words kick off an incredible ruling in a federal bankruptcy court in California last week, condemning Bank of America for a long nightmare of a foreclosure against a couple named Erik and Renee Sundquist. Klein ordered BofA to pay a whopping $46 million in damages, with the bulk of the money going to consumer attorney organizations and public law schools, in hopes of ensuring these abuses never happen again—or at least making them less likely.

The ruling offers numerous lessons in the aftermath of a foreclosure crisis that destroyed millions of lives. First of all, the judge specifically cited top executives as responsible, not lower-level employees. Second, the sheer size of the fine—for just one foreclosure—is a commentary on the failure of America’s regulatory and law enforcement system to protect homeowners, despite the financial industry’s massive legal exposure.

Inspectors contracted by the bank staked out the home, banged on the doors and tailed the family in cars, terrorizing them to keep tabs on the property.

Bank of America promptly lost or deemed inadequate roughly 20 different applications for a loan modification. At the same time, BofA pursued foreclosure, a dubious practice known as “dual-tracking.”

The Sundquists eventually filed bankruptcy in June 2010, triggering an automatic stay, whereby Bank of America couldn’t foreclose until after the case concluded. But BofA sold the house anyway at a trustee sale and ordered eviction. Inspectors contracted by the bank staked out the home, banged on the doors and tailed the family in cars, terrorizing them to keep tabs on the property.

The bank didn’t correct the violation for six months, by which time the Sundquists, spooked by the constant surveillance and belief they would be evicted, moved into a rental property. Bank of America finally rescinded the sale, but that put the Sundquists back on the house’s title, which is to say on the hook for mortgage payments and maintenance fees.

By the time the Sundquists got the keys back to the home in April 2011, they found all furnishings and appliances removed and the trees dead. The homeowner’s association charged them $20,000 for the substandard landscaping. Bank of America refused to take responsibility for the damages; in fact, they were still threatening to foreclose. Interest on the loan accrued at $35,000 a year this whole time, increasing the amount due.

The couple, both world-class athletes (Renee was an Olympic–level ice skater in Italy, Erik an NCAA champion soccer player) were physically and emotionally broken by the ordeal, what Judge Klein termed “a state of battle-fatigued demoralization.” Erik attempted suicide with pills. Renee suffered a stress-related heart attack and was diagnosed with post-traumatic stress disorder. She routinely cut herself with razors as an outlet for her pain. In a journal documenting six years of this nightmare, Renee Sundquist described constant stress. “All I do is cry,” she wrote.

The Sundquists won a case in state court against Bank of America in September 2013, but the violation of the stay, the heart of the wrongful foreclosure claim, had to be decided in federal bankruptcy court. There, the Sundquists found a judge who empathized with the abuse layered upon them.

In a 107-page opinion, Judge Klein found that BofA definitively violated the automatic stay and wrongfully foreclosed on the homeowners. “Throughout, the conduct of Bank of America has been intentional,” Judge Klein wrote.

By law, judges can impose actual and punitive damages in this type of case. Judge Klein ordered $1.074 million to the Sundquists in actual damages, for housing expenses, attorney fees, lost income, damaged property, medical bills, and emotional distress.

For punitive damages, Judge Klein stressed that the award had to be “sufficient to have a deterrent effect on Bank of America,” especially because of the role of top management and corporate culture in the case. The judge cited communications from the office of Bank of America’s CEO, both to the Sundquists and to the Consumer Financial Protection Bureau, the watchdog agency currently under attack by the Trump administration. After the Sundquists petitioned CFPB about the case, Judge Klein wrote that BofA lied to the agency by denying that they ever foreclosed.

“The oppression of the Sundquists cannot be chalked off to rogue employees betraying an upstanding employer,” Judge Klein wrote. “This indicates that the engine is driven by direction from senior management.” He even added that the misconduct of the CEO’s office “strayed across the civil-criminal frontier.”

Continue story here.