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Merritt v Countrywide

Page history last edited by spencer.graves@prodsyse.com 7 years, 10 months ago

Merritt v. Countrywide

 

Merritt v. Countrywide is a collection of lawsuits resulting from a predatory loan pushed upon David and Salma Merritt.  In 2006, the Merritts, newlyweds, were looking to purchase a home in Sunnyvale, CA.  Countrywide was aggressively advertising 30-year mortgages at between 1 and 3 percent interest. Representatives of Countrywide gave the Merritts a “good faith estimate” of monthly payments between $1,800 and $2,200 matching the ads. Countrywide reps then manipulated deadlines to ultimately threaten the Merritts with the loss of their down payment and the home they were wanting to buy, and with being sued for $729,000 if they failed to sign a contract without reading it and without even receiving a copy.  They were soon surprised with bills for $4,500 per month.  When Countrywide refused to produce a copy of the contract they had on file, the Merritts were told to stop making payments, which they did.  When Countrywide still did not supply the contract, the Merritts sued.  Only then did they learn that the contract that Countrywide claimed to have on file was fraudulent.  

 

The procedures used by Countrywide to obtain many loan contracts with people like the Merrits "appeared systemic", according to Eileen Foster, Senior VP for Fraud Risk Management at Countrywide in 2008.  She was interviewed on 60 Minutes, Dec. 4, 2011. Most of Countrywide's victims have meekly accepted the loss of their life savings and the confiscation of their homes through foreclosure procedures of questionable legality. David Merritt is different. He's not an attorney. However, he has worked enough with attorneys that he has been able to represent himself ("pro se" or "pro per") without being completely outclassed by attorneys for Bank of America, the parent company of Countrywide, and other major banks named as defendants in various filings by the Merritts. 

 

Merritt v. Countrywide in Federal Court

 

The Merritts first filed suit in US District Court in San José, CA in March 2009 (Case No. C09-CV-01179-JW). Judge James Ware ruled that the statute of limitations had expired and the evidence was insufficient.  The Merritts appealed to the US Ninth Circuit Appellate Court (appeal No. No. 09-17678). The firm of Kasowitz, Benson, Torres & Friedman LLP was appointed to represent the Merritts. Oral arguments were heard November 9, 2012. Attorneys Jacob N. Foster, representing the Merritts, and James Goldberg, representing Countrywide et al. were peppered with questions by a 3-judge panel. Goldberg noted that the law gives loan applicants 3 days to demand rescission, and the Merritts did not request rescission in 2006 but waited until 8 days after they received on January 20, 2009 a copy of the contract that Countrywide claimed they had signed. Goldberg confirmed under questioning that there were outstanding class action suits against Countrywide in similar cases. A ruling from the appellate court is now pending.  

 

Merritt v. Wells Fargo

 

This case attracted national attention when the California Court of Appeals, Sixth District, reinstated Wells Fargo as a defendant after a lower court had removed them from Merritt v. Mozillo.  An undisclosed settlement was reached between the Merritts and Wells Fargo that have removed the latter as a defendant in future actions.  

 

 

Merritt v. Mozilo 

 

The primary case in this process is Salma Merritt and David Merritt, Plaintiffs, v. Angelo R. Mozilo, Bank of America, First American Title, et al., Case Number 1-09-CV-159993 in the Santa Clara County Superior Court.  It was filed 22 December 2009.  As of November 2012, it is still in process.  Similar suits were either dismissed or settled in at most 9 months.  The complaint alleges that senior executives of Countrywide, Bank of America, Wells Fargo, Chase and others conspired to write unintelligible legal contracts, market them aggressively and deceptively especially to first time home buyers.  

 

Judge Stoelker and Defense Attorney Goldberg 

 

Between March 2010 and November 2012 judge James L. Stoelker was ruling on discovery in Merritt v. Mozilo et al.  Unbeknownst to the Merritts, Stoelker had represented defendants in this case in numerous cases in the decade prior to being appointed to the bench in Dec. 2010.  In this case, he has ruled consistently in favor of his previous clients.  This does not constitute evidence of bias under California law, even if the rulings are contrary to law.  The key question is whether "A person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial." [CCP 170.1(a)(6)(A)(iii)]  For this, we consider his rulings regarding the unprofessional and possibly criminal behavior of defense attorney James Goldberg, in yelling obscenities and physically assaulting the elderly father of David Merritt, who attempted to observe a previous deposition. Moreover, Goldberg was clearly inappropriately aggressive and abusive when deposing plaintiff Salma Merritt, who is disabled and in frail health.  Judge Stoelker ruled that the depositions continue without other observers apart from David Merritt's Father and without the Merritts being allowed to make their own recording.  Stoelker did so without citing "good cause shown", as required by law [CCP 2025.420(b)].  Stoelker's illegal failure to cite "good cause shown" may not be evidence of bias.  However,  his insistence on the continuation of a secret, abusive deposition of a woman in frail health could potentially cause "A person aware of the facts [to] entertain a doubt" about the impartiality of the judge.  Stoelker made this ruling is spite of the fact that defense attorney Goldberg clearly has a motive for fabricating a fraudulent deposition record, and his previous unprofessional behaviors suggests that he may have the will to do so.  Judge Stoelker's ruling to exclude independent observers and recording gives Goldberg the opportunity to do so.  However, Stoelker has not recused himself, and a supervising judge has also denied the Merritts' motion for recusal. Merritt has appealed.  On Nov. 26, 2012, the appellate court ruled that the Santa Clara County Superior Court should either replace Stoelker or show cause why they shouldn't.  

 

Merritt v. Benson

 

Merritt v. Mozilo includes allegations that appraiser John Benson conspired with representatives of Countrywide to inflate the value of the property by 10 percent so Countrywide could obtain higher commissions, etc.  Benson failed to respond to a summons in August 2011.  January 9, 2012, Judge Manouchian heard 2 hours of presentation of evidence against Benson.  February 16, 2012, Manouchian awarded the Merritts a $1.8 million default judgment.  Benson then got an attorney, who got that decision reversed, so as of 20 July 2012, the Merritts owe Benson $4,000 in attorney's fees.1  

 

 

Future Hearings

 

Monday, December 24, 2012, 9 AM, Santa Clara County Superior Court, Department 9, 191 North First Street, San José, CA:  Judge Mark Pierce will hear the responses of parties to the demand from the appellate court that Judge Stoelker be disqualified from further hearings in this case or explain why not.  

 

*** NOTE: THIS SCHEDULE IS TENTATIVE. THE DATE, TIME OR LOCATION MAY CHANGE. THIS WEB SITE WILL BE UPDATED WHEN MORE INFORMATION IS AVAILABLE.  

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1 The $1.8 million summary judgment was set aside on June 6, 2012, with Benson awarded attorney's fees.  Benson requested $14,000 attorney's fees, which were reduced to $4,000 July 20, 2012, as the only fees relevant to that decision.  Plaintiff's objections to the attorney's fees were overruled on August 31, 2012.  For documentation, look for "Benson" under "Documents" on the web site for S. C. County Superior Court Case Number 1-09-CV-159993 , and "Click for Text" with specific entries.  

 

 

 

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