By Brent Yarborough and Eric Rosenkoetter On June 13, the Bureau of Consumer Financial Protection issued a consent order with a holding company and its affiliated operating entities engaged in consumer lending. The consent order reflects the parties’ settlement of an administrative enforcement action that focused on the lenders’ debt collection and credit reporting practices. The lenders neither admitted nor denied the Bureaus’ findings or conclusions, but as part of the settlement they are required, among other things, to pay a civil money penalty of $5 million and to refrain from making in-person visits for collection purposes. This is the second consent order…
The Supreme Court of the United States recently reversed a ruling of the U.S. Court of Appeals for the Ninth Circuit, and clarified that American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), does not toll a subsequent class action after the statute of limitations expires. A copy of the opinion in China Agritech, Inc. v. Resh is available at: Link to Opinion. As you may recall, American Pipe first stated the tolling rule that timely filing a class action “tolls the applicable statute of limitations for all persons encompassed by the class complaint.” Thus, under American Pipe, where a court…
The Supreme Court of Pennsylvania recently held that a borrower is not entitled to attorney’s fees under the Pennsylvania Loan Interest Law (“Act 6”) relating to an affirmative defense raised in a mortgage foreclosure action that was subsequently discontinued without prejudice. A copy of the opinion in Bayview Loan Servicing, LLC v. Lindsay is available at: Link to Opinion. The borrower defaulted on his mortgage loan, and the mortgagee filed a foreclosure action. Thereafter, the borrower answered the foreclosure complaint and asserted as an affirmative defense an alleged violation of § 403(a) of Act 6, which, according to the Court, is an “extensive…
In a putative class action alleging violations of the federal Fair Credit Reporting Act, the U.S. Court of Appeals for the Ninth Circuit recently held that: (1) the credit reporting agency’s reporting of short sales was not inaccurate or misleading, even though it knew that a government sponsored enterprise misinterpreted its short sale code as a foreclosure, because FCRA does not make credit reporting agencies liable for the conduct of its subscribers; (2) the credit reporting agency’s consumer disclosures were clear and accurate, and 15 U.S.C. § 1681g did not require the credit reporting agency to disclose its proprietary codes…
In an unpublished opinion, the U.S. Court of Appeals for the Eleventh Circuit recently affirmed a trial court’s order denying an auto finance company’s motion to compel arbitration pursuant to the terms of a retail installment sales contract with a consumer. In so ruling, the Eleventh Circuit concluded that the consumer’s TCPA claims were an independent cause of action based on rights created under the TCPA, and not subject to the arbitration provision that only covered disputes arising from or related to the agreement or the motor vehicle collateral. A copy of the opinion in Hope Gamble v. New England…
The Supreme Court of Wisconsin recently held that claim preclusion does not bar a mortgagee from proceeding with a foreclosure complaint despite a prior litigation which resulted in a dismissal with prejudice if the subsequent litigation is based upon a default and acceleration which occurred after the initial foreclosure proceeding. A copy of the opinion in Federal National Mortgage Association v. Thompson is available at: Link to Opinion. Following a borrower’s default on his mortgage loan, the prior servicer of the loan initiated foreclosure proceedings based upon a default and acceleration alleged to have occurred in 2009. The trial court in this initial foreclosure…
In a data breach putative class action brought by financial institutions against a retail grocery store chain, the U.S. Court of Appeals for the Seventh Circuit recently held that the economic loss doctrine prevented recovery of economic losses in tort cases. Although the financial institutions had no direct contractual relationship with the retail grocery store chain, the Seventh Circuit noted that the banks and the merchant all participated in a network of contracts that tied together all the participants in the card payment system. In so ruling, the Seventh Circuit joined the Third and First Circuits in rejecting negligence theory…
The U.S. Court of Appeals for the Ninth Circuit held that a party with a pecuniary interest affected by a bankruptcy court order satisfies the “person aggrieved” requirement for appellate standing even where the party fails to appear and object in the bankruptcy proceeding. Accordingly, the Ninth Circuit reversed the district court’s dismissal of the appeal for lack of standing and remanded the case. A copy of the opinion in In re Point Center Financial is available at: Link to Opinion. The debtor in this action was an originator and servicer of residential mortgage loans (“lender”). The lender obtained funding…
The District Court of Appeal for the Fifth District of Florida recently denied a motion to reconsider an order awarding appellate attorney’s fees to borrowers who were the prevailing party on appeal, reversing judgment of foreclosure entered in favor of the mortgagee. Distinguishing contrary rulings from a different Florida appellate court, the Court upheld its prior order awarding the borrowers attorney’s fees pursuant to Fla. Stat. Section 57.105 and the terms of the subject mortgage, despite its conclusion that the mortgagee lacked standing when it filed the foreclosure complaint, as the mortgagee nonetheless was a party to the mortgage contract…
The District Court of Appeal for the Second District of Florida recently affirmed an order involuntarily dismissing an action to foreclose a second mortgage which secured a home equity line of credit. In so ruling, the Appellate Court upheld the trial court’s holding that the promissory note for the relevant home equity line of credit was not admissible into evidence because it was nonnegotiable, and thus, not a self-authenticating instrument. A copy of the opinion in Third Federal Savings Loan Association of Cleveland v. Koulouvaris is available at: Link to Opinion. A lender bank filed a complaint to foreclose a second mortgage…
ND Indiana Grants Class Cert. Over Objections as to Standing, Commonality of Injury, ‘Consumer’ Debt
ND Indiana Grants Class Cert. Over Objections as to Standing, Commonality of Injury, ‘Consumer’ Debt
The U.S. District Court for the Northern District of Indiana recently concluded that the objective “unsophisticated consumer” standard applicable in the Seventh Circuit for whether there was a material misrepresentation under the federal Fair Debt Collection Practices Act (FDCPA) parallels the commonality requirement for class certification under Fed. R. Civ. P. 23(a). In addition, the District Court concluded that receiving a false and misleading dunning letter from a debt collector, as the plaintiff alleged, establishes an injury in fact to the plaintiff. According to the Court, even though the injury was intangible, it was concrete and particularized, thus establishing the…
The U.S. Court of Appeals for the Fifth Circuit held that where a mortgagee rescinded a notice of intent to accelerate and then filed a foreclosure action without first issuing a new notice of intent to accelerate, it failed to meet its burden to show clear and unequivocal notice of intent to accelerate prior to filing suit, and therefore was not entitled to foreclosure judgment. Accordingly, the Fifth Circuit reversed the ruling of the trial court granting summary judgment in favor of the bank, and dismissed the foreclosure action. A copy of the opinion in Wilmington Trust, N.A. v. Angel…