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…
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
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…
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…
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…
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,…
The Appellate Court of Illinois, Second District, recently held that a mortgagee with a foreclosure judgment could not collect on the deficiency against rents from other properties owned by the mortgagor, because the mortgagee’s foreclosure judgment was not superior to the prior recorded mortgages for the other properties which contained assignment-of-rent clauses, and the other mortgagees had executed forbearance agreements to enforce those assignment-of-rents clauses. A copy of the opinion in BMO Harris Bank N.A. v. Joe Contarino, Inc. is available at: Link to Opinion. In 2013, a bank, acting as the assignee of the FDIC, foreclosed on four mortgages…
The U.S. Court of Appeals for the Ninth Circuit recently reversed the dismissal of a Fair Debt Collection Practices Act claim arising out of a non-judicial foreclosure. The Ninth Circuit ruled that section 1692f(6) of the FDCPA applies to non-judicial foreclosure activity. A copy of the opinion in Dale Dowers v. Nationstar Mortgage, LLC is available at: Link to Opinion. Two borrowers refinanced a loan secured by their home and executed a note and deed of trust. The lender assigned the note to a purchaser of the subject loan (the “loan owner”). Later, the lender assigned the deed of trust…
The U.S. Court of Appeals for the Fifth Circuit recently held that no statute of limitations applies to a mortgage loan borrower’s claims of violations of the requirements for home equity loans contained in section 50(a)(6) of the Texas Constitution. In so ruling, the Court recognized and applied the Texas Supreme Court’s recent ruling in Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (2016), which reached the same conclusion, and held that the borrower did not waive the issues in Wood for purposes of the appeal. A link to the opinion in Ocwen Loan Servicing, LLC v. Berry is…
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy. In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers. A copy of the opinion in McCullough v. CitiMortgage, Inc. is available at: Link to Opinion. The borrowers obtained a loan from the…
The U.S. Court of Appeals for the Seventh Circuit recently affirmed the dismissal of a borrower’s lawsuit against his mortgagee, its former employees, counsel and appellate counsel, and the original mortgagee’s software platform creator, under various federal and state consumer protection statutes and common law torts. In so ruling, and despite the borrower’s assertion that new and previously unknown claims were being asserted, the Court held that all causes of action brought by the borrower in the federal action were necessarily adjudicated in a prior state court foreclosure action and barred by the Rooker-Feldman doctrine. A copy of the opinion…
Reversing a trial court’s ruling in favor of a condominium association and against a mortgagee, the Appellate Court of Illinois, First District, recently held that the Illinois Condominium Property Act’s (“Condo Act”) provision creating a mechanism to extinguish liens for pre-foreclosure common expense assessments does not create a timing requirement as to when common expense assessments must be paid post-foreclosure to confirm extinguishment of the pre-foreclosure lien. A copy of the opinion in 5510 Sheridan Road Condominium Association v. U.S. Bank is available at: Link to Opinion. A condominium association (“COA”) filed a lawsuit against a mortgagee seeking possession of…