Court Slams Wells Fargo Bank Tactics Against Homeowner

Considering the current recession brought on by the mortgage-lending practices of several large banks, it is good to see one court was not going to let the perpetrators of financial ruin add insult to injury.


A few weeks ago, federal judge A. Howard Matz, United States District Court Judge for the Central District of California, denied Wells Fargo Bank's motion to order homeowners Abundio and Luz Cruz to pay $18,552.50 in attorney's fees the Bank incurred in defending against their lawsuit to stop a foreclosure on their home. The Cruz's claimed they were deceived by Wells Fargo Bank into agreeing to a payment-option, adjustable rate mortgage.


Wells Fargo successfully moved to dismiss the case on technical grounds, showing that the Cruz's complaint was, among other things: (1) preempted by federal law and (2) had to be dismissed because the Mortgage Reform and Anti-Predatory Act of 2010 was enacted too late to apply to the Cruz's case.


Wells Fargo then filed a motion asking the Court to order the Cruz's to pay the attorney's fees the bank incurred in successfully defending the lawsuit. Wells Fargo argued that under California law (Code of Civil Procedure, Section 1032), it was entitled to payment of attorney's fees because the Cruz's promised to pay such fees when they contractually agreed to the loan.


The Court, however, pointed out there was a higher principle of law, namely, that federal courts have the discretion to deny contractually-authorized attorney's fees if an award of fees would be inequitable and unreasonable. (Cruz v. Wachovia Mortgage, Well Fargo, et al., (2011) 2011 U.S. Dist. LEXIS 24784). In fact, the court noted it would be an abuse of its discretion for a court to award contractually-authorized attorney's fees under circumstances making the award inequitable or unreasonable. (Id.)


Under the circumstances of this case, the Court concluded that to permit Wells Fargo to recover its attorney's fees would be both inequitable and unreasonable.


The Court's conclusion is well-reasoned. First of all, Wells Fargo had never disproved the Cruz's allegations; rather, Wells Fargo prevailed on technical defenses that did not address the merits of the Cruz's allegation that the lenders disregarded their underwriting requirements to get the Cruz's to obtain a loan they would not be able to repay. The Court believed the allegation was plausible. In the words of the Court, "as the revelations of mortgage and banking abuses over the past two years have demonstrated, this allegation is by no means implausible." (p.3). Moreover, Wells Fargo did not claim the Cruz's suit was frivolous.


Second, the contractual attorney's fees provision was in fine print, buried in six pages of legalese. As the Court put it, 'the size of the print is so tiny that most readers blessed with 20-20 vision would experience the trevails of Mr. Magoo in trying to decipher it." (p.4).


Lastly, the Court found Wells Fargo's motivation to be offensive. "Now, Wells Fargo Bank seeks to punish Plaintiffs for daring to sue it." (p.3). "Plaintiffs are already facing the loss of their home. To saddle them with nearly $20,000.00 in attorney's fees sought by a giant financial institution because they had the temerity to file a lawsuit would be worse than inequitable and unreasonable ; it would be a travesty." (p.7).


This opinion should give hope to homeowners contemplating a lawsuit to save their home. Anyone considering a lawsuit for breach of contract or a loan agreement that contains an attorney's fees provision should seriously consider their liklihood of prevailing before filing suit. But as this case shows, an attorney's fees provision in an agreement with a mortgage lender or bank should be construed in the context of the abuses perpetrated by the lenders.

It remains to be seem whether other courts will agree; nevertheless, it is undeniable the lenders played a major role in creating the current crisis. Moreover, the banks received hundreds of billions of dollars to bail them out of the crisis they created; for them to to get attorney's fees from insolvent homeowners, just to punish and deter hoeowners' legal attempts to save their homes would just add insult to injury.

Forced Abortion Constitutes Political Persecution

Last summer, the United States Court of Appeals for the Ninth Circuit held that the Board of Immigration Appeals must reconsider its denial of an asylum application by Nai Yuan Jiang, a Chinese man whose girlfriend was forced to have an abortion in China. In his application, Jiang claimed he was persecuted under China's coercive family planning policies. The Court agreed. The key to the Court's decision in Jiang's favor was its finding that forced abortion constitutes political persecution within the meaning of our immigration laws. (Jiang v. Holder, 611 F.3d 1086 (9th Cir. 2010)).

Upon reading the Court's opinion, one is readily inclined to agree that the Court made the right call; after all, it must be horrible to live in a country where the government controls population growth through the barbaric practice of forced abortion. But wait, in the context of abortion, what is the difference between China and the United States ? Well, U.S. citizens are not forced to have abortions; to the contrary, they volunteer to have them! How enlightened we are; how superior we are to those barbarians in China. China's abortions constitute political persecution but ours are politically correct.

Is the difference between China and the U.S. simply freedom of choice? Does a person's freedom to choose change the nature of the act itself? Of course not. Any act is objectively good or bad in itself; the goodness of the act does not depend on whether the act is done freely or under force. Forced action changes a person's culpability for an action, but it does not change the nature of the act itself. A person can be absolved of responsibility for an act done against their will, but the act itself does not change.

So again, one must ask what is the difference between the U.S. and China? Thomas Aquinas teaches that there are three parts to the morality of any act and all three parts must be good for any act to be morally good. The three are (1) the objective act itself, (2) the subjective motive, and (3) the situation or circumstances. (Peter Kreeft, Making Choices, Practical Wisdom for Everyday Moral Decisions, (Servant Books, Cincinnati, Ohio, 1990) pp. 29-30). By applying this test to the act of abortion we can see that we are more culpable than the Chinese.

Of course, there are some who will say that an abortion, in and of itself, is neither good nor bad; rather, it's no different than disposing of hamburger, both are just lifeless flesh. It's possible that such people have never laid their hand on a pregnant woman's stomach and felt the movement of a child in the womb. On the other hand, it is impossible that such people have ever felt a pound of packaged hamburger moving and kicking.

On this day, the 38th anniversary of the Roe v. Wade holding, we must stop and think. How can we look down our noses at China for its law of forced abortions while at the same time seeing ourselves as superior for our law of free abortions?

The abortion issue is the most important issue of our time. The next generation might well ask of us, like we have asked of Germans who lived next door to concentration camps during WWII, why more wasn't done to stop these murders. Six million people were killed under Nazism; 30,000,000 were killed under Stalinism, and approximately 54,000,000, so far, have been killed in the name of individualism since Roe v. Wade. (See statistics kept by the U.S. Center for Disease Control).

Mother Teresa said "the greatest destroyer of peace today is abortion because it is war against the child...A direct killing of the innocent child, murder by the mother herself...And if we can accept that a mother can kill even her own child, how can we tell other people not to kill one another?"

Prop. 8: A Long History or a New History?

Proponents of Proposition 8 recently asked the trial court to block same-sex marriages while they consider taking an appeal. In opposition to the request, attorneys for Gov. Arnold Schwarzenegger argued that allowing same-sex marriages “is consistent with California’s long history of treating all people and their relationships with equal dignity and respect.” Huh? Does California really have a long history of treating all people with equal dignity, or have the learned counsel for the Governor chosen to re-write history to justify their position?

Regarding the history of American Indians in California from 1849 to 1879, historian Hubert Howe Bancroft writes “that part of the early intercourse between aboriginal Americans and Europeans which belongs to history may be briefly given, short work was made of it in California. The savages were in the way; the miners and settlers were arrogant and impatient; there were no missionaries or others present with even the poor pretense of soul saving or civilizing. It was one of the last human hunts of civilization, and the basest and most brutal of them all.” (see www.nps.gov/history/history/online_books/5views/5views1c.htm).

The gold rush era was also a time of less-than-dignified treatment for Chinese-Americans. In 1886 the United States Supreme Court held that a City of San Francisco ordinance prohibiting laundries in wooden buildings, unless a permit was obtained, was applied in a discriminatory fashion against Chinese. (Yick Wo v. Hopkins (1886) 118 U.S. 356). Although most of the city’s wooden building laundries were owned by Chinese, not one of them were granted a permit whereas only one non-Chinese was denied a permit.

In 1946 the United States District Court for the Central District of California found that the Westminster school district’s segregation of Mexican-American schoolchildren into separate “Mexican schools” was unconstitutional. (Mendez v. Westminster, 64 F.Supp. 544 (C.D. Cal. 1946). The district court’s ruling was affirmed on appeal, aided in part by an amicus curiae brief by Thurgood Marshall, who later became Supreme Court Justice, and whose experience in this case contributed to the landmark holding in Brown v. Board of Education. (see Strum, Mendez v. Westminster: School Desegregation and Mexican-America Rights (2010), and Ettinger, A Leader in the Fight Against School Segregation, Daily Journal (July 8, 2010) p.6).

The war years also saw the mistreatment of Japanese-Americans, who were rounded-up and placed in internment camps. (see Korematsu v. United States, 323 U.S. 214 (1944). Inspired by a desire to prove their loyalty, many young Japanese-Americans enlisted in the armed forces, and the Japanese-American soldiers of the 442 Infantry Regiment became the most-decorated regiment in the history of the United States Armed Forces, earning 18,000 individual decorations. The 442nd and the 100th Battalion from Hawaii, another Japanese-American unit, earned a total of 21 Medals of Honor. The price these young men paid to overcome suspicion and earn equal dignity was high. The 442nd/100th sustained 9,486 wounded and over 600 killed, the highest casualty rate of any American unit during the war.

After WWII, the Cold War began. During this period one can recall the revisionist history proclaimed by Communist party leaders, a re-writing of history that was laughable. Today we have President Ahmadinejad of Iran denying that the Holocaust ever occurred. We just laughed at him, but now we have counselors wiping clean the pages of history in order to make their cause seem righteous by association with the past, a past that didn’t exist. Who’s laughing now?