Friday, February 18, 2011

Foreclosure Case

BALLINGER v. BAY GULF CREDIT UN., 2D09-4561 (Fla.App. 2 Dist. 12-15-2010) BALLINGER v. BAY GULF CREDIT UN., 2D09-4561 (Fla.App. 2 Dist. 12-15-2010) SAMUEL W. BALLINGER, Appellant, v. BAY GULF CREDIT UNION, Appellee. Case No. 2D09-4561. District Court of Appeal of Florida, Second District. Opinion filed December 15, 2010. Appeal from the Circuit Court for Hillsborough County; Martha J. Cook, Judge. Robert A. Carr of Resolute Law Group, LLC, Tampa (withdrew after briefing); Leon A. Williamson, Jr., of Leon A. Williamson, Jr., P.A., Tampa, (substituted as counsel of record), for Appellant. Keith D. Skorewicz and Jamie L. Weatherholt of Bush Ross, P.A., Tampa, for Appellee. MORRIS, Judge. Samuel W. Ballinger appeals a final summary judgment entered in favor of Bay Gulf Credit Union. While we find no error in two of the issues raised by Ballinger, we must reverse because the verified complaint was insufficiently pleaded and, therefore, final summary judgment was improvidently entered. This case involves Bay Gulf’s actions in seeking to repossess three luxury vehicles which Ballinger financed through Bay Gulf. In Bay Gulf’s verified complaint, a Bay Gulf employee, Sharmon Lenth, stated that Lenth read everything and that the facts stated were “true to the best of my knowledge and belief.” During the course of the proceedings, Bay Gulf sought summary judgment, and although Ballinger attempted to file an affidavit in opposition to Bay Gulf’s motion for summary judgment, the trial court refused to accept the affidavit because it had not yet been filed with the trial court at the time of the summary judgment hearing. The court then rejected Ballinger’s argument that the verified complaint — standing alone — was insufficient as a matter of law to support a final summary judgment. In doing so, the court noted that the complaint “says it is verified.” We acknowledge that “[a] verified complaint may serve the same purpose as an affidavit supporting or opposing a motion for summary judgment.” Boettcher v. IMC Mortg. Co., 871 So. 2d 1047, 1049 n. 2 (Fla. 2d DCA 2004). “However, in order to be so considered, the allegations of the verified complaint must meet the requirements of the rule governing supporting and opposing affidavits.” Id. (citing Fla.R.Civ.P. 1.510(e)). Rule 1.510(e), in turn, provides that affidavits must be based on personal knowledge and shall “show affirmatively that the affiant is competent to testify to the matters stated therein.” A verification which is improperly based on information and belief is insufficient to entitle the verifying party to relief because the verification is qualified in nature. See Muss v. Lennar Fla. Partners I, L.P., 673 So. 2d 84, 85 (Fla. 4th DCA 1996); Barton v. Circuit Court of the Nineteenth Judicial Circuit, 659 So. 2d 1262, 1263 (Fla. 4th DCA 1995); Thompson v. Citizens Nat’l Bank of Leesburg, Fla., 433 So. 2d 32, 33 (Fla. 5th DCA 1983). In this case, the verification reflects it was not based on Lenth’s personal knowledge. Bay Gulf asks this court to construe the verification as if it were based on Lenth’s personal knowledge because the verification does not say it was based on Lenth’s “information and belief” but, rather, states it was based on Lenth’s “knowledge and belief.” However, we decline to impose such a construction because the fact that the verification included the word “belief” indicates it was not based on Lenth’s personal knowledge. And, in fact, it is apparent from the record that Lenth could not state she had personal knowledge of the loan documents in question. The qualified verification here fails to meet the requirements of rule 1.510(e) and, therefore, should not have been considered by the trial court on a motion for summary judgment. See Thompson, 433 So. 2d at 33. Reversed and remanded. WALLACE and KHOUZAM, JJ., Concur. NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

Of Interest

Florida Supreme Court Briefs and Opinions

Even Rolling Stones Has Something to Say on Wall St

New York Foreclosure Legal Assistance

Mortgages (BNA 02/16/2011)

New York to Provide Legal Assistance In Foreclosure Cases, Chief Judge Says

ALBANY, N.Y.-New York state will create a program this year to ensure that homeowners who cannot afford a lawyer are provided with free legal assistance at their foreclosure settlement conferences, Judge Jonathan Lippman, the state's chief judge, announced Feb. 15 in his annual State of the Judiciary address.

Lippman said the program would begin in Queens, N.Y., in conjunction with the Legal Aid Society of Queens, and in Orange County, N.Y., with Hudson Valley Legal Services. The program will expand statewide by the end of the year, he said.

"A truly glaring problem ... is that the foreclosure process presents a need for legal counsel at precisely the moment when a lawyer is least affordable,'' Lippman said in his prepared State of the Judiciary report.

"Far too many homeowners enter our courts without legal help and with little understanding of the legal process. Many are so intimidated by the process and its consequences that they don't show up at all.''

The program is the second effort by Lippman and the state court system to address problems associated with foreclosures. In October, the New York State Unified Court System promulgated a rule requiring that attorneys for plaintiffs in residential foreclosure proceedings file an affirmation certifying that they have taken reasonable steps to verify the accuracy of documents related to the case.

The legal assistance program was applauded by the New York State Bar Association. "We are pleased with the chief judge's pilot program and his plans to later expand this innovative program statewide,'' Stephen P. Younger, president of the association, said in a statement.

"Nearly two-thirds of homeowners facing foreclosure are not represented by attorneys at their settlement conferences,'' Younger said.

Under a 2008 state law, courts must schedule a mandatory settlement conference with the parties in foreclosure proceedings involving certain subprime loans.

Lippman to Assign Attorneys

Lippman said, under the new program, he would assign legal services attorneys with foreclosure expertise to courts in the counties involved in the program. "After a screening process designed to make sure that the foreclosure settlement conferences are as meaningful as possible, these legal services attorneys will provide legal assistance or representation to unrepresented homeowners at the initial conference in as many cases as possible,'' he said.

"Thereafter, the attorney will either keep the case and continue with representation or refer the homeowner to a network of legal services, pro bono or law school clinic counsel who will be standing by to provide additional legal assistance in support of this project.''

By Gerald B. Silverman

Foreclosed homes still selling at Palm Beach County auction without representation

Foreclosed homes still selling at Palm Beach County auction without representation

Interesting Articles

Accused MERS Robo Signer

Caryn A. Graham is an attorney employed by Marshall Watson P.A.

Read this from a former Robo Signer

More Accused Robo Signers

Lisa Markham signs for Deutsche Bank and for CitiMortgage and CR Title

Pite Duncan the California equal of David Stern in FL


Treva Moreland

Pam January

Tishana S. Gibbs

G. Soberanis for Deutsch bank National Trust and Carrington Mortgage

Cecelia Knox Josh Lade Topako Love Reginald Lynch Greg Lyons Nathan Miller Bill …

eileen j gonzales where can i send them vp of first franklin vp of mers

Angelica Alanis and Gloria E Coleman-Benson. Alanis signed for Mers and Gloria was the notary. We have traced Alanis to a Household

Jeannette Love-Hadden, Anne Neely and just an FYI my assignment was signed by Kevin Prieshoff Assistant secretary for MERS. Please refer to the Shelli Hill deposition who confirms that he is an employee of the foreclosing law firm Lerner Sampson and Rothfuss. Also the notary was Karen James confirmed as an employee as well.

Pamela K Troxell

Chamagne Williams

cardless dixon – lisa gerard – jerrie moton – rashonda lynn turner – kimley godfrey – carolyn mcleod – van johnson – beverly clark




Robo Signers

This Site has a list of Robo Signers with links and hints.

B of A Alledged Robo Signers

I don't guarantee spellingis correct  the list was hard to read.

Mark Acosta

Carrie Erbe

Catherine M Gorlewski

Jeanette Grodsky

Suzanne M Haumesser

Cynthia A Mech

Brandon Sciumbato

John S Smith

David P Sunlin

Christine Albert

Lisa Alliason

Micall Bachman

Lance Bell

Donald R Clark

Kimberly Dawson

Renee Hertzler

Lancia Herog

Mary Joos

Mary Kist

Michael Prindle

Rhoena Rice

Sheri Sohum

Melissa Viveros

Rhonda Weston

Jill Wosnak

Ted Cassell

Aaron Fozmby

Serena Harman

Gregory Higeons

Michael Holtz

Kaneisha Hunley

Holly M jarmusz

Deborah A jurek

Barbara Komisarof

Bridget Left

Cody mahon

Cheryl Mallory

Susan McCaughan

Timothy E Moran

Roxanne Nowicki

Frances Pecoraro

David M Perez

Laura m Pirritano

Tania Ramos

Robert Rybarczyk

Ken Setsky

Joyce Schithbato

Keri Selman

Teresa Skinner

TiaQuanda Turner

Sandra Williams

Ashley Barraza

Destiny Bentley

Tyria Garrison

Benjamin Hillis

Julia Myra

Gregory J Price

Donna Powell

Kathy Repka

Gail Stein

Vicki Lynn Vasquez

Lisa Wickser

Rachelle Wickware

Angelica B Williams

Diane Young

Commit Bankruptcy Fraud go to Prison

As of early last year, criminal charges had been filed in just 24 of the 1,611 cases referred for prosecution nationwide in 2009.

In 2006, authorities say, Richard Likane of Tampa got a mortgage after telling the lender he was making $12,324 a month as manager of an Italian restaurant.

But tax returns submitted in his 2008 bankruptcy case correctly stated that the only income he had in 2006 was $44.

After the FBI investigated those and other discrepancies between mortgage applications and Likane's bankruptcy filing, he was indicted last year on a charge of mail fraud affecting a financial institution — and faces up to 30 years in prison.

Are you listening South Florida?

Wednesday, February 16, 2011

Cal Sup Ct Says Recording ZIP Code Violates CA Song-Beverly Credit Card Act

The Supreme Court of California recently held that a business violates the California Song-Beverly Credit Card Act of 1971 (the "Credit Card Act"), which prohibits businesses from requesting that cardholders provide "personal identification information" during credit card transactions and then recording that information, when the business requests and records a customer's ZIP code during a credit card transaction.

A copy of the opinion is available online at:

The language of Section 1747.08 of the Credit Card Act provides that no business "that accepts credit cards.shall.request, or require as a condition to accepting [a] credit card as payment., the cardholder to provide personal identification information, which the [business] accepting the credit card [records] upon the credit card transaction form or otherwise." Section 1747.08 further defines personal identification information as "information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder's address and telephone number."

Plaintiff credit card holder was asked for her ZIP code during a purchase at one of defendant retailer's stores. Plaintiff provided the requested information, which defendant recorded and then later cross-referenced with available databases to determine plaintiff's home address.

Plaintiff sued, asserting a violation of the Credit Card Act. The trial court ruled against the plaintiff, concluding that a ZIP code does not constitute "personal identification information" as that term is defined in Section 1747.08 of the Credit Card Act. The Court of Appeal affirmed, and the plaintiff appealed to the Supreme Court of California.

The Court considered the lower Court's conclusion that ZIP code information is not subject to Section 1747.08 because, although an address and telephone number are "specific in nature regarding an individual., a ZIP code pertains to the group of individuals who live within the ZIP code." Overruling and reversing the lower courts' decisions, the California Supreme Court noted that "a ZIP code is readily understood to be part of an address; when one addresses a letter to another person, a ZIP code is always included," and thus "the statute should be construed as encompassing not only a complete address, but also its components."

Further, even a complete address is unlikely to be specific to an individual, because multiple individuals often reside in the same household.

The Court also noted that all of the elements of Section 1747.08 "constitute information unnecessary to the sales transaction that, alone or together with other data such as a cardholder's name or credit card number, can be used for the retailer's business purposes." A broader interpretation of Section 1747.08 is preferred, ruled the Court, both because "courts should liberally construe remedial statutes in favor of their protective purpose" and because "[t]he Court of Appeal's interpretation.would permit retailers to obtain indirectly what they are clearly prohibited from obtaining directly, 'end-running' the statute's clear purpose." The Court also concluded that the terms chosen by the legislature "suggest. the Legislature did not want the category of information protected under the statute to be narrowly construed."

The Court then ruled that a broad interpretation is also consistent with subdivision D of Section 1747.08, which allows businesses to require a cardholder to provide reasonable forms of identification, such as a California state identification card, but specifically disallows the recording of that information. Because such identification would include information such as a ZIP code, the Court ruled, it would be inconsistent to otherwise allow the recording of information in a manner explicitly prohibited by subdivision D of the Section 1747.08.

The Court then examined the legislative history of Section 1747.08 and concluded that the legislature enacted its precursor "to address the misuse of personal identification information for, inter alia, marketing purposes" and concluded that the statute's "overriding purpose [is] to 'protect the personal privacy of consumers who pay for transactions with credit cards.'" The Court also observed that the Senate Committee on Judiciary analysis expressed the same motivating concerns.

The Court then examined subsequent amendments to Section 1747.08, which "permit.businesses to require cardholders provide identification so long as none of the information [is] recorded." Disregarding defendant's reliance on commentary by the State & Consumer Services Agency, which characterized these subsequent amendments as "a clarifying, nonsubstantive change," the Court ruled "that former subdivision (d) was considered merely clarifying and nonsubstantive suggests the Legislature understood former section 1747.08 to already prohibit the requesting and recording of any of the information, including ZIP codes, contained on driver's licenses and state identification cards."

Further, the Court noted, even "the 1990 version of former section 1747.08 forbade businesses from "requir[ing] the provide personal identification information." Given that the provision was later "broadened, forbidding businesses from "request[ing], or requir[ing] as a condition to accepting the credit card., the cardholder to provide personal identification information." the Court ruled, "[t]he obvious purpose of the 1991 amendment was to prevent retailers from requesting 'personal identification information and then matching it with the consumer's credit card number.'" Further, "[t]hat the Legislature so expanded the scope of former section 1747.08 is further evidence it intended a broad consumer protection statute."

Therefore, the Court concluded, "in light of the statutory language, as well as the legislative history and evident purpose of the statute, we hold that personal identification information, as that term is used in Section 1747.08, includes a cardholder's ZIP code."

The Court also rejected the business's contention that a broad interpretation of Section 1747.08 would "be unconstitutionally oppressive because it would result in penalties 'approach[ing] confiscation of [defendant's] entire business.'" The "statute does not mandate fixed penalties; rather it sets the maximum. at $250 for the first violation and $1,000 for subsequent violation[s]," the Court ruled, and thus "the amount of the penalties awarded rests within the sound discretion of the trial court."

Finally, the Court rejected the business's argument that the Court's ruling "should be prospectively applied only." Instead, the Court ruled, "[i]n our view, the statute provides constitutionally adequate notice of proscribed conduct." Further, because the filing of the plaintiff's complaint predated contrary precedent, "it therefore cannot be convincingly argued that the practice of asking customers for their ZIP codes was adopted in reliance on [contrary precedent]."

Monday, February 14, 2011


America Saves Week (February 20–27) is a chance for organizations and professionals to make a concerted effort to help individuals take positive steps to reach their savings goals. Visit to learn more, including ways to get involved. 

National Consumer Protection Week (March 6-12) brings together government and non-profit organizations to help consumers learn how to protect their privacy, manage their money, decipher advertising messages, and steer clear of fraud and scams.  Visit for details and materials, including a toolkit and outreach ideas.

Obama's Fannie & Freddie Plan

Obama's Fannie, Freddie plan may boost mortgage rates

Washington Post
By Zachary A. Goldfarb
Friday, February 11, 2011; 8:59 AM

The Obama administration proposed raising fees for borrowers and requiring large down payments for home loans as part of a long-term effort to reduce the government's outsized footprint in the housing market, but warned that these moves could increase mortgage rates and potentially reduce the availability of the 30-year fixed rate mortgage, a mainstay of American housing for decades.

In a long-awaited white paper, the administration said that it intends to wind down Fannie Mae and Freddie Mac, which together with the Federal Housing Administration provide more than 90 percent of housing finance, but said the process could take five or more years.

It discussed three options for replacing them, including a new government agency that would insure mortgages all the time, a new agency that would only step in during times of market crisis, and then a third option that does not provide any government backing for home loans beyond the FHA.

The administration warned that this no-government option "has particularly acute costs in its potential impact on access to credit for many Americans." The white paper also warned that this option could have the greatest impact on boosting mortgage rates and would make it difficult for community banks to compete in the housing market.

But it said the other options continue to put at risk taxpayers for bailing out the mortgage market in big declines.

Regardless of this longer-term overhaul, the administration suggested a range of new measures to make taking a government-backed mortgage more expensive and thereby making it more competitive for private sector firms to compete in offering mortgages.

These include reducing the size of mortgages Fannie and Freddie can purchase, from $729,750 now to $625,500 by this fall. It also includes phasing a 10 percent down payment requirement for the companies. Finally, it includes raising fees the companies charge to insure loans.

The administration also suggested scaling back FHA, which caters to first-time homebuyers with low down-payment options. It said it wants to reduce the size of loans that FHA can provide, increase fees by a quarter percentage point, and potentially raise the down payment requirement from 3.5 percent now to 5 percent in the future.

The report also emphasized the importance of rental housing for low and moderate-income communities.

Senior administration officials said they would take gradual steps, to avoid harming the already struggling housing market. But they said this plan laid the groundwork for the future of housing in America.

"This is a plan for fundamental reform - to wind down the [Fannie and Freddie], strengthen consumer protection, and preserve access to affordable housing for people who need it," Treasury Secretary Timothy F. Geithner said. "We are going to start the process of reform now, but we are going to do it responsibility and carefully so that we support the recovery and the process of repair of the housing market."

In an interview with CNBC immediately following the release of the report, Geithner said that it is "important Congress legislates this over the next two years."

Mark Zandi, chief economist for, told CNBC that he felt the Obama administration had "laid out a prudent, appropriate plan."

"At the end of the day, though, the government is going to have to play some role in a catastrophic backstop," Zandi added.

Bipartisan support for scrapping Fannie, Freddie draws criticism
By Zachary A. Goldfarb
Washington Post Staff Writer
Wednesday, February 9, 2011; 10:55 PM

To many Republicans and the Obama administration, Fannie Mae and Freddie Mac, the government's mortgage giants, are ill. But rather than healing them, both sides agree that the companies should be left to die and that their support for the housing market should wither away.

Some influential interest groups are taking issue with that surprising bipartisan consensus.

They include small banks, real estate agents and consumer groups, who all say that Fannie and Freddie, or something similar, are crucial for sustaining the struggling housing market.

And ahead of the administration's scheduled release Friday of a white paper on overhauling the nation's mortgage system, some economists are also saying that shrinking the government's role too much will make housing far more costly for Americans.

"These groups have considerable political clout and will make it difficult to get Congress to act on housing finance reform," said Jaret Seiberg, an analyst with MF Global. "Legislation to cut back the government's role in housing finance will result in higher mortgage rates and downward pressure on home values. That is a tough vote for many lawmakers, regardless of their party affiliation."

Some business groups, such as small banks and credit unions, are worried that the demise of Fannie and Freddie would allow large financial firms to dominate the mortgage market. Realtors and home builders are reluctant to part with the federal subsidy for housing provided by Fannie and Freddie. Consumer groups are wary of eliminating the firms because of the role they play in helping lower- and moderate-income homebuyers get access to mortgages.

Seiberg said that this opposition could lead the administration to retain the two companies and reform them.

"We continue to believe the administration will restructure its investments in the enterprises to stabilize them to give Congress even more time to act," he said in a research report Wednesday. "A more stable Fannie and Freddie reduces the need for legislation, which makes it even harder to get lawmakers to act."

Divergent approaches

Although Republicans and the administration agree that Fannie and Freddie have got to go, that's where the agreement ends.

Congressional Republicans want to accelerate the mortgage giants' demise, reflecting their view that Fannie and Freddie are government-created monstrosities whose victims have been taxpayers. The seizure of the companies has cost the Treasury more than $130 billion. The Obama team wants to take a gradual approach.

And on the question of what should replace them, the GOP has outlined a clear, if controversial, vision: nothing. The administration's long-delayed white paper, by contrast, will not present a single vision for reform, but three different options.

This approach to overhauling Fannie and Freddie could make it even less likely that Congress will devise a new system for housing finance this year.

Federally backed Fannie and Freddie buy mortgage loans and guarantee them against default. This government guarantee has lent certainty and stability to the housing market, keeping funding available and interest rates low, at a time of severe stress. Fannie and Freddie, combined with the Federal Housing Administration, which supports low down-payment loans, have been behind more than 90 percent of new home loans in recent years.

Mark Zandi, an economist and adviser to both Republicans and Democrats, estimated this week that mortgage rates would be one percentage point higher and that home prices would be 10 percent lower if Fannie and Freddie were eliminated and nothing replaced them.

One of the options in the administration's white paper matches the Republican proposal that nothing replace the companies. The other two options involve a new government agency that would provide mortgage insurance for high-quality loans all the time - and one that would step in during times of crisis.

The administration will propose baby steps toward reducing government support, such as raising fees that Fannie and Freddie charge lenders and borrowers for the government guarantee as well reducing the size of mortgages they can insure, from $729,750 to $625,500.

The administration is also likely to champion steps that it has taken and regulators can take to overhaul the housing finance system.

GOP prodding

Meanwhile, Republicans, particularly in the House, say they will be pushing the administration to do more, faster.

"It's unfortunate that my colleagues across the aisle resisted any attempt last Congress to address the most expensive component of the federal government's intervention during the financial crisis," Rep. Scott Garrett (R-N.J.), chairman of the House panel overseeing housing finance, said Wednesday at hearing on their future.

But Rep. Barney Frank (D-Mass.), the top Democrat on the House Financial Services Committee, said that Republicans are likely to be more circumspect now that they are in charge and that any precipitous move to disrupt the housing market could cost homeowners in their districts.

The Republicans "seemed to know exactly what they wanted to do when they were in the minority," he said. "I think what they're finding is it's a little more complicated than they thought."

Hearing Set in Blockbuster Chap. 7 Motion

"A New York judge will hold a hearing on Feb. 24 to address a request by a Blockbuster Inc. creditor to move the Dallas movie and game rental chain's bankruptcy into Chapter 7 liquidation."

10 Years for Bankruuptcy Fraud Debtor

10 Years for Bankruuptcy Fraud Debtor

Bankruptcy Vlo Case Update

7th Circuit: Busson-Sokolik v. Milwaukee School of Engineering (In re Busson-Sokolik)

The Seventh Circuit Court of Appeals affirmed the denial of debtor's discharge of his educational loans, holding that the determining factor of whether educational loans are educational or not is the purpose of the loan, not the use of the loan proceeds. The Court also affirmed the award of attorney fees for the creditor, as contractually provided for within the terms of the promissory note, and not in violation of the "American Rule" as argued by debtor. Finally, the Court affirmed the denial of sanctions under 9011(c)(1)(A) by the debtor as the debtor failed to provide the creditor with any opportunity to purge itself of sanctionable conduct under the 'safe harbor' rule, and affirmed the award of sanctions, for a lesser amount (by one half), imposed by the court against the Debtor through Fed R Bankr P 8020, such that he award would have deterrent effect, rather than result in financial ruin.


Debtor was a student at the Milwaukee School of Engineering (MSOE) from September 1999 through May 2000. He borrowerd $3,000 on October 29, 1999. MSOE sued debtor in April 2005 on account of the note, and obtained a default judgment for $5,909.63. In June 2005, Debtor filed a Chapter 13 petition that was later converted to a Chapter 7 proceeding. MSOE was listed as a creditor, and Debtor filed an adversary to determine dischargeability of the debt. The bankruptcy court found the debt to be non-dischargeable and found that the Debtor owed MSOE $16,248.78, which included costs and attorney fees. Sanctions, on appeal to the District Court, were imposed by the court in an amount just exceeding $60,000.00. The Seventh Circuit reduced the sanction award by just over $30,000.00, finding same would deter future sanctionable conduct by the parties, without finanicially ruining the debtor and his counsel.

11th Circuit: Abrams v. Saint Felix (In re Miller)

Case No. 10-12085 (11th Cir. Feb. 10, 2011)


The Eleventh Circuit reversed the district court's affirmance of the bankruptcy court's award of Rule 9011 sanctions because the motion for sanctions did not identify with specificty the conduct alleged to be sanctionable as required by Rule 9011(c)(1)(A).


The trustee in bankruptcy sued Mr. Saint Felix to recover an alleged fraudulent transfer to him by the debtor of real property. In response, Mr. Sanit Felix served a Rule 11 motion. SImultaneously with service of the Rule 11 moion, Mr. Saint Felix filed a motion to dismiss; however, he subsequently withdrew the motion to dismiss and then filed a motion for summary judgment. Of note, the motion for sanctions did not refer to or incorporate the bases for the motion to dismiss. Contrary to the requirement of Rule 9011(c)(1)(A), the sanctions motion did not identify the alleged sanctionable conduct. Nevertheless, the bankruptcy court imposed sanctions which award was affirmed by the district court. On further appeal, the Eleventh Circuit held that the award of sanctions was an abuse of discretion because the sanctions motion did not identify the alleged sanctionable conduct. The Eleventh Circuit rejected Mr. Saint Felix's argument that notice was provided by the contemporaneously filed motion to didmiss, explaining that the rule required the sanctions motion to include that information and in any event the sanctions motion did not refer to or incorporate the motion to dismiss which, in fact, was subsequently withdrawn.

RSBS Citizen v. RTGO

The Appellate Court of Illinois for the First District recently held that an interest provision in a loan agreement was not ambiguous and therefore the borrower was not entitled to claims under the Interest Act, good faith and fair dealing, and statutory and consumer fraud, based on alleged misrepresentations and ambiguity in the interest provision.

The borrower and lender entered into a loan agreement to finance the development of a residential condominium project. After the borrower defaulted on the loan, the parties executed a series of forbearance agreements. The loan remained unpaid and ultimately the lender filed a complaint for foreclosure.

The borrowers filed an answer, affirmative defenses and counterclaims based on alleged violations of the Illinois Interest Act (815 ILCS 205/1, et seq.), the duty of good faith and fair dealing, the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) (815 ILCS 505/1, et seq.), and common law fraud. The borrower’s allegations revolved around the general contention that the lender did not disclose its method of computing and charging interest, and unlawfully increased the amount of interest charged on the loan.

The lender moved to strike and dismiss all affirmative defenses and counterclaims. The circuit court granted the motion, dismissing the affirmative defenses and counterclaims with prejudice. The circuit court later denied a motion to reconsider its dismissal, and the borrowers appealed.

In upholding the circuit court, the appellate court first examined language in the forbearance agreement signed by the borrower that provided that the borrower had “no claims or defenses to the enforcement of the rights and remedies of Lender thereunder,” and that the agreements and relevant loan documents “constitute the legal, valid and binding obligations of Borrower, enforceable against it in accordance with their respective terms, and Borrower has no valid defense to the enforcement of such obligations.” The court noted that the forbearance agreements containing a waiver of defenses were executed in 2008, and the alleged offenses occurred upon the execution of the Note in 2005.

The appellate court held that Illinois law permits a party to contractually waive all defenses, though the duty of good faith and fair dealing is not waived absent an

“express disavowal,” which the appellate court found the above language did not do. However, the appellate court noted that a waiver of defenses was inapplicable to claims originating under the ICFA.

Nevertheless, the appellate court found the waiver of defenses was essentially part of the consideration that the lender received in exchange for a forbearance agreement. It noted that it “would be inclined to find that defendants also waived any affirmative defense or counterclaim based upon the Interest Act and common law fraud.” However, the Court “nevertheless address[ed] defendants’ contentions for the sake of completeness.”

The Court noted that each of the borrowers’ affirmative defenses and counterclaims revolved around the same basic theory – that the borrowers were mislead as to the amount of interest that would be paid under the loan. The court noted that there are generally three different methods lenders use to compute interest: the 365/365 method, 360/360 method, and 365/360 method.

The lender utilized the 365/360 method when charging interest under the loan, but the borrowers argued that the loan identified the rate as “per annum,” which they argued is defined as “by the year.” The relevant portion of the loan provided as follows with respect to interest charged: “Interest shall be computed on the principal balance outstanding from time to time, on the basis of a three hundred sixty (360) day year, but shall be charged for the actual number of days within the period for which interest is being charged.”

The Court noted that the phrase per annum does not appear in the interest provision. The Court therefore found that there was no ambiguity in the language and that the loan provided for the 365/360 method of interest calculation. Therefore, the appellate court held that the lender did not violate the Interest Act.

The Court next discussed the claims revolving around a duty of good faith and fair dealing. It noted that they occur “when one party is given broad discretion in performing its obligations under the contract.” The plaintiff borrowers alleged that the defendant lender breached this duty by (1) “deliberately creat[ing] ambiguity in the language of the loan documents” as to the calculation of interest; and (2) “exercise[ing] its discretion to calculate interest in a manner that charged *** more interest than Defendants reasonably expected.” The Court first noted that the duty of good faith and fair dealing, did “not arise out of precontractual actions and is only applicable to the conduct of parties to an existing contract.” Accordingly, it held that any allegations relating to the formation of the loan agreement did not implicate or violate the duty of good faith and fair dealing. The Court further found that since the agreement was not ambiguous, the lender did not exercise any discretion and therefore the second argument was also without merit.

With respect to the statutory and common law fraud claims, the Court noted that the borrowers’ fraud claims were predicated upon an assertion that the interest calculation method was deceptive and based upon misrepresentations and false statements. The Court held that there could be no statutory or common law fraud because there was no evidence of any impropriety or deception on the part of the lender and because it already determined that the loan agreement was unambiguous.

Finally, the appellate court found that the claims were properly dismissed with prejudice because the borrowers would not be able to cure the defect in the claims simply be repleading. However, the Court denied the lender’s request for sanctions against the borrowers for filing a frivolous appeal, noting that while it was unpersuaded by the borrowers’ arguments, it was not unreasonable that the borrowers would appeal the circuit court’s decision given that the primary issues on appeal were subject to de novo review and largely dependent upon an interpretation of a single contract provision.

Baud v. Carroll

Middle District of Tennessee.

Baud v. Carroll, 2011 WL 338001 (Sixth Cir. Feb. 4, 2011) (Cole) (Published at 2/14/11)

The applicable commitment period of a Chapter 13 plan requires payments to be made over a time equal to the applicable commitment period; a debtor’s projected disposable income excludes benefits received under the Social Security Act; and there is no exception to the temporal requirement for debtors with a negative projected disposable income

Freddie & Fannie going Away?

Housing Crash Is Hitting Cities Once Thought to Be Stable

The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune - economically diversified cities where the boom was relatively restrained, the New York Times reported today. In the last year, home prices in Seattle had a bigger decline than in Las Vegas, while Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix. The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Though the overall economy seems to be mending, housing remains stubbornly weak. CoreLogic, a data firm, said last week that American home prices fell 5.5 percent in 2010, back to the recession low of March 2009