You only need to look at the date, 2011. At that time, it was chaos on Wall Street with the monstrous financial collapse and which wreaked havoc throughout the 3 branches of government.
The government and Wall St agreed to save bankers and their institutions at the expense of the people and their families. To wrongfully and corruptly evict homeowners who were subjected to predatory loans for greed by bankers and brokers alike. In order to do so, the mortgage servicers started the shenanigans, returning mortgage payments and explainin’ to customers that they need to go into default to get relief. This would allow the army of bankers ‘creditor rights’ lawyers and foreclosure mills to enter courts nationwide with fake documents and a story that wasn’t backed up in law and started lyin’ profusely. They didn’t even know what they were doin’, truth be told and it took many attempts in the early years to streamline the fraudulence on the people. In order to do so, the judiciary would have to become the executioners in dirty black robes.
Over the coming years, the lies, the fake documents generated with printers and rubber stamps along with lyin’ affidavits (as shown below) would be accepted by courts, despite the fact they were a complete sham. New ‘precedential’ foreclosure driven opinions would be written by circuit courts and any ‘honest’ judges would be tossed onto the streets as an unwanted whistleblower. Only corrupt judges willing and able to evict over 6 million families would be allowed to stay on the bench.
This would become the largest corrupt taking of residential property in history, rubber stamped by the U.S. Government. The US Supreme Court deserted their post, not hearing a single judicial foreclosure case in 13 years as they hide in the closet to this very day.
Below, former Chief Judge Magner was clearly horrified at what she saw. This was at the beginning, 2011. Sadly, this shock would become silence and obedience to the task at hand, kick out families for Wall St greed.
In the end US District Judge Feldman would become the Bank’s personal bodyguard and prevent the criminal sanctions from being heard on a very dubious ‘lack of jurisdiction‘ argument. He would not stop there, then allowing the foreclosure lawyers for LPS to have the criminal sanctions and referral opinion removed, termed legally; “withdraw a reference“.
As for Magner, she would see out her agreed term of office, but as soon as the end date arrived, she resigned, most likely sick to her stomach at what she had both witnessed and become over the years, or because she was too controversial and honest to be supported by her judicial colleagues for another term.
At LIT, we vow to uncover the paywalled docket and release as many of these documents and opinions as our small but highly motivated blogging engine will allow. Our goal is to ensure that this corrupt government will take heed – the harm and destruction of human lives for greed will never be forgotten – and, we hope, never to be seen again – as we currently stare down Tsunami Foreclosure Crisis II, care of the international pandemic.
We also expect restitution and justice for those affected by the greatest recession in history, along with an apology for those who have endured over a decade of fighting for freedom, liberty and property nearly taken from the true warriors – the wrongful foreclosure pro se litigants – who have stood up and rejected the foul American government and the abhorrent sins they commit against those they are supposed to protect.
– Aye yours, the Justice Seeker, Laws In Texas. No Bull. Just the Truth.
On December 1, 2010, the Motion for Sanctions1 filed by the United States Trustee (UST) came before the Court. At the beginning of the hearing, a request to bifurcate the issues presented was granted. Hearing on the sanctions to be awarded was deferred to a separate hearing, pending determination of liability for sanctionable conduct. After trial on the merits, the Court ordered that simultaneous briefs be submitted no later than February 1, 2011. Upon the filing of briefs, the matter was taken under advisement.
I. Procedural History and Facts Leading to Expanded Order to Show Cause
Option One Mortgage Corporation (“Option One”) holds a mortgage on Ron and LaRhonda Wilson’s (“Debtors”) home payable in monthly installments. On September 29, 2007, Debtors filed a voluntary petition under chapter 13 of the Bankruptcy Code. At the time of their bankruptcy filing, Debtors were in default on the mortgage , and a prepetition arrearage was owed. Debtors’ plan of reorganization provided for monthly payments to the trustee for satisfaction of the prepetition arrearage, and Debtors’ direct payment of monthly postpetition mortgage installments to Option One. The plan was confirmed on December 21, 2007.2
Option One filed a Motion for Relief From Stay on January 7, 2008 (“First Motion”). The First Motion alleged that Debtors had failed to make the monthly postpetition installment payments for November 2007 through January 2008. The First Motion requested relief from the automatic stay to enforce payment of the debt in a foreclosure action. On February 4, 2008, Debtors responded averring they were current and that Option One had failed to credit several postpetition payments to their account.
Because Option One failed to supply evidence of default, the First Motion was denied without prejudice. Option One filed a new Motion for Relief From Stay on March 10, 2008 (“Second Motion”). The Second Motion alleged that Debtors were in default for “over four (4) months now . . .” Option One also stated that “Due to the Debtors’ failure to maintain the monthly [postpetition] payments, there exists the possibility that real estate taxes may go unpaid or insurance on the property may lapse because of the shortage in the Debtors’ escrow account.”
The Second Motion was supported by an affidavit of Dory Goebel, Assistant Secretary for Option One. In the affidavit, Ms. Goebel averred under oath that Option One was the holder of the secured claim in Debtors’ case. To support her affidavit, Ms. Goebel attached a copy of a note and mortgage executed by Debtors and an endorsement to Option One by America’s Mortgage Resource, the original payee on the note.
Ms Goebel affirmed:
Appearer has reviewed and is familiar with the mortgage loan account of RON WILSON, Sr. And LA RHONDA WILSON (“Mortgagor”) represented by the afore described note and mortgage and the records and data complications [sic] pertaining thereto, which business records reflect acts, events or condition made at or near the time by Dory Goebel, or from information transmitted by a person with knowledge thereof and which records and data complications [sic] are made and kept as a regular practice of the regularly conducted business activities of OPTION ONE MORTGAGE CORPORATION.
Ms. Goebel then declared that the balance due on the note was $176,063.27 and that Debtors were in default under their plan for failure to pay the monthly installments accruing from November 1, 2007, through February 1, 2008. Ms. Goebel represented that the last payment on the note was applied to the October 1, 2007 installment.
Debtors opposed the Second Motion alleging that all postpetition installments were paid by money order, cashier’s, or personal check and that all payments by cashier’s or personal check were delivered by certified mail. At the initial hearing on the Second Motion on April 8, 2008, Debtors offered into evidence proof of payment for installments made on the Option One note. Debtors’ evidence included:
1. October 2007 payment-confirmation by Western Union that a money order was delivered to Option One on October 20, 2007, in the amount of $1546.64 and receipt was acknowledged by Option One on October 27, 2007.
2. November 2007 payment-confirmation by Western Union that a money order was delivered to Option One on November 30, 2007, in the amount of $1546.64 and receipt was acknowledged by Option One on November 30, 2007.
3. December 2008 payment-copy of a certified mail receipt showing delivery to Option One on January 2, 2008. Debtors alleged tender of a cashier’s check #70060810000560554786 for $1546.84.
4. January 2008 payment-a copies of a cashier’s check for $1000.00 and two money orders for $546.84 and $312.00 both dated January 25, 2008; certified mail receipts evidencing delivery to and acknowledging receipt by Option One on January 31, 2008.
5. February 2008 payment-copies of a cashier’s check for $1546.84 and a personal check for $78.00; as well as a receipt for certified mail delivery on February 28, 2008, and acknowledging receipt by Option One on March 3, 2008.
6. March 2008 payment-copies of two cashier’s checks for $1546.84 and $78.00; as well as a receipt for certified mail delivery on March 28, 2008, and confirmation of delivery to Option One by the United States Postal Service on March 31, 2008.
At the conclusion of the hearing, the Court continued the matter until April 22, 2008, in order to allow Option One the opportunity to trace the alleged payments and provide an accounting of the loan’s payment history from petition date through April 2008.
On April 22, 2008, the continued hearing on the Second Motion was held. Mr. Farrelly again appeared on behalf of Option One. At the hearing, Debtors’ counsel represented that Mr. Wirtz had contacted him at 5:30 p.m. the night before requesting a continuance due to a conflict in another court. Mr. Wirtz stated that he had not reviewed the prior evidence and was not prepared to address the issues raised by Debtors in their Opposition. Option One did acknowledge, through a pleading filed by Mr. Wirtz the night before the hearing, the receipt of three (3) additional and previously undisclosed payments:
1. Payment dated October 22, 2007, in the amount of $1546.84 applied to the installment due October 1, 2007;
2. Payment dated December 3, 2007, in the amount of $1546.84 applied to the installment due November 1, 2007; and
3. Payments of $1546.84 and $78.00 dated April 2, 2008, applied to installment due December 1, 2007.
The pleading was not the accounting ordered by the Court, but instead a chart reflecting the receipt and application of three (3) payments postpetition. The pleading again asserted that the funds delivered were insufficient to satisfy the amounts due and reasserted Option One’s request for relief.
Since Debtors’ evidence indicated 1) additional payments not acknowledged by Option One; 2) Option One had failed to supply the ordered accounting or address the additional payments made by Debtors; and 3) Mr. Farrelly lacked any knowledge regarding the loan, the Court determined that Option One’s response was insufficient and issued show cause orders for Mr. Wirtz, Dory Goebel, and Option One. The merits of the Second Motion were again continued to afford Option One and Ms. Goebel the opportunity to respond to the allegations raised by the Opposition and subsequent admission by Option One that three (3) unaccounted for payments were not included in its motion.
On June 26, 2008, a third hearing on the Second Motion and the initial hearing on the show cause orders was conducted. Mr. Wirtz appeared at the hearing, but Ms. Goebel was not present. Mr. Wirtz admitted that Debtors were in fact current on their loan. Mr. Wirtz also admitted receipt of $7,513.53 in funds on Debtors’ account and stipulated that Debtors were current through and including May 2008. Mr. Wirtz admitted that between the filing of the First and Second Motions, Option One located one (1) payment which was applied to the October 2007 installment.
Regarding the show cause order, Mr. Writz represented that his contact was Fidelity National Foreclosure Solutions, n/k/a Lender Processing Services (“LPS”) and that all information regarding payments, defaults, or inquires were taken by him from a LPS website or LPS personnel.
Mr. Wirtz represented that additional unapplied payments were only discovered when they arrived at his office. Specifically, he stated that payments were delivered on February 18, 2008, in the amount of $1,858.84; March 7, 2008, in the amount of $1,624.17; May 12, 2008, in the amount of $1,624.84; and May 22, 2008, in the amount of $1,524.84. Because payments were received by Mr. Wirtz on February 18 and March 7 and prior to the filing of the Second Motion, Mr. Wirtz was sanctioned for his failure to disclose this fact in the Second Motion or correct the representations made in his pleadings.
Nevertheless, based on the information available to Mr. Writz when the Second Motion was filed, it appeared that the payments received from Option One were insufficient to alert Mr. Wirtz that the loan was entirely current.
As a result, the Court ordered further investigation into the receipt and application of payments by Option One in a continued effort to uncover the cause of the erroneous filing.
The Court jointly sanctioned Option One and Ms. Goebel $5,000.00 for failure to appear and $5,000.00 for filing a false affidavit. Option One was also ordered to pay $900.00 in attorney’s fees to Debtors’ counsel. The Court sanctioned Mr. Wirtz $1,000.00 for failing to amend the Second Motion and Default Affidavit once he obtained information which revealed that they were false.
The Court continued the hearing on the show cause order against Ms. Goebel and Option One to August 21, 2008. Based on Mr. Wirtz’s representations, an additional show cause order was issued for LPS.
On July 9, 2008, LPS voluntarily intervened “to clarify its role in this matter and to address any misconceptions or misunderstandings which may have been left with the Court regarding that role.” On August 21, 2008, the Court held an evidentiary hearing on the Orders to Show Cause. Participating at the hearing were representatives and counsel for Boles, LPS, Option One, the UST and Debtors.
Ho, Fidel Castro and Property Rights – who’s he kiddin’? He’s married to Mrs. MERS for Wall St Bankers. Six million+ homeowner properties right here in America were stolen by bankers. Judges are Wall St. Executioners in Dirty Black Robes. We’ve proven it time and time again. pic.twitter.com/6KzmPy56TE
— LawsInTexas (@lawsintexasusa) August 3, 2021
. . . [B]asically Fidelity became-if you think if it almost as a library, various clients could put their information in that library. The attorneys would go to the library, check out the information, and that’s how things would happen. One of the services that we provided, and no longer do, but one that we did is executing affidavits such as the one in this case.
Mr. Michael Cash, representing LPS, explained LPS’ role in the administration of Debtors’ loan:
Fidelity does work for Option One, and basically Fidelity’s role is almost as a conduit and storage of information and data. Option One will send their information to Fidelity, and then attorneys such as Clay [Wirtz] can access that information.
Ms. Goebel is an employee of Fidelity. The various clients in this case, including Option One, would sign a corporate resolution, and I have a copy of a corporate resolution, that would give her limited authority as a vice president for particular purposes. And in this case one of the purposes was executing the affidavit.
Court: . . . if Fidelity is merely storing information . . . why wouldn’t Option One sign the affidavit?
Cash: . . . a number of clients sign their own, Your Honor. Sometimes they would want us to, simply because we have people like Ms. Goebel who handle the accounts on a daily basis, who review the material, who have access to the material, and it was simply one less thing that the client had to do, that we would do.
Cash: . . . and when Ms. Goebel would execute the affidavit she would have access to the same information as someone at Option One. She would go into their system, look at what has been posted, what hasn’t been posted. And I think what happened here was just a series of miscommunications . . .
Cash: . . . And I think that the simple explanation here, . . . and I think it’s one that’s clearly human error that can happen, is there was a payment sent. There was an error made where that payment was sent, because this was in bankruptcy. . . . that payment was sent to the Boles Firm, rather than being posted.
And that was basically, I think, someone in Mr. Wirtz’s office had instructed Option One, “Send us the checks and we will send them back,” or “we will take care of that.”
Mr. Cash then offered the testimony of Ms. Goebel who is both an employee of LPS and was an authorized signer of default affidavits for Option One. Ms. Goebel testified as to the process by which a default affidavit is executed. In particular, Ms. Goebel explained:
To execute such an affidavit, once I receive the affidavit, I will review the information that is in the affidavit with Option One’s system. So, I will validate the information based on their system and the information that is there.
At the August 21, 2008, hearing, Ms. Goebel represented that from her desk she would log into Option One’s computer system and verify the information in the affidavit. She also represented that she had access to Option One’s entire record of the loan. She stated that she verified this information with LPS’ own system which reflected the communications between Option One’s law firm and Option One. Ms. Goebel represented that LPS only maintained a “library” of information that Option One supplied.
She confirmed that she reviewed a debtors’ entire loan history prior to executing the affidavit and would also review communications between counsel and LPS in connection with the signing of the affidavit. She, however, would not review communications between counsel and Option One.
Ms. Goebel explained that LPS had no way to verify unposted payments.
She stated emphatically that after reviewing Debtors’ file, she found no communications between LPS and Boles about any additional payments tendered after the filing of the motions.
Ms Goebel also testified that after reviewing Debtors’ loan file before testifying, she saw no communications between LPS and Option One.
She asserted that it was Option One’s responsibility to notify counsel should a change in circumstance warrant the withdrawal of a motion for relief and that LPS never stopped legal actions once it referred a loan to counsel.
The testimony presented by Option One, however, did not agree with Mr. Cash or Ms. Goebel’s representations.
Mr. Arthur Simmons of American Home Mortgage , formerly Option One, testified for Option One. Mr. Simmons was the person tasked with the day to day administration of Debtors’ loan once their bankruptcy was filed.
Mr. Simmons testified that once a borrower filed for bankruptcy, LPS opened a bankruptcy workstation or subprogram to administer the loan. Option One was given notice that this had occurred.
Once a bankruptcy workstation is opened, Option One would take no action unless requested by LPS, who was described as actually administering the loan.
As previously explained in In re Stewart, LPS markets to loan servicing companies and note holders a very sophisticated loan management program commonly referred to in the industry as “MSP.” MSP interfaces with a client’s computer system collecting information and monitoring a loan’s status.
When certain events occur, the program is designed to take action without human intervention.
For example, when a loan reflects past due payments for a specified period of time, generally forty-five (45) days, MPS will generate a demand or default letter to the borrower. The timing or triggers for various loan administrative actions are set by the lender or servicer but executed by MSP as overseen by LPS.
When a bankruptcy is filed, the bankruptcy workstation is activated and provides a set of additional parameters, tasks and actions that can be performed by the program or those that use it in a bankruptcy. For example, when a loan is sixty (60) days postpetition delinquent, the system will notify of this event and typically trigger a referral to counsel for the filing of a motion for relief.
Mr. Simmons represented that LPS manages all tasks required during the administration of a loan during bankruptcy. If counsel needs instruction, LPS is contacted and only if LPS cannot solve counsel’s problem, is Option One involved.
Although Debtors’ filed for bankruptcy relief on September 29, 2007, the bankruptcy workstation was not activated by LPS until November. Because LPS delayed setting up the workstation, Debtors’ first postpetition payment, made in October 2007, was not posted to the October installment but to June 2007, the earliest outstanding prepetition installment. As a result, the system showed October 2007 installment as past due.
When Debtors’ file was reviewed by LPS for referral to counsel, the postpetition due date was not accurate because it did not reflect the October payment.
To avoid this type of problem, Option One had procedures in place for LPS to follow if activation of a bankruptcy workstation was delayed. In such a case, LPS was directed to search for payments that might have been delivered after the bankruptcy filing date but prior to activation of the workstation. If any were found, LPS was to apply the payments to postpetition installments correcting the posting error.
Mr. Simmons testified that LPS had the ability to adjust the application of payment in this circumstance and it was their responsibility to do so.
Mr. Simmons also testified that Option One’s computer system generated reports when a debtor was 45 to 60 days postpetition past due. In this case, a delinquency report was generated in December, when the incorrect posting for October led the computer to read a 60 day postpetition delinquency.
LPS maintained an on site employee at Option One who reviewed the post bankruptcy delinquency reports. That employee reviewed the list, then entered a request on LPS’ system for a motion for relief referral.
If a payment was received after a file had been referred to counsel for action (i.e. the filing of a motion for relief from stay), Option One’s policy was to request that LPS contact counsel for instruction. If LPS could not satisfy counsel’s request, only then would LPS contact Option One.
Although direct communications between counsel and Option One were not prohibited, they were rare because it was LPS’ responsibility to manage the loan. This case appears to have followed the normal chain of administration because there was no evidence that Boles had any, or attempted any, direct communications with Option One.
When Option One received the payment for December 2007, LPS sent an inquiry to Boles for instructions. Boles replied that Option One should send the payment to it. Option One contacted LPS for instructions on each payment as it was received from December through March.
As each postpetition payment arrived from Debtors, Option One communicated with LPS, LPS with Boles, and then LPS reported back to Option One the instruction received.
As a result, Debtors’ postpetition payments for December 2007 through March 2008 were not posted, but instead were reflected on a cash log that was not available to either Mr. Wirtz or LPS.
However, LPS knew of the payments because it was communicating directly with Mr. Wirtz and Option One on the issue.
All Motions for Relief from Stay or Affidavits of Default are submitted by counsel directly to LPS. Option One neither proof reads nor reviews these documents.
If an Opposition is filed, Option One does not read it. Instead, Option One employs LPS for the purpose of handling any issues pertaining to the loan or Motion for Relief. LPS contacts Option One only if it cannot handle a matter.
In this case, LPS contacted Option One about Debtors’ claim of missing payments. Option One replied that the payments were with Mr. Wirtz.
The UST made an appearance for the purpose of assisting the Court in its investigation.
The obvious conflict between the testimony of Mr. Simmons and Ms. Goebel and representations by counsel for LPS led the Court to accept the UST’s offer for assistance.
As a result of the foregoing, the Court continued the hearing on August 21, 2008, without date to allow formal discovery.
From July 9, 2008, through December 2010, the parties conducted contentious discovery. Ten (10) motions to quash, compel, clarify, reconsider orders, stay proceedings, request protective orders; and appeal interlocutory orders were considered along with responses, oppositions and replies to each. On May 21, 2010, the UST filed a Motion for Sanctions against LPS and Boles. On December 1, 2010, trial on the merits of the UST’s intervening Motion for Sanctions against LPS was heard.
II. Law and Discussion
Q: Mr. Simmons, what was the amount due on the . . . Wilson account on February, 28th, 2008? . . .
A: Actually, the loan was current, if in fact we would have accounted for all the monies received. . . .
Q: What about on March 10, 2008? What was the amount due on the mortgage loan at that date?
A: Again, the loan would have been current. . . . .
Debtors filed bankruptcy on September 29, 2007. Notification of that fact was mailed to Option One on October 6, 2007. LPS encoded the bankruptcy filing on November 21, 2008. The process was completed on November 23, 2008.
Debtors sent their first postpetition mortgage payment of $1,546.84 via Western Union on October 21, 2007. Because LPS failed to alert its system that a bankruptcy had been filed, this payment was applied to Debtors’ earliest past due prepetition installment, June 2007.
Debtors forwarded another $1,546.84 payment to Option One on November 30, 2007. That payment was intended to satisfy the postpetition installment due November 1, 2007. Instead, Option One applied the payment to the October 1, 2007, installment, the date showing due on the system. 63
On December 21, 2007, 64 LPS entered a referral to Boles requesting a Motion for Relief from Stay based on two (2) past due postpetition payments (November 1 and December 1, 2007). The First Motion was filed by Boles on January 7, 2008. In the interim, LPS received notification that a payment of $1,546.84, one (1) monthly installment, had been made by Debtors. 66 LPS requested posting instructions from Boles, who directed LPS to send the payment to the firm.
On January 25, 2008, Debtors sent $1,858.84 to Option One. That payment was received on January 31, 2008. Again, LPS was notified by Option One of the payment, and on February 1, 2008, LPS requested posting instructions from Boles. Boles responded three (3) days later directing LPS to send the payment to it.
On February 4, 2008, Boles advised LPS that the First Motion would go to hearing on February 12, 2008. Boles cited “Judge delay” as the reason, but in reality, Debtors opposed the First Motion.
In the Opposition, Debtors alleged that all payments had been made on the loan postpetition, challenging the allegations of Option One’s First Motion that the loan was postpetition delinquent for November 1, 2007, and all installments thereafter.
Putting aside the posting issue created by LPS’s failure to properly account for Debtors’ bankruptcy filing, the allegations of the First Motion also failed to acknowledge Option One’s receipt of $1,546.84 on January 2, 2008. 71
LPS was also alerted by Boles on February 6, 2008, of Debtors’ Opposition. Boles requested a “pencil post” of the loan. Boles’ understanding of a “pencil post” was a manual accounting of a loan payment history used to verify the status reflected by the computer file. In reality, LPS only manually reviews what is already on the computer system and recopies it onto a spread sheet.
Evidently in performing the “pencil post,” LPS discovered the misapplied October payment and requested correction on February 11, 2008. The manual adjustment also corrected the application of the two (2) Western Union payments received postpetition.
However, no mention was made of the two (2) additional unposted payments discussed in the preceding communications between LPS, Option One, and Boles.
On February 15, 2009, LPS sent a message to Boles that according to Option One, its cash log reflected forwarded payments to Boles in an amount sufficient to bring the loan current.
However, LPS instructed Boles that if in fact the funds Boles held were insufficient to bring the loan current, Boles should consider the loan past due as of December 1, 2007.
In response to LPS’ message on February 15, 2008, Boles acknowledged receipt of $1,858.84 in funds. Assuming they were applied to the December 2007 installment, payments for January and February 2008 were still due. 74
Therefore, as of February 15, Boles had not received enough funds to bring the loan current and communicated this fact to LPS. 75
On February 27, 2008, Debtors’ account was adjusted to show a past due date of December 1, 2007. No further investigation or response was made as to the whereabouts of the missing January 2008 payment.
On February 27, 2008, Boles forwarded an affidavit to Ms. Goebel at LPS for execution in connection with the Second Motion.
The affidavit alleged Debtors were past due as of November 2007, which was in conflict with the allegations contained in the Second Motion which now reflected a past due date as of December 1, 2007.
As part of its default services, LPS executed Affidavits of Default in support of Motions for Relief from Stay.
LPS testified that it was just one of the services that LPS provided to clients. The affidavit is typical. It purports to be executed under oath before a notary and two (2) witnesses. It provides the name and title of the affiant and represents that the affiant has personal knowledge of the facts contained in the affidavit.
In fact, it is a sham.
When an affidavit is received by LPS, an employee prints the document and delivers it to one of twenty-eight (28) LPS employees authorized by Option One to execute the document on its behalf.
By corporate resolution, Option One grants these individuals “officer” status, but limits their authority to the signing of default affidavits. These “officers” execute 1,000 documents per day for Option One and other clients similar to the one used in this case.
In fact, Ms. Goebel is an employee of LPS with little or no connection to Option One. Each day Ms. Goebel receives approximately thirty (30) documents to sign. The process of signing default affidavits is rote and elementary.
As Ms. Goebel is also a manager of a work unit at LPS, she allocates two (2) hours per day for document execution and estimates that it takes her five (5) to ten (10) minutes to sign each affidavit she receives. Before signing an affidavit, Ms. Goebel follows the procedures directed by LPS. She checks three (3) computer screens that provide the amount of the installment payment, the total balance due on the loan, and the due date for the earliest past due installment. She matches this information with that contained in the affidavit. If it is correct, she signs the document and forwards it to a notary for execution.
Although the affidavit in this case purported to verify that Option One was the holder of the note owed by Debtors through an assignment, Ms. Goebel does not personally know this to be a fact and made no effort to verify her assertion. Similarly, the affidavit identifies the mortgage and note as exhibits to the affidavit, but Ms. Goebel neither checks the attachments nor verifies that they are correct. In fact, the affidavits she signs never have any attachments when forwarded to her for execution, and she never adds any.
Although the affidavit represents that it was executed in the presence of a notary and witnesses under oath, no oath is ever administered, and the signatures of the affiant, notary, and witnesses are separately affixed and outside the presence of each other.
Ms. Goebel has no personal knowledge regarding the loan file save for the three (3) or four (4) facts read off a computer screen that she neither generates nor understands. She does not review any other information pertaining to the loan file , even information available to her. LPS admitted that Ms. Goebel followed its procedures and that those procedures were used in all cases.
Ms. Goebel’s training on the seriousness of her task was sorely lacking.
She could not remember who “trained” her when she was promoted in 2007 to a document execution position. She could not remember the extent or nature of her training. She did surmise that written procedures were given to her and then she began “signing.”
She described her task as “clerical” and repeatedly expressed the belief that the affidavits were counsel’s affidavits, and therefore, she relied upon counsel regarding their accuracy.
In this admission, the real problem surfaces.
Default affidavits are a lender’s representation as to the status of a loan. They are routinely accepted in both state and federal courts in lieu of live testimony.
They are an accommodation to the lending community based on a belief by the courts that the facts they present are virtually unassailable.
The submission of evidence by affidavit allows lenders to save countless hours and expense establishing a borrower’s default without the need for testimony from a lending representative.
While they can be refuted by a borrower, too often, a debtor’s offer of alternative and conflicting facts is dismissed by those who believe that a lender’s word is more credible than that of a debtor. The deference afforded the lending community has resulted in an abuse of trust.
The abuse begins with a title.
In this case, Ms. Goebel was cloaked with the position of “Assistant Secretary,” in a purposeful attempt to convey an experience level and importance beyond her actual abilities.
Ms. Goebel is an earnest young woman, but with no training or experience in banking or lending. By her own account, she has rocketed through the LPS hierarchy receiving promotions at a pace of one (1) promotion per six (6) to eight (8) month period. Her ability to slavishly adhere to LPS’ procedures has not only been rewarded, but has assured the development of her tunnel vision.
Ms. Goebel does not understand the importance of her duties, and LPS failed to provide her with the tools to question the information to which she attests.
For example, the following exchange occurred between the Court and Ms. Goebel:
Q: . . . if you look at paragraph 2 at the bottom there is “see attached copy of the Notice, Exhibit A, certified copy of the mortgage is Exhibit B, and copy of the assignments is Exhibit C.” Is your testimony that those documents were not attached to the affidavit when you signed it.?
A: Typically, those exhibits would not be attached.
Q: . . . So, . . . counsel would attach those after you signed.?
A: . . . we relied on the attorney. We believed the information that they were giving us and what they were going to attach, because this is their affidavit. It would be accurate.
Q: . . . Did you check any screen to see if in fact there was a note, there was a mortgage , there were assignments?
A: That would be the responsibility of the attorney.
Q: . . . so you didn’t verify that information at all?
A: No . . .
Q: . . . And you don’t sign it [the affidavit] in the presence of the notary or the witnesses?
A: That’s correct.
Q: You weren’t put under oath by a notary before you signed the Affidavit of Debt?
Q: And you didn’t really have personal knowledge of the contents [of the affidavit] because you just said the information involving the existence of the mortgage and the note and so on you relied on the Boles Law Firm to have that information correct.
A: Right. As I stated earlier, it was the Boles Law Firm. Option One had hired them to kind of handle this work and had asked LPS to help clerically sign these. We relied on the Boles Law Firm.
Q: So you considered this a clerical function?
A: Part of our administrative services with LPS.
Q: But you just used the word “clerical.”
A; Well, it’s signing a document, more you know administrative work, clerical work, yes.
Q: Ms Goebel . . . Have you ever refused to sign an affidavit for a reason other than the note payment amount was incorrect, the due date on the affidavit was incorrect, the number of installment payments that were past due was incorrect, or . . . that you were not a [authorized] signatory . . .?
A: Not to my recollection, no.
Q: . . . So if, . . . you had know[n] that there were three payments that were not posted on this account . . . that were in the possession of either Option One or the law firm, would you have still signed the affidavit?
A: In my opinion, yes. I was getting an affidavit from a law firm that I trusted. They’re the legal experts on the matter and Option One is in charge of their cash posting. I’m not the decision maker of, you know, should they proceed. The attorney would have that knowledge.
It is evident that the training provided Ms. Goebel by LPS was insufficient and negligent. LPS was the first line of communication with counsel.
The evidence was clear that Option One was contacted only if LPS employees could not satisfy counsel’s requests. Counsel did not communicate directly with Option One, and although Option One controlled the physical posting of payments, LPS managed the communications between Option One and its counsel regarding them.
In this case, LPS had personal knowledge of four (4) critical facts.
First, that as of February 15, 2008, Option One had received two (2) payments from Debtors in amounts sufficient to satisfy the installments due for December and January.
Second, counsel had directed that the payments be sent to it rather than posted.
Third, Option One alerted LPS in February that the amounts forwarded were sufficient to bring the loan current.
Fourth, counsel reported to LPS that they had only received $1,846.84, a fact LPS neglected to forward to Option One.
As a result of this knowledge, LPS should have known that a payment was unaccounted for between Option One and Boles. An inquiry to either might have brought the problem to light. Instead, LPS ignored the facts.
Ms. Goebel presented another opportunity for LPS to get it right.
If she had reviewed the file and familiarized herself with the communications between the parties, she might have also noticed that the December payment was forwarded to Boles, but evidently not received. She certainly would have noted the receipt of an additional payment by Boles but not posted and the inconsistency in due dates contained in the Second Motion and affidavit.
However, Ms. Goebel was trained to rotely check three (3) finite pieces of information. She candidly admitted that even if she had known of the unposted payments, she would have signed the affidavit without questioning its content because it was counsel’s.
Of course, the affidavit is anything but counsel’s. It is the sworn statement of the loan’s status by the holder of the note. It is evident that LPS blindly relied on counsel to account for the loan and all material representations. In short, the affidavit was nothing other than a farce and hardly the evidence required to support relief.
The facts supporting a default are the lender’s to prove, not counsel’s. In this case the lender and LPS cloaked Ms. Goebel with a title that implied knowledge and gravity. LPS could have identified Ms. Goebel as a document execution clerk but it didn’t.
The reason is evident, LPS wanted to perpetrate the illusion that she was both Option One’s employee and a person with personal and detailed knowledge of the loan. Neither was the case.
The fraud perpetrated on the Court, Debtors, and trustee would be shocking if this Court had less experience concerning the conduct of mortgage servicers. One too many times, this Court has been witness to the shoddy practices and sloppy accountings of the mortgage service industry.
With each revelation, one hopes that the bottom of the barrel has been reached and that the industry will self correct. Sadly, this does not appear to be reality. This case is one example of why their conduct comes at a high cost to the system and debtors.
The hearing on the Motion for Sanctions provides yet another piece to in the puzzle of loan administration.
In Jones v. Wells Fargo, this Court discovered that a highly automated software package owned by LPS and identified as MSP administered loans for servicers and note holders but was programed to apply payments contrary to the terms of the notes and mortgages.
In In re Stewart, additional information was acquired regarding postpetition administration under the same program, revealing errors in the methodology for fees and costs posted to a debtor’s account.
In re Fitch, delved into the administration of escrow accounts for insurance and taxes.
In this case, the process utilized for default affidavits has been examined.
Although it has been four (4) years since Jones, serious problems persist in mortgage loan administration.
But for the dogged determination of the UST’s office and debtors’ counsel, these issues would not come to light and countless debtors would suffer. For their efforts this Court is indebted.
For the reasons assigned above, the Motion for Sanctions is granted as to liability of LPS. The Court will conduct an evidentiary hearing on sanctions to be imposed.
New Orleans, Louisiana, April 6, 2011.
9 April, 2012
A federal judge who has fiercely criticized how big banks service home loans is fed up with Wells Fargo.
In a scathing opinion issued last week, Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, characterized as “highly reprehensible” Wells Fargo’s behavior over more than five years of litigation with a single homeowner and ordered the bank to pay the New Orleans man a whopping $3.1 million in punitive damages, one of the biggest fines ever for mortgage servicing misconduct.
“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed,” Magner writes. “But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”
The opinion reflects Magner’s disgust with tactics that Wells Fargo used to fight the case — and perhaps frustration with an appeals court ruling in a separate, but similar case, that overturned her order that would have forced Wells Fargo to audit and provide a full accounting for more than 400 home loans in her jurisdiction.
As The Huffington Post previously reported in a story co-published with The Center for Public Integrity, sources familiar with the preliminary findings said that the bank made costly accounting errors in the administration of practically all of those loans.
In an emailed statement, Tom Goyda, a Wells Fargo spokesman said: “The ruling handed down by the court in an individual bankruptcy case covers allegations going back more than six years and ignores significant changes in servicing practices that have occurred since that time. We believe that there are numerous factual and legal problems with the opinion and are reviewing our options regarding an appropriate legal response.”
Goyda said that an appeal of the ruling is “one option” the bank is considering.
Despite widespread reports that the banks and other companies that service home loans engaged in a range of misconduct — from ordering unnecessary property inspections to misapplying payments in a way that can lead to wrongful foreclosure — few judges have had the time, ability or inclination to do the kind of forensic analysis necessary to uncover wrongdoing in individual cases. For a non-accountant, reading a loan history is like interpreting hieroglyphics without a Rosetta Stone, and banks are often reluctant to turn them over in the first place.
The exceptions have tended to come in federal bankruptcy courts, where justices typically have more time to dig into loan accounts, and are much more likely to have the financial expertise necessary to do so. In an earlier interview, Magner said that she analyzed the loan files of more than 20 borrowers in her court and found mistakes in every instance.
“These are loans of working-class people who bought homes they could afford and whose loans were not administered correctly from an accounting perspective,” she said. “I think that these types of problems occur in almost every [defaulted] loan in the country.”
The current case involves Michael Jones of New Orleans. In a 2007 decision, Magner ruled that Wells Fargo improperly charged Jones more than $24,000 in fees, owing to a fundamental problem in the automated methodology the bank used to account for his loan payments.
After Jones fell into default, Magner ruled, the bank improperly applied his mortgage payments to interest and fees that had accrued instead of to principal, as required by his servicing contract. This triggered a waterfall of additional fees and interest that consumer lawyers call “rolling default.” Later, after Jones applied for bankruptcy, the bank continued to misapply payments, according to Magner’s opinion.
In the most recent opinion, Magner describes Wells Fargo’s litigation tactics, which involved filing dozens of briefs, motions and other filings that slowed down the proceedings to a snail’s pace, as “particularly vexing.” The tactics suggest that any other borrower who might wish to contest a fee or charge would find a legal challenge to the bank simply too burdensome.
And yet, Magner writes, it is only through litigation that the abuses can be uncovered. Calling Wells Fargo’s conduct “clandestine,” Magner wrote that the bank refused to communicate with Jones even as it was misdirecting payments for improper purposes.
“Only through litigation was this practice discovered,” Magner writes. “Wells Fargo admitted to the same practices for all other loans in bankruptcy or default. As a result, it is unlikely that most debtors will be able to discern problems with their accounts without extensive discovery.”
Magner wrote that the bank still refuses to come clean with homeowners about mistakes it made in the accounting of home loans. This is particularly troublesome in her district, where more than 80 percent of the borrowers who file for bankruptcy have incomes of less than $40,000, and consequently are often unable to hire the kind of legal firepower necessary to counter Wells Fargo’s army of lawyers.
“[W]hen exposed, [Wells Fargo] revealed its true corporate character by denying any obligation to correct its past transgressions and mounting a legal assault ensure it never had to,” Magner wrote.
Monday, September 10, 2018
The current 14-year term of U.S. Bankruptcy Judge Elizabeth Magner of the Eastern District of Louisiana will expire September 8, 2019. The U.S. Court of Appeals for the Fifth Circuit is considering whether to reappoint Judge Magner to a new 14-year term. Members of the bar and the public are invited and requested to submit comments for consideration by the court before it decides whether to reappoint Judge Magner to a new term. See the Official Notice for more information.
Hon. Elizabeth Wall Magner
U.S. Bankruptcy Judge, Eastern District of Louisiana
She had been called a lot of names: soccer mom, homeroom mom, Brownie troop leader. Introducing herself as Elizabeth, she strode into a sun-drenched banquet hall crowded with students, professors, and judges.
She was armed with a briefcase slung around her shoulder that said business and a grin on her face that announced confidence. Bankruptcy Judges Douglas D. Dodd and Harlin D. Hale together had pleaded with her to address the group to kick off Louisiana State University’s annual seminar on bankruptcy.
Judge Elizabeth Wall Magner spoke without hesitation:
“I believe that in this day and age, bankruptcy law is the most exciting and challenging area of prac- tice. It has been an absolute pleasure, and a tremendous honor working with such an excellent caliber of attorneys. In practice, participating in trials, arguing motions, and confecting ‘plans’ is a fun way of saving peoples’ livelihoods.” She paused thoughtfully, then said, “Of course, it doesn’t hurt that it’s the only area of law where you get to be a CFO when you’re 26!”
That was my first impression of Judge Magner. Later, I would observe that her ardor for the prac- tice of bankruptcy law that she had shown that day in October 2008 was nothing unusual for her. Judge Magner wears her unwavering fervor for the judicial process as a badge of pride.
“I’m just a law nerd,” she candidly admits. The upcoming fourth anniversary of her appointment to the bench coinciding with this is- sue of The Federal Lawyer offers readers the perfect occasion to get a glimpse into this outstanding federal lawyer’s story.
Elizabeth Wall grew up in Baton Rouge. The oldest of four children, she had two sisters and a brother. For as long as she could remember, she wanted to be a doctor.
This aspiration seemed perfectly normal for Elizabeth, as the Wall family had a history of providing Louisiana with doctors going all the way back to the time it first became a state. Growing up in a large family made her conscientious from an early age; a lifelong feeling of responsibility would accompany her unshakable status as the family’s first child. As a precocious youngster, she excelled in sciences and mathematics.
When she was a teenager, her father gave her a job assisting him in his private surgery practice. This experience instilled in her the first inklings of profes- sionalism. For three summers, she worked the same exhaustingly long hours as her father. In describing their return home each day, she explains,
“I was al- ways worn out by dinner time. But my father some- how found the energy to call the families of every single recovering patient to see how they were doing. His personal touch showed how much he cared about his patients.”
Elizabeth graduated from an all-girl’s Catholic school and immediately enrolled in Louisiana State University. Because she wanted “to do deals,” she majored in accounting and minored in finance and graduated in three years. As a college student, she
also worked at Louisiana National Bank, which of- fered her the opportunity to work on the cutting edge of managerial accounting. She climbed the corporate ladder from gofer to analyst and ended up in the Man- agerial Accounting Department, where she scrutinized financial profit centers.
Immediately after graduating from college, Eliza- beth attended LSU’s Paul M. Hebert Law Center, where she did three things: “lived life, loved school, and worked hard.”
On the side, she worked as a law clerk for Sanders, Downing, Kean & Cazedessus—a precursor to Kean Miller, Milling Benson, and Phelps Dunbar law firms. She still wanted to “do deals,” and decided that tax law was the best route for her. After graduating from law school, she continued working at Milling Benson for over two years. After that she was hired by Lemle & Kelleher.
That same year she married her husband, also an attorney, with whom she would soon raise two children—a boy and a girl (as well as their pet poodle). Four more years passed, and Elizabeth became one of three female partners at Lemle & Kelleher. After six years in the partnership, she resigned and hung out her own shingle. She prac- ticed solo for 10 years until Sept. 9, 2009, the day she was sworn in as a bankruptcy judge.
In her days working as an associate at both firms,
Elizabeth discovered that she had an inexplicable drive to do commercial litigation.
“There is no objective reason why I should have been successful in that field in New Orleans right after law school. I didn’t fit the mold of the person who played golf with clients or schmoozed with them at dinner. I just worked hard, worried mostly about winning cases, and communicated regularly with clients.”
That formula was her prescription for success.
Elizabeth built her connections from the ground up as her clients became her most reliable business network. “My father had always taught me that the biggest asset you have and best defense against malpractice is knowing your cli- ents.”
Elizabeth began her connection with the bankrupt- cy specialty in an unusual way. The OPEC embargo ended, precipitating a drastic economic downturn.
“Every kind of deal contingent on the oil market went through the floor. Bankruptcy suddenly became an at- tractive solution for companies defaulting on commercial loans. For the first time, there was a Bankruptcy Court and it was federal.” One of the partners at Milling Benson had experience in bankruptcy law, and he knew she had taken a course on the topic when she was in law school.
“We became the bankruptcy department overnight. It was very serendipitous since I thought my field was going to be tax law.”
Those were wild days, according to Judge Magner.
“It’s hard to believe this now, but I was trying cases alone two weeks after being sworn into the bar. When I ran into my first big problem preparing to argue on a motion, I had this scary moment. I went to the firm’s library, and there were only three volumes of the Bankruptcy Reporter! There was just no jurisprudence.”
After some reflection, though, she realized that her situation was nothing but an opportunity to blaze her own trail.
“It was an exciting field for a new lawyer because you couldn’t be outgunned by your lack of knowledge.”
Elizabeth was grateful for her training in the ancient Roman civilian law tradition as practiced in Louisiana courts. Having cut her teeth on the Civil Code, which governs a vast array of sub- jects, she had a peculiar advantage in analyzing how Bankruptcy Code articles were constructed and how they fit together under broader policies and rules of public order. Louisiana lawyers and bankruptcy specialists have a lot in common, she says.
“Our mutual task is to give life to a systematic body of law that the legislature enacts.”
Elizabeth’s personality fit well with bankruptcy practice.
“It involved the managerial accounting aspects I loved. I got to wrestle with great questions from my accounting days, like ‘what makes a business profitable?’”
Bankruptcy practice’s frenetic pace triggered an intuition in Elizabeth that had been developing since her early days working in family medicine.
“I thrived on that type of uncertainty and pandemonium. That’s why I’d probably be an ER physician if I weren’t a lawyer.”
As she gained experience in bankruptcy law, she incrementally upped the ante by taking on new and challenging projects. “I started out on very small files—suits on notes and foreclosures and worked my way up. First, it was several thousand dollar deals, then a couple hundred thousand, then million dollar deals, then two million, then 10, then 20—I just kept pushing forward.”
Elizabeth developed a name for herself for her sternness in facing triage situations and for her fearlessness in expressing her opinions. She had a zest for making decisions with imperfect information and not worrying about it.
“Part of me loved being aggressive, and part of me just hated routine.”
In a major prepackaged bankruptcy case involving exposure to asbestos, for example, with the corporate world’s eyes on her, she persuaded the Third Circuit Court of Appeals to reverse the lower court. The 135-page opinion became precedent for reorganizing more than $200 billion in corporate debt.
Although clearly confident, Elizabeth believes she owes much of her success to her willingness to negotiate.
According to Judge Magner, This characteristic is what made me less inclined to get into needless ego battles in litigation. Ambition is a great thing, but stubbornness can be fatal. I consider it a strong skill for lawyers to be able to grovel, beg, plead, cajole—basically do whatever it takes to develop settlement or consensus. Recognizing when a settlement or deal is in your client’s best interest is the key to success as a bankruptcy litigator. To avoid being “crammed down” upon, you have to be a positive participant in the system.
She credits her family with preserving a sense of humility.
“I was very fortunate that both my husband and I supported each other, so my negotiating per- spective remained unclouded from outside financial pressures.”
It takes some moderate arm-twisting, but Judge Magner is willing to share some of her top bankruptcy war stories from this epoch.
She begins the account with a chuckle, “I often wondered to myself—how did a good Catholic girl end up in a case like this?”
The most absurd story goes like this:
One time, I represented a video poker truck stop owner in a real death match. It was no- holds-barred litigation against a prominent indi- vidual in Lake Charles. So we’re in bankruptcy getting ready to go to court, and the night be- fore trial, I get this strange phone call out of the blue. Basically, this anonymous guy tells me he has information helpful to my client and that he wants to meet me at the Holiday Inn in Jennings, Louisiana, at midnight. … So, there I go. I take my male co-counsel with me as a chaper- one (so that I don’t end up at the bottom of the bayou), and meet this guy and he hands me two boxes of damning impeachment evidence. The day after, when the gaggle of lawyers on the other side put their witness on the stand, I ask him my first question. The next thing you know, they’re all screaming and hollering objections— the judge was completely mystified—he didn’t know what he stepped into.
Elizabeth lived to tell more shocking tales of frontier lawyering. One memorable event involved her dispensing legal advice to an emotionally disturbed client while he held her at gunpoint. But the case that took the cake in terms of physical difficulty was a fil- ing that involved her litigating 165 motions in three months, taking 20 depositions in three foreign coun- tries, reviewing 360,000 documents, and, just for good measure, ending with a five-week trial.
Elizabeth was appointed a U.S. bankruptcy judge for the Eastern District of Louisiana, at New Orleans, one week after Hurricane Katrina struck.
In addition to fielding manifold legal problems in the wake of the city’s devastation, she took charge of the situation from a disaster relief standpoint.
“We [the Eastern District Bankruptcy Court] became a central locator when people went missing. For instance, we used the electronic filing system to get in touch with clients and posted names and numbers of lawyers on our website.”
She began her judicial career in charge of all of the consumer bankruptcy cases in the district. She had never handled a Chapter 13 consumer case before then. Her colleague, Judge Jerry A. Brown, took on the corporate cases. This bifurcated system developed because the Bankruptcy Code had just been revised in 2005 under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
“There was a lot of uncertainty. So when an issue came up, I refused to tell lawyers what I thought the answer was. I made them try cases. That’s how it’s supposed to work.”
“I was fortunate that the lawyers in my bar were very cooperative with each other. Where the law was unclear, they consolidated cases allowing me to write opinions on the different issues presented by BAPCPA. Those opinions gave lawyers in my district the guidance they sought.”
Because of her ample solo practice experience in pushing the envelope by arguing new law, she had no fear of wading into previously undecided issues.
“I’m used to sticking my neck out. No guts, no glory.”
These circumstances led to a series of watershed opinions whereby Judge Magner breathed new life into bankruptcy courts that were involved in consumer cases. In one case, her court held that the “means test” statute did not prevent the bankruptcy court from exercising its discretion in granting a debtor a benefi- cial deduction. Judge Magner’s grand exhortations of judicial power helped spark a national movement to- ward more policy-sensitive jurisprudence in consumer bankruptcy cases.
“The Bankruptcy Code embodies a flexible scheme for the reorganization of debt and the orchestration of a debtor’s fresh start. … No statute can anticipate every factual circumstance, and this Court does not believe that Congress intend- ed to attempt such a feat. … [W]hile the [means] test itself is mechanical, its application is not. The calculations derived from the means test are only presumptive, not definitive, and may be modified by the ex- istence of ‘special circumstance.’”
In re Devilliers, 358B.R. 849, 856–858 (E.D. La. 2007) (citing BankruptcyCode § 707(b)(2)(B)(i)).
Over time, Judge Magner began to take on corporate cases in addition to her usual consumer docket. Her judicial philosophy continued to dovetail with her litigious experience. With new issues came new challenges in the form of pressures to dispose of matters hastily, but Judge Magner did not relent.
“It’s my job to try cases, and I am happy to do it. It’s not my job to hint that parties should settle or try to induce them to do so. Trying cases is an appropriate means to resolve issues if the parties cannot or do not settle.”
Judge Magner believes that the key to the entire process flourishing is her commitment to the judicial system’s efficiency.
“I don’t let matters sit. I move my docket. I have internal flags and trigger points, and if the case doesn’t go according to the pretrial plan, I call the whole group in for a status conference.” (Not always a popular move.)
A central feature of Judge Magner’s court is its fastidious organization according to extremely rigorous local rules. Remarking on this subject, she explains, “I came from private practice believing that if the judiciary demands a certain level of behavior—litigants will rise to the expectation.” For instance, her court enforces a strict ethics program through the use of procedure.
“As I see it, lawyers are going to settle their discovery disputes among themselves if they can. If they can’t, they’ll file a motion to quash or compel. When that happens, I expect them to call chambers and let us know. We normally set the dispute for hear- ing within 48 hours, at 7:30 a.m. if necessary, because nobody is working at that time. I get down to the nut quickly and then send out detailed orders. I think that avoids delay, so people can’t force the other side to lose time.”
Judge Magner adapts her strict expectations for herself into what she asks of the litigators who ap- pear before her.
“Federal practice is and should be exacting. I expect lawyers to be prepared, on time, organized, and ready to go because I work very hard to be that way.”
Adopting features of the inquisitorial style routinely practiced in Louisiana state courts, Judge Magner commands a spectacular performance from her litigants. “As soon as a lawyer opens, I may start peppering him with questions, bringing out other relevant code articles and policies. Very often, I get into intellectual-big-picture discussions with the counsel appearing in front of me. I don’t mind going round and round with lawyers for hours on a motion; those are just opportunities to soak it all in.”
Addressing misconceptions about bankruptcy law, Judge Magner says,
“There is a prejudice with both bench and bar that only Chapter 11 cases are important. The perceived idea is that those are the cases that give you the press, that make you an ‘important judge’ or that make real ‘precedent.’ However, the dirty little secret on the bench is that consumer cases make up probably 90 percent of the docket. So, when you look at the big picture, consumer cases in fact represent a lot of people, money, and issues that move through the system.”
What does bankruptcy law mean to Judge Magner, and what should it mean to aspiring lawyers? The answer is, in her own words:
“It means having to adjust quickly, not knowing where you’re going, moving your brain—and your feet—quickly. And it means matching wits with really good, smart lawyers.” TFL