Justia Consumer Law Opinion Summaries

In 2004, the plaintiffs’ Rockvale, Tennessee home burned down. They replaced it with a 2180-square-foot, “triple-wide” manufactured home purchased from the defendant for $160,230. Defendant was responsible for “normal delivery and installation” on the plaintiffs’ land and warranted that, “[f]or new homes, installation at the initial homesite will be completed in accordance with applicable governmental requirements.” Defendant delivered and installed the home in March 2005, but only one member of the installation crew was identified. He was not licensed to install manufactured homes as required by T.C. 68-126-404(a). Plaintiffs immediately began noticing defects that suggested the home was not level when installed and notified the defendant before they closed the purchase. Defendant assured plaintiffs that it would repair and level the home. After several years of inspections and repair efforts, defendant never levelled or repaired the home to the plaintiffs’ satisfaction. Plaintiffs sued, claiming breach of contract and federal breach of warranty under15 U.S.C.A. 2304, the Magnuson-Moss Warranty Act, “and/or other applicable law.” The district court held that an arbitration clause was invalid and awarded $39,238.29. The Sixth Circuit remanded, concluding that federal jurisdiction did not exist because the home is not a “consumer product” under the Magnuson-Moss Act. View "Bennett v. CMH Homes, Inc." on Justia Law

Plaintiff filed suit against Guthy for violation of Business and Professions Code section 17529.5, alleging, among other things, that Guthy sent them unsolicited commercial email advertisements purporting to be from "Proactive Special Offer," "Wen Hair Care," "Proactive Special Bonus Deal," "Wen Healthy Hair," "Wen by Chaz Dean," "Proactive Bonus Deal," "Proactive Bonus Gift," and "Proactive: Special Offer," which are not names or registered fictitious business names of existing entities, and are not traceable to Guthy via a WHOIS database. The court held that a header line in a commercial email advertisement does not misrepresent the identity of the sender merely because it does not identify the official name of the entity which sent the email, or merely because it does not identify the official name of the entity which sent the email, or merely because it does not identify an entity whose domain name is traceable from an online database, provided the sender's identity is readily ascertainable from the body of the email, as was the case here; the body of the emails made clear that free shipping or free gifts were contingent upon a purchase; a reasonable sender would not have reason to believe that commercial missives like these were "likely to deceive a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message." Accordingly, the court concluded no cause of action was stated for violation of section 17529.5, subdivision (a)(2) or (a)(3) and affirmed the judgment of dismissal. View "Rosolowski v. Guthy-Renker" on Justia Law

A jury found in Bui’s favor on an intentional misrepresentation claim and awarded him $150,000 against Hi-Tech Dental and $50,000 against Hi-Tech’s owner and dental assistant, Nguyen. About three weeks later, before judgment was entered, Bui obtained a permanent injunction requiring Nguyen to identify herself as a dental assistant, not a dentist, in all Hi-Tech advertising, and to refrain from wearing a white dental lab coat. Bui made a post-judgment motion for more than $500,000 in attorney fees pursuant to Code of Civil Procedure 1021.5, arguing that he acted in the role of a private attorney general in obtaining injunctive relief that was beneficial to a large group of potential dental patients. The court awarded $126,974.13. The court of appeal reversed. Bui failed to establish that private enforcement was necessary to protect the public from false advertising by Nguyen; necessity of private enforcement is one of the required elements under section 1021.5. View "Bui v. Nguyen" on Justia Law

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

This was a dispute between two collections agencies. Medical Recovery Services, LLC (MRS) and Bonneville Billing and Collections, Inc. (BBC) both had outstanding accounts relating to the same debtor, Stacie Christ. In 2008, MRS obtained a judgment against Christ for $1,868. MRS then obtained an order for continuing garnishment of Christ's wages at her place of employment, Western States Equipment Company (WSEC), until the judgment, plus interest, was satisfied. WSEC intended to make the first payment on the continuing garnishment, but a WSEC's payroll department employee inadvertently selected "BBC" instead of "BCS," (for Bonneville County Sheriff), on a computer dropdown menu, and sent the first payment of $331.00 to BBC. WSEC repeated the same mistake on two subsequent occasions and sent checks for $394.83 and $357.38 to BBC instead of the Bonneville County Sheriff. BBC had been assigned two accounts involving Christ as the debtor. The first account was assigned on May 7, 2007, in the amount of $325.50. BBC filed a complaint in connection with this account on May 8, 2008, but did not obtain a judgment. The second account was assigned on April 24, 2008, in the amount of $966.86, and BBC had not yet initiated legal efforts to collect on this account. Due to WSEC's payroll mistake, BBC received three checks from WSEC: $331.00 on July 22, 2008; $394.83 on July 28, 2008; and $357.38 on August 12, 2008. In total, WSEC mistakenly sent BBC $1,083.21, which BBC applied to Christ's outstanding accounts. MRS received a letter from the Bonneville County Sheriff alerting MRS to WSEC's errors. The letter indicated that WSEC had also notified BBC of the error but that BBC refused to return the money. After learning of WSEC's payroll mistake, MRS contacted WSEC and instructed WSEC to discontinue the garnishment. MRS sent BBC a demand letter asking for a return of the $1,083.21. BBC acknowledged receiving the checks and stated that it intended to keep the funds since Christ owed on accounts held by BBC. BBC further indicated that, at the time the checks were received, it believed that the funds resulted from wage assignments that Christ had voluntarily initiated to pay her debts. MRS then sued BBC alleging conversion, unjust enrichment, and requesting a constructive trust over the disputed funds in the amount of $1,083.21. Both parties moved for summary judgment. The magistrate court denied MRS' motion, granted BBC's motion, and awarded BBC attorney fees and costs in the amount of $10,658. On May 3, 2011, MRS appealed to the district court. The district court reversed the magistrate court's judgment and: (1) granted MRS summary judgment on the issues of unjust enrichment and conversion; (2) imposed a constructive trust in favor of MRS over the disputed $1,083.21; (3) vacated the magistrate court's order granting BBC attorney fees and costs; (4) remanded the matter to determine a pre-appeal attorney fee award for MRS; and (5) granted MRS attorney fees on appeal. BBC appealed. The Court of Appeals reversed the district court and reinstated the magistrate court's award of attorney fees. Upon review, the Supreme Court concluded the district court erred in finding that BBC was unjustly enriched by MRS, erred in finding that BBC converted MRS' property, and erred in imposing a constructive trust. Accordingly, the district court's memorandum decision and order was reversed. The case was remanded to the district court with instructions to reinstate the magistrate court's award of attorney fees in favor of BBC and to determine an appropriate award in favor of BBC for attorney fees incurred in proceedings before the district court on intermediate appeal. View "MRS v. Bonneville Billing and Collections" on Justia Law

In 2009, Joseph Pierce filed this action against Steven McMullen and Highland Financial, LLC, seeking damages for various violations of the Idaho Consumer Protection Act and for breach of contract, all based upon an alleged scam in which defendants represented that they could protect Pierce from losing his equity in real property that was facing foreclosure. He alleged that the defendants obtained title to his real property pursuant to a promise to assume the loans secured by the property, to market and sell the property, and to pay him at least $50,000 or more from the sale proceeds, depending upon the sale price. He claimed that he deeded the property to defendants, they failed to make the payments on the loans, and that the property was sold at a foreclosure sale. The complaint also alleged that Highland Financial was the alter ego of McMullen. Only McMullen appeared in the action, but he did not deny the allegations of wrongdoing in the complaint. When McMullen failed to appear at the trial, the district court ordered that he was in default, that Pierce prevailed on his complaint, and that he could present evidence of his damages. Pierce did so, but the district court later dismissed the action on the ground that Mr. Pierce had failed to prove liability. Finding that decision was made in error, the Supreme Court reversed the district court's decision and remanded the case for further proceedings. View "Pierce v. McMullen" on Justia Law

Redbox operates automated self‐service kiosks at which customers rent DVDs and Blu‐ray discs with a debit or credit card. Redbox outsources certain functions to service providers, including Stream, which provides customer service when, for example, a customer encounters technical problems at a kiosk and requires help from a live person. If resolution of the issue requires accessing that customer’s video rental history the Stream employee will do so. Redbox has granted Stream access to the database in which Redbox stores relevant customer information. Plaintiffs challenged Stream’s ability to access customer rental histories and Stream’s use of customer records during employee training exercises as violating the Video Privacy Protection Act, which prohibits “video tape service provider[s]” like Redbox from “disclos[ing], to any person, personally identifiable information concerning any consumer of such provider,” 18 U.S.C. 2710(b)(1). The Act includes an exception for disclosure incident to the video tape service provider’s ordinary course of business, defined as debt collection activities, order fulfillment, request processing, and the transfer of ownership. The district court granted Redbox summary judgment. The Seventh Circuit affirmed, concluding that Redbox’s actions fall within the exception for disclosures in the ordinary course of business: disclosures incident to “request processing.” View "Sterk v. Redbox Automated Retail, LLC" on Justia Law

Jeffrey Wright and Myron Allenstein filed separate complaints against A-1 Exterminating Company, Inc.; Terry Buchanan; Edward Wrenn; and David Wrenn (collectively, "A-1"). In the complaints, plaintiffs alleged that, on the date of the initial termite bonds they were issued, A-1 Exterminating promised to identify and recommend the appropriate services to protect the plaintiffs' houses or property from termites. Plaintiffs stated that in their contract with A-1, plaintiffs had paid for the initial service, the issuance of the termite bond, and annual renewal premiums. During subsequent periodic visits to the subject properties, A-1 sprayed liquids and either represented to plaintiffs or led plaintiffs to believe that those applications were treatments for termites. But in the last two years, A-1 had admitted that the periodic sprays were not to prevent or control termites; and that Buchanan, a State-licensed pest-control operator who worked for A-1 Exterminating, had admitted that the spray was a regular, watered-down pesticide that might only be strong enough to kill ants and possibly spiders. The two complaints included counts alleging fraud, including promissory fraud; breach of warranty; negligence, including negligence per se, and wantonness; breach of contract; and negligent training, supervision, and retention. It also included a request for "equitable relief, including unjust enrichment." The trial court entered an amended protective order in both cases. Plaintiffs then filed petitions for the writ of mandamus with the Supreme Court seeking a rescission. The Supreme Court found the protective orders overbroad: "the trial court should balance its interest in protecting A-1's right to a fair trial against the First Amendment rights of the plaintiffs and their attorneys. Further, any protective order in this regard must be narrowly tailored so that it uses the least restrictive means necessary to protect A-1's right to a fair trial." The Court granted plaintiffs' petitions for mandamus relief, and remanded the cases for further proceedings. View "Wright v. A-1 Exterminating Company, Inc., et al." 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

Alasko Foods, Inc. (“Alasko”), a Canadian corporation that sells frozen produce to retail outlets, and Foodmark, Inc. (“Foodmark”), a Massachusetts corporation that assists food manufacturers in marketing branded-label and private-label products to retailers, entered into a “U.S. Representation Agreement [and] Sales Management Agreement” wherein Alasko retained Foodmark to market Alasko’s products in the United States. Five years later, Alasko terminated the Agreement. Foodmark filed a complaint against Alasko, alleging that Alasko’s refusal to pay the “Non-Renewal Termination Fee” contemplated by the Agreement constituted a breach of the Agreement and of its covenant of good faith and fair dealing. A federal district court entered summary judgment for Foodmark and awarded $1.1 million in damages. The First Circuit affirmed, holding that there were no genuine issues of fact, and Foodmark was entitled to a termination fee in the amount calculated by the district court. View "Foodmark, Inc. v. Alasko Foods, Inc." on Justia Law