Justia Consumer Law Opinion Summaries

Robert Smith, a schizophrenic trash collector, was induced into acting as a straw buyer for two overvalued residential properties in Massachusetts. Smith sued various entities and individuals involved in the transactions. After a jury trial, the jury returned a verdict largely favorable to Smith on his claims of fraud and breach of fiduciary duty. The district court doubled and trebled certain damages pursuant to the Massachusetts Consumer Protection Statute, Mass. Gen. Laws ch. 93A. Two defendants, a real estate brokerage firm (Century 21) and a mortgage broker (NEMCO), appealed. Smith cross-appealed the dismissal of several of his claims. The First Circuit Court of Appeals (1) vacated the damage award against Century 21 and remanded for a new trial on damages; (2) reversed the judgment against NEMCO on Smith's common-law claims; (3) vacated the judgment against NEMCO on Smith's Chapter 93A claim and remanded for a determination on the merits; (4) vacated the judgment in favor of another defendant and remanded; and (5) reversed the dismissal of Smith's Chapter 93A claim against yet another defendant and remanded for a determination of the claim on the merits. View "Smith v. Jenkins" on Justia Law

Defendant appealed the district court's order denying her objection to the garnishment of her disability payments. The court concluded that defendant's disability payments were "earnings" within the meaning of the Consumer Credit Protection Act, 15 U.S.C. 1673(a), and were subject to the Act's limitations on garnishment. Accordingly, the court reversed the district court's judgment holding otherwise. View "United States v. Ashcraft" 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

The Simons filed for Chapter 7 bankruptcy protection, identifying a nonpriority credit-card debt to FIA. FIA retained Weinstein, which sent the Simons a letter and notice through their bankruptcy counsel, stating that FIA was an adversary proceeding under 11 U.S.C. 523 to challenge dischargeability, but offering to forego the proceeding if the Simons stipulated that the debt was nondischargeable or agreed to a reduced amount. The letter stated that a Rule 2004 examination had been scheduled, but that Weinstein was open to settlement; it mentioned the possibility of rescheduling and set out information about challenging the debt. The subpoena certificate, signed by a Weinstein attorney, stated that a copy was mailed to the Simons’ home and their attorney’s office. The Simons allege that Weinstein did not actually send it to their home. Their counsel received copies. The Simons moved to quash, alleging violations of Bankruptcy Rule 9016 and Civil Rule 45 subpoena requirements, and filed an adversary proceeding asserting Fair Debt Collection Practices Act claims based on the letter. The Bankruptcy Court quashed the notices, but ruled that it lacked jurisdiction over the FDCPA claims. The Simons then sued FIA and Weinstein in the district court, which dismissed. The Third Circuit affirmed dismissal of 15 U.S.C 1692e(5) and (13) claims for allegedly failing to identify the recording method in the Rule 2004 examination and by issuing the subpoenas from a district other than where the examinations were to be held. The court also affirmed dismissal of a 1692e(11) claim because its mini-Miranda requirement conflicts with the Bankruptcy Code automatic stay. The court reversed dismissal of claims based failing to serve the subpoenas directly on the individuals and failing to include the text of Civil Rule 45(c)–(d) in the subpoenas. View "Simon v. FIA Card Servs., NA" on Justia Law

Todd alleges that in 2012 he received a recorded telephone message from Collecto asking him to call and help the company locate his mother, Terry. He called; a Collecto representative told him that Terry owed AT&T money for cell phone service. Todd stated that he is not Terry, but the representative continued to discuss the alleged debt without asking how to reach Terry or asking Todd to pay the bill. Todd claimed that this interaction harmed him emotionally and violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692b, which permits a debt collector to call a third party for help in locating a “consumer” but prohibits revealing the existence of the consumer’s debt to the third party. Section 1692f prohibits “unfair or unconscionable means to collect or attempt to collect any debt.” The district court concluded that Todd lacked standing under the Act. The Seventh Circuit affirmed, finding that Todd lacked standing under 1692b and failed to state a claim under 1692f. View "Todd v. Collecto, Inc." on Justia Law

Plaintiff filed suit against debt management businesses and individual employees of those businesses on behalf of herself and a statewide class of about 10,000 consumers. The parties agreed to allow a magistrate judge to enter a final judgment in the class action. The parties then reached a settlement agreement. Five class members and the Attorneys General of Connecticut, Florida, Maine, New York, and West Virginia objected to the settlement agreement. The court concluded that the magistrate judge had subject-matter jurisdiction to enter a final judgment because absent class members were not parties whose consent was required for a magistrate judge to enter a final judgment under 28 U.S.C. 636(c). However, the court vacated the judgment because the magistrate judge abused his discretion when he found, without adequate evidentiary support, that defendants could not satisfy a significant judgment. Accordingly, the court remanded for further proceedings. View "Day v. Persels & Assoc., LLC, et al." on Justia Law

Mortgagors appealed the district court's grant of judgment on the pleadings to their lenders in a dispute regarding a home loan. At issue on appeal was whether mailing a notice of rescission within three years of consummating a loan was sufficient to "exercise" the right to rescind a loan transaction under 15 U.S.C. 1635(a) or, alternatively, whether a party seeking to rescind the transaction was required to file a lawsuit within the three-year statutory period. The court held that a party seeking to rescind a loan transaction must file suit within three years of consummating the loan. Accordingly, the court affirmed the district court's judgment on the pleadings in favor of the lenders. View "Jesinoski, et al. v. Countrywide Home Loans, Inc., et al." on Justia Law

The defendants, affiliated companies, owned ATMs in Indianapolis bars that were popular with college students. Plaintiffs filed a purported class action, based on violation of the Electronic Funds Transfer Act, 15 U.S.C. 1693b(d)(3). At the time, the Act required a sticker notice on the ATM and an onscreen notification during transactions. Defendants provided onscreen notice but not, according to the complaint, a sticker. The Act has been amended to remove the sticker notice requirement. The district court decertified the class. The Seventh Circuit reversed, finding that the district judge did not provide adequate explanation. While the compensatory function of the class action has no significance in this case, the damages sought by the class, and, more importantly, the attorney’s fee that the court will award if the class prevails, will likely make the suit a wake‐up call and have a deterrent effect on future violations of the Electronic Funds Transfer Act. View "Hughes v. Kore of IN Enters., Inc." on Justia Law

Plaintiffs filed a putative class action suit against CMH Homes, Vanderbilt and others in state court. The companies subsequently filed a petition in the district court alleging that plaintiffs' claims were subject to mandatory arbitration. The district court dismissed the petition. The companies argued that the district court erred by concluding that it lacked diversity jurisdiction. The court concluded that the district court correctly reasoned that Vaden undermined Advance America and required the court's departure from that precedent. Following the Vaden approach, the district court properly looked through the arbitration petition to the state court complaint to determine the amount in controversy. Nonetheless, the court remanded for the district court to calculate an amount in controversy and to determine on that basis whether it had jurisdiction over the putative class action under 28 U.S.C. 1332(d)(2). View "CMH Homes, Inc., et al. v. Goodner, et al." on Justia Law

In 2007, Gager applied for a line of credit to purchase computer equipment. The application required that she provide her home phone number. Gager listed her cellular phone number without stating that the number was for a cellular phone, or indicating that Dell should not use an automated telephone dialing system to call her at that number. Gager defaulted on the loan Dell granted. Dell began using an automated telephone dialing system to call Gager’s cell phone, leaving pre-recorded messages concerning the debt. In 2010, Gager sent a letter, listing her phone number and asking Dell to stop calling it regarding her account. The letter did not indicate that the number was for a cellular phone. Dell continued to call, using an automated telephone dialing system. Gager filed suit, alleging that Dell violated the Telephone Consumer Protection Act of 1991, 47 U.S.C. 227(b)(1)(A)(iii). The district court dismissed on the theory that she could not revoke her consent once it was given. The Third Circuit reversed. The fact that Gager entered into a contract with Dell does not exempt Dell from the TCPA. Dell will still be able to call Gager about her delinquent account, but not using an automated dialing system. View "Gager v. Dell Fin. Servs. LLC" on Justia Law