Consumer Protection Litigation

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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.…

Continue Reading Justices Rule that Businesses Engaged in Nonjudicial Foreclosure Proceedings are Not “Debt Collectors” under the FDCPA

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…

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

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.

Tolling

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 Merceri Times Two Equals Clarity on the Statute of Limitations in Washington State

In a Declaratory Ruling and Order issued in 2015, the Federal Communications Commission (“FCC”) sought to clarify key aspects of the Telephone Consumer Protection Act (“TCPA”), including (1) what device making calls qualifies as an Automated Telephone Dialing System (“ATDS”), (2) whether a call made to a reassigned telephone number where the prior subscriber gave consent constitutes a violation, (3) the manner required for a consumer to revoke consent, and (4) whether healthcare-related calls are exempt. The United States Court of Appeals for the District of Columbia Circuit in ACA International v. Federal Communications Commission set aside two parts of the Order but upheld two others.
Continue Reading ACA International v. Federal Communications Commission: A Mixed Opinion on the FCC’s Recent Interpretation of the Telephone Consumer Protection Act