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As was widely reported recently a jury In California awarded $16.2 million mostly in punitive damages. The Judge entered an order for PHH reducing the award to under $200,000. see http://www.kcra.com/news/jury-awards-yuba-co-homeowner-16m-in-mortgage-suit/27041910 This appears to be a case of the Judge substituting his own verdict for that of the jury. First the Judge had to evaluate the case to decide whether to allow the claim for punitive damages. Second, the Judge gave instructions to the jury regarding the award of punitive damages. Then the jury came in with the verdict finding that the behavior of the foreclosure players was so outrageous that they needed to be stopped. They awarded $16.2 million most of which was punitive damages.
The Judge, upon motion from the other side, decided that the verdict from the jury was not just excessive but also unfounded — going against his own prior rulings. Apologists for the banks are trumpeting this “triumph of justice” to stall any other lawyers who are looking for a big payday for themselves and their clients. This will most certainly go on to appeal and from what I know, the appellate court should vacate the judge’s order and allow the jury’s verdict to stand.
The award is only excessive or unfounded from the perspective of (a) assuming that the loan was valid and enforceable by the foreclosing party and (b) a windfall for the homeowner out of proportion to his investment in his home. As to the latter, the law is pretty well settled that the effect of the award on the Plaintiff is not good grounds for remitting the jury verdict. Since it was the left to the jury to decide if the facts supported punitive damages, the Judge had no business reeling it back in unless the verdict was such that it not only punished PHH but also put it out of business. From my understanding of this case the Judge was operating out of political bias and not in accordance with law and I believe that the appellate court will agree that the Judge stepped outside the bounds of his discretionary authority and reinstate the punitive damage award. Unfortunately for all of us the likelihood is that the case will be settled before the case is heard on appeal and a decision is rendered.
We keep hearing about Zombie foreclosures, fabricated documents, backdating, forging and various other activities that would put the average person in jail. A quick perusal of the newspapers reporting on finance shows that the banks are back doing the same things they were doing before — because they were not caught for what they did and/or they were not prosecuted for their behavior. The absence of prosecution means that the last opportunity for justice is in the courts. The continued behavior of the banks in the sale of derivatives, the selling of loan products so complex that the federal Reserve Chairman declared that he didn’t understand them, shows that now that the banks have proven their concept with tremendous inflows of cash illegally obtained, they are free to repeat the behavior with impunity.
If fines in the tens of billions of dollars are not enough to stop them then the ante must go up, not down. The $16.2 Million award might seem high for a $200,000 case, but it only represents a tiny fraction of 1/10th of a percent of the money that was siphoned out of the U.S. economy. Any sane analyst would agree that the rise of Zombie foreclosures are just the tip of the iceberg of a pattern of fraud covered up by the persistent push toward foreclosure. In all other settings, most of the loans would be modified and worked out as they have been for hundreds of years. Instead, the banks misrepresenting the investors, drove the value of the investment down to zero, foreclosed on the property and then abandoned tens of thousands of homes — many of which have been bull-dozed because the banks wouldn’t pay for taxes, insurance and maintenance.
So my opinion, for what it is worth, is that the $16.2 Million award was not too high. It might have been too low. And if our rule of law means anything, once put in the hands of a jury properly instructed, the verdict stands.
Filed under: foreclosure