Takeaway: The U.S. Supreme Court ever so slightly trimmed removal rules under the Class Action Fairness Act (CAFA) last week in Home Depot U.S.A., Inc. v. Jackson, No. 17-1471. In an opinion by Justice Thomas, the Court held that neither CAFA nor the general removal statute (28 U.S.C. § 1441(a)) permit removal by a third-party counterclaim defendant. That is, a party brought into the suit through a claim filed by the original defendant cannot remove the case to federal court. Read the full article on our sister blog, Consumer Protection Review.
The California Homeowner Bill of Rights (“HOBR”), codified in Sections 2920.5 et seq. of the Civil Code, became effective January 1, 2013. The statutes impose certain pre-foreclosure loss mitigation duties on mortgage servicers as well as trustees and deed of trust beneficiaries. Certain provisions of the HOBR were repealed as of January 1, 2018. While the legislature enacted new statutes to replace repealed provisions, not all requirements survived the January 2018 enactments, and expired as of the sunset date. But not long after expiration, many repealed provisions were given new life again through SB818 passed by Senator Beall. These statutes—revived with their original terms or with amendments—went into effect on January 1, 2019. We explore some of the repealed, later-revived statutes and notable appellate court decisions over the past year.
The Ninth Circuit recently held a company vicariously liable for the actions of a downstream vendor of text message and telephone marketing activities. The Telephone Consumer Protection Act (TCPA) is increasingly being used to bring lawsuits with potential statutory damages totaling millions or even hundreds of millions of dollars.
Companies should consider due diligence and vendor oversight protocols as counter-measures to limit the risk of liability for digital advertising and text marketing activities. Continue Reading
Mortgage service companies (and their lawyers) got a big boost on March 20, 2019, when the Supreme Court delivered a unanimous opinion in Obduskey v. McCarthy & Holthus LLP, holding that a business engaged in no more than nonjudicial foreclosure proceedings is not a “debt collector” under the Fair Debt Collection Practices Act (FDCPA or Act), except for the limited purpose of §1692f(6). This decision will prevent needless and unfair litigation by borrowers seeking to stall collection efforts.
The petitioner in the case (who purchased his home in 2007 and defaulted approximately two years later) argued that the law firm hired by the creditor bank to carry out a nonjudicial foreclosure failed to comply with the FDCPA, which requires a debt collector to cease collection efforts until it obtains and delivers verification of the debt to the debtor.
Companies whose primary business purpose is to collect debts—whether or not they actually participate in the debt collection activities—suffered a setback recently. Despite a debt purchaser’s not having any direct contact with the consumer or even approving the debt collection agency’s communications with the consumer, the U.S. Court of Appeals for the Third Circuit found the debt purchaser to be a “debt collector” under the terms of the Fair Debt Collection Practices Act (FDCPA) and therefore vicariously liable for the actions of its collection agencies. Barbato v. Greystone Alliance, LLC, No. 18-1042, 2019 WL 847920 (3d Cir. Feb 22, 2019). Continue Reading
Many loan servicers face the daunting task of issuing affidavits for their litigation cases across the United States. For the sake of efficiency, a loan servicer may wonder whether it would be worth it to streamline the affidavit process by using uniform acknowledgment language. However, research suggests that any alteration of an affidavit that replaces the traditional oath or “sworn to statement” with acknowledgment-like language is contrary to both New York statutory and case law and would likely result in rejection by New York State courts. Continue Reading A Loan Servicer’s Acknowledgment vs. an Oath in New York
The Ninth Circuit recently denied a motion for rehearing en banc in Marks v. Crunch, leaving in place a Ninth Circuit decision that broadly defines “automated telephone dialing system” (autodialer) under the Telephone Consumer Protection Act (TCPA). The decision conflicts with decisions from other circuits. And in the New Year, the FCC is expected to issue its own new interpretation of the term “autodialer” under the TCPA. Amidst this uncertainty, companies should proceed cautiously when reaching consumers by phone or text, and should consider how to minimize risk with respect to the TCPA’s autodialer provisions. Continue Reading Ninth Circuit Interprets Automatic Telephone Dialing System Under TCPA, Leaving Circuit Split
The United States Court of Appeals for the Second Circuit recently made clear that foreclosure actions qualify as “debt collection” under the Fair Debt Collection Practices Act (FDCPA). See Cohen v. Rosicki, Rosicki & Assocs., P.C., 897 F.3d 75 (2d Cir. 2018). Thus, even if a foreclosure action is not seeking a deficiency judgment and the proceeding is strictly in rem, it now falls under the FDCPA debt collection umbrella in the Second Circuit.
In Cohen, the borrower appealed the district court’s dismissal of his FDCPA claims based on the defendants’ allegedly incorrect identification of Green Tree Servicing LLC as the creditor in the foreclosure complaint, certificate of merit, and request for judicial intervention. The basis for the district court’s dismissal of the case was that “enforcement of a security interest through foreclosure proceedings that do not seek monetary judgments against debtors” does not qualify as debt collection within the scope of the FDCPA. The Second Circuit disagreed. Cohen, aff’d, 897 F.3d 75 (2d Cir. 2018) Continue Reading Second Circuit: Mortgage Foreclosure Constitutes “Debt Collection” Under FDCPA
In Washington State the statute of limitations on actions to enforce a note or deed of trust can be a brutally effective sword for borrowers. The limitations period is six years, and a borrower may sue for quiet title where “an action to foreclose . . . would be barred by the [statute of limitations].” RCW 7.28.300. If successful, the borrower is entitled to “judgment quieting title” against the security instrument. Two commonly litigated issues arising in this context are tolling and acceleration. The Court of Appeals of Washington recently published two noteworthy opinions as they relate to installment loans that should dampen quiet title claims based on the statute of limitations.
Quiet title litigation based on RCW 7.28.300 often involves a loan in which foreclosure is delayed one or more times because of loss mitigation or bankruptcy filed by the borrower—easily extending the foreclosure well beyond six years of the default or acceleration. The potentially harsh effects of events beyond a lender’s control, such as bankruptcy, is ameliorated by RCW 4.16.230, which provides that a limitations period is tolled when “an action is stayed by . . . statutory prohibition.” The automatic stay under 11 U.S.C. § 362 is one such statutory prohibition. Nonetheless, borrowers have argued that § 362 is not a statutory prohibition for purposes of the tolling statute because a creditor may seek relief from the stay. Continue Reading <i>Merceri</i> Times Two Equals Clarity on the Statute of Limitations in Washington State
On June 28, 2018, the state of California adopted the strictest general privacy and data security law in the country. The “California Consumer Privacy Act” will become effective on January 1, 2020 and will transform how companies that handle consumer data will do business in California.
The Act will regulate the collection and sale of personal information by companies and will increase fines and penalties on businesses that fail to take “reasonable security measures” to safeguard Californian’s personal information. Businesses must notify consumers about the type of data they collect and must allow consumers the option to opt out of their personal information being sold or disclosed to third parties. California, already a popular venue for plaintiffs to file consumer privacy class action litigation, will likely see an increase in litigation when the Act becomes effective. This Act will apply to for-profit companies doing business in California that collect consumers’ personal information and exceed $25 million in gross revenue, handle the personal information of 50,000 or more consumers, devices or households, or derive more than 50% of their annual revenue from selling consumers personal information. Continue Reading