In Pedro v. Equifax, Inc., --- F.3d ---, 2017 WL 3623926 (11th Cir. 2017), the Eleventh Circuit held that it was not objectively unreasonable for TransUnion, LLC to interpret section 1681e(b) of the Fair Credit Report Act ("FCRA") to allow it report an account belonging to an authorized user.
Kathleen Pedro filed a putative class action alleging that TransUnion willfully violated section 1681e(b), which requires consumer reporting agencies to "follow reasonable procedures to assure maximum possible accuracy," when it reported her parents' credit card account for which she was an ...
Today, Florida's Fifth DCA and Second DCA issued two seminal opinions; Klebanoff v. Bank of N.Y. Mellon, and Huntington National Bank v. Watters, which clarify the cloud of uncertainty that had engulfed the statute of limitations issue in Florida and provide a strong basis for lenders that are filing subsequent foreclosures of the same loan based on the same initial default date.
In Klebanoff, the Bank filed its foreclosure action in 2014 alleging that the Klebanoff's defaulted for failing to make the March 1, 2009 payment and all subsequent payments due thereafter. Klebanoff v. Bank ...
What You Can Learn about Vendor Management from the DocuSign Breach
While some industries may get away with the "trust but verify" model, heavily regulated industries such as financial services have no such luxury. Trust no one-you can't afford to.
Last week, DocuSign, one of the most frequently used electronic signing services, reported a data breach involving phishing emails being sent to its customers. While inside the DocuSign system, criminals stole possibly more than 100 million emails to use as targets in a phishing email campaign. Wrong-doers sent emails to customers with ...
In Midland Funding, LLC v. Johnson, No. 16-348 (May 15, 2017), the U.S. Supreme Court held that a debt collector does not run afoul of the FDCPA by filing a proof of claim in bankruptcy on a stale debt. In its 5-3 decision, the Court sided with the majority of the federal courts of appeals to have considered the issue and reversed the Eleventh Circuit Court of Appeals, which had held that filing a proof of claim on a debt for which the statute of limitations had expired amounted to a "false," "deceptive," "misleading," "unconscionable," and "unfair" means of debt collection.
The case arose ...
The West Virginia Senate Judiciary Committee and the West Virginia Senate recently approved amendments to the West Virginia Consumer Credit and Protection Act ("WVCCPA"), West Virginia Code §§ 46A-1-101 et seq, which was last amended in 2015. While the original versions of the senate bills sought to make the WVCCPA more similar to the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., the committee substitute of S.B. 563 includes only minor amendments. Among other things, the proposed amendments:
- Clarify how notice of attorney representation must ...
On March 16, 2017, the Florida Supreme Court denied motions for rehearing and/or clarification filed by petitioners Lewis Brook Bartram, the Plantation at Ponte Vedra, and Gideon M.G. Gratsiani. All three petitioners requested the Florida Supreme Court reconsider or clarify its landmark November 3, 2016 opinion in Bartram v. U.S. Bank, N.A., SC14-1266, 2016 WL 6538647. The Florida Supreme Court's opinion in Bartram holds that the involuntary dismissal of a prior foreclosure action, be it with or without prejudice, does not prevent the filing of a subsequent foreclosure action ...
On March 1st, Florida's Third District Court of Appeal affirmatively held that a mortgage holder who fails to prove its standing to foreclose is not liable to a defendant borrower for prevailing party attorney's fees. The Fitzgerald holding is succinct but immensely significant: "[b]ecause [the Borrower] successfully obtained a judgment below that the [Plaintiff] lacked standing to enforce the subject mortgage and note against her . . . no contract existed between the [Plaintiff] and [Borrower] that would allow [the Borrower] to invoke the reciprocity provisions of Section ...
Florida's Fourth District Court of Appeal breathed life back into the lis pendens statute by reversing course in Ober v. Town of Lauderdale-By-the-Sea. On a motion for rehearing, the Court withdrew and replaced its August 24, 2016 opinion, which "eviscerated" the lis pendens statute by holding that liens placed on property between a final judgment of foreclosure and the judicial sale were not discharged by Florida Statute § 48.23. For an in-depth discussion of the Court's August 24, 2016 opinion, click here. Consistent with the real property and mortgage industry's understanding ...
On November 18, 2016, the United States District Court for the Middle District of Florida held that the communication of an unequivocal and non-coercive settlement offer does not violate the Fair Debt Collection Practices Act (the "FDCPA"). Vazquez v. Prof'l Bureau of Collections of Maryland, Inc., -- F. Supp. 3d --, 2016 WL 6822480, at *2 (M.D. Fla. Nov. 18, 2016). In Vazquez, the plaintiff alleged that a debt collector violated section 1692c(c) of the FDCPA by sending a communication offering to settle a debt (the "Settlement Offer") after the plaintiff disputed the debt. Id. at *1 ...
The Florida Supreme Court today affirmed Bartram v. U.S. Bank National Association in a virtually unanimous decision. The decision resolves a long standing controversy regarding the effect (if any) of a prior unsuccessful foreclosure action with regards to Florida's statute of limitations for mortgage foreclosure. The Court's opinion in case number SC14-1265, which was joined by all the justices with the exception of Justice Lewis (who concurred in result only and authored a short opinion of his own) and contains several important holdings. The vast majority of the opinion is ...
In the wake of Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (May 16, 2016), the Supreme Court decision that had the chance to be legendary, but instead settled for punting back to the Ninth Circuit Court of Appeals, we are left wondering who the real winner was and what is the fallout for mere procedural violations of statutes for consumer claims?
Spokeo, Inc. v. Robins: Straight Back to the Ninth Circuit
In a 6-2 decision, with Justice Thomas concurring and Justices Ginsburg and Sotomayor dissenting, the Supreme Court held that that the Ninth Circuit Court of Appeals had failed to properly ...
On October 4, 2016, the Eleventh Circuit Court of Appeals ruled that chapter 7 debtors who file a statement of intention to surrender real property in bankruptcy cannot later contest a foreclosure action, and bankruptcy courts have broad power and authority to sanction violations. Failla v. CitiBank, N.A., case no. 15-15626 (11th Cir. October 4, 2016). The bankruptcy court in Failla reopened a chapter 7 bankruptcy case several years after entry of discharge and ordered the debtors to cease their defense of the bank's foreclosure action, threatening to vacate the discharge order for ...
In the wake of the Supreme Court's ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. May 16, 2016), a growing trend is emerging with respect to cases involving claims under the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"). Indeed, while many early decisions held that "a violation of the TCPA is a concrete injury," see, e.g., Rogers v. Capital One Bank (USA), N.A., No. 1:15-cv-4016, 2016 WL 3162592, at *2 (N.D. Ga. June 7, 2016), more recently, some courts are requiring more. In fact, in Ewing v. SQM US, Inc. et al., Judge Cathy Ann Bencivengo of the Southern District of ...
The Consumer Financial Protection Bureau ("CFPB") issued updated examination procedures it will use to assess lender compliance with the Military Lending Act rule ("MLA"). The MLA rule was amended in 2015 and the new requirements for lines of credit, installment loans, and deposit advances go into effect on October 3, 2016. Credit card issuers have a later compliance date of October 3, 2017. The MLA applies to active duty servicemembers and covered dependents. The amendment expands the types of products covered by the MLA, requiring enhanced disclosures, and restricting loan ...
In Kuntz v. Rodenburg LLP, No. 15-2777, - F.3d -, 2016 WL 5219884 (8th Cir. Sept. 22, 2016), the Eighth Circuit held that a law firm hired to collect a debt did not violate § 1692b(3) of the Fair Debt Collection Practices Act ("FDCPA") when it made multiple calls to a third party to obtain information about the debtor.[1] Section 1692b(3) prohibits debt collectors from communicating more than once with a person other than the debtor ("third party") in order to obtain information about the debtor's location unless the third party requests to be contacted or the debt collector "reasonably ...
In Marquez v. Weinstein, Pinson & Riley, P.S., No. 15-3273, - F.3d -, 2016 WL 4651403 (7th Cir. Sept. 7, 2016), the Seventh Circuit Court of Appeals held that a validation notice in a complaint to collect a debt violated the Fair Debt Collection Practices Act ("FDCPA"). The ruling interpreted § 1692e of the FDCPA, which prohibits debt collectors from using "any false, deceptive, or misleading representations or means in connection with the collection of any debt." 15 U.S.C. § 1692e. The Seventh Circuit found that the validation notice violated § 1692e because the validation notice was ...
In Dubois v. Atlas Acquisitions LLC, Case No. 15-1945 (4th Cir. Aug. 25, 2016), the Fourth Circuit Court of Appeals held in a 2-1 decision that filing proofs of claim on time-barred debts does not violate the Fair Debt Collection Practices Act ("FDCPA"), at least where state law preserves the right to collect on the payment. In so holding, the court sided with the Second and Eighth Circuit Courts of Appeals in a circuit split regarding the viability of FDCPA claims premised on proofs of claim filed in a debtor's bankruptcy case.
The Fourth Circuit first held that filing a proof of claim is ...
Florida's 4th District Court of Appeal sent the real property and mortgage world into a frenzy this week after issuing its opinion in Ober v. Town of Lauderdale-By-The-Sea, dramatically weakening the protections of Florida's lis pendens statute. It held that a lien placed on a property after the foreclosure judgment which arises from an action occurring post-judgment, is not extinguished by Florida Statute §48.23. The term most commonly used in emails and articles drafted by attorneys to describe the impact of this decision on the lis pendens statute is "eviscerate". This type of ...
The Second District Court of Appeal has become the first appellate court in Florida to hold that Florida Statute § 559.715, part of the Florida Consumer Collection Practices Act, Chapter 559, et seq. ("FCCPA"), does not apply to the note holder in a mortgage foreclosure proceeding. Deutsche Bank Nat. Trust Co. v. Hagstrom, 2D14-5254, 2016 WL 3926852, at *1 (Fla. 2d DCA 2016). In many instances, the Hagstrom holding will eviscerate a § 559.715 affirmative defense, which historically has been a popular and often effective defense to foreclosure, due in large part to the lack of case law ...
The Fourth District Court of Appeal recently affirmed its prior decision in Vidal v. Liquidation Properties, Inc., 104 So. 3d 1274 (4th DCA 2013). Wells Fargo Bank, N.A. v. Hilary A. Williamson, Case No. 4D15-285, 2016 WL 3745477 (Fla. 4th DCA 2016). It concluded, once again, that a borrower is in the best position to know their own financial information. Therefore, if a borrower executes their loan application including false information, that borrower is precluded from raising fraud as an affirmative defense in a subsequent action absent unique circumstances. See Shahar v. Green ...
The Supreme Court's ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. May 16, 2016), continues to have a substantial impact on federal courts, especially with respect to alleged statutory violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (the "FDCPA"). In fact, just last week the Third Circuit Court of Appeals relied on the Spokeo decision in reversing a district court's order granting summary judgment in favor of the plaintiff in Bock v. Pressler & Pressler, LLP, No. 15-1056, 2016 WL 4011150 (3rd Cir. July 27, 2016). The plaintiff in Bock had alleged ...
Early in the morning on July 28, 2016, in coordination with the Consumer Financial Protection Bureau's (the "Bureau") field hearing on debt collection being held the same day in Sacramento, California, the Bureau released a detailed outline of proposals under consideration for debt collection rulemaking. While the proposals only cover third-party debt collection issues, the Bureau indicated that they plan to address first-party collectors and creditors with similar proposals at a later date. We expect that many of the same principles outlined in the third-party proposals will ...
The Consumer Financial Protection Bureau (CFPB) released a special edition of its supervision report, honing in on mortgage servicers on June 22nd [1]. It blamed outdated technology and process breakdown for trends it has seen with violations of the CFPB's 2014 servicing rules. The primary areas of concern are communications and data related to loan modifications and servicing transfers.
Among the highlights of the report, CFPB examiners found that "information about loan modifications is late, incorrect, or deceptive, due to technological breakdowns or malfunctions ...
The Public Comment period closed yesterday on the National Credit Union Administration's (NCUA) proposed Rule amending its regulation governing federal credit union (FCU) property occupancy requirements. Presently, a FCU must plan for and eventually achieve full occupancy of any acquired commercial property. Under the proposed Rule, a FCU will be able to lease or sell excess capacity in its facilities, and it does not require that the FCU plan to occupy the entire space at some point in the future.
The NCUA reports that the comments it has received are largely supportive of the Rule ...
*Co-authored by Charles Davis [1]
On May 5, 2016, the Consumer Financial Protection Bureau ("CFPB") held its fourth field hearing on Arbitration and issued a proposed Rule that would prohibit the use of arbitration clauses that block consumers' participation in class actions in contracts for consumer financial products and services. The Rule would also require providers who use pre-dispute arbitration agreements to submit certain records relating to arbitral proceedings to the CFPB. The Rule is expected to take effect during the summer of 2017.
Upon issuance of the Final Rule ...
Learning the interplay between state rules of judicial procedure and federal bankruptcy law can be a daunting undertaking, but the pitfalls of failing to do so can be severe. A recent example of the importance of being mindful of these issues is Hewett v. Wells Fargo Bank, N.A. as Trustee, No. 2D15-1074, 2016 WL 3065014 (Fla. 2d DCA June 1, 2016) where the filing of a bankruptcy petition ultimately cost a foreclosure defendant his right to appeal a final judgment of foreclosure.
The Second DCA summarized the procedural posture of the case as follows:
"The circuit court's final judgment of ...
In a recent opinion, the Second District Court of Appeal held that the lower court was not required to uphold its three prior rulings denying relief from technical admissions when: (1) the record evidence was contrary to those admissions; and (2) the opposing party failed to show it would be prejudiced by the withdrawal of the admissions. Judge Crenshaw stated that the trial court abused its discretion in denying the defendant, Wells Fargo's, relief from technical admissions. The court reversed and remanded the case. Wells Fargo Bank Nat'l Ass'n v.Voorhees, Case No. 2D15-2055, 2016 ...
Congress voted this week to de-rail the Department of Labor's sweeping fiduciary-duty suite of rule-making, but doesn't have the votes to override the President's threatened veto.
The Rule (over a 1,000 pages in all) imposes a sweeping definition of who owes fiduciary duties to retirement investors in retail IRA, HSA, Roth, Coverdell and other "qualified money" situations and prohibits conflicted transactions (including differential compensation), unless they comply with a series of exceptions, carve-outs and exemptions. Industry groups say the compliance and paperwork ...
It's hornbook law that a later intentional breach of contract, alone, doesn't equal promissory fraud.
Holding it therefore cannot establish mail or wire fraud, the Second Circuit reversed the Government's $1.2 Billion FIRREA judgment against Countrywide, Bank of America and others, with instructions to dismiss the case. The case started as a qui tam action alleging that Countrywide's "high-speed swim lane" process delivered substandard mortgage loans to GSEs (Fannie, Freddie) during performance of master mortgage-loan sales agreements ("MLSAs") executed earlier. The ...
In AML/BSA rule amendments published May 11, FinCEN will require "covered financial institutions" to implement new beneficial-owner identification and verification as part of their Customer Due Diligence ("CDD") and adopt risk-based supervisory procedures for their AML/BSA programs.
The Amendments require use of a prescribed Beneficial Owner reporting form, or its substantial equivalent. Though effective July 11, covered institutions have until May 11, 2018 to comply. See 31 C.F.R. § 1010.230 & App. A. FinCEN's AML/BSA requirements impose the "four pillars" of AML ...
On April 25, the Consumer Financial Protection Bureau ("CFPB") entered into a Consent Order with a New Jersey debt collection law firm, Pressler & Pressler, LLP, and two of its managing partners, Sheldon H. Pressler, and Gerard J. Felt (collectively "the Firm").[1]
The Firm agreed to pay a civil penalty of $1 million dollars in addition to adhering to the provisions contained within the Order. This Order raises questions about whether there is or should be a limit to the federal regulation of attorney practice and litigation strategy. The CFPB appears to be asserting authority ...
The CFPB received a lesson in the importance of specificity on April 21st when the United States District Court for the District of Columbia's Judge Richard J. Leon found that it overreached in its attempt to enforce a Civil Investigative Demand ("CID") it served on the Accrediting Council for Independent Colleges and Schools ("ACICS").
The Opinion warned the CFPB to be "especially prudent before choosing to plow head long into fields not clearly ceded to them by Congress". Yet the takeaway for the CFPB is likely one related to the editing of its CID language rather than a true ...
In a joint release, Office of the Comptroller of the Currency, Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; Federal Housing Finance Agency; National Credit Union Administration; and U.S. Securities and Exchange Commission, (collectively "Regulators"), have issued their long-anticipated Proposed Rule limiting incentive-based compensation for bankers Thursday.
This 2016 Proposed Rule is stronger and broader than the one Regulators initially proposed in 2011. The Rule largely mirrors the industry trends in ...
In Edwards v. Macy's, Inc., --- F. Supp. 3d ---, 2016 WL 922221 (S.D.N.Y. Mar. 9, 2016), the U.S. District Court for the Southern District of New York recently held that state law claims arising from plaintiff's enrollment in a debt cancellation program were preempted by the National Bank Act ("NBA") and accompanying regulations promulgated by the Office of the Comptroller of the Currency ("OCC"). Further, the court held that the claims against both the national bank and the corporation acting on behalf of the national bank were preempted, even though the corporation was not a ...
In a recent opinion, the Second District Court of Appeal explained its approval of agency relationship to establish that a plaintiff is entitled to foreclose as "holder" of the original note under Florida Statute Section 673.3011(1). Phan v. Deutsche Bank Nat'l Trust Co., Case No. 2D14-3364, 2016 WL 746400 (Fla. 2d DCA Feb. 26, 2016). Recounting the relevant facts of this case, Deutsche Bank initiated a foreclosure action against Ms. Ngoc Phan on April 28, 2009, alleging she failed to make the loan payments on her Pinellas County home since January 1, 2009. Ms. Phan denied the Bank's ...
On March 1, 2016, the Eleventh Circuit Court of Appeal held that the assignee of a loan cannot be liable for the failure to provide a payoff statement as required by the Truth in Lending Act, 15 USC 1639g. The case is Evanto v. Federal National Mortgage Association, No. 15-11450 and it has wide reaching implications for all legal post-origination TILA compliance issues. The case revolves around what many consumer advocates argue is a loophole in the TILA statute. The TILA statue requires creditors and assignees alike to provide a payoff statement within seven days of the borrower's ...
In McFarland v. Wells Fargo Bank, N.A., 14-2126 (4th Cir. Jan. 15, 2016), the Fourth Circuit Court of Appeals examined the argument that a loan was substantively unconscionable because it vastly exceeded the worth of the residential property by which it was secured. The case drew the attention of numerous amici for both the lender and the borrower. In short, during the height of the housing bubble, the borrower received a call from a mortgage broker that the value of his home had doubled in two years. The borrower refinanced his home to pay down other debt, but could not manage the larger ...
On January 12, 2016, the Ninth Circuit affirmed the denial of class cert. in a Telephone Consumer Protection Act (TCPA), 47 USC 227 action on predominance and superiority grounds in the case Paul Gannon v. Network Telephone Services, Inc., et al., No. 13-56813, 2016 WL 145811 (9th Cir. Jan. 12, 2016). In Gannon, the plaintiff alleged that he called the defendants' phone sex service by accident, and quickly hung up. Nonetheless, plaintiff alleged that several weeks later he began receiving unsolicited text messages in violation of the TCPA. Defendants alleged incoming calls received ...
The brief era of confusion amongst Florida trial judges regarding the standard for judging compliance with conditions precedent in residential mortgage foreclosures is hopefully coming to a close. Despite a rash of written opinions from Florida trial judges adopting a strict compliance standard for contractual conditions precedent, Florida's Fifth District Court of Appeal joined the Second and the Third District Court of Appeal in adopting a substantial compliance standard in Bank of New York Mellon, etc. v. Donna D. Johnson, 5D14-3626 (Fla. 5th DCA Jan. 29, 2016). The opinion ...
In Cottrell as Trustee v. Taylor, Bean & Whitaker Mortgage Corp., 41 Fla. L. Weekly D141f, 2D14-5885 (Fla. 2d DCA Jan. 8, 2016), Florida's Second District Court of Appeal examined the applicability of Rule 1.540(b) to notices of voluntary dismissal undertaken with the mistaken belief the plaintiff's claim was time-barred. In Cottrell, fraud was not alleged as the basis to set aside the dismissal. Instead, it was mistake. See Fla. R. Civ. P. 1.540(b)(1). The bank alleged that it dismissed its case based on advice of counsel that the claim was time-barred. However, subsequent to the ...
In Stuart-Findlay v. Bank of America, N.A., 2010CA014370, 41 Fla. L. Weekly D207a (Fla. 4th DCA 2014), Florida's Fourth District Court of Appeal held that a clerk's default entered in error should have been set aside, regardless of the defendant's alleged failure to demonstrate excusable neglect, meritorious defenses, or due diligence. The facts of the case were not in dispute. At the time the clerk's default was entered, the defendant had served various papers in the action. As a result, pursuant to Fla. R. Civ. P. 1.500 the Court, and not the Clerk, was the proper party to enter a ...
In Castellanos v. Midland Funding, LLC, 15-CV-559 (M.D. Fla. Jan. 4, 2016) the United States District Judge John Steele joined with several of his Middle District of Florida colleagues and held that the Bankruptcy Code preempts the FDCPA with respect to filing time-barred proofs of claim. In Crawford v. LVNV Funding, LLC, the Eleventh Circuit held that filing a time-barred proof of claim in bankruptcy court violated the FDCPA. 758 F.3d 1254, 1262 (11th Cir. 2014) cert. denied, 135 S. Ct. 1844 (2015). To the contrary, the Bankruptcy Code permits creditors to file proofs of claim without ...
In Garfield v. Ocwen Loan Servicing, LLC, 15-527 (2d Cir. Jan. 4, 2016), the Second Circuit Court of Appeals examined whether a debtor who has been discharged in a bankruptcy can sue in a district court under the Fair Debt Collection Practices Act ("FDCPA"), as opposed to seeking relief in the bankruptcy court. During her bankruptcy, the debtor paid the arrears on her mortgage, and agreed to make monthly payments to forestall foreclosure. After receiving her discharge, the debtor ceased making payments. Within months her arrearage totaled over six thousand dollars. The lender ...
In the case of Domistyle, Inc., 14-41463 (5th Cir. Dec. 29, 2015), the United States Court of Appeal for the Fifth Circuit affirmed an order of the bankruptcy court requiring a secured creditor to reimburse the trustee for expenses paid to preserve real property subject to the creditor's lien until the debtor's eventual surrender of the property to the creditor. The surcharge was based on Section 506(c) of the Bankruptcy Code which provides a "narrow" and "extraordinary" exception to the general rule that the administrative expenses of the bankruptcy estate are to be satisfied by the ...
In a split two-one decision, Florida's Second District Court of Appeal affirmed the decision reached below and held that Fla. Stat. 559.715's notice of assignment provision does not create a condition precedent to foreclosure. The case is Brindise v. U.S. Bank, N.A., 2D14-3316, 2016 Fla. App. LEXIS 653 (Fla. 2d DCA Jan. 20, 2015). The Second DCA further certified the following question to the Florida Supreme Court as a matter of great public importance: "IS THE PROVISION OF WRITTEN NOTICE OF ASSIGNMENT UNDER SECTION 559.715 A CONDITION PRECEDENT TO THE INSTITUTION OF A FORECLOSURE ...
For years, counsel for borrowers have successfully argued that the bank failed to meet conditions precedent required under Section 559.715 of Florida's Consumer Collection Practices Act ("FCCPA"). Procedurally, this argument has been raised in the borrower's answer to the mortgage foreclosure complaint. Rather than simply alleging it as a well-pled affirmative defense, the borrower generally denies that the lender complied with all conditions precedent required to bring a mortgage foreclosure action. The borrowers' strategy is to then move for summary judgment denying ...
The writing was on the wall following Justice Elena Kagan's dissent in Genesis Healthcare Corp. v. v. Symczyk, 133 S. Ct. 1523 (2013), wherein Justice Kagan blasted the view that an unaccepted offer of complete relief made to a named plaintiff pursuant to Fed. R. Civ. P. 68 is capable of mooting the plaintiff's individual (and putative class) claims as "wrong, wrong, and wrong again," id. at 1533 (Kagan, J., dissenting) - a position that every Court of Appeals to rule on the issue after Genesis Healthcare had adopted - and on January 20, 2016, the Supreme Court made it official. In a 6-3 ...
In Cowen Loan Servicing, LLC v. Jean Marie Delvar, 4D14-763, 2015 WL 8347300 (Fla. 4th DCA Dec. 9, 2015) the borrower alleged that he had been offered a loan modification and accepted and relied on that offer by making loan payments in accordance with the offered terms. The trial judge found that this was sufficient to state a defense to foreclosure on promissory estoppel principals and entered an order reforming the mortgage to reflect the alleged new terms. Ocwen appealed the judgment of the trial court. In reversing the trial court, the Fourth District Court of Appeal held that the ...
In the case of Sill v. JPMorgan Chase Bank National Association, Michael Sill appealed a final judgment of foreclosure entered in favor of JPMorgan Chase Bank ("Chase"), in which he asserted three issues. 4D14-1014, 2016 WL 67256 (Fla. 4th DCA Jan. 6, 2016). Of note, is Mr. Sill's third contention arguing that Chase was required to send a new notice of default after it voluntarily dismissed the first suit and before it filed the second suit. The Fourth DCA affirmed on all issues, but it wrote an opinion to address the sole issue of whether a new notice of default was required to be sent by ...
With its recently-issued opinion in Elsman v. HSBC Bank USA as Trustee for MLMI 2006-AF1, slip op. 5D14-1753, 41 Fla. L. Weekly D57b, 2015 WL 9491875 (Dec. 31, 2015), the Fifth DCA has added to a growing body of case law regarding what is required to evidence a plaintiff's standing to foreclose a mortgage. In Elsman, the plaintiff asserted standing as holder of the promissory note at issue but failed to attach an endorsed copy of the promissory note at issue to its complaint or to present any alternate evidence of its status as holder. Because the plaintiff, HSBC Bank USA, as Trustee for MLMI ...
In OneWest Bank, FSB v. Gino Alessio, et al., 4D14-1444 (Fla. 4th DCA Jan. 6, 2014), the Fourth District Court of Appeal reversed a trial judge's order dismissing a foreclosure after the defendant improperly used a motion in limine to exclude the bank's sole witness and procured dismissal of the action. While the trial court's order was ostensibly a sanction for violating the pre-trial order's requirements regarding witness and exhibit lists, the Fourth District Court of Appeal reversed because the trial court failed to consider the factors set forth in the Florida Supreme Court's ...
In Bank of New York Mellon Trust Company v. Dennis M. Conley, 4D14-2430 (Fla. 4th DCA Jan. 6, 2016), Florida's Fourth District Court of Appeal clarified the methods by which a foreclosure plaintiff can seek to enforce a note indorsed to another party. Specifically, the court held that, "[w]here a bank is seeking to enforce a note which his specially indorsed to another, the bank is a nonholder in possession." The court went on to hold that in order to prove standing as a non-holder the plaintiff must provide proof of an effective transfer, purchase of the debt, or a valid assignment. In ...
In Deutsche Bank Nat'l Trust Co. v. Estrella Perez, et al., No. 3D15-58, 2015 WL 8347002 (Fla. 3d DCA Dec. 9, 2015), Florida's Third District Court of Appeal held that the trial court erred in dismissing a foreclosure case on the ground that Plaintiff failed to specifically name its corporate representative that would testify at trial. Burr & Forman LLP attorneys Brendan A. Sweeney, Esq. and Douglas J. Stamm, Esq. represented Plaintiff/Appellant Deutsche Bank National Trust Company on behalf of LSF MRA Pass-Through Trust ("Deutsche Bank") at the trial and appellate level. On ...
The Supreme Court Monday re-affirmed the enforceability of class-waivers in arbitration agreements. The five-justice majority felt the need to rebuke the California courts for trying to end-run Federal preemption through a latent "States-rights" nullification approach. Two of the three dissenters saw the case as a consumerist crusade against big business. But the biggest take away for businesses using arbitration clauses just might lie hidden within the opinion. DirectTV's Conditional Class-Waiver. DirectTV's consumer contracts contained a conditional class waiver ...
In Bank of America, N.A. v. Kipps Colony II Condominium Association, Inc., the Second District Court of Appeal reversed a 2011 final judgment entered in favor of Kipps Colony II Condominium Association, Inc. ("Association"). See Nos. 2D14-858, 2D14-4436, 2015 WL 8321268 (Fla. 2d DCA Dec. 9, 2015). Though Bank of America had been defaulted in the Association's claim of lien foreclosure action, the appellate court found the trial court erred in denying Bank of America's Florida Rule of Civil Procedure 1.540(b) motion. Judge Black delivered the opinion of the court finding that the ...
In Surloff v. Regions Bank, et al., No. 4D14-842, 2015 WL 7275207 (Fla. 4th DCA Nov. 18, 2015), the Fourth District Court of Appeal of Florida was faced with the issue of whether Regions Bank (the "Bank") had any duty or "special relationship" with its client that would subject the Bank to liability for its client's suicide. The issue arose after the trial court granted the Bank's motion to dismiss Plaintiff Cheri Surloff's (as personal representative of the Estate of Arthur B. Surloff) (the "Plaintiff") claims of negligent undertaking and negligent infliction of emotional ...
Be careful what you wish for. That was the message Middle District of Florida Judge Carlos Mendoza delivered in Claudet v. First Federal Credit Control, Inc., 14-CV-2068 (M.D. Fla. Nov. 17, 2015) to the filer of an improper motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure. The Court awarded attorney's fees AGAINST the filer of the improper Rule 11 motion, finding it was filed for an improper purpose (to harass opposing counsel) and certainly not the outcome the filer had in mind. More interestingly, the Court did so without any motion from the non-movant.
The ...In Ensler v. Aurora Loan Servs., LLC, the Fourth District Court of Appeal of Florida was faced with the issue of whether a prior mortgage loan servicer's documents could be introduced into evidence when the current servicer testified the prior servicer's records were "accurate" because "[t]hey're a reputable big company and we trust them and they trust us." At trial, Plaintiff sought to introduce the following documents into evidence (through the testimony of the current servicer): the breach letter, payment history, and power of attorney. All of these documents were authored ...
On November 23, 2015, in the first appellate decision of its kind, the District Court for the Southern District of Florida affirmed a bankruptcy court order to compel chapter 7 debtors to surrender real property by directing the debtors to cease all foreclosure defense. The decision in Failla v. Citibank, N.A. (In re Failla), case no. 15-80328, marks the first decision from a federal appellate court to address the question of whether a bankruptcy court may enter an order directing a debtor to cease defending a mortgage foreclosure suit pending in state court. On December 19, 2014, Judge ...
Speaking to a November 16 Money Laundering conference jointly sponsored by the American Banking and Bar Associations, Deputy AG Sally Yates unveiled revisions to the Department of Justice's U.S. Attorneys' Manual ("USAM"). The revisions implement the new focus on individual wrongdoing in the corporate criminal context first announced September 9 in the "Yates Memo." The revisions principally involve (1) the Filip Factors, (2) extend the Yates Memo to civil investigations, and (3) address coordination in parallel proceedings.
- Filip Factor Revisions.
In Hicks v. Wells Fargo, 5D14-1748, Florida's Fifth District Court of Appeal issued the first appellate opinion to pass on the proper method of pleading a re-filed foreclosure where a prior foreclosure effort was dismissed and certain defaults are now outside the five year statute of limitations for mortgage foreclosure. The facts of the case were as follows: a foreclosure complaint was filed in September 8, 2006 premised on the borrowers' alleged failure to make the June 1, 2006 payment. The complaint was voluntarily dismissed in 2008. A new notice of default was sent in 2011 ...
In Wells Fargo Bank v. Lauri Mailloux, 2D14-5116 (Fla. 2d DCA October 30, 2015), the Second District Court of Appeal held that the inclusion of language purporting to render a notice of voluntary dismissal conditional upon an agreement between the parties which did not exist served to invalidate entirely the effect of the notice. Specifically, the Plaintiff is the case dismissed its foreclosure " expressly … conditional upon Plaintiff and the Defendants agreeing to pay their own attorneys' fees and costs." Unfortunately, as the Plaintiff stipulated for purposes of appeal, no ...
In Gensel v. Performant Technologies, Inc., No. 13-C-1196, 2015 WL 6158072, (E.D. Wisc. Oct. 20, 2015), the U.S. District Court for the Eastern District of Wisconsin granted Performant Technologies, Inc.'s ("Performant") motion to continue the stay pending judicial review of the FCC's July 10 Order. Plaintiff filed suit against Performant alleging violations of the TCPA based on several calls she received from Performant on her cell phone. Plaintiff's cell phone provider assigned her a number that was previously assigned a person who defaulted on a student loan. Performant ...
On October 14, 2015, the United States Supreme Court heard oral argument in Campbell-Ewald Company v. Gomez, 14-SC-857. The plaintiff in Gomez alleged he received an unsolicited marketing text message advertising the US Navy from the marketing firm Campbell-Ewald Company in violation of the Telephone Consumer Protection Act ("TCPA"). The plaintiff sued on the Campbell-Ewald Company on behalf of himself and a putative class. The facts of the case present a classic example of an effort to "pick off" a putative class representative with an offer of judgment under Rule 68 ...
In Russell v. Nationstar Mortgage, LLC, No. 14-61977-CIV, 2015 WL 5029346, at 5 (S.D. Fla. Aug. 26, 2015), United States District Court Judge Beth Bloom issued litigious borrowers their latest setback in a large scale litigation campaign being conducted by a South Florida consumer law firm. The case is one of many filed by Loan Lawyers, LCC, on behalf of their clients alleging violations of regulations promulgated pursuant to Real Estate Settlement Procedures Act (RESPA) known as Regulation X (Reg X). Many of the cases have the same facts: Loan Lawyers sends a letter requesting a ...
In Danehy v. Time Warner Cable Enterprise LLC, No. 5:14-cv-133, 2015 WL 5534285 (E.D.N.C. Sep. 18, 2015), the United States District Court for the Eastern District of North Carolina adopted the magistrate's findings that a caller's good-faith belief of consent is a complete defense under the Telephone Consumer Protection Act ("TCPA"). The defendant in Danehy, a cable company, had been asked by one of its customers to perform a service visit. The customer had provided a cell phone number to the defendant as one of his contact numbers. Unbeknownst to the defendant, the cell phone ...
In Jenkins v. Midland Credit Management, Inc.,[1] the U.S. Bankruptcy Court for the Northern District of Alabama held that the filing of a proof of claim based on a time-barred debt cannot give rise to a claim for damages under the Fair Debt Collection Practices Act ("FDCPA"), reasoning that any such claim is precluded by the Bankruptcy Code's comprehensive claims-allowance procedure. The court further held that the filing of a proof of claim on a stale debt does not merit sanctions under Bankruptcy Rule 9011 where the proof of claim is filed in compliance with the Code. Accordingly, the ...
On September 8, 2015, United States District Judge Marvin H. Shoob declared Georgia's statutory garnishment process unconstitutional in Strickland v. Alexander, No. 1:12-CV-02735-MHS (N.D. Ga. Sept. 8, 2015) (granting summary judgment for plaintiff). In what is sure to be the first of many county-level responses, Gwinnett County officials announced on September 9, 2015 that they will stop issuing garnishment summonses and disbursements pending further judicial instruction. The opinion will potentially affect the debt collection industry (for an unknown duration ...
The U.S. Court of Appeals for the Sixth Circuit recently addressed both the timing and scope of "prior express consent" under the Telephone Consumer Protection Act ("TCPA"). The plaintiff in Stephen M. Hill v. Homeward Residential, Inc., - F.3d- , No. 14-4168 (6th Cir. Aug. 21, 2015) alleged that his mortgage lender violated the TCPA by calling his cell phone using an autodialer in an attempt to contact him related to a mortgage debt he owed. The plaintiff did not provide his cell phone number when the mortgage was originated, but provided it three years later by contacting the mortgage ...
On August 11, 2015, the Federal Communications Commission (FCC) fined Travel Club Marketing, Inc. and its owner $2.96 million dollars for alleged violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227, et seq. The TCPA prohibits, amongst other things, the use of an automated telephone dialing system or pre-recorded voice to make telephone calls to a cellular telephone without prior express consent. The Florida based telemarketing firm is alleged to have made 185 such calls to more than 142 cellular telephone numbers, many of which were listed on the National Do ...
With its decision up on re-hearing, Florida's Third District Court of Appeal may be rethinking its decision in Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575, 2014 WL 7156961 (Fla. 3d DCA Dec. 17, 2014). In Beauvais, the court held that only a dismissal with prejudice will allow a cause of action for mortgage foreclosure to accrue after a failed foreclosure effort is dismissed. The effect of the decision was to render numerous foreclosures time-barred where a prior dismissal had been taken voluntarily, or otherwise without prejudice. The Third DCA acknowledged its ...
It would be difficult to identify a federal circuit court of appeals that has released a larger number of influential consumer finance decisions in the last year than the Eleventh Circuit. And last week, the court continued its recent consumer finance trend. Before Friday's landmark FDCPA decision in Davidson v. Capital One (covered in a separate blog post), the court again waded into the turbulent waters of the TCPA. On Thursday, the Eleventh Circuit issued its decision in Murphy v. DCI Biologicals Orlando, LLC, --- F.3d ---, No. 14-10414 (11th Cir. Aug. 20, 2015), in which another ...
In Davidson v. Capital One Bank (USA), N.A., a case closely followed by the financial services industry and handled by Burr & Forman, LLP, the Eleventh Circuit held that an entity collecting a debt that was acquired after default, and which the entity now owns, is not a "debt collector" under the Fair Debt Collection Practices Act ("FDCPA") unless the principal purpose of the entity's business is the collection of debts or the entity regularly collects debts owed to others. In so holding, the Eleventh Circuit broke from the large majority of courts (including the Third, Seventh, and ...
In Cooper v. Fay Servicing, LLC, 2015 WL 4470213 (S.D. Ohio July 17, 2015), the mortgagors sued the servicer of their real estate loan asserting claims for alleged violations of Regulation X relating to the loss mitigation process. Critical to this case was the timing of the loss mitigation process that resulted in the alleged Regulation X violations, the date of the foreclosure filing, and the date of the foreclosure sale. Specifically, the foreclosure proceeding was initiated on January 4, 2014, six days prior to the effective date of the CFPB's new Mortgage Rules, while the alleged ...
Following the Supreme Court's ruling in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010), it is clear that the bona fide error defense set forth in section 1692k(c) of the Fair Debt Collection Practices Act, 15 U.S.C. § § 1692 to 1692p (the "FDCPA"), "does not apply to a violation of the FDCPA resulting from a debt collector's incorrect interpretation of the requirements of th[e FDCPA]." Id. at 604-05. But as the district court recently recognized in Gray v. Suttell & Associates et al., a putative FDCPA class action filed in the Eastern District of ...
The UCC was supposed to make enforcing negotiable instruments a simpler, more streamlined process. It has proven anything but in Florida. Continuing a trend that now stretches back years, mortgage lenders have had an increasingly tough time proving standing to the satisfaction of Florida's District Courts of Appeal in the last few months. Florida's Fourth District Court of Appeal has long been the most vocal on the standing issue. See e.g. McLean v. JP Morgan Chase Bank Nat. Ass'n, 79 So. 3d 170 (Fla. 4th DCA 2012). The last few months have been no different. One opinion of particular ...
The Eleventh Circuit Court of Appeals and Georgia Court of Appeals recently issued competing orders about mortgage borrowers' standing to challenge security deed assignments. Though the Eleventh Circuit affirmed that borrowers cannot challenge their security deed assignments when making wrongful foreclosure claims, the Georgia Court of Appeals found that borrowers can challenge their assignments under Georgia's Quiet Title Act. This newly-clarified distinction will perhaps provoke borrowers to file quiet title actions to frustrate Georgia foreclosure efforts in the ...
Numerous states have adopted statutory bans on "unfair" or "deceptive" trade practices. When state legislatures enacted those statutes, most of them decided to let consumers sue directly for damages. However, many state legislatures also barred consumers from bringing class actions under those state consumer-protection statutes. See, e.g., Ala. Code § 8-9-10(f) (barring class actions under Alabama's Deceptive Trade Practices Act); O.C.G.A. § 10-1-399(a) (barring class actions under Georgia's Fair Business Practices Act); Miss. Code § 75-24-15(4) (barring class ...
In Haynes v. McCalla Raymer, LLC, No. 14-14036, __ F. 3d __, 2015 WL 4188459 (11th Cir. July 13, 2015), the Eleventh Circuit Court of Appeals affirmed the Northern District of Georgia's grant of summary judgment in favor of Bank of America, N.A. ("BANA") on the mortgagors' wrongful foreclosure claim. The court held that the mortgagors lacked standing to challenge any alleged deficiencies in the assignment of the security deed from MERS to BANA and that the borrowers' own default, rather than any alleged defect in the foreclosure notice, led to the foreclosure. With respect to the ...
In Lankhorst v. Independent Sav. Plan Co., No. 14-11449, 2015 WL 3440288 (11th Cir., May 29, 2015), the Eleventh Circuit Court of Appeals held that the credit agreement the Plaintiff's entered into did not convey the requisite security interest in the Plaintiffs' primary residence in order to trigger the TILA protections on which the Plaintiffs relied. Therefore, the district court did not err in granting summary judgment in favor of the defendants. The Plaintiffs agreed to purchasing a water treatment system and having it installed in their home. However, the purchase and ...
On June 1, 2015, the United States Supreme Court issued its decision in Bank of America, N.A. v. Caulkett, in which all nine Justices joined in an opinion that reversed an Eleventh Circuit ruling that chapter 7 debtors may "strip off" wholly unsecured junior liens. The Caulkett opinion largely relies upon the Supreme Court's prior decision in Dewsnup v. Timm, 502 U.S. 410 (1992), in which the Court held that a chapter 7 debtor may not "strip down" liens where the value of the property partially secures the underlying claim. The Eleventh Circuit previously recognized but distinguished ...
For several years, numerous businesses and industry groups have petitioned the Federal Communications Commission ("FCC") to provide clarity to the Commission's prior interpretations of the Telephone Consumer Protection Act ("TCPA"). Currently, the FCC is facing more than twenty (20) petitions asking the Commission to provide guidance and relief on many different topics, including the definition of an "autodialer," whether a consumer can revoke "prior express consent," and whether a business can be held liable for unknowingly placing calls to a cell phone that had ...
John Chiles and Zach Miller were recently published in the American Bar Association's The Business Lawyer (Vol. 70, No. 2) with an article titled TCPA Litigation Developments: Inconsistent Federal Court Decisions Headline a Hectic Year. The article highlights important decisions issued by U.S. federal courts addressing the Telephone Consumer Protection Act ("TCPA") during 2014. Of particular importance is the Eleventh Circuit's opinion on revocation of consent and the meaning of "called party" in Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014). Other topics ...
In David L. Ham, Jr. v. Nationstar Mortgage, LLC, 1D14-4024 (Fla. 1st DCA May 12, 2015), the First District Court of Appeals ("First DCA") reversed the trial court's Final Judgment of Foreclosure in favor of Nationstar for failing to furnish competent and substantial evidence overcoming Borrower's standing defense, and that the original Plaintiff possessed the original note, indorsed in blank, at the inception of the lawsuit. Here, 123 Loan, LLC ("123 Loan") originated the subject loan in 2004, and allegedly assigned the note to Aurora Loan Services, LLC ("Aurora") at some unknown ...
In Gorel v. Bank of New York Mellon, 5D13-3272 (Fla. 5th DCA May 8, 2015) Florida's Fifth District Court of Appeal offered relief to increasingly popular arguments using minor defects in paragraph 22 notices of default as a defense to foreclosure. It has become popular among the foreclosure defense bar to point to minor variances between the language used in notices of default and the express language of paragraph 22, and assert that because the notices do not strictly conform word for word with paragraph 22, that foreclosure should be denied. These arguments have had some measure of ...
In Deutsche Bank Nat'l Trust Co. v. Adriana Avila-Gonzalez, 2015 WL 2089094 (Fla. 3d DCA May 6, 2015), the Florida Third District Court of Appeal reversed a trial court order that dismissed a foreclosure action with prejudice and cancelled the note and mortgage. Central to the Court's ruling was the determination that the Bank was negligent in asserting the note was lost, by pleadings and by affidavit, when the note was actually in the servicing agent's possession for the duration of the foreclosure action. Contrary to the trial court's ruling, the Court found the Bank's negligence did ...
In Russell v. Aurora Loan Services, LLC, 40 Fla. L. Weekly D967a (Fla. 2d DCA Apr. 24, 2015), Florida's Second District Court of Appeal added to the emerging line of case law regarding the proof required to establish standing in mortgage foreclosure actions. There, the Second DCA held that substituted party-plaintiff, Nationstar Mortgage, LLC, failed to establish at trial that either Nationstar or the original plaintiff, Aurora Loan Services, LLC, had standing as the servicer acting on behalf of the real party in interest to foreclose against borrower William Russell. As a result ...
Andrew D. Dunavant, Jr., and Mary Dunavant (the Dunavants) appealed the district court's partial denial of their motion for summary judgment and its grant of the defendant's motion for summary judgment. Dunavant v. Sirote & Permutt, P.C., 2015 WL 525536, 1 (11th Cir. Feb. 9, 2015) (per curiam). The Dunavants allege that the defendant, Sirote & Permutt, P.C. (Sirote), unlawfully published two notices of foreclosure sale for the Dunavants' property after a state court enjoined the foreclosure action. Id. On appeal, the Dunavants first argue that the district court incorrectly ...