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Posts published in August 2016

Court Affirms Dismissal of Crawford Case for FDCPA ‘Time-Barred’ Proof of Claim, Case Was Itself ‘Time-Barred’

On July 10, 2014, the United States Court of Appeals for the Eleventh Circuit issued its opinion in Crawford v. LVNV Funding, LLC. That opinion began by decrying the “deluge” of proofs of claim filed by debt buyers on debts that are unenforceable under state statutes of limitations. It ended by holding that the filing of a “stale” claim in bankruptcy violates the Fair Debt Collection Practices Act. As expected, the Eleventh Circuit’s opinion led to another sort of deluge: numerous FDCPA claims based upon the filing of proofs of claim or other collector conduct in bankruptcy. While courts across…

Fla. App. Court Holds Florida ‘Notice of Assignment of Debt’ Not Applicable to Mortgage Lenders or Foreclosures

The District Court of Appeal of Florida, Second District, recently reversed a final summary judgment in borrowers’ favor, holding that section 559.715 of the Florida Consumer Collection Practices Act (FCCPA) does not apply to the holder of the note and is not an affirmative defense to foreclosure actions because it does not create a condition precedent to an action to foreclose the mortgage and enforce the note. A copy of the opinion in Deutsche Bank National Trust Company v. Hagstrom is available at:  Link to Opinion. A mortgagee filed a foreclosure action, attaching to the complaint a note and an allonge bearing…

7th Cir. Holds Junior Mortgagee is Necessary or Required Party to Illinois Foreclosure

The U.S. Court of Appeal for the Seventh Circuit recently held that a junior mortgagee is a necessary or “required party” to an Illinois foreclosure action, because the trial court could not “accord complete relief” under Fed. R. Civ. P. 19(a) to the plaintiff mortgagee without the junior mortgagee, as the junior mortgagee would still have an interest in the property. A copy of the opinion in U.S. Bank National Association v. Cheryle Collins-Fuller T. is available at:  Link to Opinion. A mortgagee filed a foreclosure action in federal court in Illinois based on diversity jurisdiction.  The mortgagee had its main office…

Illinois App. Court (2nd Dist) Holds Successive Actions on Same Guaranty Not Barred by Res Judicata

The Appellate Court of Illinois, Second District, recently rejected the arguments of two loan guarantors that a bank’s current claims against them were barred by res judicata because the current claims arose out of the same guaranty that the bank used to sue them in a prior action. In so ruling, the Court held that where a single guaranty contemplates multiple loan transactions, each loan transaction constitutes a distinct transaction implicating the guaranty. Therefore, the operative “transaction” for purposes of res judicata is each of the loans. A copy of the opinion in BMO Harris Bank, N.A., v. K & K…

Fla. App. Court (4th DCA) Reverses Sanctions Against Foreclosing Mortgagee as to Non-Signing Spouse

The District Court of Appeal of the State of Florida, Fourth District, recently reversed an order imposing sanctions against a foreclosing mortgagee, holding that the trial court erred in granting the motion for sanctions because the plaintiff mortgagee had an objectively reasonable belief that a non-signing spouse was a properly named defendant in the case. A copy of the opinion in Trust Mortgage, LLC v. Dina Ferlanti, et al is available at:  Link to Opinion. A mortgagee filed a foreclosure action against husband and wife borrowers. The note and mortgage reflected only the wife as the borrower, but the first page…

DC Circuit Rejects FDCPA ‘Meaningful Involvement’ and Related State-Law Claims

The U.S. Court of Appeals for the District of Columbia recently held that, under the federal Fair Debt Collection Practices Act (FDCPA), a collection letter from a law firm did not misrepresent any meaningful involvement by an attorney. Because the letter clearly stated that the law firm was acting as a debt collector, and that no attorney with the law firm had reviewed the debtor’s account, the D.C. Circuit held the letter was not deceptive as a matter of law. A copy of the opinion in Tawanda Jones v. David Dufek, Sr. is available at: Link to Opinion. A borrower owed…

Fla. App. Court (4th DCA) Reverses Dismissal of Foreclosure Based on ‘Unclean Hands’

The District Court of Appeal of the State of Florida, Fourth District, recently reversed the dismissal of a mortgage foreclosure action, holding that the trial court “erred in using the doctrine of unclean hands to dismiss the bank’s foreclosure action.” A copy of the opinion in Wells Fargo Bank, N.A. v. Williamson is available at:  Link to Opinion. The borrower defaulted on her mortgage and the mortgagee sued to foreclose. The borrower raised several defenses, including that “the original lender committed fraud and used unclean hands in securing the loan.”  Specifically, the borrower alleged that “the original lender’s loan consultant falsified…

Mass. SJC Holds HOA/COA May Obtain Successive 6-Month Priority Liens for Unpaid Common Expenses

The Supreme Judicial Court of Massachusetts recently held that a homeowners association may establish and enforce multiple contemporaneous liens for unpaid common expenses, each with a six-month period of priority over the first mortgage, by filing successive legal actions. A copy of the opinion in Drummer Boy Homes Association, Inc. v. Britton is available at:  Link to Opinion. The borrowers purchased a condominium unit, and later began withholding payment of their monthly common expense assessments because of a dispute concerning parking rules and related fines. The condominium association commenced an action to recover the unpaid common expenses and to enforce a…

10th Cir. Rejects Lender’s Title Insurance Action Involving Municipal Tax Lien

The U.S. Court of Appeals for the Tenth Circuit recently held that, under Utah law, only the actual levy of a municipal tax assessment on the property constitutes a defect in, or a lien or encumbrance on, title to the insured property. Because the levy of assessment at issue occurred after the title policy was issued, the Tenth Circuit held that the title insurance policy did not cover a loss incurred when a municipality foreclosed on the insured property. A copy of the opinion in BV Jordanelle, LLC v. Old Republic National Title Insurance Company is available at:  Link to Opinion. In…