Justia Banking Opinion Summaries

After Stratton stopped making payments on her credit card, GE “charged off” Stratton’s $2,630.95 debt, as uncollectible. GE stopped charging Stratton interest. By charging off the debt and ceasing to charge interest GE could take a bad-debt tax deduction, I.R.C. 166(a)(2), and avoid the cost of sending Stratton statements. A year later, GE assigned Stratton’s charged-off debt to PRA, a “debt buyer.” Two years later, PRA filed suit in state court, alleging that Stratton owed interest during the 10 months after GE charged off her debt, before GE sold that debt, and that Stratton owed 8% interest rather than the 21.99% rate established in her contract with GE. The 8% rate is the default rate under Kentucky’s usury statute, KRS 360.010. Stratton filed a putative class action, alleging that PRA’s attempt to collect 8% interest for the 10-month period violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, in that the 8% interest was not “expressly authorized by the agreement creating the debt or permitted by law,” that PRA had falsely represented the “character” of Stratton’s debt and the “amount” owed, and that PRA’s suit was a “threat” to take “action that cannot legally be taken.” The district court dismissed. The Sixth Circuit reversed. Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest; any attempt to collect statutory interest when it is “not permitted by law” violates the FDCPA. View "Stratton v. Portfolio Recovery Assocs., LLC" on Justia Law

Plaintiff sued Defendants for fraud and deceptive trade practices in connection with a real estate purchase and loan arrangement. The jury found in favor of Plaintiff and awarded him compensatory damages consisting of actual damages and emotional distress damages, as well as punitive damages. The Supreme Court reversed the judgment as to consequential damages and remanded for a redetermination of punitive damages. On remand, the district court instructed the jury that it was to decide “what amount, if any, [Plaintiff] was entitled to for punitive damages.” After punitive damages were awarded, Defendants appealed. The Supreme Court reversed the district court’s punitive damages award and remanded for a new trial, holding (1) Nev. Rev. Stat. 42.005(3) requires a second jury on remand to reassess whether punitive damages are warranted before that jury may determine the amount of punitive damages to be awarded; and (2) because the jury instruction did not require the jury to make the threshold determination of whether punitive damages could be awarded, the case must be remanded for a new trial on punitive damages. View "D.R. Horton, Inc. v. Betsinger" on Justia Law

Plaintiffs filed suit alleging, among other things, fraud and unfair business practices in the origination of plaintiffs' residential mortgage loans, and negligence in the subsequent servicing of the loans. On appeal, plaintiffs argued that the trial court erred in concluding that the complaint failed to allege fraud for which defendants are responsible and in concluding that defendants owed no duty of care to plaintiffs in the review of their applications for a loan modification. The court concluded that plaintiffs have alleged a cause of action for fraud against defendants where the complaint alleged that the loan documents concealed the terms of plaintiffs' loans and plaintiffs have alleged facts establishing defendants' liability for the alleged fraud. Accordingly, the court reversed as to plaintiffs' first, second, and sixth causes of action and remanded for further proceedings.View "Alvarez v. BAC Home Loans Servicing, L.P." on Justia Law

Plaintiffs filed a class action suit against defendants, alleging that they violated Section 8 of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2607, by creating a joint venture (Prosperity) to skirt RESPA's prohibition on kickbacks while failing to disclose this business arrangement to its customers. The court concluded that the district court did not abuse its discretion denying plaintiffs' claims because plaintiffs' failed to move for judgment as a matter of law before the jury reached its verdict and because of the highly deferential lenses through which the court must review the issues before it. Accordingly, the court affirmed the judgment of the district court.View "Minter v. Wells Fargo Bank, N.A." on Justia Law

Bormes, an attorney, tendered the filing fee for a lawsuit via pay.gov, which the federal courts use to facilitate electronic payments. The web site sent him an email receipt that included the last four digits of his credit card’s number, plus the card’s expiration date. Bormes, claiming that the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681c(g)(1) allows a receipt to contain one or the other, but not both, filed suit against the United States seeking damages. In an earlier appeal the Supreme Court held that the Little Tucker Act, 28 U.S.C. 1346(a)(2), does not waive sovereign immunity on a suit seeking to collect damages for an asserted violation of FCRA and remanded for determination of “whether FCRA itself waives the Federal Government’s immunity to damages under 1681n.” The Seventh Circuit held that although the United States has waived immunity against damages actions of this kind, it did not violate the statute on the merits. The statute as written applies to receipts “printed … at the point of the sale or transaction.” The email receipt that Bormes received met neither requirement. View "Bormes v. United States" on Justia Law

Haddad bought his condominium in 1991 and lived in the unit until 2005, when he began renting it out. In 2008, a law firm, representing the association, sent Haddad a notice of delinquency, stating that Haddad owed $803 in unpaid condominium assessments, $40 in late charges, and $55 in legal fees and costs. Haddad notified the firm that he disputed the amount demanded, that he had never missed a monthly dues payment, but that he had been “singled out and charged with various violations” by the management company. Correspondence continued for several months, with the amount owed increasing each month and Haddad contesting the charges. The law firm ultimately recorded a Notice of Lien, which was discharged about six months later. Haddad sued under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, and the Michigan Collection Practices Act, alleging use of a false, deceptive or misleading representation in the collection of a debt, and continuing collection of a disputed debt before verification of the debt. The district court rejected the claims on the ground that the debt was commercial because the unit was rented when collection began. The Sixth Circuit court reversed, holding that an obligation to pay assessments arose from the original purchase and constituted a “debt” under the FDCPA. On remand, the district court granted summary judgment, finding that the firm had properly verified the debt and that the collection efforts were not deceptive or misleading. The Sixth Circuit reversed and remanded, based on failure to properly verify the debt.View "Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC" on Justia Law

Plaintiff appealed the dismissal of her complaint alleging that defendants fraudulently procured a mortgage on her home, and thereafter sought to foreclose on that mortgage, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961 et seq., the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., the New York General Business Law, N. Y. Gen. Bus. Law 349, and common law. The district court denied plaintiff's motion for partial summary judgment on the issues of liability and granted the motions of defendants for summary judgment dismissing the claims against them, ruling that, because plaintiff failed to disclose these claims in a 2006 proceeding under Chapter 13 of the Bankruptcy Code, her present suit was barred for lack of standing or by collateral estoppel. The court considered all of the parties' arguments and, except to the extent indicated, have found them to be without merit. The court affirmed the judgment in regards to the denial of plaintiff's motion for partial summary judgment in her favor and the grant of defendants' motions for summary judgment dismissing her claims under RICO, ECOA, New York Business Law 349, and for negligent misrepresentation. The court vacated so much of the judgment as dismissed plaintiff's claims for violation of TILA and for common-law fraud, and remanded for further proceedings.View "Crawford v. Franklin Credit Management Corp." on Justia Law

Med‐1 buys delinquent debts and purchased Suesz’s debt from Community Hospital. In 2012 it filed a collection suit in small claims court and received a judgment against Suesz for $1,280. Suesz lives one county over from Marion. Though he incurred the debt in Marion County, he did so in Lawrence Township, where Community is located, and not in Pike Township, the location of the small claims court. Suesz says that it is Med‐1’s practice to file claims in Pike Township regardless of the origins of the dispute and filed a purported class action under the Fair Debt Collection Practices Act venue provision requiring debt collectors to bring suit in the “judicial district” where the contract was signed or where the consumer resides, 15 U.S.C. 1692i(a)(2). The district court dismissed after finding Marion County Small Claims Courts were not judicial districts for the purposes of the FDCPA. The Seventh Circuit initially affirmed, but, on rehearing en banc, reversed, holding that the correct interpretation of “judicial district or similar legal entity” in section 1692i is the smallest geographic area that is relevant for determining venue in the court system in which the case is filed. View "Suesz v. Med-1 Solutions, LLC" on Justia Law

Plaintiffs appealed from the district court's denial of their motion to remand and its dismissal on the merits of their claims against Wells Fargo and Kozeny. The court concluded that, because plaintiffs did not allege that Kozeny owed a tort duty enumerated in the deed of trust, no reasonable basis in fact and law supported plaintiffs' negligence claim against Kozeny; because there was no reasonable basis in fact and law for either of plaintiffs' negligence and breach of fiduciary claims, it follows that Kozeny was fraudulently joined and that the district court properly denied plaintiffs' motion to remand; the court modified the district court's dismissal of the claims against Kozeny to be without prejudice for lack of subject matter jurisdiction; and because Kozeny - the only nondiverse defendant - was dismissed, the district court properly retained federal diversity jurisdiction over plaintiffs' remaining claims against Wells Fargo. Because plaintiffs failed to state a claim of wrongful foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020.1, negligence, or negligent misrepresentation, the district court properly granted Wells Fargo's motion to dismiss. View "Wivell, et al v. Wells Fargo Bank, N.A., et al." on Justia Law

Plaintiffs appealed from the district court's denial of their motion to remand and its dismissal on the merits of their claims against Wells Fargo and Kozeny. The court concluded that, because plaintiffs did not allege that Kozeny owed a tort duty enumerated in the deed of trust, no reasonable basis in fact and law supported plaintiffs' negligence claim against Kozeny; because there was no reasonable basis in fact and law for either of plaintiffs' negligence and breach of fiduciary claims, it follows that Kozeny was fraudulently joined and that the district court properly denied plaintiffs' motion to remand; the court modified the district court's dismissal of the claims against Kozeny to be without prejudice for lack of subject matter jurisdiction; and because Kozeny - the only nondiverse defendant - was dismissed, the district court properly retained federal diversity jurisdiction over plaintiffs' remaining claims against Wells Fargo. Because plaintiffs failed to state a claim of wrongful foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020.1, negligence, or negligent misrepresentation, the district court properly granted Wells Fargo's motion to dismiss. View "Wivell, et al v. Wells Fargo Bank, N.A., et al." on Justia Law