Thursday, July 25, 2002
Buyers celebrate bank deal
Settlement gives Chesley a quick reason to crow
By James McNair, email@example.com
The Cincinnati Enquirer
Charles and Sherry Mitchell were happy homeowners and Stan Chesley was in full bloom as the class-action lawyer who kept the banks from seizing the Mitchells' house.
As part of its asset sale to Bank of Kentucky, Peoples Bank of Northern Kentucky agreed to front $16.8 million into an escrow account for the Mitchells and 208 other buyers whose Erpenbeck-built houses still have construction mortgages on them. The loans were supposed to have been paid off when the 209 buyers closed. But the money ended up in the Erpenbeck Co.'s accounts at Peoples.
For a court case that could have dragged on for years, it was a landmark settlement. Mr. Mitchell, a 64-year-old retired Covington policeman, appeared overwhelmed Tuesday by the sudden end to his legal nightmare. In contrast, it afforded Mr. Chesley, whose class-action gambits invariably expand his celebrity, the opportunity to revel in his role as a champion for victims en masse.
This is a moment in history, in my opinion, for litigants in a class action, he said. It's proof that the system works.
The 209 homeowners are scattered throughout the Tristate in several Erpenbeck developments. The Mitchells' 2,000-square-foot house was in the Claiborne subdivision in Independence. More than half a year after financing the $197,000 purchase through a mortgage lender last October, the couple learned that Kenwood Savings Bank, Erpenbeck's construction lender, still had a $139,000 first mortgage on the house.
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We worked real hard the last year and a half for that house. I worked extra jobs and through the summer, Mr. Mitchell said during a news conference at Mr. Chesley's downtown Cincinnati office around a 26-person conference table. I guess I set aside in the neighborhood of about $7,000 in cash to get into this house. To us, it was a lot of money.
Mr. Mitchell was all set for a drawn-out legal battle one complicated by the admission of at least 60 additional, heavily lawyered parties in the Boone County civil case. He said he didn't know of the proposed settlement until 45 minutes before the news conference.
It happened real fast, he said. It was a lot sooner than I expected and, of course, I'm pleased for me and my wife and the 200 other homeowners.
The last couple of weeks, it was really bad for us psychologically, but it's been a lot easier on us since (lawyers) Brandon Voelker and Stan Chesley got involved, he said.
Mr. Chesley drilled home the accomplishment of winning a 100 percent settlement and obtaining a separate concession from Peoples for legal fees in less than 90 days. Boone County Circuit Judge Jay Bamberger will decide how much Mr. Chesley and Mr. Voelker will be paid.
The combination of filing a class-action suit and playing rough and tough, Mr. Chesley said, led to the victory for his 209 clients.
It's no coincidence that the bank sold their assets, he said. Can you imagine what would have happened to these people if they went to the bank and were told that only lien holders had legal standing?
Mr. Chesley said he wouldn't drop his lawsuit against Peoples until the Federal Deposit Insurance Corp. approves the asset sale, the $16.8 million is placed in escrow and the mortgages are released. In the meantime, he said he will be assisting Peoples Bank in its case against third parties. And he served notice that additional lawsuits might be in store.
We're looking at some people nobody's looking at, he said. It's remarkable that this scam went on 2 1/2 years. That's a long time for banks not to speak up and say, "Where's my money?'
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