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Posts published in April 2017

Fla. Court (11th Jud Cir) Holds Borrower’s Heir Could Raise Statute of Limitations Defense in Foreclosure

The Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida recently dismissed a second foreclosure complaint, filed more than five years after the initial complaint and alleging the same incident of default, as barred by the statute of limitations. In so ruling, the Court also held that the borrower’s daughter and sole beneficiary to the property encumbered by a reverse mortgage had standing to assert the statute of limitations defense. A copy of the opinion in Reverse Mortgage Solutions, Inc. v. Estate of Ruby Hayes is available at:  Link to Opinion. In October 2007, a borrower…

7th Cir. Holds Debt Collectors Did Not Violate FDCPA by Demanding Prejudgment Interest Under Wisconsin Law

The U.S. Court of Appeals for the Seventh Circuit recently held that two debt collectors were entitled to demand payment for both principal amounts owed and interest under Wisconsin law. Therefore, the Court held, the debt collectors’ dunning letters demanding the principal sums owed and 5 percent per annum interest did not violate the federal Fair Debt Collection Practices Act, even where the demand was made prejudgment. A copy of the opinion in Aker v. Collection Associates, LTD. is available at:  Link to Opinion. After the consumer plaintiffs failed to pay their bill for medical services received, their providers referred…

9th Cir. Rejects Debtor’s Attempt to Avoid SBA Judgment by Disclaiming Inheritance

The U.S. Court of Appeals for the Ninth Circuit recently affirmed the district court’s judgment in favor of the U.S. Small Business Administration in a Federal Debt Collection Procedures Act (FDCPA) lawsuit the SBA filed against a loan guarantor to satisfy a default judgment assigned to it after the guarantor disclaimed an inheritance to avoid paying the judgment. The Federal Debt Collection Procedures Act, 28 U.S.C. §3001 et seq., which governs the collection of money owed to the U.S. government, should not be confused with the federal Fair Debt Collection Practices Act, which is found at 15 U.S.C. §1692 et…

Fla. App. Court (4th DCA) Holds Post-Foreclosure Deficiency Action Not Affected By Publication Service in Foreclosure

The District Court of Appeal of the State of Florida, Fourth District, recently held that a creditor may obtain a post-foreclosure deficiency judgment against a borrower when the borrower was personally served with process in the post-foreclosure deficiency action, and the fact that the foreclosure court only acquired in rem jurisdiction due to service by publication in the prior foreclosure did not matter. In addition, the Appellate Court held that section 702.06, Florida Statutes, which governs deficiency judgments, is unambiguous and allows a separate suit to recover a deficiency where the foreclosure judgment did not adjudicate a claim for a…

Illinois App. Court (1st Dist) Holds Potential Chicago Foreclosure Tenant Ordinance Violation Precluded Eviction

The Appellate Court of Illinois, First District, recently reversed a summary judgment ruling in favor of a mortgagee on its post-foreclosure forcible entry and detainer claim, finding genuine disputes as to material facts where the tenant presented evidence that she was a qualified tenant under the Chicago Protecting Tenants in Foreclosed Rental Property Ordinance, and that the mortgagee did not pay her the $10,600 relocation assistance fee required by the ordinance. A copy of the opinion in Wells Fargo Bank, N.A. v. McCondichie is available at:  Link to Opinion. A mortgagee became the owner of the subject property pursuant to…

9th Cir. Holds Mortgagee’s ‘Sold Out Second’ Claim Not Barred by California’s 4-Year Statute of Limitations

The U.S. Court of Appeals for the Ninth Circuit recently reversed a ruling that disallowed an unsecured creditor’s claim filed in a California bankruptcy court based on the forum state’s statute of limitations. In so ruling, the Ninth Circuit held that, although courts typically apply the forum state’s statute of limitations if the contract is silent on the issue, exceptional circumstances warranted the application of a longer statute of limitations here, because the creditor had no option but to enforce its claim in the forum based on where the bankruptcy petition was filed. A copy of the opinion in PNC…

8th Cir. Holds ‘Citizen’ Does Not Equal ‘Resident’ Under CAFA’s ‘Local Controversy’ Exception

The U.S. Court of Appeals for the Eighth Circuit recently held that “citizen” is not synonymous with “resident” under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d), such that the class action lawsuit at issue could not be remanded to state court under CAFA’s “local controversy” exception but rather should remain in federal court. A copy of the opinion in Tammy Hargett v. St. Bernard’s Hospital Inc, et al is available at:  Link to Opinion. The plaintiff was injured in a car accident and received treatment at a hospital, which required her to assign her Medicaid beneficiary rights to it. The hospital later contracted with…

8th Cir. Upholds Exclusion of ‘Similar Borrower’ Testimony in 8-to-1 Punitive Damages Award Case

The U.S. Court of Appeals for the Eighth Circuit recently affirmed a punitive damages award in an approximately 8-to-1 ratio to compensatory damages to a borrower who sued her mortgage loan servicer for alleged common law invasion of privacy and for allegedly violating the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA) and the Real Estate Settlement Procedures Act (RESPA). In so ruling, the Court also held that the trial court properly excluded the testimony of a non-party consumer who was supposedly treated similarly by the servicer to rebut the servicer’s assertions of good faith conduct,…

11th Cir. Holds Failure to File Proof of Claim in Receivership Does Not Extinguish Security Interest

The U.S. Court of Appeals for the Eleventh Circuit recently held that a court cannot extinguish a secured creditor’s state-law security interests for failure to file a proof of claim during the administration of an equity receivership over entities involved in a Ponzi scheme. A copy of the opinion in Securities and Exchange Commission v. Wells Fargo Bank is available at:  Link to Opinion. The U.S. Securities and Exchange Commission filed an action seeking the appointment of an equity receiver following the collapse of a Ponzi scheme.  The trial court appointed a receiver to “marshal and safeguard” the defendants’ assets…

Stating Intent Not to Sue in Letter Collecting ‘Time-Barred’ Debt Violates FDCPA Without Proper Disclosures, Says 7th Cir.

A debt buying company’s letter to collect a debt subject to the defense of an expired limitations period was found to violate the federal Fair Debt Collection Practices Act because it failed to disclose that 1) a payment or promise can revive the limitations period; and, 2) the law limits or prohibits the debt collector from suing to collect the debt. The U.S. Court of Appeals for the Seventh Circuit reached this decision even though the letter stated: “Because of the age of your debt, we will not sue you for it and we will not report it to any…

CD Calif. Cites Lack of Clear Regulatory Guidance in Dismissing ADA Claims Relating to Website Accommodations for Visually-Impaired

The U.S. District Court for the Central District of California recently dismissed a claim brought under the federal Americans with Disabilities Act (ADA) brought by a visually-impaired plaintiff who alleged that the defendant pizza company’s website did not permit users to complete their purchases using a screen-reading software program.  The plaintiff also alleged that the company’s mobile app did not allow him to access the menu on his iPhone using a particular software. In dismissing the action without prejudice, the Court concluded that there were no regulations clarifying what web accessibility accommodations are required under the ADA.  Thus, the Court…

2nd Cir. Holds Payoff Statement Stating ‘Amount Due May Include’ Estimated Fees, Costs Violates FDCPA

The U.S. Court of Appeals for the Second Circuit recently reinstated a complaint alleging a debt collector violated the federal Fair Debt Collection Practices Act when it sent a payoff statement containing unaccrued fees and costs without providing any information as to how those fees were calculated or any basis for those fees and costs. In so ruling, the Second Circuit was careful to note that a payoff statement may contain estimated fees and costs if the information in the statement would allow the least sophisticated consumer to determine the minimum amount she owed at the time of the notice,…