Update (November 18, 2014): When is a meritorious lawsuit more likely a liability rather than an asset? When the defendant is judgment-proof.
I will go out on a limb and predict that RAzOR Capital, the subject of an earlier post, below, will win on its recent motion for summary judgment against HP Debt Exchange, LLC. But that, plus about $2.00, might only get Plaintiff RAzOR a small cup of coffee.
Some time ago, I praised a resounding victory of a mortgage lender, RFC, in a mortgage repurchase case against Terrace Mortgage and that win included a hefty award of the plaintiff lenders’ attorneys’ fees. But, remember, the Court does not literally award prevailing parties’ attorneys’ fees. The Court does not cut the check. In the relatively rare circumstances where plaintiffs (or defendants) are awarded their legal fees, the litigants only get the right to get those fees from their adversaries. But if your adversary does not have a commode to micturate into, he can’t pay his own lawyers, let alone yours. You (and RFC) might taste the bitter (and expensive) dust of a resounding but pyrrhic victory. (There is some suggestion that a judgment against Terrace Mortgage might not be particularly valuable: RFC’s efforts to convert its judgment into cash appear to be on-going…)
Original post (April 30, 2014): (Under the subject line: “It is Getting About Time to Celebrate (Or Mourn?) the Eradication of An Economic Plague”): This past Sunday, the Minneapolis StarTribune’s front page announced in large top-of-the-fold type, “Metro’s Homes See Huge Rise in Value.” The article started by saying home values are “leaping back to life after years of steep drops and stagnation.”
There is a consensus that the a bubble that was inflated by many banks’ reckless lending practices (only a few crotchety conservatives seem to blame reckless borrowers, I notice (at least publicly and out loud)), that led to a dizzying and unsustainable upward spiral in home construction and home prices, that led to a bubble-burst, that led to widespread economic misery felt in varying degrees by the vast majority of Americans.
Both the feeding frenzy and the resulting famine created work for many lawyers, in particular: (1) who helped lenders, builders, buyers, sellers jump onto the run-away gravy trains, (2) who helped lenders, builders, buyers, sellers jump off the sinking ships, and, finally, (3) who have helped pitch in on salvage operations, identifying the bodies, notifying (and trying to sue) the next of kin.
(We can condemn the lawyers who have profited from this widespread misfortue as parasites or maybe we can excuse them for being humble servants simply borne on the roiling economy like everyone else rather than being responsible for it. (I prefer the latter description and place responsibility on our elected officials and the irresponsible eligible voters, most of whom do not vote. But I digress.))
We can see a microcosm of the cosmic economic expansion and collapse over the past decade or so in the case of RAzOR Capital, LLC (COol NamE, don’T yoU thInK?) v. HP Debt Exchange LLC.
RAzOR bought many loans from HP, about $18 million in outstanding loans for less then $1 million. Great bargain, right? If RAzOR could collect on a mere 10% of the loans, it would be sitting pretty, let alone 50% or more, of course.
The problem for RAzOR, however, was that the loans that that HP Debt Exchange sold RAzOR were apparently of much poorer quality than RAzOR had been led to believe.
The BITTer IroNY for manY LAWyers IS that THE AfTERmath of THESE cases CANNot gO on forEVER.
(Here is a linked declaration of HP Debt Exchange’s lawyer seeking to be released from the RAzOR case. It is not too much of a stretch of the imagination to suggest the possibility that HP Debt Exchange has not only stopped communicating with its lawyers, as the attached declaration points out, but that HP Debt Exchange also stopped paying them.)
All bad things come to an end. But then they are born again. So don’t get all jubilant or if you are a lawyer whose livelihood comes from these fiascoes, all maudlin.