Martin & Jones Obtains $38.75 Million Settlement for NC Borrowers
More than 800 North Carolina subprime borrowers received significant settlement payments in two long-running predatory lending class action lawsuits. The combined settlements total $38.75 million. The settlements followed nearly seven years of intense, hard-fought litigation against one of the nation's largest financial institutions. The cases were handled from beginning to end -- in state and federal court and in the Appellate Division -- by Martin & Jones attorneys John Alan Jones and G. Chris Olson. Judgments in the two cases, Richardson v. NationsCredit Financial Services Corporation (Durham County, Case No. 02 CVS 2398) and Williams v. EquiCredit Corporation of NC, et al. (Durham County, Case No. 02 CVS 4972) were entered on February 20, 2009. The claims administration process is ongoing and class members in the recovery classes began receiving checks in May 2009.
Through the NationsCredit and EquiCredit settlements, more than 800 North Carolina subprime borrowers will recover, on average, more than $31,500 each. The settlement also addresses the accounts of borrowers who owed deficiencies to the lenders. A portion of those borrowers' settlement monies will be applied to their deficiency balances and the borrowers will receive a complete release with respect to those deficiencies. The lenders will also make reports to the credit reporting agencies regarding the satisfaction of those deficiencies, a step which should help improve those borrowers' credit ratings.
Martin & Jones attorneys John Alan Jones and G. Chris Olson filed the Richardson v. NationsCredit case as a class action in May of 2002 and the Williams v. EquiCredit case in September of that year. Both cases involved the practice of selling and financing single-premium credit insurance ("SPCI") to North Carolinians taking out subprime mortgage loans. The lawsuits alleged that the lenders, both subsidiaries of Bank of America (1), engaged in unfair and deceptive trade practices and breached the duty of good faith and fair dealing in selling SPCI with home mortgage loans of up to 30 years' duration, even though North Carolina law restricted credit insurance sales to loans having a term of 15 years or less. The Richardson v. NationsCredit case was actively litigated, while the Williams v. EquiCredit case was essentially a "tag-along" case which followed the Richardson matter.
In June 2004, the trial court certified the NationsCredit case as a class action lawsuit. After months of intense discovery and litigation, the trial court entered Orders in favor of a group of borrowers who were unlawfully sold SPCI with long-term loans. The case proceeded to the North Carolina Court of Appeals, which affirmed the trial court rulings in favor of those borrowers. See Richardson v. Bank of America, N.A., 182 N.C. App. 531, 643 S.E.2d 410 (2007). The Court of Appeals Opinion was issued on April 17, 2007. NationsCredit then filed a Petition for Discretionary Review with the North Carolina Supreme Court, requesting that the Supreme Court review and reverse various rulings. The North Carolina Supreme Court agreed to hear two issues, one involving the scope of the duty of good faith and fair dealing and the ability to recover punitive damages and an issue related to calculation of damages. Together, the two issues which the Supreme Court agreed to hear, could have cost the Plaintiff Class millions of dollars in potential damages, had the issues been decided in favor of the lender. Class Counsel briefed and argued the issues before the Supreme Court and in an Order issued on March 7, 2008, the Supreme Court ruled that discretionary review had been improvidently granted. See Richardson v. Bank of America, N.A., 362 N.C. 227, 657 S.E.2d 353 (2008). Thus, the Court of Appeals decision remained in place as the law of the case and binding. The case was then remanded to the trial court for further proceedings.
After additional discovery, the parties agreed upon a settlement of both class action lawsuits. On December 16, 2008, the trial court entered a Preliminary Approval Order regarding the proposed settlement. The trial court granted final approval of the settlement and entered Judgment in each case on February 20, 2009.
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(1) The Court dismissed the claims against Bank of America, over Plaintiffs' objection. The sole setting defendant in each case was NationsCredit and EquiCredit, respectively. Each lender ceased making the loans at issue in this litigation in 2000.
Through the NationsCredit and EquiCredit settlements, more than 800 North Carolina subprime borrowers will recover, on average, more than $31,500 each. The settlement also addresses the accounts of borrowers who owed deficiencies to the lenders. A portion of those borrowers' settlement monies will be applied to their deficiency balances and the borrowers will receive a complete release with respect to those deficiencies. The lenders will also make reports to the credit reporting agencies regarding the satisfaction of those deficiencies, a step which should help improve those borrowers' credit ratings.
Martin & Jones attorneys John Alan Jones and G. Chris Olson filed the Richardson v. NationsCredit case as a class action in May of 2002 and the Williams v. EquiCredit case in September of that year. Both cases involved the practice of selling and financing single-premium credit insurance ("SPCI") to North Carolinians taking out subprime mortgage loans. The lawsuits alleged that the lenders, both subsidiaries of Bank of America (1), engaged in unfair and deceptive trade practices and breached the duty of good faith and fair dealing in selling SPCI with home mortgage loans of up to 30 years' duration, even though North Carolina law restricted credit insurance sales to loans having a term of 15 years or less. The Richardson v. NationsCredit case was actively litigated, while the Williams v. EquiCredit case was essentially a "tag-along" case which followed the Richardson matter.
In June 2004, the trial court certified the NationsCredit case as a class action lawsuit. After months of intense discovery and litigation, the trial court entered Orders in favor of a group of borrowers who were unlawfully sold SPCI with long-term loans. The case proceeded to the North Carolina Court of Appeals, which affirmed the trial court rulings in favor of those borrowers. See Richardson v. Bank of America, N.A., 182 N.C. App. 531, 643 S.E.2d 410 (2007). The Court of Appeals Opinion was issued on April 17, 2007. NationsCredit then filed a Petition for Discretionary Review with the North Carolina Supreme Court, requesting that the Supreme Court review and reverse various rulings. The North Carolina Supreme Court agreed to hear two issues, one involving the scope of the duty of good faith and fair dealing and the ability to recover punitive damages and an issue related to calculation of damages. Together, the two issues which the Supreme Court agreed to hear, could have cost the Plaintiff Class millions of dollars in potential damages, had the issues been decided in favor of the lender. Class Counsel briefed and argued the issues before the Supreme Court and in an Order issued on March 7, 2008, the Supreme Court ruled that discretionary review had been improvidently granted. See Richardson v. Bank of America, N.A., 362 N.C. 227, 657 S.E.2d 353 (2008). Thus, the Court of Appeals decision remained in place as the law of the case and binding. The case was then remanded to the trial court for further proceedings.
After additional discovery, the parties agreed upon a settlement of both class action lawsuits. On December 16, 2008, the trial court entered a Preliminary Approval Order regarding the proposed settlement. The trial court granted final approval of the settlement and entered Judgment in each case on February 20, 2009.
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(1) The Court dismissed the claims against Bank of America, over Plaintiffs' objection. The sole setting defendant in each case was NationsCredit and EquiCredit, respectively. Each lender ceased making the loans at issue in this litigation in 2000.
