Justia Consumer Law Opinion Summaries

A clothing retailer, Cato Corporation, with over 1,300 stores, purchased an "all-risk" commercial property insurance policy from Zurich American Insurance Company in July 2019. In the spring of 2020, Cato alleged that the COVID-19 virus and related government orders forced it to close or severely curtail operations, causing significant revenue losses and expenses for remediation and reconfiguration of its stores. Cato sought coverage for these losses under its insurance policy, but Zurich refused, leading Cato to file a lawsuit seeking a declaratory judgment and damages for breach of contract and violations of North Carolina's Unfair and Deceptive Trade Practices Act.The Superior Court of Mecklenburg County dismissed Cato's claims on a Rule 12(b)(6) motion, relying on the Court of Appeals' decision in North State Deli, LLC v. Cincinnati Insurance Co. The Court of Appeals affirmed the dismissal, concluding that tangible alteration to the property was necessary to recover for a "direct physical loss of or damage" to property, which Cato failed to allege sufficiently.The Supreme Court of North Carolina reviewed the case and agreed with the Court of Appeals' decision to affirm the dismissal but disagreed with its reasoning. The Supreme Court concluded that Cato sufficiently alleged a "direct physical loss of or damage" to property under the precedent set in North State Deli. However, the Court found that the viral contamination exclusion in Cato's policy precluded coverage for the alleged losses. Therefore, the Supreme Court modified the Court of Appeals' decision but affirmed its judgment dismissing Cato's claims. View "Cato Corp. v. Zurich American Insurance Co." on Justia Law

Steven Fustolo purchased a rental investment unit in Boston, Massachusetts, in 2009, taking out a mortgage with Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Union Capital Mortgage Business Trust. The mortgage was reassigned six times, and Fustolo defaulted on the loan. He sought a declaratory judgment that the current holders, Federal Home Loan Mortgage Corporation as Trustee of SCRT 2019-2 (the Trust) and Select Portfolio Servicing, Inc. (SPS), had no right to foreclose because they did not validly hold the mortgage or the accompanying promissory note. Fustolo also claimed defamation, slander of title, unfair business practices, violation of Massachusetts's Debt Collection Act, and a violation of Regulation X of the Real Estate Settlement Procedures Act (RESPA) by SPS.The United States District Court for the District of Massachusetts dismissed Fustolo's claims, except for one count challenging the adequacy of a notice letter, which was later settled. The court found that the Trust validly held both the mortgage and the note, and that Fustolo's state law claims hinged on the incorrect assertion that the Trust did not have the right to foreclose. The court also dismissed the RESPA claim, stating that Fustolo failed to specify which provision of RESPA was violated and that SPS had responded to his notice of error.The United States Court of Appeals for the First Circuit affirmed the district court's dismissal. The appellate court held that the Trust validly held the mortgage and the note, as the note was indorsed in blank and in the Trust's possession. The court also found that MERS had the authority to assign the mortgage despite Union Capital's dissolution. Additionally, the court ruled that Fustolo's RESPA claim failed because challenges to the merits of a servicer's evaluation of a loss mitigation application do not relate to the servicing of the loan and are not covered errors under RESPA. View "Fustolo v. Select Portfolio Servicing, Inc." on Justia Law

The case involves Andris Pukke, Peter Baker, and John Usher, who were found liable for violations of the Federal Trade Commission Act, the Telemarketing Sales Rule, and a permanent injunction from a prior fraud case. They were involved in a real estate scam, selling lots in a development called "Sanctuary Belize" through deceptive practices. The district court issued an equitable monetary judgment of $120.2 million for consumer redress, imposed an asset freeze, and appointed a receiver.The United States District Court for the District of Maryland found the defendants liable after a bench trial and issued permanent injunctions against them. The court also held them in contempt for violating a prior judgment in a related case, ordering them to pay the same $120.2 million in consumer redress. The defendants appealed, and the United States Court of Appeals for the Fourth Circuit affirmed the district court's decision, except for vacating the monetary judgment to the extent it relied on FTC Act Section 13(b).The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision to maintain the receivership and asset freeze. The court held that the receivership and asset freeze were necessary to effectuate the injunctive relief and ensure that the defendants did not continue to profit from their deceptive practices. The court also found that the contempt judgment supported maintaining the receivership and asset freeze until the judgment was satisfied. The court emphasized the defendants' history of deceptive conduct and the need for a professional receiver to manage and distribute the assets to defrauded consumers. The judgment was affirmed. View "Federal Trade Commission v. Pukke" on Justia Law

Aleksia Lindsay filed an amended class action complaint against Patenaude & Felix, APC, and Transworld Systems Inc., alleging unfair debt collection practices. Lindsay had defaulted on $60,000 in student loans, and after receiving incomplete and inaccurate information from Transworld, Patenaude initiated two debt collection lawsuits against her. Lindsay later discovered that both entities had a history of unethical collection practices, leading to actions by various regulatory bodies. After the lawsuits against her were dismissed, Lindsay received another demand for payment and subsequently filed the class action complaint.The Superior Court of San Bernardino County struck Lindsay's complaint, relying on the anti-SLAPP law, and ruled that the public interest exception did not apply. Lindsay argued that the trial court erred in this decision. The trial court concluded that although the three conditions of the public interest exception were met, the action was not brought solely in the public interest because Lindsay sought damages.The Court of Appeal, Fourth Appellate District, Division One, State of California, reviewed the case. The court held that the action was brought solely in the public interest or on behalf of the general public, as the relief sought by Lindsay was identical to that sought for the plaintiff class. The court also found that seeking damages did not preclude the application of the public interest exception. The court concluded that the action met all three conditions of the public interest exception: it did not seek greater or different relief, it would enforce an important right affecting the public interest and confer a significant benefit, and private enforcement was necessary and placed a disproportionate financial burden on Lindsay.The Court of Appeal reversed the trial court's order, exempting Lindsay's action from the anti-SLAPP law and entitling her to costs on appeal. View "Lindsay v. Patenaude & Felix" on Justia Law

JHVS Group, LLC and its members, Jasanjot Singh and Harshana Kaur, purchased a 66.4-acre pistachio orchard from Shawn Slate and Dina Slate for approximately $2.6 million. The Slates agreed to carry a loan for $1,889,600, and JHVS made a $700,000 down payment. The agreement included provisions for interest payments and additional payments coinciding with expected crop payments. JHVS alleged that the Slates and their brokers, Randy Hayer and SVN Executive Commercial Advisors, misrepresented material facts about the property, including water rights and the value of the 2022 crop. JHVS claimed the actual value of the crop was significantly lower than represented, and they fell behind on payments, leading the Slates to record a notice of default.JHVS filed a lawsuit in the Superior Court of Madera County, raising seven causes of action, including breach of fiduciary duty, negligence, intentional fraud, negligent misrepresentation, breach of contract, rescission based on fraud or mutual mistake, and injunctive relief to stop the foreclosure process. JHVS filed a motion for a preliminary injunction to prevent the foreclosure sale, arguing that the Slates and Hayer had lied about water restrictions and misrepresented the crop's value. The trial court granted the preliminary injunction after the defendants did not appear or file a response.The California Court of Appeal, Fifth Appellate District, reviewed the case and found that the trial court lacked fundamental jurisdiction over the Slates because they were never served with the summons and complaint. The appellate court determined that the trial court's order was void as to the Slates due to the lack of proper service and reversed the preliminary injunction order with respect to the Slates. The case was remanded for further proceedings consistent with the appellate court's opinion. View "JHVS Group, LLC v. Slate" on Justia Law

Dustin Lee Seyler was arrested on January 27, 2022, for two counts of burglary and was held without a warrant. The Justice Court held an initial appearance the next day and set a preliminary hearing for February 7, 2022, with bail set at $100,000. Seyler's counsel filed a notice of appearance and a request for discovery on February 1, 2022. The State filed a motion for leave to file an information on February 3, 2022, which the District Court granted on February 10, 2022. Seyler filed a motion to dismiss, arguing that the thirteen-day delay between his initial appearance and the District Court's grant of leave was unreasonable. The District Court denied the motion, and Seyler pleaded guilty while reserving his right to appeal. At sentencing, the District Court imposed various fees, which Seyler contested.The Twentieth Judicial District Court denied Seyler's motion to dismiss, finding the thirteen-day delay reasonable. Seyler appealed, arguing that the delay violated § 46-10-105, MCA, and that the District Court erred in imposing certain fees not mentioned in the oral pronouncement of his sentence.The Montana Supreme Court reviewed the case and held that the District Court did not abuse its discretion in denying Seyler's motion to dismiss. The Court found that the delay was not unreasonable given the circumstances and that Seyler had not demonstrated any prejudice resulting from the delay. However, the Court agreed with Seyler that the $50 pre-sentence investigation fee and the $200 cost of prosecution fee included in the written judgment conflicted with the oral pronouncement of his sentence. The Court affirmed Seyler's conviction but reversed and remanded for the District Court to amend the judgment by striking these fees. View "State v. Seyler" on Justia Law

Niv Goomai and Bar Hajbi purchased a property in Cincinnati and contracted with H&E Enterprise, L.L.C., Ohad Investment Group, and Avi Ohad for renovations. The renovations were not completed, leading Goomai to sell the property. Goomai then sued the defendants for breach of contract, violation of the Deceptive Trade Practices Act, and fraudulent misrepresentation, seeking actual damages but not injunctive relief.A jury trial was held before a magistrate, where the jury found that H&E had breached its contract and awarded Goomai $30,604.09 in damages. The jury also found that H&E and Ohad had engaged in deceptive trade practices but awarded $0 in damages for this violation. The jury ruled in favor of the defendants on the fraudulent misrepresentation claim. Goomai subsequently filed a motion for attorney’s fees and costs, which the magistrate denied, reasoning that Goomai did not qualify as a prevailing party under the Deceptive Trade Practices Act since they did not obtain any relief on the merits of their claim. The trial court adopted the magistrate’s decision, and Goomai appealed.The First District Court of Appeals reversed the trial court’s decision, holding that a prevailing party under the Deceptive Trade Practices Act is one who obtains a judgment in their favor, regardless of whether they received a remedy. The court remanded the case to the trial court to determine the amount of attorney’s fees to which Goomai was entitled.The Supreme Court of Ohio reviewed the case and concluded that to be a prevailing party under the Deceptive Trade Practices Act, a plaintiff must obtain actual damages or injunctive relief. Since Goomai did not receive any monetary damages or injunctive relief, they were not considered prevailing parties. The Supreme Court of Ohio reversed the judgment of the First District Court of Appeals and reinstated the trial court’s judgment denying attorney’s fees. View "Goomai v. H&E Enterprise, L.L.C." on Justia Law

Sky Moore rented a car from Budget Car and Truck Rental of Las Vegas, owned by Malco Enterprises of Nevada, Inc. Sky named Daniel Moore as an additional driver, who later rear-ended Alelign Woldeyohannes while intoxicated. Alelign sued Daniel for negligence and Malco for negligent entrustment. Daniel did not respond, resulting in a default judgment against him. The case proceeded to arbitration, where Alelign was awarded $32,680.26. Malco requested a trial de novo, leading to a short trial where the judge entered a default judgment against Daniel for $37,886.82.Alelign moved to apply the default judgment against Malco under NRS 482.305(1), which holds short-term lessors liable for damages if they fail to provide minimum insurance coverage. Malco opposed, arguing that NRS 482.305 is preempted by the Graves Amendment, which prohibits states from holding vehicle lessors vicariously liable without negligence or wrongdoing. The short trial judge granted Alelign’s motion, and the district court affirmed, concluding that NRS 482.305 is a financial responsibility law preserved by the Graves Amendment’s savings clause.The Supreme Court of Nevada reviewed the case and affirmed the district court’s judgment. The court held that NRS 482.305 is not preempted by the Graves Amendment because it is a financial responsibility law preserved by the savings clause under 49 U.S.C. § 30106(b). The court emphasized that NRS 482.305 imposes a legal requirement for lessors to provide minimum coverage, rather than a mere financial inducement, and does not impose strict vicarious liability on lessors. View "Malco Enterprises of Nevada, Inc. vs. Woldeyohannes" on Justia Law

Bluebird Property Rentals, LLC, a Montana limited liability company, and its sole member, Alaina Garcia, received a $450,000 loan from World Business Lenders, LLC (WBL) and its subsidiaries in December 2020. The loan, secured by real property in Gallatin County, had an annual percentage rate of approximately 85% and required weekly payments. Bluebird signed several agreements, including a Business Promissory Note and Security Agreement, which listed Axos Bank as the lender, although Bluebird had no prior dealings with Axos. After falling behind on payments, Bluebird sold the collateral property in a distress sale and paid off the loan in October 2022, having paid a total of $945,990.39.Bluebird sued WBL, alleging that WBL engaged in a "rent-a-bank" scheme to evade Montana's usury laws, claiming that Axos Bank was merely a front and that WBL was the true lender. Bluebird sought a declaration that Montana law applied and sought double the interest paid above the maximum allowable rate under Montana law. WBL filed a motion to dismiss and compel arbitration based on the agreements' arbitration and choice-of-law provisions.The Eighteenth Judicial District Court denied WBL's motion, ruling that Montana law must be applied to determine the enforceability of the arbitration and choice-of-law provisions. The court treated WBL's motion as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction and found that the validity of the arbitration clause was for the court to decide, not an arbitrator.The Supreme Court of the State of Montana affirmed the District Court's decision, holding that the general rule that courts determine arbitrability was not overcome by the facts of this case. The court found no clear and unmistakable evidence that the parties agreed to arbitrate arbitrability, despite WBL's arguments regarding the incorporation of AAA rules. The court did not address the merits of the enforceability of the arbitration agreement or the choice-of-law provision. View "Bluebird v. World Business Lenders" on Justia Law

A group of car owners from ten states sued Nissan, alleging that certain models equipped with automatic electronic braking systems had a defect causing "phantom activations" at inappropriate times, such as at railroad crossings or in parking garages. The plaintiffs claimed this defect breached warranties, constituted fraud, violated consumer protection statutes, and unjustly enriched Nissan. They sought to certify ten statewide classes of owners or lessees of the affected models.The United States District Court for the Middle District of Tennessee certified the ten classes under Civil Rule 23(b)(3), finding that the plaintiffs had demonstrated common questions of law or fact. Nissan appealed, arguing that the classes did not meet the requirements for certification, particularly due to differences in the software updates that had been applied to the braking systems over time.The United States Court of Appeals for the Sixth Circuit reviewed the case and found that the district court had not conducted a rigorous analysis of the commonality requirement. The appellate court noted that the district court failed to consider the material differences in the software updates and how these differences might affect the existence of a common defect. Additionally, the district court did not analyze the elements of each state law claim to determine whether they could be resolved with common answers.The Sixth Circuit vacated the district court's certification of the classes and remanded the case for further proceedings. The appellate court emphasized the need for a detailed examination of the elements of each claim and the impact of the software updates on the alleged defect. The court also held that the district court must perform a Daubert analysis to ensure the reliability of the plaintiffs' expert testimony, which was critical to establishing the commonality of the defect across the different models and software versions. View "IN RE: NISSAN NORTH AMERICA,INC. LITIGATION" on Justia Law