A federal judge has dismissed two charges in a class action lawsuit brought against ""Ally Financial's"":http://www.ally.com ""GMAC Mortgage"":http://www.gmacmortgage.com unit on behalf of Maine homeowners threatened with foreclosure or eviction, which was initially filed after GMAC's concession that some foreclosure legal documents had been used without following proper procedures.
District Judge D. Brock Hornby granted GMAC's motion to dismiss the homeowners' allegations of abuse of process and fraud. The plaintiffs agreed to the dismissal of their claim for breach of good faith and fair dealing without contest.
Regarding the abuse of process charge, Judge Hornby ""said in the court opinion"":http://www.med.uscourts.gov/Opinions/Hornby/2011/DBH_02162011_2-10cv458_BRADBURY_V_GMAC_MORTGAGE.pdf that the challenged affidavits did not satisfy the law's definition of improper use.
""They were used to win the foreclosure lawsuits, and that is a proper use of such documents. If they were false,"" Hornby wrote, noting that false documents and testimony are a deep concern to any judge or court, ""then the remedy is to seek to vacate the judgmentÃ¢â‚¬Â¦not to start a new lawsuit alleging abuse of process.""
Hornby continued, ""A contrary ruling would mean that the outcome of every lawsuit could produce a later lawsuit[COLUMN_BREAK]
by the unhappy loser, seeking damages on account of the outcome.""
With the fraud charge, the plaintiffs were seeking compensatory damages, costs, attorney fees, and punitive damages for ""fraud on the court.""
""No Maine caselaw recognizes such a basis for a private damage recovery,"" Judge Hornby said. ""Fraud on the court may be a ground for a perjury prosecution, for vacating a judgment, for lawyer discipline, or for sanctionsÃ¢â‚¬Â¦but it is not a ground for the recovery of damages by a party in a later lawsuit.""
One count is still pending in the case, in which the plaintiffs are accusing GMAC of violating the Maine Unfair Trade Practices Act and are seeking damages and an injunction.
But Thomas Cox, an attorney for the homeowners, told _Bloomberg News_ that he expects the judge to probably throw out the remaining claim.
""I just don't see how anything survives,"" Cox told the news agency, adding that Judge Hornby's decision will likely hurt similar lawsuits across the country brought by homeowners challenging the foreclosure practices of lenders.
The plaintiffs had originally filed their lawsuit in state court in October, but GMAC moved it to federal court in November on the basis of ""diversity of citizenship."" Lawyers for the homeowners had also requested Judge Hornby send the case, or at least part of it, back to state court, but that motion too was denied.
""In December"":http://dsnews.comarticles/gmac-may-resume-foreclosures-in-maine-judge-says-2010-12-13, Hornby also declined to issue a temporary restraining order requested by the same plaintiffs that would have prevented GMAC Mortgage from proceeding with foreclosures and evictions in Maine.