Court Issues $45m Punitive Damages Award Against BofA

Posted by NCBRC - March 24, 2017

“The mirage of promised mortgage modification lured the plaintiff debtors into a kafkaesque nightmare of stay-violating foreclosure and unlawful detainer,” for which the court ordered over $1 million dollars in actual damages plus a significant punitive damage award. Sundquist v. Bank of America, No. 10-35624, Adv. Proc. No. 14-2278 (Bankr. E.D. Cal. March 23, 2017).

In the first 30 pages of the 109-page opinion, the court walked through the facts of the case illustrating Bank of America’s egregious conduct and including extensive quotes from Renee Sundquist’s journal. A few highlights include the following facts. Though struggling financially, Erik and Renee Sundquist were current on their home loan, defaulting only after Bank of America told them that the only way they could get loan modification would be if they were in default. After that began a series of abortive modification attempts during which Bank of America consistently lost paperwork, denied modification for no apparent reason, or otherwise dangled modification before the Sundquists without actually providing it, while at the same time going forward then retreating on foreclosure actions. At one point, a Bank of America employee told Renee that modifications were “not real” but were simply a way for Bank of America to make more money before foreclosure.

The Sundquists filed for chapter 13 bankruptcy under threat of imminent foreclosure. After foreclosing in violation of the stay, Bank of America sent thugs to stake out the residence and intimidate the family, and gave them a three-day notice of eviction causing the Sundquists and their children to find temporary housing. Upon learning that they were no longer the owners of the home, the Sundquists voluntarily dismissed their bankruptcy case thereby ending the automatic stay. Meanwhile, and without the Sundquists’s knowledge, Bank of America rescinded the foreclosure and returned title of the home to them. When they later returned to the house they found that major appliances had been removed. In keeping with its conduct throughout, Bank of America attempted to collect mortgage payments for the months the Sundquists had been without their home.

The court found Bank of America’s conduct to be willful and intentional and that it resulted in “emotional distress, lost income, apparent heart attack, suicide attempt, and post-traumatic stress disorder, for all of which Bank of America disclaim[ed] responsibility.”

Finding that state tort principles inform damage awards in bankruptcy, the court applied a “but for” analysis to the issue of damages: “If a consequence would not have occurred ‘but for’ the automatic stay violations, then courts make awards based on that consequence.” Actual damages including economic loss, emotional distress, attorney’s fees, and punitive damages are all recoverable under appropriate circumstances.

In detailed analysis of the evidence, the court concluded that actual damages, including $70,000.00 in fees to trial counsel, medical expenses, loss of employment income, HOA fees, and lost property, came to over $1 million.

Turning to punitive damages, the court balanced the desire to properly punish Bank of America beyond what it might consider “cost of doing business,” and a reluctance to award the Sundquists vastly more than would be reasonable. It concluded that it had the power to make a portion of the award payable to organizations devoted to the public purposes of education and consumer protection. To that end, the court ordered that a portion of the punitive damages be directed to seven entities: the National Consumer Bankruptcy Rights Center, the National Consumer Law Center and five University of California Law Schools.

The decision is likely to be appealed.

Sundquist Bankr ED Cal opinion March 2017

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  • Dennise Henderson
    Posted March 27, 2017 at 3:59 am | Permalink

    I am the attorney who handled this case. It hits on a number of issues not the least being that consumers are fleeced before they get to an attorney who can try the case. Most lawyers are anxious to settle – and in four cases with B of A my experience is they don’t admit to errors that a first year lawyer would see is wrong. The lawyers assist b of a in continuing to protect them and cover up the original lie. Knowing most civil lawyers are afraid of trial and afraid of them. – Dennise Henderson

  • Ed guertse
    Posted March 29, 2017 at 5:48 pm | Permalink

    We have an issue with our mortgage servicer. After a bankruptcy and a discharge. The bank was sending monthly statements stating we still owed $25,000.00 after the discharge. Looking at my statements I lost track of our payments and fell behind. They foreclosed two time on us not excepting funds they ask for. Four years later we been putting our payment in escrow around $75,000 now plus lawyers fees. We are paying 6.875 interest every month to our account but the bank is not moving forward with our account. Very stressful and costly . Need help thank you please do not post on internet. Thank you..

  • keith pillich
    Posted October 17, 2017 at 10:32 pm | Permalink

    who was the attorney who won the case?

  • Dennise Henderson
    Posted October 30, 2017 at 3:46 am | Permalink

    Take a look at the newly unsealed documents in this case. The problem with these foreclosures is nationwide. If you look at the few cases that get to trial or get resolved – they are very few. Bank of America has now delayed the start of appeal 8 months. There are many people being defrauded and harmed. I have a woman who is locked out and living in her car – b/c of Bank of America – taking payments and not applying them as they promised while she was away from her home for 6 months. I haven’t been able to file a complaint – can’t get close to whoever has authority at B of A – while the woman who has had two strokes is in a parking lot of a 24 hr fitness – a woman who has owned her home for 24 yrs and never missed a payment who owned a business. Don’t forget the point of this case – too many people are being harmed; they are too protected by their counsel – (Reed Smith and Severson & Werson represent Bank of America) – and when you have a complaint like the one above – their is no one with authority to listen and fix it – and if you find one – they won’t be working there tomorrow. They have used the federal court – to try this case – thumbed their nose at the court and now wants to tell them how to write their vacature opinion. So is that where we are – let the corporation play with us – let us spend the little resources we have to fight – win and then besides keeping you in appeal – the bank writes a big check and asks to vacate the opinion. But they are not paying the tax payer for use of the court; the judge; his clerk; the building – and oh – plaintiff’s counsel – it is always a bonus to put them out of business as quickly as possible. Divide and conquer.

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