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BofA Judge Still Resists Erasing `Heartless' Foreclosure Ruling

Bloomberg logoBloomberg 10/18/2017 Robert Burnson
A customer enters a Bank of America Corp. financial center in Miami, Florida, U.S., on Thursday, Jan. 5, 2017. Bank of America Corp. is scheduled to release earnings figures on January 13.:  © Bloomberg/Bloomberg  

(Bloomberg) -- A judge who imposed a $45 million penalty on Bank of America Corp. over a foreclosure on a California couple still isn’t ready to forget the case he described as a “Kafkaesque nightmare.”

U.S. Bankruptcy Judge Christopher Klein voiced exasperation Wednesday as the bank sought for the third time to win his approval of a confidential settlement that would nix the monetary penalty and also erase the 107-page ruling he issued in March detailing the bank’s “callous” and “cruel” treatment of the Sundquist family after they sought a mortgage modification.

Klein asked the bank’s attorney at a hearing in Sacramento: “Are you representing, ‘Oh, judge, we just get to erase the record whenever we want?” The judge said it looked to him like the bank was “holding the Sundquists hostage” by making the settlement contingent on the ruling being dismissed.

Jonathan Hacker, a lawyer for the bank, told the judge the concern is that the ruling could be used in other cases against the bank. Hacker agreed to consult with his client and let the judge know by day’s end about whether the bank will still honor the settlement if the judge refuses to dismiss the case entirely, including his March ruling.

‘Hero’ Judge Urged by Couple to Nix $45 Million BofA Penalty

The secrecy surrounding the terms of the settlement and the proposed erasure of the judge’s ruling have 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.

Roger Heller, a lawyer for the non-profits, urged Klein not to strike the case from the law books, which would mean that other attorneys wouldn’t be able to cite it as a precedent.

“The opinion itself should certainly not be vacated or depublished or removed from the world,” Heller said.

Klein at one point quoted the late U.S. Supreme Court justice, Antonin Scalia, who said that ”public interest” sometimes outweighs a desire by adversaries to have a case vacated.

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.

“It allows us to put an end to this nightmare that has permeated every aspect of our lives and that of our sons’ lives for so long," Erik Sundquist said in a court filing. "I cannot even begin to articulate how important it is to me as a husband and a father to end this phase of our life and go forward."

One of the couple’s attorneys told the judge at a previous hearing the proposed settlement provides “substantially more” than the $6 million the family would get from the court’s ruling.

In his March 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 the size of the punitive damages award against Bank of America was meant to “not be laughed off in the boardroom.”

The case is Sundquist v. Bank of America Corp., 14-02278, U.S. Bankruptcy Court, Eastern District of California (Sacramento).

To contact the reporter on this story: Robert Burnson in Sacramento at rburnson@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, Peter Blumberg

©2017 Bloomberg L.P.

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