A bankruptcy judge who spent 107 pages excoriating Bank of America Corp. over its "heartless" foreclosure on a California couple is not happy that the homeowners want him to erase his words.
The couple reached a private settlement with the bank that calls for rescinding both the $45 million penalty the judge imposed on the lender and the scathing ruling he issued in March — for which Money magazine called him a "Hero Judge."
"So you want me to take the injunction and tear it up and throw it out," U.S. Bankruptcy Judge Christopher Klein asked during a hearing Wednesday in Sacramento. He then explained that if the opinion is vacated, it will be expunged from the annals of law and can't be cited as a precedent in other foreclosure abuse cases.
After attorneys for both the couple and the bank assured the judge that's what they want, Klein sent them into a closed-door meeting with another judge to discuss further revising the settlement.
The terms of the settlement are confidential, which has been a concern for a group of nonprofit consumer advocacy groups and five University of California law schools that were slated to receive $40 million in the award the judge issued in March. The couple, Erik and Renee Sundquist, stood to collect $5 million in punitive damages, plus about $1 million for their losses, including for emotional distress and their costs of suing Bank of America.
The Sundquists said in their Aug. 15 request to have the judgment thrown out and their lawsuit dismissed that it's the only viable path for them to a meaningful recovery.
Their attorney, James Stang, told the judge the proposed settlement provides "substantially more" than the $6 million than the family would get from the court's ruling. "The Sundquists are getting a lot more," he said later.
The nonprofits recommended in court filings that the settlement’s terms be made public, in part to see if it includes any acknowledgment of wrongdoing by the bank and a commitment to avoid similar misconduct. The groups also urged the judge not to vacate his March 23 opinion.
National Consumer Law Center lawyer Roger Heller told the judge told the judge the opinion will have a "deterrent" effect to curb misconduct by other banks.
In the opinion, Klein faulted Bank of America for "institutional obstinance and dishonesty" and said its actions smacked of "cynical disregard for the law."
"In the calculus of reprehensibility, Bank of America’s intentional conduct adds up to reckless and callous disregard for the rights of others," Klein wrote.
The judge also said the size of the punitive damages award against Bank of America was meant to "not be laughed off in the boardroom."
