Monday, May 6, 2013
Wells Fargo Slammed $3,1712,154 for Misapplying Payments in Chapter 13
Judge Elizabeth W. Magner’s imposition of punitive damages of $3,1712,154 against Wells Fargo Bank was recently affirmed by the district court in Jones v. Wells Fargo Home Mortgage Inc. 2013 WL 1155248 (E.D. La. 1/19/13).
The district court held that the bankruptcy court’s ruling was substantially supported by the record. Wells Fargo had initially agreed to a systematic audit of its accounting of home loan payments after misapplying Chapter 13 payments against undisclosed post-petition fees and costs.
In awarding punitive damages, the bankruptcy court said: “After considering the compensatory damages of $24,441.65 awarded in this case, along with the litigation costs of $292,673.84; awards against Wells Fargo in other cases for the same behavior which did not deter its conduct; and the previous judgments in this case none of which deterred its actions; the Court finds that a punitive damage award of $3,171,154.00 is warranted to deter Wells Fargo from similar conduct in the future. This Court hopes that the relief granted will finally motivate Wells Fargo to rectify its practices and comply with the terms of court order, plans and the automatic stay.”
The district court agreed and stated, “Wells Fargo was on notice that its actions were impermissible and could incur significant legal penalties and assessing punitive damages at ten times the amount of compensatory damages is within the constitutional limits.”
Professor of Law, Michaela White is the source of information.