December 2017 Update
In a decision discussing the Bankruptcy Code’s protections against false or deceptive filings of proofs of claim, the United States Supreme Court found that filing a proof of claim in the bankruptcy court was not “unfair” under the Fair Debt Collection Practices Act (FDCPA) (15 USC §§1692–1692p). Midland Funding, LLC v Johnson (2017) ___ US ___, 137 S Ct 1407. See §2.4.
The United States District Court for the Southern District of California found that the Bankruptcy Code preempts an FDCPA claim altogether when the claim is grounded on a violation of the Bankruptcy Code. Scally v Ditech Fin., LLC (SD Cal, Jan. 26, 2017, No. 16cv1992-WQH-WVG) 2017 US Dist Lexis 11701. See §2.4.
Even when the debtor is unrepresented, creditor’s defense counsel is not subject to the FDCPA, unless other reasons exist for counsel to be subject to it. Bird v Real Time Resolutions, Inc. (ED Cal, Feb. 17, 2017, No. 5:16-cv-04614-EJD) 2017 US Dist Lexis 23240. See §2.9.
Entities who acquire obligations through corporate mergers and acquisitions are not subject to the FDCPA, because they are not “debt collectors” as defined under the FDCPA. Henson v Santander Consumer USA Inc. (2017) ___ US ___, 137 S Ct 1718. See §2.13.
A trustee pursuing a nonjudicial foreclosure is not a debt collector under the FDCPA. Ho v Recontrust Co., N.A. (9th Cir 2017) 858 F3d 568. See §2.13.
Settling a split of authority, the Court of Appeals for the Ninth Circuit found that homeowners and condominium association fees are subject to the FDCPA. Mashiri v Epsten Grinnell & Howell (9th Cir 2017) 845 F3d 984. See §2.18.
For a false or misleading statement by a debt collector to be actionable, it must be material. Afewerki v Anaya Law Group (9th Cir, Aug. 18, 2017, No. 15-56510) 2017 US App Lexis 15657. See §2.34.
California enacted the Identity Theft Resolution Act (Stats 2016, ch 376), which amends CC §§1785.16.2 and 1788.2 and requires debt collectors, when informed by a debtor that a debt is the result of fraud or identity theft, to engage in necessary due diligence to make a determination of whether the debt actually belongs to the debtor by taking specified actions. See §2.44.
The Consumer Financial Protection Bureau (CFPB) has issued a report highlighting concerns and issues that it has addressed in the past year: CFPB Supervisory Highlights Consumer Report Special Edition (Mar. 2, 2017). See §2A.1.
The Consumer Financial Protection Act of 2010 (Pub L 111–203, 124 Stat 1376) is a law of general applicability and gives the CFPB broad investigative authority such that Indian tribal lending entities were subject to its jurisdiction. CFPB v Great Plains Lending, LLC (9th Cir 2017) 846 F3d 1049. See §2A.9.
The CFPB has updated its Supervision and Examination Manual as of August 2017. See §§2A.11, 2A.12, 2A.14, 2A.17–2A.19.
In a consent order, the CFPB ordered the Navy Federal Credit Union (Navy FCU) to provide $23 million in restitution to debtors impacted by Navy FCU’s improper debt collection activities. In the Matter of Navy Federal Credit Union (Oct. 11, 2016) CFPB File No. 2016–CFPB–0024. See §2A.21A.
The amounts of civil money penalties that the CFPB may assess for violations of federal consumer financial law have been increased. 12 CFR §1083.1. See §2A.24.
A new section on the constitutionality of the Telephone Consumer Protection Act (TCPA) (47 USC §227) has been added in chap 2B. See §2B.8A.
In considering a case on remand from the Supreme Court, the Ninth Circuit found that statutory violations of the Fair Credit Reporting Act (FCRA) (15 USC §§1681–1681x) satisfied both the particularized and concrete harm requirements for constitutional Article III injury-in-fact standing, permitting the plaintiff to sue on the basis of the statutory violations alone. Robins v Spokeo, Inc. (9th Cir, Aug. 15, 2017, No. 11–56843) 2017 US App Lexis 15211 (Spokeo III). See §§2B.15, 2B.16, 2C.18.
The Third Circuit held that receipt of a single prerecorded voicemail sent without express consent causes intangible harm sufficient to afford Article III standing under the TCPA. Susinno v Work Out World Inc (3d Cir 2017) 862 F3d 346. See §2B.16.
Calling the plaintiff numerous times without his or her consent may give rise to standing under the TCPA, and calls that serve both informational and telemarketing purposes qualify as telemarketing. See Flores v Access Ins. Co. (9th Cir. Mar. 13, 2017, No. 2:15-cv-02883) 2017 US Dist Lexis 36486. See §2B.16, 2B.41.
The Ninth Circuit also found that the mere receipt of unsolicited telemarketing calls may confer standing under the TCPA. Van Patten v Vertical Fitness Group, LLC (9th Cir 2017) 847 F3d 1037. See §§2B.16, 2B.25, 2B.29, 2B.36, .
One federal district court found that each phone call must be considered separately for purposes of assessing standing under the TCPA (Romero v Department Stores Nat’l Bank (SD Cal, Aug. 5, 2016, No. 15–CV-193–CAB-MDD) 2016 US Dist Lexis 110889), while another court found that a number of unwanted calls may be considered in the aggregate to determine their impact (O’Shea v Am. Solar Solution (SD Cal, June 27, 2017, No. 3:14-cv-00894-L-RBB) 2017 US Dist Lexis 99583). See §2B.16.
The Seventh Circuit held that a TCPA class action cannot be mooted by the payment of the full amount recoverable by the named plaintiff in a class action. Fulton Dental v Bisco, Inc. (7th Cir 2017) 860 F3d 541. See §2B.22.
When the consumer agrees to a contract that contains a clause giving the caller the right to call the customer’s phone number, the consumer may not unilaterally alter the terms of the contract to revoke consent. Reyes, Jr. v Lincoln Auto. Fin. Servs. (2d Cir 2017) 861 F3d 51. See §§2B.34A, 2B.35.
For purposes of the TCPA, revocation of express consent to be called by telemarketers may be partial. Schweitzer v Comenity Bank (11th Cir, Aug. 10, 2017, No. 16-10498) 2017 US App Lexis 14768. See §2B.36A.
Although Postal Instant Press, Inc. v Kaswa Corp. (2008) 162 CA4th 1510 held that the concept of reverse piercing of the corporate veil does not apply in California, the Fourth Appellate District of the Court of Appeal of California has held that Postal Instant Press is limited to corporations and reverse veil piercing is available for limited liability companies. Curci Invs., LLC v Baldwin (2017) 14 CA5th 214. See §§3.106, 11.1.
The California Supreme Court has found that an agreement that is procedurally unconscionable but not substantively unconscionable is enforceable. Baltazar v Forever 21, Inc. (2016) 62 C4th 1237. See §4.31.
The California Supreme Court found that a dealership’s practice of backdating post purchase financing contracts did not violate the Automobile Sales Finance Act. Raceway Ford Cases (2016) 2 C5th 161. See §4.42.
The former San Francisco Superior Court Rules concerning electronic service have been amended such that all electronically filed documents must now be served electronically. There is no longer an exemption from this requirement under Cal Rules of Ct 2.251(c). San Francisco Superior Ct R 2.11(P). See §§4.63, 4.70, 4A.33–4A.34, 5.14, 5.21, 5.28–5.29, 5.35, 5.37, 5.39–5.40, 7.29, 8.18, 8.23–8.24, 8.38, 8.40–8.41, 8.47, 8.51–8.53, 13.23A.
A borrower did not waive an usury claim by signing a forbearance agreement containing a unilateral general release of his claims against the lender. Hardwick v Wilcox (2017) 11 CA5th 975. See §4.90.
A savings account maintained by the judgment debtor for the qualified higher education expenses of the debtor’s children under 26 USC §529 was not exempt from the collection efforts of the judgment debtor. O’Brien v Ambs (2016) 246 CA4th 942. See §4A.56.
In a fraudulent transfer lawsuit, the transferees of the debtor’s property successfully established a good faith defense by proving they did not have actual knowledge of the debtor’s fraudulent intent in conveying the property to his father, who then obtained a reverse mortgage on the property from the transferees. Nautilus, Inc. v Yang (2017) 11 CA5th 33. See §§8.7A, 12.115.
The scope of questions that may be asked by a judgment creditor in a third-party judgment debtor examination may include the location of assets no longer in the possession of the third party. Yolanda’s, Inc. v Kahl & Goveia Commercial Real Estate (2017) 11 CA5th 509. See §8.20.
The California Supreme Court clarified that for sound reasons based in logic and policy, the 25-percent existing cap on creditor reach of discretionary income distributions under Prob C §15306.5 applies equally to distribution orders of principal and interest made under Prob C §15307. Carmack v Reynolds (2017) 2 C5th 844. See §11.43.
Even though a debtor’s disclaimer of trust property prevented creditors from accessing the property under Prob C §283, the disclaimer was preempted by the fraudulent transfer provisions of the Fair Debt Collection Practices Act (FDCPA) (15 USC 1692–1692p) such that the United States Small Business Association could reach the property to satisfy the debtor’s debt. United States SBA v Bensal (9th Cir 2017) 853 F3d 992. See §12.22.
A claim based on a judgment entered against debtors for fraudulent conversion of stock was not subject to subordination. Khan v Barton (In re Khan) (9th Cir 2017) 846 F3d 1058. See §12.94.
A law firm’s prepaid retainer agreement with a debtor qualified as an executory contract and was rejected in bankruptcy by operation of law under 11 USC §365. Ulrich v Schian Walker, P.L.C. (In re Boates) (BAP 9th Cir 2016) 551 BR 428. See §12.99.
Federal regulations reflecting the holdings of U.S. v Windsor (2013) ___ US ___, 133 S Ct 2675 and Obergefell v Hodges (2015) ___ US ___, 135 S Ct 2584 regarding same-sex marriage and defining terms in the IRC describing the marital status of taxpayers for federal tax purposes were issued in 2016. TD 9785, 2016–2 Cum Bull 361. See §13.50.
A new section has been added in chap 14 discussing how a creditor who is a personal representative of a decedent debtor—or the attorney of a personal representative—may make a claim against the decedent’s estate. See §14.17A.