Calif. AG sued over seizure of files

By Jessica M. Karmasek | Sep 7, 2011


LOS ANGELES (Legal Newsline) - Hundreds of homeowners and former homeowners have filed lawsuits in three states alleging that California Attorney General Kamala Harris "acted as the pawn of America's most powerful banks."

The homeowners allege Harris seized their legal files and denied them the right to the legal counsel of their choice. The suits were filed Tuesday in federal courts in California, Florida and New York.

Erikson M. Davis, an attorney involved in the actions, said Tuesday he expects homeowners in other states to file against Harris.

According to the California lawsuit, filed in U.S. District Court in Los Angeles, Harris seized the plaintiffs' files and denied them the counsel of their choice "under the cover of secrecy" without any public airing of the facts, without proper court approval and without allowing them or their counsel or any court a chance to respond.

"Harris did so based on an inadequate investigation while citing demonstrably false accusations against Plaintiff Mitchell J. Stein, an attorney. And Harris did so at the behest of Bank of America, whose attorneys had been deeply alarmed by the substantive progress that attorney Stein has achieved in Plaintiffs' mass joinder case against the bank," the lawsuit says.

Mass joinder lawsuits are lawsuits with hundreds or more individually named plaintiffs.

On Aug. 18, Harris announced that her office, along with the State Bar of California, sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages.

Harris sued Philip Kramer, the law offices of Kramer & Kaslow, two other law firms, three other lawyers and 14 other defendants. It was the first consumer action by the attorney general's Mortgage Fraud Strike Force.

"The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country," Harris said in a statement. "Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress."

Stein's firm was one of the practices seized.

"Defendant Harris disingenuously stated that 'her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.' Yet she clearly has taken a position by seeking to remove the single most effective lawyer in prosecuting those cases," the lawsuit says.

According to their suit, the homeowners still want to be represented by Stein. They contend that Bank of America has arranged for Harris to do its bidding.

"Plaintiffs were neither induced nor deceived in any fashion before asking Mr. Stein to represent them. To the contrary, had Harris taken the time to contact Stein's clients, she might have learned that many of Mr. Stein's clients were referred not by advertising but by the offices of California Senator Dianne Feinstein or the Department of Homeland Security," the lawsuit says.

The suit argues that Stein and his legal associates are Bank of America's "biggest nightmare" and that Harris is effectively trying to provide the bank with a "get out of jail free card" by silencing Stein.

"Defendant Harris has acted as the pawn of America's most powerful banks, rather than in the interests of California homeowners," the lawsuit alleges. "Plaintiffs refuse to be made victims of Harris' poor judgment."

The plaintiffs' lawyers said in a statement Tuesday that some homeowners have been told they cannot get their personal legal files for at least three years. Many are fearful that their files have been shared with the very banks they are suing.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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