Sunday, September 18, 2011

Desperate BofA Resorting To Forum Shopping In Search Of Better Outcome From Federal Court In Response To Nevada AG's Recent Misconduct Allegations?

In Reno, Nevada, the Reno Gazette Journal reports:

  • The state of Nevada upped the ante against the nation's largest bank, filing a second complaint that accuses Bank of America of lying to borrowers, misrepresenting its authority to foreclose on homes and reprimanding employees for spending too much time with distressed borrowers over the phone.

  • But with Bank of America successfully kicking up the original case to federal court earlier this year -- and potentially skipping the state courts -- Nevada's amended complaint against the bank faces a more uncertain outcome, if past federal judgments are any indication.

  • "This is such a big deal because 99-plus percent of these cases in federal court are disposed of without evidence ... and in summary fashion," said Geoffrey Giles, a Reno lawyer. "Banks are actually winning these cases hands down and they will do anything to get their case removed to federal court because they know they can get a better deal. It's the most rank example of forum shopping."

  • Forum shopping is the practice of trying to get a case heard in a court that is more likely to render a favorable verdict. The case's removal from state court to the U.S. Ninth Circuit was opposed by Nevada Attorney General Catherine Cortez Masto. Bank of America violated state law -- not federal law -- so the case should be decided by Nevada courts, Masto said.

  • Now the state is pursuing all legal avenues to bolster its chances for success against the bank. "We argued in federal court that the case be remanded back to the state but the federal judge disagreed," Masto said. "We're appealing that decision ... but we're also moving forward with the case in federal court."


  • Although the Nevada has a pretty solid case against Bank of America in state court, the removal of the case to federal court changes the equation, Giles said. All one needs to do is see the track record private lawyers have had when bringing up the same complaints against banks in federal court.

  • "The allegations in the (Nevada Attorney General's complaint) look very, very similar to allegations private counsel have been making all along and are getting thrown out in federal court left and right," Giles said. "I'm actually working on an appeal on this very issue right now."

  • At the heart of Giles' appeal and Masto's argument to have the Bank of America case remanded is a long-standing debate on whether federal courts should be allowed to remove cases directly related to state law from state courts. The debate is at the center of an ongoing case, "Chapman vs, Deutsche Bank," which is being heard at the Nevada Supreme Court.

  • The case could potentially put the brakes on state court cases being snatched by federal courts, with the exception of class-action lawsuits. "The issue is, should federal judges be making rulings on Nevada state law?" Giles said. "You basically have federal courts telling Nevada how its foreclosure statutes work and that's wrong. That should be up to the Nevada Supreme Court, but federal courts have consistently refused to buy those arguments."

For more, see Nevada AG accuses Bank of America of widespread misconduct.

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