Judge refuses to dismiss foreclosure lawsuit
by Kelly Quimby/Times-Georgian Times Georgian
A recent court order issued by Carroll County Superior Court Judge Dennis Blackmon has been circling the blogosphere in recent weeks and is being touted by some as a swipe against corporate bank interests, as well as an establishment of judicial support for homeowners in foreclosure cases.
In the court order filed in Superior Court on Nov. 2, Blackmon denied a request from U.S. Bank to dismiss a civil suit filed by Otis Wayne Phillips of Villa Rica regarding the bank’s denial to modify his home loan.
“Sometimes, only the courts of law stand to protect the taxpayer. Somewhere, someone has to stand up,” Blackmon wrote in his introduction. “Well, sometimes is now, and the place is the Great State of Georgia. The defendant’s motion to dismiss is hereby denied.”
The order indicates that Phillips, who had fallen behind on his house payments and was in danger of foreclosure, had approached the bank about modifying his mortgage. U.S. Bank denied Phillips’ request but gave no reason for the denial.
Phillips’ attorney, Peter Ensign, said that while U.S. Bank and several other financial institutions received millions of dollars to offset falling real estate prices, the majority of that money was squandered or held and did not benefit the taxpayers who footed the bill.
“It’s unprecedented what’s happened in the U.S. real estate market in the past three or four years,” Ensign said. “This is not an isolated incident. … I represent homeowners trying to save their homes. The truth of the matter is, what happened was unprecedented, the fact that the taxpayers paid these banks off is unprecedented, and then the banks throw these citizens out of their homes.”
In his order, Blackmon took issue with the bank’s denial of Phillips’ request, particularly because he said the bank was on the receiving end of some $20 billion of U.S. bailout or Troubled Asset Relief Program (TARP) funds, and the bank agreed to participate in the Home Affordable Modification Program (HAMP) offered by the Departments of Treasury and Housing and Urban Development, which lowers monthly mortgage payments for those who are having mortgage trouble unrelated to unemployment.
“This court cannot imagine why U.S. Bank will not make known to Mr. Phillips, the taxpayer, how his numbers put him outside the federal guidelines to receive a loan modification (…) A cynical judge might believe that this entire motion to dismiss is a desperate attempt to avoid the discovery period, where U.S. Bank would have to tell Mr. Phillips how his financial situation did
not qualify him for a modification (…) Maybe U.S. Bank no longer has any of the $20 billion left, and so their lack of written explanation might be attributed to some kind of ink reduction program to save money,” Blackmon wrote.
Ensign said that U.S. Bank received $114 million in HAMP funds from the Department of Treasury and HUD and failed to deliver assistance to his client as the program directed. He said his client is not looking to get out of making mortgage payments with his lawsuit but is instead looking for fairness.
“We’re trying to pay the banks back, but he has to pay it over time to reflect his loss of income, which is related to the devastating recession that has affected him. That’s all he seeks — fairness. It’s a shocking and sad situation, but it’s one that I deal with all day, every day. These homeowners, they want to stay in their homes, they want to stay on their property and they want to pay their debt,” Ensign said.
Blackmon’s order added that Georgia law allows third-party beneficiaries, in this case, Phillips, to sue on contracts that are intended to benefit that third party. He said that not only could Phillips sue U.S. Bank, but he might have a claim for negligence in the way that the bank failed to show good faith by denying his modification.
He concluded his order by saying that the state of Georgia allows for claims of negligent infliction of emotional distress, as well as prohibits wrongful foreclosures.
Since the order was filed, political blogs such as the Huffington Post and DailyKos have picked up and republished Blackmon’s denial.
Matt Weidner, a legal blogger in Florida, posted Blackmon’s order on his website earlier this week, promoting the judge’s honesty and straightforwardness.
“His order really taps into a very deep and transcendent national rage of common sense … like the fury that is boiling over now because Fannie Freddie are paying out $100 million in bonuses while getting Congress to write them billion-dollar checks. What if judges started applying his good common sense logic?” Weidner said.
Ensign said he has had similar results in some of his similar cases, but more often than not the result of civil suits like Mr. Phillips’ are influenced by the party with the most money.
“Sadly, the banks, they completely control Congress. They write the laws, and they have a very large influence in the judicial system as well,” he said. “We do have judges willing to look beyond corruption in U.S. government. (Judge Blackmon) was fair-minded, and he understood the issues very well. The facts that the judge cited are absolutely true in the record.”
According to Tom Joyce, a spokesman for U.S. Bank, the company has already filed an appeal to Blackmon’s order.
“The court’s order contains a number of factual and legal errors, and we will be immediately pursuing our right to appeal,” he said. “On the broader topic on which the case is based, foreclosure is always a last option for borrowers as well as the bank. That’s why the bank has worked with thousands of borrowers on mortgage modifications.”
Ensign said that he plans to continue to fight for his client’s ability to stay in his home and to make fair payments on his debt.
“We’re going to fight. They can appeal and they have a right, but I guarantee you I’ll be right there fighting with all I’ve got to fight to maintain this home for Mr. and Mrs. Phillips. We hope at some point that fairness will prevail,” he said.