Justia Consumer Law Opinion Summaries

Leonard and Pauline Cortellino executed a promissory note and mortgage in 2006 for the purchase of property in Maine. The mortgage, originally granted to Mortgage Electronic Registration Systems (MERS) as nominee for Mortgage Lenders Network USA, Inc. (MLN), was later assigned multiple times, ultimately to Wilmington Savings Fund Society, FSB, as Trustee for Brougham Fund I Trust in 2016. However, MLN filed for bankruptcy in 2007 and ceased operations after the bankruptcy concluded in 2012. Due to deficiencies in prior assignments following the Maine Supreme Judicial Court’s decision in Bank of America, N.A. v. Greenleaf, parties sought to cure the assignment defects. In 2021, a receiver for MLN, appointed by the Delaware Court of Chancery, assigned the Cortellino mortgage to Wilmington Savings, which was recorded in 2022.After the Cortellinos defaulted on their mortgage payments in 2014, Wilmington Savings sent them a notice of default and right to cure in August 2022. Wilmington Savings filed a foreclosure action in the Maine Superior Court (Androscoggin County) in October 2022. Following a trial in October 2024 and post-trial submissions, the Superior Court entered a judgment of foreclosure and sale in April 2025. The court found Wilmington Savings owned the mortgage and denied the Cortellinos’ motion for additional findings. The Cortellinos appealed.The Maine Supreme Judicial Court reviewed the Superior Court’s factual findings for clear error and its legal conclusions de novo. The Court held that Wilmington Savings was the rightful owner of the mortgage due to the valid receiver’s assignment, but found that the right-to-cure notice was legally defective. The notice overstated the amount required to cure the default and contained numerical inconsistencies, failing to strictly comply with Maine’s statutory requirements. The Court vacated the judgment and remanded for entry of dismissal. View "Wilmington Savings Fund Society v. Cortellino" on Justia Law

A lessee filed a lawsuit against a vehicle manufacturer and an authorized dealership, alleging that his leased vehicle had multiple defects that could not be repaired after several attempts. The lessee claimed he revoked acceptance of the vehicle due to these defects, but the defendants refused to provide the remedies he sought. Both the lease agreement and the manufacturer’s warranty booklet contained arbitration provisions, including opt-out clauses, and the lessee signed documents confirming receipt of these materials.The Superior Court of Los Angeles County denied the defendants’ motion to compel arbitration. The court found that the defendants did not establish the existence of enforceable arbitration agreements. Specifically, it determined there was insufficient evidence that the dealership, Standard Motor, was doing business as the named lessor in the lease. The court also concluded that the manufacturer, American Honda Motor Co., could not enforce the arbitration provision, and that the warranty booklet’s arbitration agreement was unenforceable due to concerns about consumer assent.The California Court of Appeal, Second Appellate District, Division Two, reviewed the case. It held that the defendants met their initial burden by presenting copies of the arbitration agreements and reciting the relevant terms. The court emphasized that the lessee’s own pleadings constituted a judicial admission that Standard Motor was doing business as the named lessor, and the lessee did not dispute the authenticity or existence of the arbitration agreements. The court also found the lessee failed to present evidence disputing the existence of an arbitration agreement in the warranty booklet. The Court of Appeal reversed the trial court’s order and remanded with instructions to grant the motion to compel arbitration. View "Kostandian v. American Honda Motor Co." on Justia Law

Guild Mortgage Company LLC and CrossCountry Mortgage LLC are direct competitors in the residential mortgage industry. Over an 18-month period, several Guild employees in the Kirkland, Washington branch, including the branch manager and other high-level staff, were allegedly recruited by CrossCountry while still employed by Guild. According to the complaints, these employees solicited their colleagues to also move to CrossCountry, diverted customers and loan applications, and accessed Guild’s computer systems to take confidential and proprietary information. The employees had signed agreements with Guild prohibiting such conduct, and Guild subsequently lost nearly its entire Kirkland branch workforce to CrossCountry.After Guild initiated arbitration against the former employees and prevailed, it filed a lawsuit in the Superior Court of San Diego County against CrossCountry. Guild’s claims included interference with economic advantage, interference with contract, violation of California’s Comprehensive Computer Data Access and Fraud Act (CCDAFA), unfair competition, and aiding and abetting tortious conduct. The Superior Court sustained CrossCountry’s demurrers, finding that the claims were preempted by the California Uniform Trade Secrets Act (CUTSA) or otherwise failed to state a cause of action, and dismissed the case without leave to amend.The Court of Appeal, Fourth Appellate District, Division One, reviewed the case. It held that Guild had adequately alleged actionable duties of loyalty and, for the branch manager, fiduciary duty, that were breached by the employees and aided by CrossCountry. The court found that the claims for interference and violation of the CCDAFA were not displaced by CUTSA because they arose from conduct beyond trade secret misappropriation. The court also held that the unfair competition claim could proceed since the other claims were viable. The Court of Appeal reversed the judgment in favor of CrossCountry and remanded for further proceedings. View "Guild Mortgage Company v. CrossCounty Mortgage" on Justia Law

A debt buyer sought to collect a credit card debt from a consumer, alleging that it had purchased the debt from the original creditor, Comenity Bank. In its complaint filed in county court, the debt buyer attached a bill of sale, two credit card statements, and an affidavit from its custodian of records. However, the bill of sale did not specifically reference the consumer’s account, as the accompanying asset schedule left the relevant account information blank. The affidavit attempted to confirm the purchase of the consumer’s debt but was not accompanied by a non-affidavit document establishing ownership of the specific debt.The county court found that the debt buyer’s complaint complied with the Colorado Fair Debt Collection Practices Act’s requirement to attach documents establishing ownership of the debt, reasoning that the bill of sale and affidavit were sufficient. The county court ruled against the consumer’s counterclaim, which sought damages, costs, and attorney fees for violation of the Act. The Boulder County District Court affirmed the county court’s judgment, concluding that the county court did not clearly err in determining compliance with the statutory requirements.Upon certiorari review, the Supreme Court of Colorado held that the debt buyer’s complaint did not comply with section 5-16-111(2)(b) of the Act because it lacked a non-affidavit writing establishing ownership of the consumer’s specific debt. The Court clarified that an affidavit cannot substitute for the required documentary evidence under the Act. The Supreme Court reversed the district court’s judgment and remanded the case for determination of damages, costs, and attorney fees owed to the consumer, holding that the debt buyer violated the Act and is liable under section 5-16-113. View "Wright v. Portfolio Recovery Assocs." on Justia Law

The plaintiff, after facing possible foreclosure on her home during the Covid pandemic, engaged what she believed to be a nonprofit law clinic offering free foreclosure prevention services. She alleges that the organization, in fact, operated as a front for a predatory lending scheme involving multiple corporate defendants, including the appellant, Professional Business Management Corporation (PBMC). The plaintiff claims that the defendants orchestrated a scheme where distressed homeowners were enticed with promises of free services, only to be trapped in high-fee, short-term loans that ultimately forced them to sell their homes under duress.In the Superior Court of Los Angeles County, the plaintiff named PBMC as a defendant in her second amended complaint, designating it as an alter ego, agent, or successor of the signatory to the service agreement, Nonprofit Alliance of Consumer Advocates (NACA Law). When NACA Law moved to compel arbitration based on a clause in the agreement, the court granted that motion as to NACA Law. However, PBMC's attempt to join the motion was denied because PBMC was not a party to the agreement and provided no evidence of an agency or alter ego relationship. The court later denied PBMC’s own motion to compel arbitration, finding that PBMC had failed to carry its burden to show that it could enforce the arbitration agreement as a nonsignatory.Upon appeal, the Court of Appeal of the State of California, Second Appellate District, Division Eight, affirmed the trial court’s order. The court held that mere unverified allegations in a complaint that a nonsignatory is a successor, agent, or alter ego of a signatory do not constitute a judicial admission and are insufficient, without supporting evidence, to allow the nonsignatory to compel arbitration. PBMC’s lack of evidence and its denial of any agency relationship precluded enforcement of the arbitration agreement. The order denying PBMC’s motion to compel arbitration was affirmed. View "Watson v. Professional Business Management Corp." on Justia Law

A nonprofit organization focused on reducing consumer exposure to chemical toxins alleged that two companies selling dietary supplements violated California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). The nonprofit, through its law firm, sent the required pre-suit notice to the companies, public prosecutors, and the Attorney General. The notice identified the nonprofit and its chief executive officer but did not expressly provide the address and telephone number of a responsible individual within the organization, instead listing only the law firm’s contact information. The nonprofit later filed suit seeking civil penalties and injunctive relief.The Superior Court of Alameda County granted the defendants’ motion for judgment on the pleadings, finding that the pre-suit notice did not strictly comply with the relevant regulation, which requires the name, address, and telephone number of the noticing individual or a responsible individual within the noticing entity. The trial court held that providing only an officer’s name and the law firm’s contact information was insufficient, and entered judgment for the defendants.The California Court of Appeal, First Appellate District, Division Two, reviewed the matter de novo. The appellate court concluded that the doctrine of substantial compliance applies to the statutory and regulatory pre-suit notice requirements under Proposition 65. The court held that, although the notice did not literally meet every technical requirement, it substantially complied by providing sufficient information for the defendants and public officials to assess and respond to the alleged violations. Accordingly, the appellate court reversed the judgment, directed the trial court to deny the motion for judgment on the pleadings, and ordered costs to the plaintiff. View "Chemical Toxin Working Group v. Best Naturals, Inc." on Justia Law

In this case, the plaintiff, acting individually and on behalf of a proposed class, alleged that the defendant, a health insurance marketing company, violated the Telephone Consumer Protection Act (TCPA) by sending her a prerecorded telemarketing call without her prior express consent. The defendant argued that the plaintiff had given such consent when she used a third-party “lead generation” website operated by a non-party, where she filled out a form seeking insurance quotes. The online process included an agreement (the “Terms of Use”) with an arbitration clause covering disputes related to the website’s use and consent to be contacted by marketing partners, although the defendant was not named in the agreement.After the plaintiff filed suit in the United States District Court for the Eastern District of North Carolina, the defendant moved to compel arbitration, arguing that it could enforce the arbitration clause as a third-party beneficiary under Delaware law. The district court denied the motion, holding that, although the defendant benefited from the agreement, it was not a third-party beneficiary because the benefit was not central to the contract’s purpose. The court also determined that, under Fourth Circuit precedent, the court—not an arbitrator—must decide whether a non-signatory like the defendant can enforce the arbitration agreement.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of arbitration de novo. The Fourth Circuit agreed that the district court, not an arbitrator, was the proper forum to decide the defendant’s standing to enforce the arbitration clause. However, the court disagreed with the district court’s interpretation of Delaware law, concluding that the benefit to the defendant was material to the agreement’s purpose, making the defendant a third-party beneficiary. The Fourth Circuit reversed the district court’s order and remanded with instructions to compel arbitration and stay the federal court proceedings. View "Sessoms v. USHealth Advisors, LLC" on Justia Law

Donte Jackson received a $30,000 loan from WebBank, which was later sold to Velocity Investments, LLC. After Jackson defaulted on the loan, Velocity, represented by the law firm Protas, Spivok & Collins LLC (PSC), sued Jackson in Maryland state court to collect the debt. Velocity eventually dismissed the state court suit with prejudice. Subsequently, Jackson brought a class action lawsuit against both Velocity and PSC, alleging that their practice of suing on time-barred debts was unlawful.In the United States District Court for the District of Maryland, both Velocity and PSC moved to compel arbitration based on an arbitration clause in Jackson’s original promissory note. The district court found that Velocity, as a subsequent holder of the note, was a party to the arbitration agreement but had waived its right to arbitrate by filing suit in state court. The court ruled that PSC was not a party to the agreement, as it did not fit the contractual definition of an entity “servicing” the note, which the court interpreted in accordance with Maryland law. Only PSC appealed the denial of its motion to compel arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s ruling de novo. The Fourth Circuit held that PSC, as the law firm representing Velocity, was not a party to the arbitration agreement because it did not “service” the note in the relevant contractual sense, which involves collecting and maintaining a payment schedule for the loan. The court concluded that the arbitration agreement covered only creditors and loan servicers, not lawyers. The Fourth Circuit affirmed the district court’s denial of PSC’s motion to compel arbitration. View "Jackson v. Protas, Spivok & Collins LLC" on Justia Law

A consumer purchased a licorice product manufactured by a Minnesota company, relying on packaging that stated the product was “Naturally Flavored,” “Natural Strawberry & Raspberry Flavored Licorice,” and “Free of . . . Artificial Colors & Flavors.” The consumer later learned, through laboratory testing, that the product contained DL malic acid, which is an artificial flavor created from petrochemical sources. The consumer alleged that this ingredient rendered the product’s labeling false or misleading, and filed a putative class action in California, asserting claims for violation of the California Consumers Legal Remedies Act, unjust enrichment, and breach of express warranty.The United States District Court for the Southern District of California dismissed the complaint with prejudice. The court found that the complaint failed to plead with sufficient particularity that the malic acid was artificial, thus not meeting the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The district court also held that the plaintiff did not plausibly allege that a reasonable consumer would be misled by the product’s labeling, reasoning that the labels did not explicitly state the product was “all natural” or “100% natural,” and that the ingredients list disclosed both natural and artificial ingredients.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the complaint satisfied Rule 9(b) because it identified the specifics of the alleged fraud and provided details about the laboratory testing. The court also held that the plaintiff plausibly alleged that a reasonable consumer could be misled by the product’s claim to be free of artificial flavors when it allegedly contained an artificial flavor. The case was remanded for further proceedings. View "TRAMMELL V. KLN ENTERPRISES, INC." on Justia Law

An educational technology company was contracted by a county office of education to provide software and technology services to school districts, which involved collecting and storing various types of student data, including medical information. In 2022, the company experienced a data breach that resulted in unauthorized access to student medical records, including those of a minor plaintiff. The minor, through a guardian, filed a class action lawsuit alleging violations of both the Confidentiality of Medical Information Act (CMIA) and the Customer Records Act (CRA), claiming the company was negligent in protecting confidential medical information and failed to provide timely disclosure of the breach.The Superior Court of Ventura County granted the company’s demurrer and dismissed the case, concluding that the plaintiff failed to state a claim under either statute, as the company was not a covered entity under the CMIA or CRA and the plaintiff was not a “customer” under the CRA. The California Court of Appeal, Second Appellate District, Division Six, reversed, finding that the company fell within the scope of both statutes and that the plaintiff had alleged sufficient facts to support both claims. The appellate court also determined that the trial court erred by denying leave to amend the complaint.The Supreme Court of California reversed the appellate decision. The Court held that the plaintiff did not sufficiently allege the company was a “provider of health care” under the CMIA, nor that he was the company’s “customer” under the CRA, so no claim was stated under either statute. However, the Court clarified that under the CMIA, a breach of confidentiality occurs when medical information is exposed to a significant risk of unauthorized access or use, and actual viewing by an unauthorized party is not required. The judgment was reversed and remanded for further proceedings. View "J.M. v. Illuminate Education, Inc." on Justia Law