Tuesday, May 15, 2007

Jury Found that Bank of America Committed Consumer Fraud

In March, 2007, a jury in Jersey City, after a two-day trial, found that Bank of America violated the New Jersey Consumer Fraud Act when it lost the records of a customer's $26,000 deposit in two separate CDs, and then refused to return the customer's interest and principal when the customer appeared at the bank with the two original certificates to redeem them.

In 1995, the plaintiff, a retired grandmother, deposited $26,000 in two CDs (automatically renewable every 7 months) with Bank of America predecessor bank. In late 2002, the plaintiff appeared at Bank of America predecessor bank to redeem her CDs, which had then increased to more than $40,000 in principal and interest. The bank refused to honor the plaintiff’s request contending that they could not find any records of her deposits.

A banking law in New Jersey requires that if a customer presents a genuine CD (or a passbook savings account) along with an affidavit that she did not redeem the CD, a bank must pay the customer the value of that CD (principal plus interest) unless the bank finds evidence that payment was already made. Despite having no records of payment on the CD, Bank of America continued to refuse to honor the CDs. Despite Plaintiff's 6-months efforts in trying to obtain her money, the bank refused to honor the CDs. Plaintiff told a bank employee that she will obtain a lawyer, and the bank employee’s response was (in paraphrase) “do what you have to do.”

Plaintiff then sued the bank for breach of contract and violation of the New Jersey Consumer Fraud Act, which makes it unlawful for a business to commit an "unconscionable commercial practice" against a consumer.

Bank of America, through their attorneys, first denied all allegations of the plaintiff, even the existence of the CDs. Then a few months later, changed its mind, and admitted that they breached their contract with the plaintiff. But then alleged that the CDs paid interest rates of less than 7% -as low as 1% in some years! Obviously, a judge did not buy that defense. The judge ruled that Bank of America (as a successor in interest) breached its contract with the plaintiff and ordered the Bank to pay the customer the full value of the CDs, which had grown to nearly $45,000. Bank of America did not comply (or refused to) with that order until 30 days later, and paid only after plaintiff's attorney threatened to file a motion in court. The Bank then paid the money - albeit reluctantly.

Plaintiff's consumer fraud claim remained. The bank refused to settle with the plaintiff despite plaintiff's attorney offer of a modest settlement. The bank then somehow obtained a dismissal of plaintiff's consumer fraud claim. However, an appellate court reversed that dismissal finding that a lower court judge made wrong to dismiss the case. The case was then sent for trial.

At trial, a former employee was called to testify on behalf of Bank of America. He testified that he received no training from Bank of America when a customer comes in with a passbook savings account or CD and the bank does not have any records of that customer’s deposit. That is, all he can do in such as situation is say to the customer "sorry, we can't help you." This is in direct opposite to a New Jersey Banking law (the Record Retention Statute) which states that in such a situation, the bank is required to obtain an affidavit from the customer, and if the bank cannot find proof of payment, the bank MUST pay the customer. Period.!!

After a 2-day trial, the jury found that Bank of America committed an UNCONSCIONABLE COMMERICAL PRACTICE in violation of the New Jersey Consumer Fraud Act by refusing to pay the plaintiff on her CDs and requiring her to sue them just to collect her own money.

While the jury did not find that plaintiff suffered an ascertainable loss, a Judge ruled that Bank of America must reimburse plaintiff all her reasonable counsel fees and costs.

Dragging a poor retired woman through the mud of litigation for over 4+ years is not just unconscionable commercial practice, but simply immoral. This not just a bad business decision, but a horrible conduct on the part of a bank and those who promote their interest.

Jay Chatarpaul was plaintiff’s trial counsel. Thomas Monroe, Meyer and Landis LLP, tried the case for Bank of America.

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