Litigation
Jun. 18, 2015
Brown's move after he's told to return $331 million
A judge's noncompulsory ruling that Gov. Jerry Brown improperly raided $331 million from a fund set up to help homeowners avoid foreclosure leaves open the door for several responses from the governor.
Daily Journal Staff Writer
A judge's noncompulsory ruling that Gov. Jerry Brown improperly raided $331 million
from a fund set up to help homeowners avoid foreclosure leaves open the door for several
responses from the governor.
Superior Court Judge Timothy F. Frawley of Sacramento sided with three nonprofits
that argued the governor filled budget holes in 2012 with funds from a settlement
with several financial institutions accused of mortgage servicing improprieties.
Frawley's ruling Friday came at the same time lawmakers were hammering out final details
of next year's budget, leaving them no time to consider how to replace the money.
Adding to the uncertainty was the reluctance of the state court to meddle in legislative
functions, attorneys said. Frawley stopped just short of making his ruling compulsory.
The judge told the state to return the money "as soon as there is sufficient appropriation
'reasonably' and 'generally' available for such a purpose."
"We're very hopeful that the governor will do the right thing," said Rick Richmond,
of Jenner & Block, who represented the National Asian American Coalition, the COR
Community Development Corporation and the National Hispanic Christian Leadership Conference.
Also still undetermined is whether the state will appeal Frawley's ruling. The governor's
spokesperson and his lawyer on the case, Robin B. Johansen of Remcho, Johansen & Purcell,
did not return calls seeking comment.
H.D. Palmer, spokesman for the Department of Finance, called Frawley's ruling "interesting."
"We are still determining what steps to take and whether or not to appeal the decision,"
he said.
Palmer said he does not expect the ruling to impact the current budget negotiations.
The $331 million came from a $25 billion settlement the states negotiated with some
of the nation's biggest banks in the wake of the mortgage crisis. The money arrive
when states were cash-starved from the recession. More than a dozen raided the fund
for other purposes despite the fact the money was designated for distressed homeowners.
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Andy Serbe
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