11th Circ: Wells Fargo Class Action on Motions for Relief from Stay

The following is copied from a report by Robin Miller who provides updates on bankruptcy cases throughout the country from her company CBAR(Consumer Bankruptcy Abstracts and Research).

”  Court certifies classes in class action asserting that Wells Fargo committed fraud on court in filing motions for relief from stay

Although the court in its earlier opinion, found at In re Brannan, 2011 WL 5331601 (Bankr. S.D. Ala., Nov. 7, 2011), declined to certify a class in a proposed class action, the court concluded that the plaintiffs had now demonstrated that the prerequisites for the certification of two classes in a proposed class action were satisfied. The class action asserts that Wells Fargo committed fraud on the court through its practices in generating affidavits filed in connection with motions for relief from stay. Specifically, the action asserts that (1) persons signing affidavits did not, in fact, possess personal knowledge of the facts stated in the affidavits, as the affidavits represented; and (2) the person signing the affidavits did not actually sign them in the presence of a notary public, as represented in the affidavits. These allegations, if established, warranted relief, the court concluded, both under Code § 105(a) and under the court’s inherent authority to punish contempt of the court.

The plaintiffs offered into evidence a Memorandum of Review from the Inspector General of the U.S. Department of Housing and Urban Development dated March 12, 2012, that examined Wells Fargo Bank’s foreclosure and claims processing in Fort Mill, South Carolina. The findings of that review included the following:

  • “The affiants routinely signed and certified that they had personal knowledge of the contents of documents, including affidavits, without the benefit of supporting documentation and without reviewing the source documents referred to in the affidavits and verifying the accuracy of the foreclosure information stated in the affidavits. A number of affidavit signers admitted having signed up to 600 documents per day.”
  • “Work histories (when available) showed a lack of qualifications to hold the titles held by affiants; for example, vice president of loan documentation. Moreover, interviews disclosed that the titles were given for the sole purpose of allowing the individual to sign documents and came with no other duties or authority. Employees who notarized documents, including affidavits, routinely did not witness the signature of the documents and notarized up to 1,000 documents per day.”

The court certified the two classes proposed by the plaintiffs:

  • All individuals who (i) Have filed a Chapter 13 or Chapter 7 bankruptcy case in the Southern District of Alabama in which the defendant filed, or caused to be filed, an affidavit in support of a motion for relief from stay, motion for adequate protection, or similar motion filed from January 1, 1996 through December 31, 2008; and (ii) Made any payment to Defendant (directly or indirectly) for attorneys fees and/or filing fees associated with such motions.

 

  • All individuals who (i) Have filed a Chapter 13 or Chapter 7 bankruptcy case in the Southern District of Alabama in which the defendant filed, or caused to be filed, an affidavit in support of a motion for relief from stay, motion for adequate protection, or similar motion filed from January 1, 1996 through December 31, 2008; and (ii) Have any charges posted to their mortgage account for attorneys fees and/or filing fees associated with such motions.

In re Brannan, 2013 WL 85158 (Bankr. S.D. Ala., Jan. 8, 2013)

(case no. 1:02-bk-16647; adv. proc. no. 1:04-ap-1037) (Chief Bankruptcy Judge Margaret A. Mahoney)   “

 



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