Law360, Los Angeles (November 12, 2015, 8:47 PM EST) -- A Texas state jury awarded nearly $5.4 million to a couple accusing Wells Fargo NA and others of “robosigning” documents that led to the wrongful foreclosure of their home, holding that the banking giant knew that documents supporting the foreclosure were fraudulent.
After four days of trial and just four hours of deliberation, the jury on Tuesday found that there was “clear and convincing evidence” that Carrington Mortgage Services LLC and Wells Fargo, acting as Carrington’s trustee, knew that the supporting documents were a fraudulent claim on the property owned by Houston residents Mary Ellen and David Wolf.
The jury, which also deemed a lien transfer from Carrington’s predecessor company New Century Mortgage Corp. to Wells Fargo to be void, awarded the couple $5 million in punitive damages, $150,000 in damages for financial injury, $40,000 for mental anguish and $190,000 in legal fees.
Tuesday’s verdict is blow for Wells Fargo and Carrington in a long-running case that began as a putative class action in 2011. A class was certified in 2013, but that certification was overturned on appeal the following year, and the Wolfs pursued their individual claims to trial.
The case still requires final judgment by the court. A hearing is set for Jan. 11.
The Wolfs received a home equity loan of $400,000 from New Century in 2006, which was put into a pool of securitized mortgages in which Wells Fargo acted as the trustee. The couple claimed that the mortgages were not properly transferred into the mortgage trust and a valid chain of title did not exist.
The couple said that the transfer of lien — which was “robosigned,” or rubber-stamped, by a New Century employee named Tom Croft and given to Wells Fargo — was fraudulent, invalid and void because New Century did not own the Wolfs' promissory note or deed of trust.
Thousands of foreclosure actions have been filed in Texas by Wells Fargo and the vast majority of them rely on sworn affidavits signed by Croft, according to the complaint.
“When a servicer files an affidavit that claims to be based on personal knowledge, but is not in fact based on personal knowledge, the servicer is committing a fraud on the court, and quite possibly perjury,” the fourth amended complaint said. “The existence of foreclosures based on fraudulent pleadings raises the question of the validity of foreclosure judgments and therefore title on properties.”
An attorney for the couple said that they were satisfied with the jury’s decision and hope it will prompt Wells Fargo to change their practices.
“Wells Fargo is doing this to thousands of other homeowners across the country every day,” said W. Craft Hughes of Hughes Ellzey LLP. “They know exactly what they are doing and are taking advantage of low-income homeowners who don’t have the means to hire a lawyer and are taking their homes without the right to do so.”
In 2012, Wells Fargo, along with JPMorgan Chase & Co., Citigroup Inc., Bank of America and Ally Financial Inc. — the five largest mortgage servicers in the U.S. — struck a $25 billion deal with the U.S. Department of Justice and 49 states to resolve prosecutors’ broad investigation into the banks’ mortgage servicing practices, which included the robosigning of foreclosure documents.
Representatives for Wells Fargo did not immediately respond to requests for comment on Thursday.
The Wolfs are represented by W. Craft Hughes and Jarret L. Ellzey of Hughes Ellzey LLP.
Wells Fargo and Carrington are represented by Peter C. Smart of Crain Caton & James PC.
The case is Mary Ellen Wolf v. Wells Fargo Bank NA et al., case number 2011-36476, in the 151st Judicial District Court of Harris County, Texas.