The U.S. Court of Appeals for the Fifth Circuit held that a refinance lender is not entitled to contractual subrogation where it does not have a valid deed of trust. Additionally, the Fifth Circuit certified the question of law to the Supreme Court of Texas regarding whether a lender is entitled to equitable subrogation where it failed to correct a curable constitutional defect in the loan documents under § 50 of the Texas Constitution. A copy of the opinion in Zepeda v. Federal Home Loan Mortgage Corp. is available at: Link to Opinion. In 2007, a borrower took out a…
Posts published in August 2019
The U.S. Court of Appeals for the Ninth Circuit recently reversed a trial court order remanding a case to state court for lack of jurisdiction under the federal Class Action Fairness Act (CAFA) because the jurisdictional allegations pleaded provided a short and plain statement of jurisdiction. The Court held this was sufficient, even without supporting evidence, to confer jurisdiction. A copy of the opinion in Ehrman v. Cox Communications, Inc. is available at: Link to Opinion. A plaintiff filed a class action complaint against a defendant in California state court claiming the defendant “had engaged in unlawful business practices related…
Lavallee v. Med-1 Solutions, LLC from the U.S. Court of Appeals for the Seventh Circuit examines whether an email from a debt collector was an “initial communication” and if it was, whether a clickable hyperlink serves as a proper means of providing the validation notice mandated by section 1692g(a) of the federal Fair Debt Collection Practices Act. These disclosures, sometimes called the “validation notice,” can be contained in what the FDCPA refers to as the “initial communication” or provided “in writing” within five days of the initial communication. While the debt collector was found to have violated the FDCPA, the decision…
The Court of Appeal for the Third District of California recently affirmed in part, and reversed in part, an order granting a mortgage servicer’s motion to dismiss several causes of action brought by plaintiff borrowers for denying their requests to modify their mortgage loan. The appellate court affirmed the dismissal as to the borrowers’ counts for breach of contract, negligence, and intentional infliction of emotional distress. However, it also held that the borrowers stated a valid cause of action under California’s Homeowner Bill of Rights, section 2923.6, and reversed as to that claim. Specifically, the appellate court concluded that the servicer’s…
The U.S. Court of Appeals for the Seventh Circuit recently reversed a trial court order determining that res judicata barred a borrower’s fraud claims against a bank. In so ruling, the Court held that res judicata should not apply in this case because in the first action the borrower was a defendant and raised the fraud claim before the bank voluntarily dismissed the case when the borrower learned of the fraud claims and threatened to allege them against the bank. A copy of the opinion in Doherty v. Federal Deposit Insurance Corporation is available at: Link to Opinion. A borrower…
Disagreeing with contrary rulings from the First and Sixth Districts, the California Court of Appeal for the Second District recently affirmed a trial court’s ruling that no duty of care is owed to a borrower during contract negotiations for a mortgage loan modification. A copy of the opinion in Sheen v. Wells Fargo Bank, N.A. is available at: Link to Opinion. In 1998, the plaintiff borrower obtained a $500,000 loan secured by a deed of trust (the “first loan”). The first loan is not at issue. In 2005, the borrower obtained two junior loans from the defendant bank in the amounts $167,820 (the…
The U.S. Court of Appeals for the Ninth Circuit recently held that class plaintiffs alleged a concrete and particularized harm sufficient to confer Article III standing where the defendant company’s alleged collection, use, and storage of the plaintiffs’ biometric information was the substantive harm targeted by the Illinois Biometric Information Privacy Act (BIPA), which statute protects the plaintiffs’ concrete privacy interests. The Ninth Circuit further held that the district court did not abuse its discretion in certifying the class. Accordingly, the Ninth Circuit affirmed the district court orders certifying the class, and denying the defendant’s motion to dismiss. A copy…
In a class action arising from a data breach at a retailer that resulted in the theft of millions of consumers’ credit card information, the U.S Court of Appeals for the Eleventh Circuit recently held that the fee arrangement included as part of the settlement was a fee-shifting contract and the constructive common fund doctrine did not apply, reversing as an abuse of discretion the trial court’s use of a fee multiplier in a fee-shifting case. A copy of the opinion in Northeastern Engineers Federal Credit Union, et al. v. Home Depot, Inc., et al. is available at: Link to Opinion.…
The U.S. Court of Appeals for the Second Circuit recently affirmed the dismissal of a claim under the federal Fair Debt Collection Practices Act holding that an FDCPA violation occurs, for the purposes of the FDCPA’s one year statute of limitations, when an individual is injured by the alleged unlawful conduct. In so ruling, the Second Circuit clarified that in Benzemann v. Citibank N.A., 806 F.3d 98 (2d Cir. 2015), it did not intend to expand the FDCPA’s statute of limitations by requiring individuals to be injured and receive “notice of the FDCPA violation.” A copy of the opinion in Benzemann…
The U.S. Court of Appeals for the Ninth Circuit held that where a company sent dispute letters to a credit reporting agency on behalf of a consumer, but the consumer did not identify the items to be disputed, review the letters, or otherwise play any role in preparing the letters, the letters did not come “directly” from the consumer, and the CRA was not required to conduct a reinvestigation under section 1681i of the federal Fair Credit Reporting Act (FCRA). As a result, the Ninth Circuit held that the CRA did not violate section 1681i, and also did not act…
The U.S. Court of Appeals for the Eighth Circuit recently reversed a trial court order dismissing a plaintiff’s complaint for lack of standing, holding that the plaintiff properly alleged an injury in fact because it claimed an economic harm to it that was concrete and personal to the plaintiff. In so ruling, the Eighth Circuit found that standing existed even if the claim may lack merit under the Missouri Uniform Fraudulent Transfer Act, because Article III standing is distinct from the merits of a state law claim. A copy of the opinion in Enterprise Financial Group Inc. v. Podhorn is…
The U.S. Court of Appeals for the Sixth Circuit recently affirmed dismissal of a homeowner’s claims under the federal Real Estate Settlement Procedures Act (RESPA), where the homeowner plaintiff only signed the mortgage, but not the note evidencing the loan. The Sixth Circuit’s holding reinforced that a plaintiff who does not have personal obligations under the loan agreement is not a “borrower,” and thus cannot assert claims under RESPA, which extends causes of action only to “borrowers.” A copy of the opinion in Keen v. Helson is available at: Link to Opinion. Husband and wife borrowers took out a loan secured by…