Law Firms Making Millions in Fees from 2008 Predatory Mortgage Loan Cases Denied to Homeowners by Same Courts

Judge Nelson puts PRMI on the hook for just over $22 million altogether, with 75% of that sum being awarded to law firms as attorney fees.

Quinn Emanuel is big winner in new $14 million fee ruling for ResCap

APR 29, 2021 | REPUBLISHED BY LIT; JUL 19, 2021

(Reuters) – A judge overseeing a long-running legal battle between the liquidating trust for Residential Funding Company (ResCap) and the company that sold it mortgages leading up to the 2008 financial crisis, Primary Residential Mortgage Inc, has ruled PRMI must foot the bill for ResCap’s more than $10.6 million in legal fees plus over $3.5 million in costs.

Most of those fees – over $6.7 million – are going to Quinn Emanuel Urquhart & Sullivan, ResCap’s national counsel on the litigation.

Another $3.1 million is going to Spencer Fane and the rest is split between Felhaber and Carpenter Lipps & Leland, according to a court filing dated April 20 but unsealed on Wednesday.

PRMI, represented by lawyers from Williams & Connolly and Zelle Hofmann Voelbel & Mason, had opposed the legal fees on multiple grounds, including arguing that ResCap’s counsel wasn’t transparent enough and that the fees weren’t proportional to the case – U.S. District Judge Susan Richard Nelson in Minneapolis had awarded ResCap a much smaller amount, $5.4 million, in damages in the case in August.

Nelson awarded ResCap nearly $2 million more in interest in the filing unsealed Wednesday, putting PRMI on the hook for just over $22 million altogether.

After the August judgment on damages, ResCap and PRMI’s lawyers sparred over the legal fees, including in a nearly 3 hour long video conference in February.

Nelson said in the newly unsealed order that ResCap’s counsel had properly redacted its invoices, that the fees were reasonable and that PRMI was obligated to pay because of an indemnification agreement it had signed with Residential Funding Company that included a provision for court costs and attorneys’ fees.

PRMI intends to appeal the judgment, according to a statement from the company sent by Williams & Connolly partner Matthew Johnson on Wednesday.

The case is the last one remaining of dozens ResCap filed against mortgage lenders over the fallout of the 2008 financial crisis, all asserting claims for breach of contract and contractual indemnification.

The Residential Funding Company – whose liquidating fund is called ResCap – filed for bankruptcy in 2012 after the housing market collapsed and trusts and monoline insurers sued it seeking billions of dollars in liability because it sold their insureds bundles of home mortgages pooled together into residential mortgage-backed securities.

Williams & Connolly defended at least one other mortgage lender sued by ResCap in its litigation campaign, representing Home Loan Center Inc. ResCap also won that case. The vast majority of the rest settled.

Isaac Nesser, the Quinn Emanuel partner who led those efforts, said in a statement Wednesday that his team is “gratified to have successfully completed the prosecution of 100 cases generating over $1.3 billion in settlements and verdicts.”

“We are especially thankful to Judge Nelson and all of the Court staff who worked tirelessly for the last several years as these cases were litigated,” he said.

The case is ResCap Liquidating Trust v. Primary Residential Mortgage, Inc. in the U.S. District of Minnesota No. 0:16-cv-04070-SRN-HB.

For ResCap Liquidating Trust: Anthony Paul Alden, Heather Christenson, Isaac Nesser, Jeffrey Carl Miller, Matthew Scheck and Peter Evan Calamari of Quinn Emanuel; Donald Heeman, Jessica Nelson, Laurie Quinn and Randi Winter of Spencer Fane; and Ryan Olson of Felhaber Larson.

For Primary Residential Mortgage, Inc: Elizabeth Kniffen and Rory Zamansky of Zelle Hofmann Voelbel & Mason; Jesse Smallwood, Krista Michelle Anderson, Matthew Van Johnson and Matthew Brian Nicholson of Williams & Connolly.

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Law Firms Making Millions in Fees from 2008 Predatory Mortgage Loan Cases Denied to Homeowners by Same Courts
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