Justia Banking Opinion Summaries

Beginning in 1998, consumer class actions were filed against Trans Union alleging violation of the Fair Credit Reporting Act, 15 U.S.C. 1681, by selling consumer information to target marketers and credit and insurance companies. The court approved a settlement. Trans Union agreed to give all class members “basic” credit monitoring services. Class members could also either claim cash from a $75 million fund or claim “enhanced” in-kind relief consisting of additional financial services. Trans Union was to provide $35 million worth of enhanced relief. The class was estimated at 190 million people. The Act authorizes damages of between $100 and $1000 per consumer for willful violations, so Trans Union faced theoretically possible liability of $190 billion. To persuade the court to approve the settlement, the parties agreed to an unusual provision that preserved substantive claims after settlement. Instead of releasing their claims, class members who did not get cash or enhanced in-kind relief retained the right to bring individual claims. Trans Union also partially waived the limitations period. The settlement authorized reimbursements from the fund to Trans Union itself “equal to any amounts paid to satisfy settlements or judgments arising from Post-Settlement Claims,” not including defense costs. There have been more PSCs than expected, depleting the fund. In a second appeal, the Seventh Circuit affirmed the orders authorizing disbursement of the remainder of the fund. View "Wheelahan v. Trans Union LLC" on Justia Law

Plaintiffs received letters from defendants that stated: Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office within 30 days from receiving this notice, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification. The Fair Debt Collection Practices Act, 15 U.S.C 1692g(a) requires the debt collector to include “a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector” and a “statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector.” Plaintiffs claimed noncompliance because the notice omits the phrase “that the debt, or any portion thereof, is disputed.” One letter referred to “your just debt;” the recipient alleged that the phrase suggests that the debt’s validity has been confirmed. Four trial courts dismissed. The Seventh Circuit affirmed, stating that any written request for verification constitutes a dispute for purposes of the Act. The reference to “just debt” was mere puffery. View "Borucki v. Vision Fin. Corp." on Justia Law

Plaintiffs, a class of cardholders who paid credit card penalty fees, challenged those fees on constitutional grounds. Plaintiffs argued that the fees are analogous to punitive damages imposed in the tort context and are subject to substantive due process limits described in BMW of North America, Inc. v. Gore. The court concluded that the due process analysis developed in the context of jury-awarded punitive damages was not applicable to contractual penalty clauses. Further, there was no derivative liability under the Unfair Competition Law. Accordingly, the district court did not err in dismissing the complaint where constitutional due process jurisprudence did not prevent enforcement of excessive penalty clauses in private contracts and the fees were permissible under the National Bank Act, 12 U.S.C. 85-86, and the Depository Institutions Deregulation and Monetary Control Act (DIDMCA), 12 U.S.C. 1831d(a). View "In re: Late Fee & Over-Limit Fee Litigation" on Justia Law

Plaintiffs, property owners, filed an action against Defendant, a bank, alleging eleven counts of state law violations for Defendant’s decision to deny Plaintiffs’ application for a loan modification under the Home Affordable Modification Program and to foreclose on Plaintiffs’ home. The district court granted Defendant’s motion to dismiss. The First Circuit Court of Appeals affirmed the district court’s dismissal of Plaintiffs’ amended complaint, holding that the district court properly dismissed Plaintiffs’ claims for breach of the implied obligation of good faith and fair dealing, violation of the Massachusetts Consumer Credit Cost Disclosure Act, rescission, negligence, and promissory estoppel. View "MacKenzie v. Flagstar Bank, FSB" on Justia Law

Plaintiffs filed suit in state court alleging that Quicken Loans originated unlawful loans in West Virginia and that Defendant Appraisers, which included both the named appraisers and the unnamed class of appraisers, were complicit in the scheme. Quicken Loans removed to federal court under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d). The district court then granted plaintiffs' motion to remand to state court under the local controversy exception. Quicken Loans appealed. The court vacated and remanded for a determination by the district court as to whether the named defendant appraisers satisfied the "at least 1 defendant" requirement of the local controversy exception. View "Quicken Loans Inc. v. Alig" on Justia Law

Plaintiff was sued by Asset Acceptance, a debt collector, for a debt arising from her purchase of natural gas for household use. She sued, claiming that Asset Acceptance sued after the statute of limitations on the creditor’s claim had run, in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692. Plaintiff moved to certify a class of debtors sued, after the limitations period, by Asset Acceptance for debts from sale of natural gas to consumers. The district judge waited 25 months and denied the motion. The class would have 793 members, of whom 343 reside in Illinois; 290 were sued four to five years after the claims accrued and 45 were sued more than five years after accrual. The judge shrank the class to 45, then to 23, ruling that suing to collect a debt but failing to serve the defendant did not violate the Act even if the suit was untimely, and concluded that 23 was too small a number to justify a class action. The Seventh Circuit reversed, finding that all 343 Illinois residents were proper class members because the applicable statute of limitations is four years. Certification need not be limited to Illinois residents or to claims under the federal Act. View "Phillips v. Asset Acceptance, LLC" on Justia Law

In 2006, Plaintiff financed a purchase of residential property. Residential Finance was the lender; Chase serviced the loan. In 2011 Plaintiff sent Chase a “Qualified Written Request” under the Real Estate Settlement Procedures Act, 12 U.S.C. 2605(e), requesting information about the amount owed on the loan, the identity of the “current holder,” the date Chase began servicing the loan, and a breakdown of accrued charges. Plaintiff disputed late fees and other charges and stated that Chase had refused a loan modification for which she qualified and had failed to provide a copy of the Note as requested. Chase sent some material, but stated that any requested information not included was either unavailable or considered proprietary; the letter did not provide the identity of the loan’s owner or information on the correctness of Plaintiff’s account, and did not provide contact information for obtaining assistance. Plaintiff sued, alleging that she made excess payments that Chase failed to credit, violations of the Truth in Lending Act, 15 U.S.C. 1641(f)(2), RESPA, the Ohio Consumer Sales Practices Act, and conversion. Chase finally identified the owner of the loan: Fannie Mae. The district court dismissed. The Sixth Circuit affirmed with respect to TILA, but reversed dismissal of the RESPA claim, finding that Plaintiff adequately alleged causation of damages. View "Marais v. Chase Home Fin., LLC" on Justia Law

Plaintiffs appealed from the district court's grant of defendants' motion for summary judgment on plaintiffs' Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., claims and denial of plaintiffs' motion for reconsideration of an earlier dismissal of their Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq., claims against The Money Store. The court held that the district court erred in concluding that The Money Store was not a "debt collector" under the false name exception to FDCPA liability. Where a creditor, in the process of collecting its own debts, hires a third party for the express purpose of representing to its debtors that the third party is collecting the creditor's debts, and the third party engages in no bona fide efforts to collect those debts, the false name exception exposes the creditor to FDCPA liability. In regards to the TILA claims, the court concluded that the district court correctly determined that, because plaintiffs' mortgage documents did not name The Money Store as the person to whom the debt was initially payable, The Money Store was not a "creditor" under TILA and was therefore not subject to liability. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Vincent v. The Money Store" 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 affirmed.View "Suesz v. Med-1 Solutions, LLC" on Justia Law

Serna defaulted on a loan he obtained through the Internet that was subsequently purchased by Samara. Attorney Onwuteaka, who owns Samara, obtained a default judgment and attempted to collect. Serna then filed suit in federal court, alleging that because he neither resided nor entered the loan agreement in Harris County where the judgment entered, the suit violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, venue requirement. A magistrate found Serna’s suit was untimely under the FDCPA’s one-year limitations period because he filed his complaint more than one year after Onwuteaka filed his petition in the underlying debt-collection action. The Fifth Circuit reversed, that the alleged FDCPA violation arose only after Serna received notice of the underlying debt collection action. The FDCPA provides that a debtor may bring an action “within one year from the date on which the violation occurs.” A violation of does not occur until the debt-collection suit is filed and the alleged debtor is notified of the suit.View "Serna v. Law Office of Joseph Onwuteaka" on Justia Law