A Lincoln couple’s long legal battle with Bank of America could end this week with a proposed settlement that would pay them more than $6 million.
A hearing on the settlement is set for Tuesday before U.S. Bankruptcy Court Judge Christopher Klein, the same Sacramento judge who told Bank of America in March to pay a $46 million judgment after it wrongfully foreclosed on Erik and Renee Sundquist’s Lincoln residence seven years ago.
In that ruling, Klein said the Sundquists were put through a “Kafkaesque” ordeal by the bank.
The judge’s ruling specified more than $6 million in compensatory and punitive damages to the Sundquists, plus an additional $40 million in punitive damages to be distributed among entities that included the National Consumer Law Center, the National Consumer Bankruptcy Rights Center and multiple University of California law schools.
However, Klein’s ruling left open the possibility of expensive, yearslong appeals.
Bank of America contends that the other entities named to receive $40 million in punitive damages in the March ruling have “no claims in the case, no preexisting interest in the dispute and (we believe will ultimately be established) no legal right to relief.”
Phone calls seeking comment from attorneys representing both the Sundquists and the bank were not returned last week.
The dispute dates back to 2009 when Charlotte, N.C.-based Bank of America reportedly asked the couple to default on their home loan in order to obtain a mortgage modification. But the bank refused to honor that promise, according to court documents.
At that point, the Sundquists filed for Chapter 13 bankruptcy, which triggered a stay on the foreclosure process. The bank disregarded the stay and started eviction proceedings. This included sending workers to the property on multiple occasions.
“Without identifying themselves, they staked out the premises, tailed the Sundquists, knocked on doors, knocked on windows, and rang doorbells, all to the terror of the Sundquist family,” Klein wrote in a 109-page opinion for the ruling.
Bank of America eventually gained possession of the property for six months, after which it then agreed that the foreclosure had been a mistake. The company returned the keys to the Sundquists. When they re-entered their home, the major appliances had been removed and the lawn was dead, according to the court.
“Throughout, the Sundquists were acting in good faith, not realizing that Bank of America had no intention of acting in good faith,” Klein wrote.
In June, with retired U.S. Magistrate Judge Leo Papas acting as mediator, discussions between the parties occurred, and the now-pending settlement ultimately was hammered out.
In their Aug. 15 motion to vacate the original judgment in favor of the settlement, the Sundquists’ attorneys stressed the importance of ending “a long personal and legal nightmare that has impacted every facet of (the Sundquists’) and their sons’ lives.”
The Sundquists’ motion calls the proposed settlement “the only viable path for the Sundquists to achieve a meaningful recovery from the bank without years of further litigation and appeals …”
The Sundquists claim that the ordeal “has left them financially depleted, emotionally fragile, in poor health and unable to work and earn at anywhere near their prior levels.”
In an Aug. 24 filing favoring the Sundquists’ motion to vacate the prior judgment, attorneys for Bank of America contend that the court “has full authority to vacate its judgment and give the Sundquists the relief they desire and the finality both parties deserve.”