Consumer Bankruptcy Journal Winter 2018 - Page 24

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 24 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