The U.S. Court of Appeals for the Seventh Circuit recently held that the minor child of a credit card account holder was not bound by the arbitration clause in the cardholder agreement because she did not become an authorized user of the account by using the credit card. The Seventh Circuit also held that the doctrine of estoppel did not bind the minor to the arbitration clause because the minor did not “directly benefit” from her parent’s use of the credit card. A copy of the opinion in AD v. Credit One Bank, NA is available at: Link to Opinion. In…
The Supreme Court of Florida recently denied a pro se borrower’s petition to invoke the jurisdiction of the Court, and imposed sanctions against him for filing numerous meritless and inappropriate petitions for relief pertaining to trial court foreclosure proceedings to which he is a defendant. In so doing, the Supreme Court barred the borrower from filing any future pleadings, motions or requests for relief in the Supreme Court related to his foreclosure proceedings, unless filed in good faith by an attorney in good standing. A copy of the opinion in Rivas v. Bank of New York Mellon is available at: Link…
The U.S. Court of Appeals for the Eighth Circuit held that, under the federal Real Estate Settlement Procedures Act, because the borrower did not prove actual damages he also could not prove he was entitled to ‘additional’ statutory damages, and therefore failed to prove an essential element of his RESPA claim. In so ruling, the Eighth Circuit also held that “[a] borrower cannot manufacture a pattern or practice by sending multiple requests in quick succession involving the same subject matter,” and “that two instances of noncompliance are not enough.” Accordingly, the ruling of the trial court granting summary judgment in…
In an important decision for the debt buying industry, the Massachusetts Supreme Judicial Court held that passive debt buyers are not “debt collectors” under the Massachusetts Fair Debt Collection Practices Act (MDCPA). A copy of the decision in Dorrian v. LVNV Funding, LLC is available at: Link to Opinion. An amicus brief filed by Receivables Management Association International and written by Maurice Wutscher attorneys in support of the appellant is available at: Link to Amicus Brief. In Massachusetts, “debt collectors” must obtain a license from the Division of Banks, the state agency tasked with regulating debt collection in the Commonwealth. Under the MDCPA,…
In a data breach putative class action, the U.S. Court of Appeals for the Ninth Circuit recently held that the plaintiffs sufficiently alleged Article III standing based on an alleged “increased risk of future identity theft.” In so ruling, the Ninth Circuit rejected the defendant’s argument that Clapper v. Amnesty International USA, 568 U.S. 398 (2013), in which the Supreme Court of the United States held “an objectively reasonable likelihood” of injury was insufficient to confer standing, required dismissal. A copy of the opinion in In re Zappos.com is available at: Link to Opinion. In January 2012, hackers breached the servers of…
Joining with the Fourth and Ninth Circuits, the U.S. Court of Appeals for the Seventh Circuit recently affirmed a trial court’s summary judgment order in favor of a debt collector and against a debtor finding that the debt collector did not violate the federal Fair Debt Collection Practices Act (FDCPA) by only verifying the information in its records instead of contacting the creditor to verify the debt. In so ruling, the Court also held that the debt collector did not violate the federal Fair Credit Reporting Act (FCRA) because it conducted a reasonable investigation into the disputed information. A copy…
The U.S. Court of Appeals for the Fourth Circuit recently held that a completely unsecured lien may be stripped off in a Chapter 13 bankruptcy proceeding under 11 U.S.C. § 1322(b) even though a proof of claim has not been filed. A copy of the opinion in Edwin Burkhart v. Nancy Spencer Grigsby is available at: Link to Opinion. Debtors filed a Chapter 13 bankruptcy petition in 2012. At the time, the debtors’ principal residence was valued at $435,000 and encumbered by four liens. Creditor 1 held the mortgage lien with the highest priority in the amount due of $609,500. Creditor 2’s two…
The day before the Second Circuit shut down reverse-Avila claims with its decision in Taylor v. Financial Recovery Services, Inc., the U.S. District Court for the Eastern District of New York dismissed an FDCPA Avila claim involving potential future fees and costs in Derosa v. Computer Credit, Inc. A copy of the opinion is available at: Link to Opinion. This recent chapter in the post-Avila saga involves a consumer who incurred a small hospital debt. A collector sent a letter that used the words “PAST DUE AMOUNT: $174.15” to inform the consumer of the balance. The letter contained no mention of interest, fees,…
The U.S. Court of Appeals for the Eighth Circuit held that the plaintiff borrowers did not offer sufficient evidence to defeat the rebuttable presumption created by the signed acknowledgement that they received the required number of copies of the federal Truth in Lending Act (TILA) notice of right to cancel disclosures. In so ruling, the Court noted that the plaintiff borrowers did not claim personal knowledge of the number of copies of the disclosure provided at closing, but instead relied on the so-called “envelope theory,” which the Court held was inadmissible hearsay. Accordingly, the ruling of the trial court granting…
Just over two years to the day after it issued its opinion in Avila v. Riexinger & Associates, LLC, the Second Circuit Court of Appeals has issued a critical blow to a recent spate of FDCPA lawsuits attempting to create liability out of thin air. A copy of the opinion in Taylor v. Financial Recovery Services is available at: Link to Opinion. In Avila, the Second Circuit held that a debt collector violates the FDCPA by stating the “current balance” of a consumer’s debt without disclosing that the balance is increasing due to the accrual of interest or fees. In Avila, the debt…
The U.S. District Court for the Southern District of Florida recently granted summary judgment in favor of a defendant debt collector in a putative class action alleging violations of sections 1692g and 1692e of the federal Fair Debt Collection Practices Act (FDCPA), holding that the “debt validation notice” letter at issue was neither confusing nor misleading under the applicable least sophisticated consumer standard. In so ruling, the Court held that naming the payment processing company with whom the consumer had dealt, as well as the bank that had actually issued the credit at issue, did not violate the FDCPA. A…
The U.S. Court of Appeals for the Ninth Circuit recently held that the National Bank Act (NBA) did not preempt California’s state escrow interest law, which requires financial institutions to pay at least 2 percent simple interest per annum on escrow account funds. In so ruling, the Court also held that the federal Truth in Lending Act provisions for escrow accounts, at 15 U.S.C. § 1639d, did not apply to loans originated before the 2013 effective date of the provisions. A copy of the opinion in Lusnak v. Bank of America is available at: Link to Opinion. In July 2008, the…