Judge’s Decision to Hit Bank of America with a $46 Million Award in Bankruptcy Case May Set New Precedent
A ruling by a judge in California, who found that Bank of America’s “brazen” and “heartless” behavior” during an improper foreclosure warranted fines of $46 million, may set an example that could come back to haunt corporate criminals, experts say.
In 2009, homeowners Renee and Erik Sundquist went to Bank of America to request a loan modification for their house in Sacramento. The multinational financial services company instructed the couple to stop their monthly payments and default, as a precondition for loan modification, which they reluctantly agreed to. Despite their efforts, Erik and Renee were only teased with the idea of a mortgage modification.
The next year the Sundsquists filed for bankruptcy, which should have stopped the foreclosure proceedings on their home—should have. Instead, Bank of America hit them with an eviction notice anyway and they were forced to flee to a $4,000 rental, only to find out that the home was actually still theirs. While they were gone, their house was looted, their belongings were stolen, and they were fined $20,000 from the homeowners associated for lack of landscaping upkeep.
As a result of the overwhelming stress, Renee lost her job and her husband tried to commit suicide. Debt collectors even frightened their children by repeatedly knocking on the home’s glass doors.
Last year, U.S. Bankruptcy Judge Christopher M. Klein handed down the $46 million judgment and lambasted Bank of America for violating bankruptcy restrictions on foreclosure and tossing Erik and Renee Sundquist into a “Kafkaesque nightmare.”
The Sundquists were awarded $1 million in compensatory damage, but $45 million in punitive damages—a 45:1 ratio that directly opposes a Supreme Court decision which limits the ratio to around 10:1. According to the judge, the towering ratio of punitive to compensatory damages was necessary to prevent the award from being laughed off in the boardroom as chump change.
Experts believe that Judge Klein’s decision of a large punitive damage award may have some staying power.
In Virginia, one bankruptcy court cited Klein’s decision to justify a nearly identical outcome. A clerk for bankruptcy Judge Stuart M. Bernstein wrote a brief law review article on the Sundquist case, suggesting it’s on the radar of one of the most powerful bankruptcy courts in the country.
This is all despite the judgment having been vacated and the case closed as a result of a settlement reached between Bank of America and the Sundquists.
If you are facing foreclosure, please contact our Chicago foreclosure attorneys at Atlas Consumer Law to ensure that your rights are fully protected. We are well versed in foreclosure law and can potentially help you keep your home.
Call (312) 313-1613 or contact us online for a free case evaluation.