This is not my case nor is it anyone who is listed on usacomplaints.com but it is satisfying to see for all of us who are dealing with their arduous methods.
I am only sending this to provide hope and give others a smile knowing that someone got into EMC's pockets...
Court of Appeals Reinstates $6MM Punitive Damage Award Against Servicer In Stark v. Sandberg, Phoenix & von Gontard, PC, the Court of Appeals reinstated a six million dollar punitive damage arbitration award against a mortgage loan servicer. EMC Mortgage Corporation bought Stark's loan after he was in default. The fact that the loan was in default at the time of the purchase made EMC subject to the Fair Debt Collection Practices Act, even though it was collecting its own loan. The arbitrator was outraged at the lender's disregard for the borrower's right (1) to be free from physical intrusion into the home and (2) to be represented by legal counsel. He decided that the prohibition in the arbitration agreement against punitive damages "... As to which borrower and lender expressly waive any right to claim to the fullest extent permitted by law" might not prohibit punitive damages because the law did not expressly permit the borrower to waive such damages. Furthermore, the arbitration agreement incorporated Missouri law and public policy, which prohibited waivers of this nature.
Since this clause was ambiguous, the arbitrator held that the borrowers could seek all damages permitted by law. The arbitrator found EMC violated the FDCPA and awarded the Starks $1000 each in statutory damages, $1000 each in actual damages, $22,780 in attorneys fees, and $9300 for the cost of the arbitration. The arbitrator found EMC's forcible entry into the premises reprehensible and outrageous and in total disregard of plaintiff's [sic] legal rights and awarded $6,000, 000 in punitive damages against EMC.
The District court overturned the award, but the Court of Appeals reinstated the award, holding that the arbitrator was not irrational. The Court stated:
The arbitration clause states any claims will be resolved in accordance with the FAA, which permits a waiver of punitive damages. The choice of laws provision, however, states claims must be resolved in accordance with applicable [Missouri] law, which does not permit the waiver of punitive damages argued for by EMC in this case. Thus, an arbitrator could reasonably conclude this agreement is ambiguous.
The Court of Appeals noted that the arbitration agreement could have stated that it should be governed by federal law, and not by state law.in such case, the wavier of punitive damages would have been upheld:
We recognize the FAA allows parties to incorporate terms into arbitration agreements that are contrary to state law. See UHC Mgmt.Co. V. Computer Sciences. Corp., 148 F. 3d 992,997 (8th Cir. 1998) (holding [p]arties may choose to be governed by whatever rules they wish regarding how an arbitration itself will be conducted.) (citation omitted). Thus, had the parties to this agreement intended its interpretation to be governed solely by the FAA, the punitive damages waiver might have barred any such award. The plain language of the agreement, however, makes it clear Missouri law applies to this issue.
The moral of the story is that loan servicers should not act like they are 900 pound gorillas. Borrowers who default and seek bankruptcy protection are not felons who have no rights. Employee training is key to avoiding problems of this nature. You can pay to train your employees now, or pay your attorneys much more later.
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