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Wells Fargo: Cook County blocking try to compute how much 'discriminatory' foreclosures cost county courts

COOK COUNTY RECORD

Saturday, November 23, 2024

Wells Fargo: Cook County blocking try to compute how much 'discriminatory' foreclosures cost county courts

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Ten months after a Chicago federal judge allowed Cook County to continue with a small portion of its foreclosure discrimination lawsuit against Wells Fargo, the lender has accused the county of blocking its ability to mount its defense by attempting to stop it from interviewing officials in the Cook County court system.

On Feb. 8, Wells Fargo filed a motion in Chicago federal court, asking U.S. District Judge Gary Feinerman to issue an order giving it permission to talk to judges and other employees of the Cook County court system.

The bank withdrew the motion on Feb. 12, after an attorney for the county  wrote a letter to the bank’s counsel, informing them the judges and other county court officials are represented by the Cook County State’s Attorney’s Office.


However, in its filing, Wells Fargo noted this dispute comes just a few weeks since the county also fought its ability to identify and talk with six “confidential witnesses” the bank said are essential to “investigate the basis of the County’s claims.”

The dispute comes as the latest steps in a litigation battle dating back nearly five years.

In 2014, Cook County filed suit against Wells Fargo, alleging the lender engaged in predatory lending practices against racial and ethnic minority borrowers. Cook County alleged the practices helped fuel a wave of foreclosures, stripping equity from minority borrowers and sending them into default. That, in turn, left vacant homes scattered throughout neighborhoods in Chicago and in many suburbs, depressing home values and costing local governments potentially billions of dollars in lost property tax revenues and costs to deal with the problems resulting from the surge of vacant properties.

The lawsuit vs Wells Fargo is similar to other actions the county also filed against other lenders, including Bank of America and HSBC.

Wells Fargo and the county battled in federal court for years over a number of legal questions, including whether the county even qualified under federal housing discrimination laws to bring the lawsuit.

In March 2018, however, Judge Feinerman ruled Cook County can continue with its lawsuit. But the judge said the county can only seek to claim damages it may have suffered from increased costs faced by the county Sheriff’s Office and the courts from having to handle a larger than usual number of foreclosure cases.

In that ruling, the judge nixed the county’s claims asserting the bank’s alleged actions cost it property taxes and increased blight and crime in affected neighborhoods, among other claims.

In the months since, however, the county and the bank have sparred over how much access Wells Fargo should be permitted to interview county officials and other potential witnesses the bank believes hold the answers to establish just how much the county government was actually harmed.

In November, Judge Feinerman ordered the county to divulge the identities of six witnesses it had refused previously to identify, yet whose “alleged statements” Wells Fargo said the county had relied upon “to support its claims.”

In a footnote accompanying its Feb. 8 filing, Wells Fargo said those of the “confidential witnesses who have spoken with Wells Fargo’s counsel” have indicated little connection to Cook County’s case.

In its filing, Wells Fargo said those witnesses “confirmed that they never intended to provide testimony in support of a claim against Wells Fargo, that they were never told that their statements would be included in a complaint, and that they did not have a chance to review the complaint before it was filed.

“A number of them are angry or unsettled by the fact that the County made allegations in this lawsuit that purport to include their statements. None of these witnesses who have spoken with Wells Fargo’s counsel witnessed any sort of discrimination by Wells Fargo or any evidence that non-prime loans were targeted to minorities.”

Now, Wells Fargo complained the county is also blocking it from talking with county judges and others who can help answer the question of just how much the additional foreclosure cases actually cost the county courts.

Wells Fargo said the information those officials can provide would be essential to establishing how much the county’s costs may have actually increased.

Currently, Wells Fargo said the county “does not intend to calculate any increased expenditures … directly resulting from an increased number of allegedly discriminatory foreclosure cases.”

Rather, in its Feb. 8 filing, Wells Fargo asserted the county intends to use calculations to establish “’a fully loaded cost’ associated with processing each procedural step … in a foreclosure case generally, and then to simply use the docket sheet for each challenged Wells Fargo foreclosure to tally up an overall cost for that foreclosure.

“In other words, even if there were no increased expenditures at all resulting from any increase in foreclosure cases, the County still hopes to recover what it has characterized as ‘from hundreds of dollars to tens of thousand of dollars per foreclosure.’”

In its filing, Wells Fargo had asserted judges and other courts officials should be considered employees of the state, and not the county, and thus they should be available for Wells Fargo’s lawyers to speak with them “without the interference of counsel for the County.”

In a letter filed in federal court Feb. 11, a lawyer for Cook County asserted that rationale is incorrect, and those officials are, in fact, represented by the county’s state’s attorney, and cannot be contacted directly.

Wells Fargo withdrew its motion on Feb. 12 following a status hearing. The next hearing in the case is scheduled for April 1.

The county is represented in the action by attorneys James M. Evangelista, David J. Worley and Kristi S. McGregor, of the firm of Evangelista Worley LLC, of Atlanta, Ga.;  attorney James D. Montgomery Sr., of Chicago; Sanford P. Dumain, J. Birt Reynolds, Jennifer S. Czeisler, Melissa R. Clark and Peggy J. Wedgworth, of Milberg LLP, of New York.

Wells Fargo is represented by attorneys Abram I. Moore, Nicole C. Mueller, Paul F. Hancock and Olivia Kelman, of the firm of K&L Gates LLP, of Miami and Chicago; and Sheldon T. Zenner, David C. Bohan, Peter G. Wilson and Nicola A. Bunick, of Katten Muchin Rosenman LLP, of Chicago.

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