Court Won’t Let Bank of America “Buy
and Bury” Judgment Against It
“To name and to 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.” Sundquist v. Bank of
America, No. 10-35624, Adv. Proc.
No. 14-2278 (Bankr. E.D. Cal. Jan. 18,
2018).
Calling it a “naked effort to coerce
this court to erase the record,” the
bankruptcy court declined to vacate
its 2017 judgment in which it awarded
damages for violation of the automatic
stay in the amount of $1,074,581.50
and ordered an additional $5 million
in punitive damages based on Bank
of America’s conduct in connection
with Erik and Renee Sundquists’ home
mortgage. In addition to the award
directed to the Sundquists, the 2017
order included a $45 million punitive
damage award to be distributed
to various public interest entities
which were added to the case as
Intervenors. The order also cancelled
the Sundquists’ attorney’s contingency
fee agreement, citing section 329(b),
and ordered payment of her fees on
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CONSUMER BANKRUPTCY JOURNAL
a lodestar basis.Sundquist v. Bank of
America (In re Sundquist), 566 B.R.
563 (Bankr. E.D. Cal. 2017) (2017
order) (blogged here).
proceeding. Finally, the court would
retain jurisdiction to enforce the
settlement agreement.
The parties jointly moved to dismiss
the adversary complaint after they
reached a settlement agreement in
which BA would pay to the Sundquists
substantially more that the over $6
million awarded by the court. The
settlement addressed the court’s public
interest component of the 2017 order
by agreeing that the Sundquists would
voluntarily designate $600,000.00 of
the settlement to go to the Intervenors.
BA conditioned the settlement upon the
court withdrawing its 2017 published
opinion. Discussing the reasoning behind its
refusal to withdraw its 2017 order
and its ultimate acceptance of the
remainder of the settlement agreement,
the court balanced BA’s desire for
confidentiality against the public need
to know. Where, as here, BA’s conduct
leading to the sanctions appeared to
be standard procedure rather than
aberrant conduct, the court found it
was unworthy of privacy protection.
Furthermore, the court noted that its
opinion had entered an ongoing judicial
conversation and has been cited for its
discussion of potential remedies under
sections 329(b) and 362(k).
After the court’s initial reaction of “No
chance. No dice,” the parties entered
into judicial mediation and reached
a new agreement satisfactory to the
court. Under that agreement, the court
would vacate the damages judgment
against BA in the 2017 order leaving
the remainder of the order intact. It
would then administratively close
without dismissing the adversary The court found the settlement
agreement
otherwise
had
the
advantages
of
vindicating
the
Sundquists’ complaints and their
claimed measure of damages against
BA, and sparing them years of appeals
and delay in receiving any money.
Administratively
closing
without
formally adjudicating the adversary
proceeding, addressed BA’s concern
Winter 2018
National Association of Consumer Bankruptcy Attorneys