by In Charles Dickens’ “A Tale of Two Cities,” there is a scene in which the wealthy Monsieur the Marquis riding in his carriage through a crowd runs over and kills a small, poor, child. When the crowd cries out in outrage, he carelessly throws a few coins out of the window of the carriage with the words, “It is extraordinary to me, that you people cannot take care of yourselves and your children.” With that, he rides on. Thus begins the French Revolution.
For many years, Wells Fargo has been carelessly throwing coins out its carriage window at the debtors overrun by its policies that unfairly compound their already onerous financial burdens. But, debtors, with the help of the courts, are fighting back.
The recent battlefield was the Bankruptcy Court for the Eastern District of Louisiana in the case of Jones v. Wells Fargo Home Mortgage, No. 03-16518 (Bankr. E.D. La, April 5, 2012). In that case Judge Elizabeth Magner reviewed an order for sanctions after remand by the Fifth Circuit, in light of the Fifth Circuit’s decision in Wells Fargo Bank, N.A. v. Stewart (In re Stewart), 647 F.3d 553 (5th Cir. 2011) (finding that Bankruptcy overstepped its mandate in ordering Wells Fargo to audit every case it was involved in in the district).
In a scathing opinion, Judge Magner enumerated Wells Fargo’s deliberate and consistent practices of charging fees and costs without court approval or notification to the debtor or the trustee, and misapplying plan payments in contravention of the plan requirements. These systemic, willful and routine practices resulted in incorrect amortization of loans and unwitting defaults by debtors. Moreover, Judge Magner found that Wells Fargo consistently refused to change its practice and would make corrections only when challenged, and then, only with a costly and burdensome fight. Judge Magner found that Wells Fargo acted with reckless disregard for the automatic stay and that its conduct was reprehensible, clandestine and vexing.
After taking into consideration the dual policies behind punitive damages of benefiting society at large and discouraging future misconduct, Judge Magner awarded punitive damages in the amount of $3,171,154.00. She stated in conclusion, “This Court hopes that the relief granted will finally motivate Wells Fargo to rectify its practices and comply with the terms of court orders, plans and the automatic stay.”