Category Archives: Litigation Developments

Eleventh Circuit Clarifies Foreign Company’s Dual Citizenship Status but Leaves Room for Further Debate

Posted on by
Reply

By: Jonathan M. Robbin and Anthony Richard Yanez

A drunken tumble on a cruise ship may lead to resolving how alienage/jurisdiction is determined in the Eleventh Circuit. In Caron v. NCL (Bahamas), Ltd., — F.3d —, 2018 WL 6539178 (11th Cir. Dec. 13, 2018), the Eleventh Circuit, for the first time, held an alien corporation has dual citizenship, but limited its holding. Specifically, Caron held there is no diversity jurisdiction in a suit between a foreign incorporated corporation with its principal place of business in Florida and a citizen of Canada. Unfortunately, despite guidance from sister courts, Caron left unresolved the question of whether a domestic incorporated corporation with a principal place of business abroad can invoke alienage-dual citizenship diversity in a suit against an alien following the 2012 amendments to 28 U.S.C. § 1332(c).

Background

On July 14, 2016, Canadian citizen Olivier Caron sued Norwegian Cruise Lines (“NCL”) after he sustained personal injuries by falling down an escape hatch on a ship while he was inebriated. Mr. Caron filed suit in the Southern District of Florida asserting diversity of citizenship jurisdiction and admiralty jurisdiction.[1]

Caron argued that the alienage-diversity provision, governing suits between aliens and citizens of a State, applies, and the district court properly entertained jurisdiction under this provision. Caron is a Canadian citizen and NCL is a Bermuda corporation with its principal place of business in Florida. Thus, Caron argued that NCL is a Florida citizen for alienage-diversity jurisdiction purposes. Continue reading →

NY’s Fourth Department Holds That Notice of Default Did Not Provide Clear and Unequivocal Notice to Accelerate the Debt

Posted on by
Reply

By: Andrea M. Roberts and Diana M. Eng

In Ditech Financial LLC v. Corbett, 2018 WL 6006682, at *1, —N.Y.S.3d —- (4th Dept. Nov. 16, 2018), the Appellate Division, Fourth Department, held that a notice of default sent to the borrowers-defendants, which discussed a possible future event, did not provide clear and unequivocal notice sufficient to accelerate the debt, thereby triggering the statute of limitations.

In January 2016, plaintiff, Ditech Financial LLC (“Plaintiff”), commenced an action to foreclose against borrowers, Timothy Corbett and Sheila Corbett (“Borrowers”). Plaintiff moved for summary judgment (the “Motion”), and Borrowers opposed the Motion on the grounds that the statute of limitations to foreclose had expired. In support, Borrowers alleged that a January 2010 notice of default (“2010 Default Letter”) sent by Plaintiff’s predecessor-in-interest accelerated the debt and therefore, the statute of limitations to foreclose began to run on the entire debt at that time. The Onondaga County Supreme Court (“Lower Court”) granted Plaintiff’s Motion. Borrowers appealed. Continue reading →

New York Appellate Court Holds Short Sale Documents Do Not Constitute an Acknowledgment of the Debt to Restart the Statute of Limitations

Posted on by
Reply

By: Wayne Streibich, Diana M. Eng, Jonathan M. Robbin, and Andrea M. Roberts

On August 29, 2018, New York’s Appellate Division, Second Department, issued two decisions holding that documents submitted by a borrower in connection with an attempted short sale of the property did not constitute an acknowledgment of debt under New York General Obligations Law § 17-101 (“GOL § 17-101”). In Karpa Realty Group, LLC v. Deutsche Bank Nat’l Trust Co., 2018 WL 4101011 (2d Dept. Aug. 29, 2018), the Second Department affirmed the Kings County Court’s decision granting plaintiff Karpa Realty Group, LLC’s motion for summary judgment and denying defendant Deutsche Bank National Trust Company’s cross-motion for summary judgment to dismiss Karpa Realty’s quiet title complaint. Deutsche Bank argued that the statute of limitations to foreclose had not expired because the borrower submitted a written hardship letter in connection with his short sale application, acknowledging the debt under GOL § 17-101, thus renewing the statute of limitations. The Second Department held the letter “did not constitute an unqualified acknowledgment of the debt or manifest a promise to repay the debt sufficient to reset the running of the statute of limitations.” Id. at *2.

Please click here for the full client alert. 

NY Appellate Court Holds Default Letter Stating Debt “Will Be Accelerated” Does Not Accelerate the Debt, De-Acceleration Must Be Clear and Unambiguous, and Standing, If Raised, Is an Element to De-Acceleration

Posted on by
Reply

By: Wayne Streibich, Jonathan M. Robbin, Diana M. Eng, and Jacquelyn A. DiCicco

In Milone v. U.S. Bank National Association, New York’s Appellate Division, Second Department (“Second Department”), held that a notice of default sent to a borrower, stating that failure to cure the default within 30 days “will result in acceleration,” does not “clearly and unequivocally” accelerate the mortgage debt upon expiration of the cure period. 2018 WL 3863269, at *1, — N.Y.S.3d — (2d Dept. Aug. 15, 2018). In sum, the Second Department concluded that the word “will” indicates a future intention that “may always be changed in the interim” and, therefore, does not accelerate the debt for statute of limitations purposes. See id., at *3. In addition, the Second Department ruled that a de-acceleration notice must be clear and unambiguous, and, in a case of first impression, held that standing, when raised, is a necessary element to a valid de-acceleration. See id., at *5.

Please click here for the full client alert. 

Second Circuit Holds That Debt Collector’s Inquiry Regarding Nature of Consumer’s Verbal Dispute of Debt Did Not Violate the FDCPA

Posted on by
Reply

By: Diana M. Eng, Jonathan M. Robbin, and Andrea M. Roberts

In Levi Huebner v. Midland Credit Management, Inc., Nos. 16-2363-cv, 16-2367-cv (2d Cir. July 19, 2018), the Second Circuit affirmed the Eastern District of New York’s (“Lower Court”) order granting defendant Midland Credit Management, Inc.’s (“Midland”) summary judgment motion and dismissing the complaint on the grounds that plaintiff Levi Huebner (“Plaintiff”) failed to state a claim under Sections 1692e(5), (8), and (10) of the FDCPA. The Second Circuit held Midland’s follow-up questions about the nature of Plaintiff’s dispute cannot be interpreted as threatening, or conveying false information about the consumer’s debt. Rather, Midland’s questions were an endeavor to learn more about Plaintiff’s dispute, so Midland could properly resolve the dispute. The Second Circuit also affirmed the Lower Court’s imposition of sanctions against Plaintiff and his counsel on the grounds they intentionally misled the court and Midland as to Plaintiff’s theory of the case, breached the protective order entered into amongst the parties, acted in bad faith by “unreasonably and vexatiously” multiplying the proceedings in the action, and commencing a frivolous action and filing several frivolous motions in bad faith. As such, the Lower Court properly granted summary judgment in favor of Midland.

Please click here for the full client alert. 

Southern District of New York Holds the CFPB Is Unconstitutionally Structured

Posted on by
Reply

By: Louise Bowes Marencik, Diana M. Eng, and Jonathan K. Moore

On June 21, 2018, the United States District Court for the Southern District of New York (“Southern District”) held that Title X of the Dodd Frank Act, which established the Consumer Financial Protection Bureau (“CFPB”) as an “independent bureau” within the Federal Reserve System, is unconstitutional.

In Consumer Financial Protection Bureau v. RD Legal Funding, LLC, et al., the CFPB and The People of the State of New York, by Eric T. Schneiderman, Attorney General for the State of New York (collectively, “Plaintiffs”) alleged that the defendant entities violated the Consumer Financial Protection Act (“CFPA”) by offering cash advances to consumers awaiting payouts on settlement agreements or judgments entered in their favor, which Plaintiffs argued were actually usurious loans prohibited by state law. 2018 U.S. Dist. LEXIS 104132 (S.D.N.Y. June 21, 2018). The consumers at issue were class members in the National Football League Concussion Litigation class action, and individuals eligible for compensation from the September 11th Victim Compensation Fund of 2001. Continue reading →

Second Circuit Confirms Interest Disclaimer Not Required on Collection Notices Not Accruing Interest

Posted on by
Reply

By: Edward W. Chang, Jonathan M. Robbin, Scott E. Wortman, Diana M. Eng, and Hilary F. Korman

In a win for the collection industry, the Second Circuit Court of Appeals confirmed an “interest disclaimer” is only necessary on collection notices if the debt is accruing interest. While this much-needed clarification may reduce the volume of “reverse-Avila” FDCPA litigation, questions still remain about the best method to accurately characterize balances in collection notices.

Background

In Taylor v. Fin. Recovery Servs., Inc., No. 17-1650-cv (“Taylor”), the Second Circuit confirmed that the appellants (and many other members of the consumer bar) were misapplying its decision in Avila v. Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016) (“Avila”).1 In Avila, the Second Circuit ruled that a debt collector violates 15 U.S.C. § 1692e of the Fair Debt Collection Practices Act (“FDCPA”) if it identifies the “current balance” of a debt without disclosing that such balance could increase due to the accrual of interest or fees. In that case, interest was actually accruing on the subject debt. Continue reading →