Kramer & Kaslow’s “Mass Joinder” Lawsuit – Mandelman Interviews Attorney Phillip Kramer

Should homeowners join Kramer and Kaslow’s “Mass Joinder” lawsuit against Bank of America or any of the other banks being sued by Attorney Phillip Kramer or Attorney Mitchell Stein?  Mandelman interviews attorney Phil Kramer to see what he can find out.

Last week I posted a “Homeowner Warning” about a mailer I’d received from a homeowner promoting participation in a lawsuit, referred to as a “Mass Joinder” lawsuit, being filed against several major banks on behalf of homeowners by the law firm of Kramer & Kaslow.  Before I posted the “warning” I spoke with several attorneys I know that are well-versed in law firm marketing compliance, and I made two attempts to contact the Kramer & Kaslow attorneys at the number provided on the mailer, but received no response.

A couple of hours after I posted my “warning” my phone started ringing off the hook.  Several people were calling to tell me that the mailer was not sent out by Kraner & Kaslow, but rather was a rouge marketing effort by someone not authorized to use the Kramer & Kaslow name.

At first I was not persuaded and thought I should leave the post up until I received proof that Kramer & Kaslow were not, in fact, behind this deceptive mailer, but then someone I know at a reputable law firm called me and explained that my post was causing homeowners to contact the real Kramer & Kaslow and demand that the amounts they had paid as a retainer be returned.  They had read my post and wanted out on that basis alone.  They claimed that the lawsuit was real and that if I would just take down the post for a couple of hours, attorney Phillip would be calling me to straighten things out.

While I didn’t want to take down something that could protect homeowners from being taken advantage of, I also didn’t want to be the cause of homeowners withdrawing from a legitimate lawsuit because of a my critique of a mailer that wasn’t even sent out by the firm of Kramer & Kaslow.

I finally agreed, took the post down, and awaited Mr. Kramer’s call.

Two hours later I had still received no call from Phillip Kramer, but it was about 6:00 PM by that time, so I figured I’d wait until the following day, as anyone can get tied up and not be able to get to a call, no matter how important that call may be to one or both of the parties.

The next day I did receive a call from someone who identified himself as an employee of Kramer & Kaslow, telling me that he was trying to contact Mr. Kramer and that he would be calling me shortly.

In my original post, I said that I thought the mailer looked “extremely suspicious, and could be an illegal scam… because it appears to invite homeowners to participate in a SETTLEMENT, and presents such outcomes as a free and clear mortgage and up to $75,000 in monetary damages per individual participant.

I checked into this mass joinder lawsuit, and found that there had been no “settlement,” rather it was and is an ongoing lawsuit, and therefore I found the wording used in the mailer highly deceptive.

I also was informed by several homeowners that they had received phone calls from an auto-dialer, saying something to the effect of, “If you’re interested in finding out more about how you might get your home free and clear, press ‘1’”.

Law firms are not allowed to engage in outbound telemarketing, or solicit clients in this manner, and as I pointed out, if non-lawyers are doing this and being paid commissions as a result, this is called “running and capping and may involve fee splitting, and both practices are not legal for attorneys.”

I finished the post by urging homeowners to be “extremely careful before writing a check to Kramer & Kaslow, or anyone else suggesting that you pay to be part of a lawsuit promising a lucrative settlement, especially a free house, which is an extremely rare event.

I also mentioned that several attorneys had told me that there was and is an actual lawsuit filed, but that even if that were the case, it wouldn’t make the mailer in question, or the use of auto-dialers by a law firm in any way okay.

An Interview with Phillip Kramer, Attorney at Law

Phillip Kramer called me later in the day, apologizing for not speaking with me sooner, and assuring me that his firm didn’t send out or authorize the mailer I was warning consumers about, nor was his firm doing any telemarketing, or authorizing the use of auto-dialers or outbound telemarketing.

I asked Mr. Kramer if he would put something in writing and offered to publish it in my follow-up article clarifying why I had taken the “warning” down after just a few hours.  He said he would and in a subsequent email to me, he said the following:

“As we discussed, I became aware of the mass mailing piece bearing my firm’s name when I saw it on your website.  I immediately called the toll free number, was outraged to learn that the people handling the calls were falsely purporting to be with my firm, and I asked to speak with a supervisor.

I confirmed that the mailer was prepared by and sent by a law firm that I know.  The mailer was NOT approved by me.  I did NOT authorize the mailer.  I would NOT have authorized the mailer if I had been asked in advance.

My cases are progressing nicely, and I don’t need to mass market every homeowner.  I’d rather organically grow my client base.

I’m not opposed to representing a large number of clients in my mass joinder cases.  In fact, that is the idea of delivering economy of scale to clients and being able to properly litigate against banks.  However, I am opposed to careless and aggressive marketing campaigns, and I never was asked, nor did I approve, that law firm to market under my name, and/or to pose as my law firm when speaking with prospective clients.

In fact, I have never marketed these mass joinder cases, I have not approved any marketing under my name, nor have I authorized anyone to pose as me or to solicit prospective clients under my name.  As I become aware of people doing these things, I confront them and shut them down.

I know that Mitchell J. Stein feels the same way about people marketing under his name and he is also stopping offenders as he learns about them.”

After I received his statement, I sent him a few follow-up questions to ask if he’d like to clarify things further… he did, and he said he appreciated the opportunity.

Here’s what he said…

“I know of no outbound calling.  If asked, I would not approve of that.  I knew that some law firms wanted to send out mailers.  I have insisted that everyone comply with State Bar rules and that anything with my name must be pre-approved.  As of this date, no one has submitted any proposed marketing for my review.  That piece was done without my knowledge.

I am happy to pay a referral fee to other law firms.  I do not split fees, pay commissions, nor do I pay referral fees to non-lawyers.  I do not use cappers, and have never authorized anyone to robocall, telemarket, spam email, or undertake any mass marketing on my behalf.”

While we were discussing the merits of the lawsuits he was filing, which I’ll discuss in a moment, he mentioned that he had just hired a compliance attorney to train all staff attorneys at his firm.  I asked him to send me something in writing so I could describe the sales process in his own words.  Here’s what I received:

“I have recently hired a compliance attorney.  He is currently hiring and training a staff of lawyers to call all new prospective clients.

I will not take on a new client unless I have a licensed attorney speak with the prospective client, make certain that the prospective client understands the risks — and acknowledges that joining the case is not a substitute for making payments to the lender, etc.

If a prospective client does not understand the nature of what we can and cannot do, or if someone has made false statements and the prospective client has unrealistic expectations, we are not accepting them as clients.”

Well, that’s pretty clear, I would think.  And that’s why I agreed to take down my post last week that “warned” homeowners… to give Mr. Kramer a chance to state in no uncertain terms that the mailer shown above and the reported telemarketing efforts were not coming from his firm, Kramer and Kaslow.  And that he, nor attorney Mitchell Stein, in any way endorse any illegal marketing activities, such as capping or fee-splitting… which are both illegal ways of compensating non-lawyers for bringing clients to a law firm.

It’s great to hear that Kramer and Kaslow will do everything they can to put a stop to such rogue efforts, but that doesn’t mean that the mailer or auto-dialer are okay… they’re not.  And from checking online, there are clearly dozens of other obviously unauthorized marketing efforts out there… and homeowners should take care to avoid them.

The bottom-line is… NEVER hire a law firm unless you’re talking to that law firm and can speak with a lawyer employed by that law firm before you do.  Don’t get scammed by someone who is NOT AUTHORIZED by Kramer and Kaslow… in fact, I think you should report those you suspect of unauthorized marketing activities and violations to the laws governing attorney marketing to offices of Kramer and Kaslow… at the very least.

Commentary on the Kramer and Kaslow Mass Joinder Case Itself…

Now, before I say anything… let me be very clear… I’m not an attorney and therefore I am not qualified to assess whether a given lawsuit is a good one or not, or right for you or not… so at the end of the day, homeowners have to make their own assessment and decision as to whether they want to participate or not.  All I can do is share my thoughts and ask around as to what others might think…

As I understand it, the cost to participate in the suit is about $5,000.  For some, that may sound like a cheap way to sue a bank, while for others it may be too much to gamble.  Because I think it’s worth noting that it is both of those things… a lawsuit against a bank… and a gamble.

The case at the core of the Kramer and Kaslow mass joinder lawsuit is: Ronald vs. Bank of America.  Basically, the case accuses Countrywide (subsequent cases being filed include Citibank, One West, GMAC/Ally Bank, and perhaps others) of perpetrating a massive fraud upon homeowners by knowingly inflating appraisals, creating a bubble the bank knew would pop and leave homeowner equity devastated, violate privacy statutes, and then Civil Code sections when they refused to modify… you get the idea.

The case says that Countrywide execs knew and did it anyway in order to make zillions of dollars securitizing the loans and therefore only others would incur the future losses.

Here’s an overview of what the third amended complaint says in its Introduction section:

2. This action seeks remedies for the foregoing improper activities, including a massive fraud perpetrated upon Plaintiffs and other borrowers by the Countrywide Defendants that devastated the values of their residences, in most cases resulting in Plaintiffs’ loss of all or substantially all of their net worths.

6. Hand-in-hand with its fraudulently-obtained mortgages, Mozilo and others at Countrywide hatched a plan to “pool” the foregoing mortgages and sell the pools for inflated value. Rapidly, these two intertwined schemes grew into a brazen plan to disregard underwriting standards and fraudulently inflate property values – county-by- county, city-by-city, person-by-person – in order to take business from legitimate mortgage-providers, and moved on to massive securities fraud hand-in-hand with concealment from, and deception of, Plaintiffs and other mortgagees on an unprecedented scale.

7. From as early as 2004, Countrywide’s senior management led by Mozilo knew the scheme would cause a liquidity crisis that would devastate Plaintiffs’ home values and net worths. But, they didn’t care, because their plan was based on insider trading – pumping for as long as they could and then dumping before the truth came out and Plaintiffs’ losses were locked in.

9. It is now all too clear that this was the ultimate high-stakes fraudulent investment scheme of the last decade. Couched in banking and securities jargon, the deceptive gamble with consumers’ primary assets – their homes – was nothing more than a financial fraud perpetrated by Defendants and others on a scale never before seen. This scheme led directly to a mortgage meltdown in California that was substantially worse than any economic problems facing the rest of the United States. From 2008 to the present, Californians’ home values decreased by considerably more than most other areas in the United States as a direct and proximate result of the Defendants’ scheme set forth herein.

This massive fraudulent scheme was a disaster both foreseen by Countrywide and waiting to happen. Defendants knew it, and yet Defendants still induced the Plaintiffs into their scheme without telling them.

10. As a result, Plaintiffs lost their equity in their homes, their credit ratings and histories were damaged or destroyed, and Plaintiffs incurred material other costs and expenses, described herein. At the same time, Defendants took from Plaintiffs and other borrowers billions of dollars in interest payments and fees and generated billions of dollars in profits by selling their loans at inflated values.

14. Since the time Plaintiffs filed the initial Complaint herein, Defendants’ improper acts have continued, including, inter alia: (i) issuing Notices of Default in violation of Cal. Civil Code §2923.5; (ii) misrepresenting their intention to arrange loan modifications for Plaintiffs, while in fact creating abusive roadblocks to deprive Plaintiffs of their legal rights; and (iii) engaging in intrinsic fraud in this Court and in Kentucky by stalling in addressing Plaintiffs’ legitimate requests to cancel notices of default and for loan modifications, and by refusing to respond, in any way, to Plaintiffs’ privacy causes of action.

Now, there’s no question… this is a real lawsuit.  Some attorneys believe it will be a very difficult case to win, while others think it’s quite viable and likely to settle.  I can see both sides of that argument.

On one hand, it would seem difficult to prove that Countrywide caused the housing bubble; there were certainly many parties involved and numerous other contributing factors as well.  On the other hand, the case has numerous aspects that are unquestionably true and certainly wrong.

Then there’s what’s known as “the banker factor.”  Actually, I’m making that up, but you know what I mean.  The banks aren’t going to lay down for this as it would open an enormous can of litigating worms… so they have to fight… or is there no percentage in that either?  Well, now you’ve seen first hand why I chose not to go to law school.

I really haven’t the foggiest idea what’s going to happen… and neither does anyone else.

But then, Columbus couldn’t exactly stop and ask for directions either, which, it’s worth noting is why, when sailing for The New World, he landed in the Bahamas and named them San Salvador, but assumed he had found the Indies so he named the native people Indians (leading me to always wonder what he would have named them had he not gotten so hopelessly lost.)

(What if his favorite word was “Jujubees,” and he had named the natives “Jujubees?”  Then I would have grown up playing Cowboys & Jujubees?)

So, since no one can know what’s going to happen in the future of this case, I thought I’d take a look at where it is today.  From a review of the Los Angeles Superior Court’s online records database we find these events have transpired to-date or are set for the near future…

1. Original complaint was filed in March 2009.

2. First amended complaint was in June of 2009.

3. Second amended complaint March 2010.

4. August 2010: the banks try to remove the case to federal court, but fail.

5. Third amended complaint was filed July 7, 2010.

6. The defendant banksters have demurred again, but it doesn’t appear that the demurs filed in December have been heard.

7. Status conference set for Thursday, February 3rd, 2011.

8. There is a hearing date scheduled for March 29, 2011, but it’s not clear to me what will be happening at that hearing.

So, this is their third “amended complaint.”  That means the defendants… the banks… have demurred twice.  That means that the banks have come to court claiming that the mass joinder plaintiffs don’t state a cause of action… or in other words saying the plaintiffs have no case… and the court has allowed the plaintiffs to amend the complaint three times so far.

Like almost everything in the law, I guess you could read that a couple of different ways.  On one hand it seems positive… the case brought by the mass joinder plaintiffs has not been tossed out by the judge yet.  That’s good, right?

On the other hand… the court could “sustain the demur without leave to amend,” in which case the mass joinder suit would be over and done.

And that’s why litigating is always a gamble, and by no means a sure thing.

Here’s an oversimplified look at the mass joinder’s causes of action.

First Cause of Action… Fraudulent Concealment – This is saying that the bank was hiding things from the borrowers.

Second Cause of Action… Intentional Misrepresentation – This is lying when you knew you were lying.  In other words, you knew an appraisal was wrong… it came in at $500,000, but you knew it was worth $400,000 and you passed it off anyway.

Third Cause of Action… Negligent Misrepresentation – This is like saying that you’re lying but it wasn’t intentional.  Let’s say that you ordered an appraisal but never really looked at the appraisal to make sure it was done correctly.  You include this cause of action in case the conduct doesn’t rise to the level of intentional misrepresentation, and perhaps because some insurance policies don’t cover intentional acts.

Fourth Cause if Action… Invasion of Constitutional Right to Privacy – This is saying that the banks disclosed personal information… perhaps when selling the loans to another investor.

Fifth Cause of Action… Violation of California Financial Information Privacy Act – See above or read the actual complaint.

Sixth Cause of Action… Civil Code 2923.5 – Defendants are prohibited by statute from recording a Notice of Default against the primary residential property of any Californian without first making contact with that person as required under § 2923.5 and then interacting with that person in the manner set forth in detail under § 2923.5.  Nothing special here, but its been upheld by other courts in California.

Seventh Cause of Action… Civil Code 1798 – When they gave away your private information, they didn’t tell you they did it?  Defendants failed to timely disclose to Plaintiffs the disclosure of their personal information as required under California Civil Code § 1798.82

Eighth Cause of Action… Unfair Competition Against All Defendants – Defendants’ actions in implementing and perpetrating their fraudulent scheme of inducing Plaintiffs to accept mortgages for which they were not qualified based on inflated property valuations and undisclosed disregard of their own underwriting standards and the sale of overpriced collateralized mortgage pools, all the while knowing that the plan would crash and burn, taking the Plaintiffs down and costing them the equity in their homes and other damages, violates numerous federal and state statutes and common law protections enacted for consumer protection, privacy, trade disclosure, and fair trade and commerce.

In Conclusion…

Attorney Phillip Kramer, in his own words, made it quite clear that his firm was not responsible for the mailer I received or the telemarketing about which I’ve been notified.  Once again, he says…

“I know of no outbound calling.  If asked, I would not approve of that.  I knew that some law firms wanted to send out mailers.  I have insisted that everyone comply with State Bar rules and that anything with my name must be pre-approved.  As of this date, no one has submitted any proposed marketing for my review.  That piece was done without my knowledge.

I am happy to pay a referral fee to other law firms.  I do not split fees, pay commissions, nor do I pay referral fees to non-lawyers.  I do not use cappers, and have never authorized anyone to robocall, telemarket, spam email, or undertake any mass marketing on my behalf.”

So, if you want more information from Kramer and Kaslow about the “mass joinder” lawsuit, there’s only one way to get it… from the source’s mouth at Kramer & Kaslow.  And nowhere else, because no other marketing efforts have been approved, according to Mr. Kramer.

As to the law suit… it’s a real lawsuit… and I’ll be following it closely here on Mandelman Matters, you can count on that.

Mandelman out.

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