New Mexico Court of Appeals Holds Wells Fargo’s Reprehensible Conduct Justifies Punitive Damages

Law Gavel

On April 6, 2020, the New Mexico Court of Appeals held that reprehensible conduct by a bank – namely, Wells Fargo – justified significant punitive damages against it.  Wells Fargo sold the homeowner an accidental death policy that was supposed to pay off his mortgage if he met an untimely death.  When the homeowner died, Wells Fargo should have applied the proceeds of the wrongful death policy to the mortgage, paying it off.  It did not do so.  It refused to do so until the deceased homeowner’s son got an attorney.  And when Wells Fargo finally applied the proceeds, it paid itself first for bogus fees – including fees for cutting grass that did not exist – thus keeping the property in foreclosure.  The Court of Appeals found this conduct highly reprehensible.

The Court found that Wells Fargo had set up its system so it paid itself first when the mortgage did not allow it to pay itself first.  In fact, Wells Fargo had been caught doing so in an earlier case, leading to a large punitive damages award in that case.  Yet it did it again.  It did not change its unfair and illegal system.

Given this history, the New Mexico Court of Appeals decided that punitive damages beyond what might be typical for such conduct was justified.  Although the Court of Appeals sent the case back to the trial court so the trial court could better explain the reasoning behind the $2.5 million punitive damages it had awarded, the Court of Appeals emphasized that such conduct should be strongly punished.

In representing lots of homeowners against banks and mortgage servicers, Treinen Law Office has seen similarly reprehensible conduct from others.  Their systems are set up to make money by investing the least amount of time and money possible in customer service.  When something goes wrong, because of the highly automated system, and the lack of training for employees, a mistake is often not only not corrected, but compounded by even more outrageous conduct.  And homeowners are expected to accept such mistreatment.

The Court of Appeals found when banks mistreat homeowners in these ways, they should expect to be severely punished.

The Opinion can be found here:

Dollens v. Wells Fargo

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