Justia Consumer Law Opinion Summaries

Steven Andrew Clem, the former owner of a defunct homebuilding company, appealed a judgment regarding the nondischargeability of a debt incurred from a failed home construction project. An arbitration panel had found Clem personally liable to LaDainian and LaTorsha Tomlinson for breach of contract and violations of the Texas Deceptive Trade Practices Act (DTPA). Clem subsequently filed for Chapter 7 bankruptcy, and the Tomlinsons initiated an adversary proceeding. The bankruptcy court determined that Clem had obtained over $660,000 from the Tomlinsons through false representation or false pretenses, making the debt nondischargeable under 11 U.S.C. § 523(a)(2)(A).The bankruptcy court's decision was based on findings that Clem had committed fraud by nondisclosure during the performance of the contract, including failing to inform the Tomlinsons about the switch from concrete piers to helical steel piers, failing to disclose the puncturing of a water line, and misrepresenting the purchase of a Builder’s Risk insurance policy. The court also found that Clem failed to provide proper accounting for the Tomlinsons' funds. The district court affirmed the bankruptcy court's decision.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court concluded that the bankruptcy court erred in not applying collateral estoppel to the arbitration findings, which had already determined that Clem's actions did not constitute knowing violations of the DTPA or fraud. The appellate court found that the issues of fraudulent misrepresentation and nondisclosure had been fully litigated in the arbitration, and the arbitration panel had explicitly found no fraud or knowing DTPA violations.The Fifth Circuit reversed the bankruptcy court's judgment and rendered judgment in favor of Clem, holding that the Tomlinsons were collaterally estopped from relitigating the fraud claims and that Clem's conduct did not meet the criteria for nondischargeability under Section 523(a)(2)(A). View "Clem v. Tomlinson" on Justia Law

The case involves Taylor Capito, who filed a class action lawsuit against San Jose Healthcare System, LP, also known as Regional Medical Center San Jose, challenging the assessment of Evaluation and Management Services (EMS) fees for two emergency room visits. Capito argued that Regional had a duty to notify emergency room patients about EMS fees beyond listing them in the chargemaster, such as through posted signage or during the patient registration process. She claimed that Regional's failure to do so constituted an unlawful, unfair, or fraudulent business practice under the Unfair Competition Law (UCL) and violated the Consumers Legal Remedies Act (CLRA).The trial court sustained Regional's demurrer without leave to amend, and the Court of Appeal affirmed. The appellate court reasoned that hospitals do not have a duty to disclose EMS fees beyond what is required by the relevant statutory and regulatory framework, following the reasoning in similar cases like Gray v. Dignity Health and Saini v. Sutter Health. The Court of Appeal also affirmed the trial court's order striking the class allegations in Capito's first amended complaint.The Supreme Court of California reviewed the case and affirmed the Court of Appeal's judgment. The court held that hospitals do not have a duty under the UCL or CLRA, beyond their obligations under the relevant statutory and regulatory scheme, to disclose EMS fees prior to treating emergency room patients. The court emphasized that requiring such disclosure would alter the balance of competing interests, including price transparency and the provision of emergency care without regard to cost, as reflected in the multifaceted scheme developed by state and federal authorities. The court also dismissed Capito's appeal from the trial court's order striking her class allegations as moot. View "Capito v. San Jose Healthcare System, LP" on Justia Law

Plaintiff John Doe filed a class action lawsuit against Integris Health, Inc., alleging that Integris collected confidential health information from its website visitors and unlawfully shared it with third parties like Google and Facebook. Doe's complaint, filed in Oklahoma state court, asserted state law claims including negligence, invasion of privacy, and breach of fiduciary duty. Integris removed the case to federal court under the federal officer removal statute, claiming it was acting under the direction of a federal officer by helping the federal government achieve its objective of ensuring patient access to electronic health records (EHR).The United States District Court for the Western District of Oklahoma remanded the case to state court, concluding that Integris had not demonstrated it was "acting under" the direction of a federal officer. The court found that Integris was merely complying with federal regulations, which is insufficient to establish federal officer jurisdiction.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The Tenth Circuit held that Integris was not "acting under" a federal officer because it was only complying with federal regulations and not fulfilling a basic government task. The court emphasized that compliance with federal law, even if highly detailed and supervised, does not equate to acting under a federal officer. The court also noted that Integris's use of tracking technology on its website was not required by the federal government and was not part of any federal directive. Therefore, the court concluded that removal under the federal officer removal statute was improper. View "Doe v. Integris Health" on Justia Law

In January 2019, Raymond Robinson and his son sued Emerald Homes, L.L.C., and 21st Mortgage Corporation in the Baldwin Circuit Court. Robinson had contracted with Emerald to purchase a mobile home, financed by a loan from 21st Mortgage. After tearing down his existing house in preparation for the new mobile home, the loan was not completed, allegedly due to Emerald and/or 21st Mortgage's refusal to finalize the transaction. The complaint included claims of breach of contract, misrepresentation, suppression, and negligence, seeking compensatory and punitive damages.The trial court compelled arbitration for claims against Emerald and granted summary judgment in favor of 21st Mortgage on Raymond's claims. The case proceeded to a jury trial on Robinson's claims against 21st Mortgage. The jury found in favor of Robinson on promissory fraud and the tort of outrage, awarding him $2,980,000 in total damages. 21st Mortgage's post-trial motions, including for judgment as a matter of law (JML), were denied.The Supreme Court of Alabama reviewed the case. It held that Robinson did not present substantial evidence of promissory fraud, as he failed to prove that 21st Mortgage had no intention to perform the loan promise at the time it was made or intended to deceive him. The court also found that Robinson did not meet all the conditions required for the loan, and the failure to close the loan was not due to any fraudulent intent by 21st Mortgage.Regarding the tort of outrage, the court held that the conduct of 21st Mortgage did not meet the extreme and outrageous standard required for such a claim. The court reversed the trial court's judgment and remanded the case for further proceedings consistent with its opinion. View "21st Mortgage Corporation v. Robinson" on Justia Law

Medical Recovery Services, LLC (MRS), a medical debt collector, sought to collect $460 from Katrina Melanese (now Katrina Sullivan) for an emergency room visit in September 2017. Sullivan was treated at Eastern Idaho Regional Medical Center (EIRMC) by Intermountain Emergency Physicians (IEP), which did not collect insurance information directly from patients. Sullivan provided her insurance information to EIRMC, but IEP billed her outdated insurance information from a previous visit. When the outdated insurers denied the claim, IEP assigned the bill to MRS for collection.The magistrate court ruled in favor of Sullivan, finding that an implied condition precedent existed, requiring IEP to bill Sullivan’s insurance before seeking payment from her. The district court affirmed the magistrate court’s decision, agreeing that the condition precedent was not satisfied because IEP did not make reasonable efforts to obtain Sullivan’s correct insurance information.The Supreme Court of Idaho reviewed the case and affirmed the district court’s decision. The court held that an implied-in-fact contract existed between IEP and Sullivan, and that the contract included a condition precedent requiring IEP to bill Sullivan’s insurance before seeking payment from her. The court found substantial and competent evidence supporting the magistrate court’s finding of the condition precedent, noting that Sullivan provided her insurance information to EIRMC and that IEP’s general practice was to bill insurance before seeking payment from patients. The court also rejected MRS’s argument that the federal Emergency Medical Treatment and Labor Act (EMTALA) prevented the application of the condition precedent in emergency room settings.The court concluded that IEP failed to make reasonable efforts to satisfy the condition precedent and, therefore, MRS could not collect the debt from Sullivan. The court awarded attorney fees and costs on appeal to Sullivan. View "Medical Recovery Services, LLC v. Melanese" on Justia Law

In 2014, Casey Moyer entered into an agreement with Doug Lasher Construction, Inc. for the construction and purchase of a new home, which was substantially completed in November 2014. Over the next six-and-a-half years, Moyer repeatedly informed Lasher Construction about issues with the home, particularly water leakage, and received assurances that the issues would be fixed. However, the problems persisted, and Moyer and Caitlin Bower filed suit against Lasher Construction in November 2021, alleging breach of contract and violation of the Idaho Consumer Protection Act.The District Court of the Fourth Judicial District of Idaho granted summary judgment in favor of Lasher Construction, ruling that all claims were time-barred under Idaho Code sections 5-241(b) and 5-216, which require that claims arising out of a contract for the construction of real property be brought within five years of the final completion of construction. The court also found that the Idaho Consumer Protection Act claims were time-barred under the two-year statute of limitations provided by Idaho Code section 48-619. The court rejected the homeowners' arguments for equitable estoppel and the repair doctrine, concluding that they failed to show that Lasher Construction prevented them from pursuing their claims within the statutory period.The Supreme Court of Idaho affirmed the district court's decision. The court reaffirmed that the repair doctrine is not available in Idaho and upheld the district court's conclusion that the homeowners failed to establish the elements of equitable estoppel. The court also agreed that the text messages and the July 2, 2021, response to the NORA demand did not constitute enforceable independent contracts. Lasher Construction was awarded attorney fees and costs on appeal as the prevailing party. View "Moyer v. Lasher Construction, Inc." on Justia Law

Maritza Zavala filed a lawsuit against Hyundai Motor America (HMA) under the Song-Beverly Consumer Warranty Act, alleging that HMA failed to honor its warranty obligations for a vehicle she purchased in 2016. After prevailing at trial, Zavala was awarded $23,122.44 in damages. The trial court also granted Zavala’s motion for attorney fees and ruled on the parties’ competing motions to tax costs, resulting in a judgment in favor of Zavala for $276,104.61 in attorney fees and costs.The trial court concluded that HMA’s offer to compromise under Code of Civil Procedure section 998 was invalid for cost shifting because it contained two options: a $65,000 payment and a statutory option that was deemed too vague. The court found that the statutory option lacked specificity, making the entire offer invalid.The Court of Appeal, Fourth Appellate District, Division One, State of California, reviewed the case. It determined that the $65,000 option was sufficiently specific and certain to trigger cost shifting under section 998, even though the statutory option was not. The appellate court concluded that the trial court erred by not separately considering the validity of the two options. The appellate court reversed the trial court’s orders on Zavala’s motion for attorney fees and the parties’ motions to tax costs, as well as the judgment based on those orders. The case was remanded for further proceedings consistent with the appellate court’s opinion. The parties were ordered to bear their own costs on appeal. View "Zavala v. Hyundai Motor America" on Justia Law

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