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Bank sanctioned $7,500 for wrongful foreclosure

Peter Vieth//November 1, 2012

Bank sanctioned $7,500 for wrongful foreclosure

Peter Vieth//November 1, 2012

A bank that paid $70,000 to settle a defamation action after mistakenly starting foreclosure proceedings against a Rockingham County woman has been ordered to pay an additional $7,500 for its delay in delivering the settlement checks.

U.S. Magistrate Judge B. Waugh Crigler found Bank of America “willfully failed to comply” with both the terms of the settlement agreement and the court’s orders when the bank took 55 days to pay the plaintiff and her lawyers after reaching a settlement agreement.

The judge ordered the bank to pay the $7,500 to the plaintiff’s counsel for fees incurred in pursuing the bank’s performance of the settlement agreement and the court orders. The bank has until Nov. 9 to pay, under terms of Crigler’s order.

Crigler said the sanctions would not be stayed automatically if the bank were to appeal. “Should an appeal be filed, payment may be stayed only by filing a supersedeas bond in the amount of $15,000,” Crigler wrote in his order.

Confidential no more

The amount of the settlement had been confidential until the bank submitted copies of internal emails at a hearing on the motion for sanctions. The emails detail that payment was to be made in two checks, one to the plaintiff in the amount of $35,000 and the other to her lawyers in the same amount.

When the bank finally delivered payment, it was in a single check. The plaintiff’s lawyer had to make arrangements at a branch bank to have two cashier’s checks issued.

Thomas D. Domonoske of Harrisonburg, who represented Laura Summers in her fight against impending foreclosure, said it came out at the sanctions hearing that a Bank of America paralegal who served as contact with local bank counsel could not be reached for two weeks after the settlement was completed.

Domonoske said he was told that paralegal is no longer with Bank of America.

Crigler said it appeared that the bank was “too big to perform,” according to Domonoske. The judge also was critical of the bank using a paralegal to give direction to lawyers. Crigler found the violation of the various payment deadlines was “as willful as you can get,” Domonoske said.

The underlying case began with the bank’s approval of a loan modification plan for homeowner Laura Summers. She paid as directed, but the bank mistakenly rejected her participation and started foreclosure proceedings.

Even though bank representatives told Summers she was correct, no one could seem to stop the ongoing foreclosure process.

At the last minute, Summers’ lawyers had the foreclosure stopped. The bank went ahead with the modified loan for Summers. After negotiation with her lawyers, the bank agreed to pay $70,000 to resolve her lawsuit for defamation, fraud and other claims.

Domonoske said the bank seemed to have few people qualified to make decisions. “If you don’t have well-trained decision-makers with the authority to solve problems, you get in trouble,” he said.

C. Paige Bobick of Charlottesville, counsel for Bank of America, said she could not comment on the case.

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