The state Supreme Court’s considering a case where damages were awarded to a couple during the mortgage crisis of 2008.
David and Crystal Holms of Holt, Missouri sued Wells Fargo after the banking giant foreclosed on their property during the great recession.
A circuit court judge awarded the couple almost $3.3 million in damages, noting the bank failed to comply with orders to produce documents and witnesses.
Arguing for the Holms’, Attorney Kenneth McClain claimed the judge acted appropriately in penalizing Wells Fargo. “He had ordered them four separate times to produce documents and warned them that sanctions were coming if they continued to hide the ball” said McClain. “They failed to produce two witnesses at his direction. They lied to him, he said, twice. I’ve looked at all the cases for sanctions. I’ve never seen more egregious conduct than existed here.”
Government sponsored mortgage company Freddie Mac, which bought the foreclosed property from Wells Fargo, is also a defendant in the case.
The Holm’s lawsuit claimed the couple was not in default and had sent Wells Fargo money to reinstate the loan. It sought to regain title to the home in their name.
Representing Wells Fargo, which appealed the lower court judges ruling, attorney Eric Martin argued damages couldn’t be awarded because the Holms’ clearly had defaulted. “In this case, the evidence showed that from the time foreclosure proceedings began in May of 2008, and that’s when the plaintiffs alleged in their petition they began, if they were in default at that point, there can be no damages” said Martin. “(That’s) bedrock principal of foreclosure law.” Martin said the Holms introduced a payment history showing their last payment was in May 2008, more than three months before the foreclosure.
Two weeks before the lower court trial, the judge blocked the mortgage companies from introducing evidence in the case, granted the couple’s motion for sanctions and ordered they be paid $34,000 by Wells Fargo and Freddie Mac to cover attorney fees.
On the day of the trial, the judge disallowed a jury trial, and awarded the Holms’ $296,000 in actual damages as well as $2.96 million in punitive damages, and reinstated the property title in their name.
The Supreme Court heard arguments this month and has not yet issued a ruling. Among the issues before it is whether the circuit court erred in granting the Holms’ claim for sanctions, and if it erred in refusing to allow Wells Fargo to present a defense. The high court will also determine whether Wells Fargo was wrongly denied a jury trial.
In his brief before the Supreme Court, Martin, the couple’s attorney, wrote “The experiences of the Holm family are a microcosm of larger trends. August of 2008 is “when people got scared” about the national housing market and bank conduct.” He also stated “This historically significant moment in our nation’s economic life played out in devastating ways for the Holm family”.