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Posts published by “Jeffrey Karek”

NJ Supreme Court Holds Invalidity of Transaction as a Whole Does Not Negate Arbitration Agreement

The Supreme Court of New Jersey held that where a plaintiff challenges the validity of a transaction as a whole and not specifically the arbitration agreement that is included as part of a transaction, the plaintiff must arbitrate their claims because an arbitration agreement is severable and enforceable, notwithstanding a plaintiff’s general claims about the invalidity of the transaction as a whole. Accordingly, the judgment of the appellate court was reversed and the trial court orders compelling arbitration were reinstated. A copy of the opinion in Goffe v. Foulke Management Corp. is available at:  Link to Opinion. The plaintiffs each purchased cars…

DC Cir. Rules in Favor of Bank in Deposit Account Loss Claim

The U.S. Court of Appeals for the D.C. Circuit held recently that plaintiffs failed to offer sufficient evidence to create a genuine dispute of fact as to their accounting and fraudulent concealment claims against a bank based on the disappearance of funds from a savings account that was closed 12 years before the lawsuit was filed. Specifically, the Circuit Court determined that the plaintiffs did not demonstrate the existence of a fiduciary relationship as required for their accounting claim, and they did not establish the detrimental reliance element of their fraudulent concealment claim. Accordingly, the Circuit Court affirmed the trial…

2nd Cir. Holds Common Fund Principles Apply Even in Fee-Shifting Class Actions

The U.S. Court of Appeals for the Second Circuit held that even if a class action case is brought pursuant to a fee-shifting statute, common-fund principles control fee awards authorized from a common fund, and a common-fund fee award may be calculated as the lodestar or as a percentage of the common fund. Accordingly, the Second Circuit affirmed the trial court’s ruling finding that lead plaintiff’s counsel was entitled to its requested fee and expense award. A copy of the opinion in Fresno County Employees’ Retirement Association v. Isaacson/Weaver Family Trust is available at:  Link to Opinion. This case involved…

Texas Supreme Court Upholds Contractual Waiver of Statute of Limitations for Deficiency Claims

The Supreme Court of Texas held that the contractual waiver of the statute of limitations on deficiency claims contained in a guaranty agreement was sufficiently “specific and for a reasonable time” as to be enforceable and not void as against public policy. Accordingly, the Texas Supreme Court affirmed the ruling of the appellate court, although it disagreed with portions of the appellate court’s reasoning. A copy of the opinion in Godoy v. Wells Fargo Bank, NA is available at:  Link to Opinion. The lender extended a loan to the borrower, which loan was secured by property owned by the borrower.  A guarantor…

SCOTUS Holds Ambiguous Agreement Not Enough for Classwide Arbitration

In a 5-4 decision, the Supreme Court of the United States  recently held that under the Federal Arbitration Act (FAA), an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. Accordingly, the contrary ruling of the Ninth Circuit was reversed and the matter was remanded to the trial court for further proceedings. A copy of the opinion in Lamps Plus, Inc. v. Varela is available at:  Link to Opinion. The defendant company sells light fixtures and related products.  In 2016, a hacker impersonating a company official tricked a company employee into…

9th Cir. Holds That Citizenship of Bank Acting as Trustee Generally Controls for Diversity Purposes

The U.S. Court of Appeals for the Ninth Circuit held that the Supreme Court of the United States’ decision in Americold Realty Trust v. ConAgra Foods, Inc. did not upset the Supreme Court’s prior holding in Navarro Ass’n v. Lee, and that “when a trustee files a lawsuit or is sued in her own name her citizenship is all that matters for diversity purposes.” Accordingly, the Ninth Circuit held that the trial court properly exercised its jurisdiction over the matter where the bank — acting as trustee — was sued in its own name, and along with the other named…

2nd Cir. Holds FDCPA Does Not Require Itemization of ‘Amount of the Debt’

The U.S. Court of Appeals for the Second Circuit held that a debt collection letter that informs the consumer of the total, present quantity of his or her debt satisfies section 1692g of the federal Fair Debt Collection Practices Act (FDCPA) notwithstanding its failure to inform the consumer of the debt’s constituent components or the precise rates by which it might later increase. The Court further held that such a letter does not violate section 1692e of the FDCPA for failure to inform the consumer that his or her balance might increase due to interest or fees when the letter…

6th Cir. Rules Ohio Amendment on Defective Mortgage Executions Did Not Bar Bankruptcy Trustee’s Avoidance Action

The U.S. Court of Appeals for the Sixth Circuit held that a recent change to Ohio law involving notice of a defective lien had no bearing on a bankruptcy trustee’s ability to avoid the defective lien because such notice is irrelevant to a trustee’s status as a judicial lien creditor. Accordingly, the Sixth Circuit affirmed the Bankruptcy Appellate Panel’s upholding of the bankruptcy court’s denial of the mortgagee’s motion for judgment on the pleadings. A copy of the opinion in Donald Harker v. PNC Mortg. Co. is available at:  Link to Opinion. The borrowers filed a chapter 7 bankruptcy petition that included…

Illinois App. Court (1st Dist) Holds Borrower’s General Denial Insufficient to Avoid Summary Judgment in Foreclosure

The Appellate Court of Illinois, First District, recently held that a borrower’s general denial that the mortgagee performed the conditions precedent of the mortgage contract prior to filing a foreclosure action was insufficient under Illinois Supreme Court Rules and therefore constituted a forfeiture of the issue. Accordingly, the Appellate Court affirmed the ruling of the trial court granting summary judgment in favor of the mortgagee. A copy of the opinion in The Bank of New York Mellon v. Wojcik is available at:  Link to Opinion. After the borrower defaulted on her mortgage loan, the bank sent her a letter titled “Notice…

7th Cir. Holds Mere Need for Extrinsic Evidence to Interpret Ambiguous Contract May Not Be Enough to Avoid Class Cert.

The U.S. Court of Appeals for the Seventh Circuit held that merely requiring extrinsic evidence to interpret a provision of a form contract does not render class certification improper, and that absent a more thorough explanation of its reasoning from the trial court, it could not uphold the trial court’s ruling decertifying the class. As a result, the Seventh Circuit vacated the decision of the trial court and remanded for further proceedings. A copy of the opinion in Red Barn Motors, Inc. v. NextGear Capital, Inc. is available at:  Link to Opinion. The plaintiff auto dealerships entered into demand promissory note…

4th Cir. Holds Tax Payment Agreement Subject to TILA and EFTA, Plaintiff Had Spokeo Standing

The U.S. Court of Appeals for the Fourth Circuit held that a tax payment agreement entered into pursuant to Virginia Code section 58.1-3018 was a consumer credit transaction subject to the federal Truth in Lending Act and Electronic Funds Transfer Act. The Court further ruled that the plaintiff had standing to assert his EFTA claim, because the claim was not merely for “a bare procedural violation,” but instead alleged “a substantive violation of the rights conferred by EFTA.” Accordingly, the Fourth Circuit affirmed the trial court’s denial of the company’s motion to dismiss the TILA and EFTA claims. A copy…

5th Cir. Finds Ambiguity in Deed of Trust’s Provisions for Real Estate Taxes and Escrow

The U.S. Court of Appeals for the Fifth Circuit held that ambiguity in the deed of trust regarding the lender’s right to pay real estate taxes and establish an escrow account precluded entry of summary judgment in favor of the loan servicer on the borrower’s breach of contract claim. Additionally, the Court vacated a counterclaim for foreclosure in favor of the loan servicer and remanded the claim for reconsideration, noting that foreclosure would only be available if the servicer could show that it complied with contractual requirements. Finally, the Fifth Circuit affirmed the trial court’s rulings in favor of the…