Friday, April 6, 2012

Fighting Back: Wells Fargo assessed $3.1 million in punitive damages for misapplying Chapter 13 debtor's plan payments.

Did I read that correctly?  Yes, Wells Fargo was assessed $3.1 million in punitive damages by the bankruptcy court for misapplying Ch. 13 payments!

In an extensive analysis and opinion, Bankruptcy Judge Elizabeth W. Magner assessed $3,171,154.00 against Wells Fargo in punitive damages, along with litigation costs awarded to debtor's counsel, "to deter Wells Fargo from similar conduct in the future".  See  Jones v. Wells Fargo Home Mortgage, Inc. (In re Michael L. Jones), Ch. 13 Case No. 03-16518, Adv. Pro. No. 06-1093 (Bankr. E. D. La. 4/5/12)(Elizabeth W. Magner, United States Bankruptcy Judge [Chief Judge]).

Apparently, Wells Fargo failed to properly apply post-petition payments made by Chapter 13 debtors and failed to disclose the assessment of certain post-petition costs and fees. And, apparently, they picked on the wrong debtor and wrong debtor's counsel who fought them for years until they won. While it is likely that Wells Fargo will appeal this decision, a betting person would also predict that, down the road, Wells Fargo is going to end up paying a significant sum of money for this conduct.

The full decision should be posted shortly on the Court's web site:  Click here: Judge Elizabeth W. Magner - "Section A"

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