May 24, 2012

In Fight to Hold Financial Institutions Accountable for Mortgage Overcharges, Pennsylvania Woman Should Not Be Priced Out of Court, Public Citizen Argues

Low-Income Plaintiff Cannot Keep Up Financially With Wells Fargo, Goldman Sachs; Case Could Deter Consumers From Suing Financial Institutions

WASHINGTON, D.C. – A woman who has sued Wells Fargo and Goldman Sachs seeking compensation for overcharges on her mortgage should not be priced out of court by being forced to pay for a private adjudicator to resolve routine litigation disputes, Public Citizen said in a petition filed today in the U.S. Court of Appeals for the Third Circuit on behalf of the woman, Mary Glover. Allowing the court to charge a low-income litigant for the services of a private adjudicator, called a “special master,” would place low-income individuals at a debilitating disadvantage in the civil justice system, potentially blocking their access to the courts, the petition warned.

The plaintiff in the case is a Pittsburgh-area resident whose sole source of income is Social Security Disability benefits amounting to less than $10,000 a year. In June 2008, she filed a lawsuit against Goldman Sachs and Wells Fargo for breach of contract, seeking compensation for overcharges and mishandled payments when she tried to renegotiate her mortgage.

Three years into the case, the opposing sides asked the magistrate judge overseeing the case to decide disputes over production of documents and information. Frustrated by the parties’ inability to resolve the disputes on their own, the magistrate ordered Glover and the financial institutions to pay to have the discovery disputes decided by a special master – a local attorney appointed by the court – and to split the cost evenly between the banks and Glover. If she is forced to pay the special master’s fees, Glover, who lives in Clairton, Pa., will not be able to afford to continue the lawsuit.

The appointment of a special master is unusual. The U.S. Supreme Court has held that neither the congestion of a court’s docket nor the complexity of a particular case is a sufficient reason to appoint a master.

The special master’s appointment in this case was improper, both because the magistrate judge’s goal in appointing him was to coerce the parties into settling their procedural disputes, and because the magistrate impermissibly ordered that the costs be borne in part by a party who could not afford them, the petition said.

“The law explicitly requires that the court consider the parties’ means when allocating the costs of a special master,” said Scott Michelman, the Public Citizen attorney representing Glover. “If unchecked, special-master appointments such as this one would turn our country’s presumptively open courts into a pay-to-play system in which a party can be compelled to pay for her own adjudicator.”
The special master appointed in this case charges a minimum of $400 an hour, according to the court’s website. Therefore, if he spent 60 hours on the case, costs would reach $24,000, and Glover’s share would be $12,000 – more than a year’s income for her.

“I did everything they asked me to do; I just wanted to keep my house,” Glover said. “I thought the companies were working with me, but they weren’t. When you’re an amateur and getting in the ring with a pro, you need to get some help. I got a lawyer.”

Glover hopes to have her case certified as a class action so that thousands of other homeowners can obtain compensation for similar overcharges. However, “until her case is certified, it’s just Ms. Glover against the big banks,” said Michael Malakoff of Michael P. Malakoff, P.C., who filed the lawsuit on behalf of Glover and is co-counsel with Public Citizen at the Court of Appeals. “It’s David versus Goliath, and in our system; David’s slingshot is access to the courts. The special master appointment here would effectively deny Ms. Glover that access.”

Added Michelman, “The U.S. Supreme Court admonished almost 50 years ago that the quality of justice a person enjoys should not depend on the amount of money she has. We are asking the appeals court to enforce that principle.”

Get more information about the case. 

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