LPS fires back with motion seeking sanctions against Alabama attorney
A division of Lender Processing Solutions (LPS) wants a court to issue sanctions and an injunction against Alabama attorney Nick Wooten for allegedly using confidential company information to file multiple lawsuits against LPS and disparaging the company. Jacksonville, Fla.-based LPS, a provider of technology and services to the mortgage and real estate industry, filed the motion late Monday in the Larry David Wood and Karen Wilborn Wood lawsuit against Option One Mortgage Corp. — a bankruptcy case pending in DeKalb County, Ala. LPS' motion alleges that Wooten took confidential information that he received in the Wood case and then systematically used that confidential information to file multiple "cookie cutter" lawsuits against LPS in Alabama, Mississippi, Florida and Kentucky. LPS also claims he violated a "nondisparagement" addendum multiple times with scandalous allegations, even referring to LPS and its division LPS Default Solutions as the proverbial "devil himself" in court pleadings. LPS asked the court for an injunction that would prevent Wooten from using the confidential information he gained in the Wood case in his other lawsuits. "In these cases, Mr. Wooten makes broad sweeping legal allegations with no allegations of fact relating to the specific plaintiffs, but merely files identical pleadings alleging these defendants are somehow involved in an illegal fee-splitting scheme with various law firms within those states," the LPS motion read. Wooten has been the source of recent media coverage, including coverage in HousingWire, the Birmingham News in Alabama and several blogs. He accuses the $2.4 billion firm of an illegal fee-splitting scheme with default services attorneys who handle foreclosure cases on behalf of lenders using LPS' technology platform. LPS alleges that the media coverage harmed its reputation and will continue to do so if Wooten isn't stopped. On Tuesday, Wooten denied LPS' allegations. "LPS is a bully," he said. "I've always stood up to bullies, and I'll be standing up to this one. I don't think this motion is going to go very far." The 150-plus page court motion, however, argues that Wooten "has attached, filed, cited, quoted and utilized not only the deposition transcript of Bill Newland from this case, but also the default services agreement, which itself is a confidential and proprietary business contract between Fidelity (National Information Services) and Option One." Bill Newland is an executive employed at LPS. Wooten and LPS entered into a confidentiality agreement in the Wood case in May 2010, according to the court filing. That agreement stated that any material in the case deemed proprietary, private or commercially sensitive by either party would be kept secret. The confidential material obtained by Wooten in the case was to only be used to litigate the Wood case, and was not to be disclosed to any parties not connected to that case, unless written permission was first sought and obtained. Newland's testimony, it was noted, was admitted by the court as a confidential item. LPS also explicitly designated its default services agreement as confidential. Wooten claims that the Newland deposition was distributed to over 2,000 lawyers a year before anyone asked for confidentiality, noting that it was taken in June 2009. "They knew and have known that deposition has been all over the country. It's got more frequent flier miles than Delta airlines and every passenger they have booked," he said. He also claims that he hasn't disclosed the default services agreement other than two to three sentences based on personal knowledge. Another document at issue, the attorney network agreement, was obtained via informal discovery from an insurance carrier, according to Wooten. LPS, on the other hand, contends that its confidentiality agreement and court privacy order with Wooten is broad. The privacy order covers all "documents, information, material, files, email, videotapes, photographs, drawings, or other things produced in this action," according to the original court order in the Wood case, signed by both LPS and Wooten. "Once so designated by any party, the document shall be considered "confidential material" subject to the terms of this protective order," language in the signed document reads. The first Wooten case against LPS to be litigated in full, Wells Fargo Bank v. Edward J. Thomas, et al v. Lender Processing Services, resulted in a summary judgment against Wooten's clients, LPS notes in its filing, saying the judge found no basis in fact for Wooten's claims. A second case which received media coverage, U.S. Bank v. Erica Congress, also resulted in Wooten losing the "standing" issue that he's argued in other cases, including the Wood case. After the Congress ruling, what LPS alleges was a "desperate Wooten" sent an email to LPS attorneys seeking to settle every case he had in Alabama for $5,000 per case — with the exception of the Wood case. He threatened to file multiple lawsuits against LPS around the country if they didn't comply, LPS alleges in its motion. The Wooten email, dated Feb. 24, and sent to two attorneys representing LPS, refers to a recent filing LPS made in the "Thomas" case. It is included in the hundreds of pages of exhibits that LPS included in its filing. Wooten, when asked by HousingWire about the $5,000 figure, said LPS was considered an ancillary defendant in the particular cases in question. In his Feb. 24 email to LPS attorneys, Wooten says if LPS did not agree to his offer of settlement, he'd seek an injunction against LPS on any default services related matter in Alabama and disgorgement of fees paid in state court matters. Wooten also notes in the email that he had recently decided to abandon all of his previous individual foreclosure cases — or about 85% of his files — based on the unfavorable ruling in the U.S. Bank v. Congress case. "However, I am far from done with LPS and they need to make a collective decision about just how far they want to go with this because I can have and will have about 30 statewide class actions filed against them in similar and like fashion in the next 60 days if this is the road they want to travel," Wooten writes in the email. "If they want to go to war make sure they know that I lost 85% of the files in my office yesterday and I now have lots of time to spend on them and no distractions." In an April 22 interview with HousingWire on recent suits against LPS, Wooten said he expected to file another 10 to 12 lawsuits against the company within the next month. HousingWire began writing about Wooten's fee-splitting allegations last fall. It also wrote about the Harris case back in 2008. LPS also notes in court documents that it already prevailed in two cases that previously alleged illegal fee splitting with attorneys: the Mattie Harris case in Texas, which was dismissed in 2008, and in re: Foster, a Kentucky case that was also dismissed in February. On Monday, Stephens Inc. lowered its earnings estimate for LPS' upcoming first quarter report based on macroeconomic factors, but analysts at the firm also questioned the wisdom of Wooten's various suits, saying it was unlikely that 200 attorneys would all be in cahoots in an alleged fee-splitting scheme. Along with more than a dozen large mortgage servicers, LPS recently signed a consent order with regulators to establish new foreclosure processes following a federal investigation. LPS also announced plans to hire an outside firm to study the company's default management businesses and document execution practices. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.