A bankruptcy judge who slammed Charlotte-based Bank of America for its treatment of a California couple over a foreclosure declined a request to tear up the scathing opinion, saying it was important “to name and to shame” the company in order to shed light on practices that affect consumers.
U.S. Bankruptcy Judge Christopher Klein was labeled a “hero judge” by Money magazine for his March ruling, which blasted Bank of America for its “heartless” conduct against the couple, Erik and Renee Sundquist, and awarded more than $45 million in damages. The bank agreed to pay the Sundquists several million dollars more than the $6 million they won at trial if Klein’s opinion was expunged.
“This was a naked effort to coerce this court to erase the record,” Klein wrote in a Thursday opinion. “No chance. No dice.”
Although the judge agreed to vacate the damages, he said “trials have consequences” and the litigation is no longer a two-party dispute. Nonprofit consumer advocacy groups and law schools that had intervened in the case on behalf of the public had a “potent point” when they noted that the bank “has shown no remorse, made no apology and promised no reform of the corporate culture practices illustrated by this case,” Klein said.
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“Nothing suggests that the bank accepts responsibility for its actions,” Klein said. “This court remains persuaded that the conduct warranting significant damages resulted from a corporate culture that facilitates, and is unwilling to correct, the problems that Bank of America visited upon the Sundquists.”
Jerry Dubrowski, a spokesman for Bank of America, declined to comment on Thursday’s opinion.
The Sundquists stood to collect $5 million in punitive damages and about $1 million for their losses, including for emotional distress and their costs of suing Bank of America. The intervenors were slated to receive $40 million. The Sundquists agreed to donate $300,000 to the intervenors from their settlement, Klein said.
The Sundquists were told during the recession that they needed to let their 6 percent mortgage go into default if they wanted to modify it, according to Klein’s March ruling. When they did so, even though they could afford the payments, the bank never agreed to a modification and the couple ended up in bankruptcy court.
The bank violated a rule requiring foreclosure actions to be postponed during bankruptcy proceedings. By the time it realized it made a mistake and allowed the Sundquists to return, their major appliances had been stolen. The judge noted that the ordeal led Erik Sundquist to attempt suicide and caused his wife to be hospitalized with heart-attack symptoms.
“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 said. “Other persons dealing with Bank of America will be able to gauge their experiences against what has been revealed in this case.”