Law.com
Petra Pasternak
05-14-2010

Nearly a year after the California Supreme Court sided with Bank of America by reversing a more than $1 billion judgment against it, the plaintiffs are trying to revive their class action.

They want to start over with an amended complaint -- and a San Francisco judge has given them the OK. Now Bank of America is trying to get the 1st District Court of Appeal to step in and declare an end to the almost 12-year-old litigation.

The 1st District and the Supreme Court "clearly dealt a death knell" to the litigation and intended that judgment be entered in favor of the bank, its lawyers at Morrison & Foerster argue in their writ petition. "The trial court swept away 12 years of litigation and fed two published appellate opinions into the shredder," they wrote.

The bank was sued in 1998 by Paul Miller, a disabled man who accused the bank of improperly tapping deposited Social Security and other benefits to cover overdraft fees and penalties. After getting a class of more than 1 million members certified, attorneys at the Sturdevant Law Firm and the Brandi Law Firm won at trial before Judge Anne Bouliane, who has since retired. The 1st District reversed, and was affirmed by the Supreme Court.

But when Miller v. Bank of America was remanded to San Francisco Superior Court Judge Curtis Karnow, the bank asked that judgment be entered in its favor -- and the plaintiffs asked to amend their complaint.

In his March ruling, Karnow allowed it.

With the two sides arguing over whether the appellate courts had ruled against Miller on just a "single account" theory, or also on the "two account" theory the plaintiffs want to focus on now, Karnow found that "The courts were silent on this issue: They overtly neither confirmed nor denied that both theories had been adjudicated."

The judge added that, while Bank of America accurately noted that the plaintiffs lawyers "swung for the fences" the first time around by arguing in the broadest possible terms that the bank's practices under either scenario went against case law, the plaintiffs' shift now doesn't amount to gamesmanship. "The fundamental explanation here is that Miller's lawyers were mistaken in their understanding of [Kruger v. Wells Fargo Bank]. Now that the law is clear, it is fair that the case be tried on the merits."

In BofA's briefs at the 1st District, though, MoFo insists that the two-account theory has been considered and denied. "After Mr. Miller lost on appeal, he asked first [the 1st District], then the Supreme Court, to modify their opinions based on his 'two-account' theory ... . Both requests were denied. The two-account theory had its day in court and is a dead issue," states the petition, signed by senior of counsel Miriam Vogel.

They also argue that Karnow's order denies the bank finality, violating its right to due process.

James Sturdevant argues in the plaintiffs' brief that the bank's writ petition is without merit in part because the bank itself put the spotlight on the single-account scenario. "At every pivotal point in the appellate proceedings in this case, the bank asserted that the only issue at stake was the legality of seizing exempt funds to recover overdrafts and overdraft [fees] from the same account."

The plaintiffs also say the defense should have asked the 1st District and the Supreme Court to spell out instructions to enter judgment for the bank if that's what it wanted.

The bank countered: "When the umpire calls the third strike for the third out at the end of the ninth inning, the game is over -- even if he doesn't say 'game over.'"