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County working on lawsuit against bank

Judge dismissed bank’s suit against county in December, opening door to further action

Private attorneys for Maui County are currently working on a draft complaint of a lawsuit that may be brought against Bank of America and other mortgage lenders, a county attorney said on Tuesday. Bank of America had filed a lawsuit last year in hopes of stopping the county, but a judge dismissed the case in December. AP photo

Contracted private attorneys for Maui County are currently working on a draft complaint of a lawsuit that may be brought against Bank of America and other mortgage lenders, a county attorney said on Tuesday.

Corporation Counsel Moana Lutey told the Maui County Council’s Government Relations, Ethics and Transparency Committee Tuesday that as the draft complaint is firmed up by special counsel Bronster Fujichaku Robbins, she will come back to the council to discuss the matter prior to the filing of the lawsuit. She did not give a time frame but said she would be checking in with the Honolulu-based firm.

In July, the council voted to hire legal council to pursue claims against Bank of America and other mortgage lenders for “failure to fulfill loan commitments, fraudulent foreclosures and similar unlawful conduct.”

In turn, hours after the vote, Bank of America filed a suit in federal court to stop the county. A federal judge dismissed the bank’s lawsuit in December, paving the way for the county to pursue its claims against the banking giant over a decades-old $150 million home loan promise to Native Hawaiians and others that allegedly went unmet.

The council had previously approved $200,000 for the original suit against the bank and other mortgage lenders, Lutey explained. But since Bank of America turned and filed suit against the county last year, the county spent around $89,000 to get the case dismissed. On Tuesday, Lutey was requesting an additional $89,000 to make up for the funds used from the original allocation. With the committee’s agendas full and council members soon to head into busy budget deliberations, Lutey said she wanted to get the issue resolved sooner than later.

“This is not a mom and pop situation,” Lutey said, pointing to testifiers’ comments about Bank of America having trillions of dollars in assets.

Lutey said she wanted to make sure the county has “a sufficient pot of money” to move forward with the lawsuit. She added that she expects Bank of America to quickly file a motion after the county files its suit, which will also require funding to contest.

The resolution to approve the $89,000 for private counsel was recommended unanimously by the committee and now heads to the full council for approval.

Lutey said she would also check with the Honolulu firm to see if they could seek reimbursement of attorneys’ fees from Bank of America for the case that was dismissed in December.

When funds are returned to the county, they are normally deposited into the county’s general fund, Lutey said.

Committee members also discussed working with Miami-based foreclosure litigator Bruce Jacobs, who has been retained by Na Po’e Kokua, a Maui-based housing advocacy group that on Feb. 11 filed a whistleblower complaint against Bank of America alleging that the company defrauded its investors by not disclosing its “criminal and civil exposure” for “systemic fraudulent conduct” involving its failed commitments, false statements and false claims, among other actions through the years.

The bank has said it fulfilled its $150 million home loan pledge and that the state Department of Hawaiian Home Lands confirmed it in a letter in 2007. But according to public documents and news reports, the Hawaiian Homes Commission in 2012 disputed the earlier letter and said the bank did not fully follow through.

Na Po’e Kokua President Brandon Maka’awa’awa said Tuesday that he supported the council’s resolution.

“Na Po’e Kokua is really here to help the county to move forward,” said Maka’awa’awa, who also advocated for the county to work with Jacobs.

Haiku resident Ian Chan Hodges of the Hawaii Fair Lending Coalition, who has also been “taking on Bank of America” for a “long time” also asked the county to work with Jacobs.

“I don’t think we will be able to prevail against Bank of America unless we are all working together,” he said.

As a point of disclosure, Council Member Tasha Kama reminded the committee that she was a founder of Na Po’e Kokua and continues to sit on its board of directors.

* Melissa Tanji can be reached at mtanji@mauinews.com.

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