Justia Consumer Law Opinion Summaries

Appellant filed a claim against Wells Fargo Home Mortgage, Inc. under the Missouri Merchandising Practices Act (MMPA), alleging that Wells Fargo engaged in bad faith negotiations of a loan modification and wrongfully foreclosed on a deed of trust. The trial court entered judgment for Wells Fargo, concluding that because Wells Fargo’s actions were not taken before or at time of the extension of credit in the original loan, and because Wells Fargo was not a party to the transaction when Appellant first obtained the loan, Wells Fargo’s actions were not “in connection with” the sale of the original loan. The Supreme Court affirmed in part and reversed in part, holding (1) to the extent Appellant’s allegations related to the wrongful foreclosure, summary judgment was not appropriate pursuant to Conway v. CitiMortgage, Inc., also decided today; and (2) because Wells Fargo was not enforcing the terms of the original loan when it negotiated the loan modification, its actions were not “in connection with” the sale of the original loan and thus did not violate the MMPA. Remanded. View "Watson v. Wells Fargo Home Mortgage, Inc." on Justia Law

Homeowners filed a claim against Fannie Mae and CitiMortgage (collectively, Defendants) under the Missouri Merchandising Practices Act (MMPA), alleging wrongful foreclosure of a deed of trust. Defendants filed a motion to dismiss on the basis that the alleged wrongful foreclosure of the deed of trust was not “in connection with” the mortgage loan. The trial court dismissed the complaint, concluding that the MMPA did not apply because Defendants were not parties to the original loan transaction and that the MMPA does not apply to post-sale activities that are unrelated to claims or representations made before or at the time of the transaction. At issue before the Supreme Court was whether Homeowners sufficiently pleaded that Defendants’ alleged wrongful foreclosure of the deed of trust was “in connection with” the loan so as to state a claim under the MMPA. The Supreme Court reversed, holding that because the sale of a loan lasts as long as the agreed upon services are being performed, Homeowners’ allegations of fraud and deception must have occurred “in connection with” the “sale” of their loan. Remanded. View "Conway v. CitiMortgage, Inc." on Justia Law

Plaintiff filed suit on behalf of himself and a putative class of consumers whose Touchpad orders had been cancelled, alleging that Barnes & Noble had engaged in deceptive business practices and false advertising. On appeal, Barnes & Noble challenged the district court's denial of its motion to compel arbitration against plaintiff under the arbitration agreement contained in its website's Terms of Use. The court held that there was no evidence that the website user had actual knowledge of the agreement. The court also held that where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on - without more - is insufficient to give rise to constructive notice. Therefore, the court concluded that there is nothing in the record to suggest that those browsewrap terms at issue are enforceable by or against plaintiff, much less why they should give rise to constructive notice of Barnes & Noble's browsewrap terms. In light of the distinguishing facts, the district court did not abuse its discretion in rejecting Barnes & Noble's estoppel argument. Accordingly, the court held that plaintiff had insufficient notice of Barnes & Noble's Terms of Use, and thus did not enter into an arbitration agreement. The court affirmed the judgment of the district court. View "Nguyen v. Barnes & Noble Inc." on Justia Law

Appellant financed the purchase of a car over time pursuant to a loan contract. The car dealer assigned the contract to Appellee, a financial services company. Because Appellant stopped making payments before the loan was paid off, Appellee repossessed and sold the car. Appellant sued Appellee, alleging that the repossession and sale of the car did not comply with the Credit Grantor Closed End Credit Law (CLEC). The circuit court dismissed the complaint, concluding (1) Appellant’s statutory claims were untimely under the Maryland Equal Credit Opportunity Act’s one-year statute of limitations, and (2) Appellant’s complaint did not state a cause of action for breach of contract because the requirements of CLEC were not incorporated into the contract as to Appellee. The Court of Appeals reversed, holding (1) an action alleging a violation of CLEC must be brought no later than six months after the loan is satisfied pursuant to the CLEC’s statute of limitations, and therefore, Appellant’s claims under CLEC on limitations grounds were improperly dismissed; and (2) Appellant may assert a contract claim against Appellee because the loan contract adequately incorporated CLEC as part of the contractual obligations, and Appellee voluntarily accepted that provision in taking the assignment. View "Patton v. Wells Fargo Fin. Md., Inc." on Justia Law

Plaintiff filed suit against Absolute Collection, alleging that the collection agency's conduct violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692-1692p, and the North Carolina Collection Agency Act, N.C. Gen. Stat. 58-70-1 et seq. Plaintiff alleged that Absolute Collection falsely reported the status of a 2008 debt to credit bureaus as "past due." The district court granted plaintiff's motion for judgment as a matter of law with respect to certain claims under the FDCPA and allowed the state claims to go to the jury, which found in favor of plaintiff. Absolute Collection appealed. The court concluded that the district court did not err in denying Absolute Collection's motion for judgment as a matter of law and held that a debtor is not required to dispute his or her debt under section 1692g as a condition to filing suit under section 1692e. The court rejected Absolute Collection's remaining arguments and affirmed the judgment of the district court. View "Russell v. Absolute Collection Services" on Justia Law

The FTC appealed the damages portion of a district court order granting in part the FTC's motion for contempt relating to defendants' violation of a Consent Order. The FTC argued that it was entitled to a presumption that consumers relied, when deciding to purchase defendants' products, on defendants' omissions and misrepresentations. Therefore, the FTC sought over $14 million in contempt damages, an amount equal to defendants' gross receipts. As a preliminary matter, the court concluded that the FTC may pursue recovery for contempt damages based on alleged violations of a Consent Order. The court agreed with the FTC and joined its sister circuits in holding that the FTC is entitled to a presumption of consumer reliance. Here, in the context of a contempt action arising out of violations of a promise to refrain from misrepresentations concerning material terms or omissions of material terms, the court held that the calculation of the appropriate measure of loss begins with defendants' gross receipts derived from such contumacious conduct. After the court uses defendants' gross receipts as a baseline for calculating damages, the court must permit defendants to put forth evidence showing that certain amounts should offset the sanctions assessed against them. The court vacated that portion of the district court's contempt order that has calculated damages and remanded for further proceedings. View "FTC v. BlueHippo, et al." on Justia Law

This case stemmed from issues arising from plaintiff Maria Mendoza’s purchase of a home with proceeds of a loan secured by a deed of trust, and the subsequent loss of the home in a nonjudicial foreclosure sale. The trial court sustained the banks' demurrer to plaintiff’s complaint without leave to amend, rejecting her attempt to void the trustee's sale based on purported defects in the assignment of her deed of trust, irregularities in the substitution of trustees, and flaws in the securitization of her loan. The homeowner contends that not only should she be allowed to remain in her home, but that she is entitled to outright ownership without paying her debt because the banks have "already benefitted from an American taxpayer bailout of unprecedented proportions." In affirming the trial court’s dismissal of the second amended complaint for wrongful foreclosure, declaratory relief, and quiet title, the Court of Appeal concluded: (1) plaintiff failed to make a specific factual showing that the foreclosing parties did not have the requisite interest in the property to issue the notice of default, the notice of trustee’s sale, and the trustee’s deed of sale; and (2) in the absence of prejudice, she lacked standing to challenge irregularities in the securitization process. View "Mendoza v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiffs entered into a loan agreement with Potomac Realty Capital LLC (PRC) to rehabilitate and renovate certain property. As security for the loan, NV One granted a mortgage on the property. Plaintiffs later filed a complaint against PRC, asserting violations of the Rhode Island usury law, among other claims. The trial justice granted summary judgment to Plaintiffs with respect to the usury claim, entered an order declaring the loan usurious and void, and voided the mortgage. At issue on appeal was whether a usury savings clause in the loan document validated the otherwise usurious contract. The Supreme Court affirmed, holding that Plaintiffs were entitled to judgment as a matter of law on their usury claim because (1) the loan was a usury; and (2) the usury savings clause was unenforceable on public policy grounds.View "NV One, LLC v. Potomac Realty Capital, LLC" on Justia Law

MPHJ Technology Investments, LLC (MPHJ) owned several patents relating to network scanner systems. Through subsidiary licensees, MPHJ wrote to various business and non-profit organizations operating in Vermont, requesting the recipient to confirm it was not infringing MPHJ’s patents or, alternatively, to purchase a license. If there was no response, a Texas law firm sent follow-up correspondence stating that an infringement suit would be filed. The State of Vermont filed suit against MPHJ in Vermont state court alleging MPHJ engaged in unfair and deceptive trade practices under the Vermont Consumer Protection Act, stating that the letters contained threatening, false, and misleading statements. MPHJ removed the case to the United States District Court for the District of Vermont, asserting federal question jurisdiction and diversity jurisdiction. The State moved to remand the case back to state court for lack of subject matter jurisdiction. MPHJ opposed the State’s motion to remand, and filed a motion to dismiss for lack of personal jurisdiction and a motion for sanctions. Finding that it lacked jurisdiction to grant MPHJ its requested relief, the Federal Circuit Court of Appeals dismissed the petition and appeal. View "Vermont v. MPHJ Technology Investments" on Justia Law

First Resolution Investment Corp. filed a notice of judgment lien against Roslyn Currier's home and maintained it for approximately one month although the judgment it was based on never became final and was vacated. Upon review of the matter, the Sixth Circuit Court of Appeals held that filing and failing to release an invalid judgment lien against a debtor's home while the related state court collection action remained pending fell within the broad scope of practices prohibited by the Fair Debt Collection Practices Act (FDCPA). Because Currier stated a plausible claim under the FDCPA, the Court reversed the dismissal of her claims and remanded the case for further proceedings. View "Currier v. First Resolution Inv. Corp." on Justia Law