Judge Addresses Attorney BS When Imposing Sanctions Against Lawyer For Role In Attempt To Revoke Valid Loan Modification Agreement

In Oakland, California, U.S. Bankruptcy Judge Randall J. Newsome recently found himself addressing the conduct of an attorney representing IndyMac Bank (OneWest Bank) for her role in attempting to improperly scrap a valid loan modification agreement between the bank and a homeowner facing foreclosure, and which resulted in an unappreciated waste of the judge's time.

• [W]hen attorneys come before the court and play "fast and loose" with the truth, or rely on the bureaucratic obfuscations of their clients to dodge commitments they have made, this court is required to act to protect the integrity of its processes. If the court cannot rely on and trust the authority and words of the lawyers that appear before it, it cannot effectively handle the increasingly heavy volume of work confronting it, thus risking systemic collapse. That trust has been breached in this adversary proceeding, and the remedy of judicial estoppel perfectly suits the facts presented.

• Accordingly, the defendants are hereby adjudged to have accepted the July 1, 2009 [loan modification] agreement signed by the [homeowner ...], and are fully bound by the terms thereof. The terms of that agreement supercede and replace any and all terms that are inconsistent therewith in any and all notes and deeds of trust previously executed by the parties, their successors and assigns.

• As for the issue of sanctions, the defendants' failure to appear at status conferences and respond in timely fashion to court orders alone amply support a finding of bad faith in the conduct of this litigation. The total indifference shown towards the court's processes, the waste of judicial resources that resulted, and the misleading statements made to both the court and plaintiffs' counsel, constituted willful misconduct. In re DeVille, 361 F.3d 539 (9th 662 Cir.2004); see also U.S. v. McCall, 235 F.3d 1211, 1217 (10th Cir.2000).

For the ruling, see In re Clawson, 414 B.R. 655 (Bankr. N.D. CA, Oakland Div. 2009).

Thanks to Deontos .is for the heads-up on the court ruling.