Business owner hires lawyer to sue lender
A day-care center operator in Pahrump who won a temporary order stopping foreclosures by a Bank of America affiliate in Nevada has retained an attorney who intends to pursue a class action lawsuit.
Suzanne North, operator of a home business called Carousel Family Child Care, persuaded Nye County District Judge Robert Lane on Jan. 20 to issue a temporary restraining order and preliminary injunction against ReconTrust Co., a company affiliated with Bank of America Corp., the biggest bank holding company in the United States.
The judge ordered ReconTrust temporarily to stop all nonjudicial foreclosures in Nevada. Most foreclosures in Nevada are nonjudicial, meaning they are handled outside of court. ReconTrust had 7,500 nonjudicial foreclosure sales scheduled in Nevada when Lane signed the order, ForeclosureRadar.com reported.
North's lawsuit contends that ReconTrust lacked a state or local business license, but defense attorney Ariel Stern contends that ReconTrust is a national bank and is not required to have a business license. Also, she argued in court papers that ReconTrust was not appointed as a trustee for the mortgage loan when foreclosure was started.
North prepared the lawsuit with a paralegal's help but filed it on her own behalf.
Since then, she has retained Salt Lake City attorney John Barlow as her attorney. Barlow said he is pursuing the case as a class action in which North would represent a group of similar individuals. A potential judgment could include compensation for all members of the class.
Barlow represented a plaintiff in a similar lawsuit in Utah against ReconTrust, but a federal judge ruled in favor of the bank. However, Barlow appealed to the 10th U.S. Circuit Court of Appeals, based on arguments that the case should have been turned over to a Utah state District Court.
"I'm not opposed to foreclosure," Barlow said. "I understand that's a necessary element in our society. If the (lender) is going to do (a foreclosure), they need to do it correctly."
Meanwhile, ReconTrust and the holding company on Tuesday filed a notice that they were removing the state lawsuit to federal court in Las Vegas. Chief U.S. District Judge Roger Hunt set out procedural requirements in the case.
Bank of America said in a statement that it "intends, as soon as possible, to move to dissolve the injunction. It is Bank of America and its related affiliates' policy to handle foreclosures in compliance with applicable laws, and we believe that the court will recognize that fact."
Separately, Verise Campbell, deputy director of the state's Foreclosure Mediation Program, on Tuesday ordered mediators to suspend mediation cases involving ReconTrust until Monday "out of an abundance of caution," program spokesman Michael Sommermeyer said.
The suspension will give program officials time to confer with attorneys about the implications of the court's restraining order, he said.
Ian Hirsch, president of Fortress Credit Services and frequent representative of homeowners in mortgage mediation, criticized the state for the suspension. He said the delay could cause some home-
owners to fail to qualify under the federal Home Affordable Modification Program, because program benefits aren't available to homeowners who failed to make full payments for more than 12 months.
"There's already a major backlog in the mediation program," Hirsch said.
Tisha Black Chernine, an attorney with Black & Lobello, disagreed.
"It's prudent to cease these things until such time as you ascertain all the i's are dotted and t's crossed," she said. "It's much harder to undo a foreclosure than to merely extend the process."
Contact reporter John G. Edwards at
jedwards@reviewjournal.com
or 702-383-0420.
