http://gawker.com/5527403/mark-pincus-the-facebook-desperado-making-off-with-millions?skyline=true&s=i
Friday, April 30, 2010
Bocott Mafi Wars and Farmville on Face Book!!
This guy is a cockroach, don't play his games.
http://gawker.com/5527403/mark-pincus-the-facebook-desperado-making-off-with-millions?skyline=true&s=i
http://gawker.com/5527403/mark-pincus-the-facebook-desperado-making-off-with-millions?skyline=true&s=i
HR 5043 Student Loan Bankruptcy Fairness Act of 2010
Thanks to David Goch who posted this on the Bankruptcy Roundtable Listserve:
Yesterday, the House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on H.R. 5043, "The Private Student Loan Bankruptcy Fairness Act of 2010".
H.R. 5043, according to Rep. Cohen (D-TN), the bills sponsor along with Rep. Davis (D-Ill.), "is very narrowly tailored to make debt resulting from student loans issued by private, for-profit institutions dischargeable in bankruptcy."
H.R. 5043 amends Bankruptcy Code Section 523(a)(8), eliminating Section 523(a)(8)(B), which currently makes debt from private loans issued by for-profit lenders nondischargeable in bankruptcy absent undue debtor or debtor's dependents hardship. The bill also amends Section 523(a)(8)(A)(i) to clarify that only loans for which substantially all of the funds were provided by a nonprofit institution remain nondischargeble in bankruptcy.
Deanne Loonin, a staff attorney for the National Consumer Law Center, pointed out that student loan borrowers are a very diverse group of people but they chare one common trait: "they're all trying to better themselves through education" and are all struggling with student loan debt. However, Loonin stated "[B]ankruptcy is not and should not be the entire safety net" for borrowers who cannot repay their student loans."
Loonin said she supports H.R. 5043, not because bankruptcy is the best option, but because it is the only option some have to be able to move on with their lives.
According to John Hupalo, managing director at Ramirez Capital Advisors, a group specializing in student loan finance, whether or not to permit bankruptcy discharge of private student loan debt is a complex issue. Huppalo indicated he understood the intended benefit of repealing non-dischargeability of private student loans, but went on to state he is concerned the bill would be "counter-productive to the country's shared goal of making a college education more accessible to the greatest number of students possible."
Adrian Lapas, a solo practitioner testifying on behalf of the National Association of Consumer Bankruptcy Attorneys, voiced support of H.R. 5403, noting that the legislation will "restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt."
Meanwhile, in an April 21 letter to Cohen, more than two dozen organizations representing students, consumers, institutions of higher education and civil rights and public policy organizations expressed their support for the bill. Among the groups signing the letter: The American Council on Education, Consumer Action, Consumer Federation of America, Consumers Union, Demos: A Network for Ideas & Action, Rock the Vote, U.S. Public Information Research Group, UNCF, and the National Association for Equal Opportunity in Higher Education.
Yesterday, the House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on H.R. 5043, "The Private Student Loan Bankruptcy Fairness Act of 2010".
H.R. 5043, according to Rep. Cohen (D-TN), the bills sponsor along with Rep. Davis (D-Ill.), "is very narrowly tailored to make debt resulting from student loans issued by private, for-profit institutions dischargeable in bankruptcy."
H.R. 5043 amends Bankruptcy Code Section 523(a)(8), eliminating Section 523(a)(8)(B), which currently makes debt from private loans issued by for-profit lenders nondischargeable in bankruptcy absent undue debtor or debtor's dependents hardship. The bill also amends Section 523(a)(8)(A)(i) to clarify that only loans for which substantially all of the funds were provided by a nonprofit institution remain nondischargeble in bankruptcy.
Deanne Loonin, a staff attorney for the National Consumer Law Center, pointed out that student loan borrowers are a very diverse group of people but they chare one common trait: "they're all trying to better themselves through education" and are all struggling with student loan debt. However, Loonin stated "[B]ankruptcy is not and should not be the entire safety net" for borrowers who cannot repay their student loans."
Loonin said she supports H.R. 5043, not because bankruptcy is the best option, but because it is the only option some have to be able to move on with their lives.
According to John Hupalo, managing director at Ramirez Capital Advisors, a group specializing in student loan finance, whether or not to permit bankruptcy discharge of private student loan debt is a complex issue. Huppalo indicated he understood the intended benefit of repealing non-dischargeability of private student loans, but went on to state he is concerned the bill would be "counter-productive to the country's shared goal of making a college education more accessible to the greatest number of students possible."
Adrian Lapas, a solo practitioner testifying on behalf of the National Association of Consumer Bankruptcy Attorneys, voiced support of H.R. 5403, noting that the legislation will "restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt."
Meanwhile, in an April 21 letter to Cohen, more than two dozen organizations representing students, consumers, institutions of higher education and civil rights and public policy organizations expressed their support for the bill. Among the groups signing the letter: The American Council on Education, Consumer Action, Consumer Federation of America, Consumers Union, Demos: A Network for Ideas & Action, Rock the Vote, U.S. Public Information Research Group, UNCF, and the National Association for Equal Opportunity in Higher Education.
Thursday, April 29, 2010
Florida Default Law Group in the Wall Street Journal
Foreclosure Lawyers Face New Heat In Florida
By Amir Efrati
These are precarious times for lawyers in the business of filing foreclosure cases for banks. This is particularly true in one of the epicenters of the foreclosure crisis, Florida.
As we’ve noted before, the feds in Jacksonville recently started a criminal investigation of a company that is a top provider of the documentation used by banks in the foreclosure process. And a state-court judge ruled that a bank submitted a “fraudulent” document in support of its foreclosure case. That document was prepared by a local law firm.
For more Law Blog background on the foreclosure mess in our nation’s courts, this post will help.
The news today: the Florida Attorney General’s office said it has launched a civil investigation of Florida Default Law Group, based in Tampa, which is one of the largest so-called foreclosure-mill law firms in the state.
According to the AG’s website, it’s looking at whether the firm is “fabricating and/or presenting false and misleading documents in foreclosure cases.” It added: “These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient.”
The issue: judges are increasingly running into situations in which banks are claiming ownership of properties they actually don’t own. Some of them end up chewing out the lawyers representing the banks.
The AG’s office said Florida Default Law Group appears to work closely with Lender Processing Services — the company we referenced earlier that is being investigated by the Justice Department.
LPS processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS often works with local lawyers who litigate the foreclosure cases in court. Sometimes those same law firms produce documents that are required to prove ownership.
We’ve reached out to Florida Default Law Group and LPS and will let you know if we hear back.
Check this out too!
http://docs.google.com/fileview?id=0ByahxE3mgBCEMjE1MDM0NmEtZDBiNy00Yjc5LTk5MDQtYmVhZWIwOTgyOTMx&hl=en
By Amir Efrati
These are precarious times for lawyers in the business of filing foreclosure cases for banks. This is particularly true in one of the epicenters of the foreclosure crisis, Florida.
As we’ve noted before, the feds in Jacksonville recently started a criminal investigation of a company that is a top provider of the documentation used by banks in the foreclosure process. And a state-court judge ruled that a bank submitted a “fraudulent” document in support of its foreclosure case. That document was prepared by a local law firm.
For more Law Blog background on the foreclosure mess in our nation’s courts, this post will help.
The news today: the Florida Attorney General’s office said it has launched a civil investigation of Florida Default Law Group, based in Tampa, which is one of the largest so-called foreclosure-mill law firms in the state.
According to the AG’s website, it’s looking at whether the firm is “fabricating and/or presenting false and misleading documents in foreclosure cases.” It added: “These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient.”
The issue: judges are increasingly running into situations in which banks are claiming ownership of properties they actually don’t own. Some of them end up chewing out the lawyers representing the banks.
The AG’s office said Florida Default Law Group appears to work closely with Lender Processing Services — the company we referenced earlier that is being investigated by the Justice Department.
LPS processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS often works with local lawyers who litigate the foreclosure cases in court. Sometimes those same law firms produce documents that are required to prove ownership.
We’ve reached out to Florida Default Law Group and LPS and will let you know if we hear back.
Check this out too!
http://docs.google.com/fileview?id=0ByahxE3mgBCEMjE1MDM0NmEtZDBiNy00Yjc5LTk5MDQtYmVhZWIwOTgyOTMx&hl=en
House Judiciary Committee to Hold Hearing on Credit Card Merchant Fees
The House Judiciary Committee today will hold a hearing on H.R. 2695, the "Credit Card Fair Fee Act of 2009."
Hearing Information
Hearing on: H.R. 2695, the "Credit Card Fair Fee Act of 2009"
Wednesday 4/28/2010 - 10:00 A.M.
2141 Rayburn House Office Building
Full Committee
By Direction of the Chairman
Hearing Information
Hearing on: H.R. 2695, the "Credit Card Fair Fee Act of 2009"
Wednesday 4/28/2010 - 10:00 A.M.
2141 Rayburn House Office Building
Full Committee
By Direction of the Chairman
Hearing Information
Hearing on: H.R. 2695, the "Credit Card Fair Fee Act of 2009"
Wednesday 4/28/2010 - 10:00 A.M.
2141 Rayburn House Office Building
Full Committee
By Direction of the Chairman
http://judiciary.house.gov/hearings/hear_100428.html
Hearing on: H.R. 2695, the "Credit Card Fair Fee Act of 2009"
Wednesday 4/28/2010 - 10:00 A.M.
2141 Rayburn House Office Building
Full Committee
By Direction of the Chairman
http://judiciary.house.gov/hearings/hear_100428.html
35 Fla. L. Weekly D700a--- 2nd DCA CASE
In Florida, the Second District Court of Appeals covers the West-Central part of the state . There are now fourteen counties in the Second District which includes a population of over 3.8 million: Pasco & Pinellas, Hardee, Highlands, Polk, DeSoto, Manatee, Sarasota, Hillsborough, Charlotte, Glades, Collier, Hendry, and Lee.
Background Facts
The facts of this case are undisputed, and only Mr. Palacios and the second mortgagee, Appellee Wachovia Bank, N.A., are interested parties in this appellate proceeding. On April 15, 2008, the circuit court entered a final summary judgment of foreclosure in favor of Florida Funding for $60,136.09. On May 9, 2008, the Clerk conducted the foreclosure sale, at which Mr. Palacios and Florida Funding were the only bidders. Florida Funding bid $40,000 and Mr. Palacios ultimately prevailed with a bid of $41,000. Shortly thereafter, Mr. Palacios moved to release his money from the Clerk because he discovered that there was a second mortgage on the property. Then, on May 19, 2008, Wachovia moved to set aside the foreclosure judgment and the sale, claiming that it had not been properly served in the initial proceedings and that there were substantial unexplained irregularities in the final judgment concerning the proper amount owed to Florida Funding. At the hearing on Wachovia’s motion, the circuit court determined that instead of more than sixty thousand dollars, Florida Funding was owed in total only $16,427.28 on its first mortgage because its contract did not properly secure future advances on the mortgage. The circuit court denied Wachovia’s motion to set aside the final judgment of foreclosure and sale and instead merely modified the final judgment to reflect the newly corrected amount owed to Florida Funding. This postsale modification left over twenty-four thousand dollars in excess of the first mortgage to satisfy junior lien holders like Wachovia. The circuit court also retained jurisdiction to later consider Mr. Palacios’ pending motion to return his money.
Mr. Palacios then amended his pending motion to change tack,1 claiming that the amended final judgment of foreclosure and foreclosure sale should be vacated because the judgment was substantially modified after the sale was held. He cited section 45.031, Florida Statutes (2007), which states that a judicial sale will be held no sooner than twenty days after entry of the final judgment. His motion argued that allowing the sale to stand when such a substantial change was made to the final judgment would defeat the intent of the statute and result in a fraud on and injustice to the third-party bidder who has a right to rely on the affidavits and judgments filed prior to a sale. The circuit court heard argument on this motion from Mr. Palacios and Wachovia at a hearing but denied the motion. The circuit court reasoned that there were no known irregularities before the sale, distinguishing 601 West 26 Corp. v. Equity Capital Co., 174 So. 2d 626 (Fla. 3d DCA 1965), on this point. Further, because the amended final judgment decreased rather than increased the amount due, the circuit court concluded that the third-party bidder was neither disadvantaged at the time of the sale nor thereafter. We do not agree.
Analysis
Wachovia adopts the circuit court’s reasoning on appeal, emphasizing that because there were no irregularities noted before the sale, all requirements of the statute were complied with. This is true but misses the point. The statutory notice requirements are meant to ensure that the public, i.e., a potential third-party bidder like Mr. Palacios, is adequately on notice in order to determine his fair market bidding price at the foreclosure sale. Mr. Palacios was prejudiced here by the faulty original foreclosure judgment because it misled him as to the property’s foreclosure market value. Had the correct amount due to Florida Funding under its first mortgage — approximately $16,427 — been known and set forth in the final judgment of foreclosure at the time of the sale, Mr. Palacios would not have been required to outbid Florida Funding’s interest by offering $41,000; a bid of slightly more than $16,427 would have sufficed. At that point, a junior lienor would have been required to bid more or lose its interest in the foreclosed property. Thus, Wachovia, which had a position subordinate to Florida Funding in the foreclosure sale process, would have been required to bid higher or lose the property. Depending on what a junior lien holder would have done at the sale, Mr. Palacios could have bid higher — or not — depending on his evaluation of his particular circumstances. He may not have had to bid much more than $16,000 to acquire the property.
To conduct a fair foreclosure sale, the correct amount needed to pay off the foreclosing first mortgagee must be known to all potential bidders, be they outsiders like Mr. Palacios or junior lien holders like Wachovia. This is so each bidder can assess the situation corresponding to that bidder’s individual circumstance and decide what the bidder is willing to pay to protect that bidder’s interest. When the true circumstances became known to the circuit court, it should have set aside the final judgment of foreclosure and the sale. Instead, the process the circuit court utilized conferred a benefit to the subordinate lien holder, and a corresponding detriment to Mr. Palacios, by awarding Wachovia the amount remaining after satisfaction of the first mortgage, a benefit to which Wachovia was not entitled by law.
Wachovia cites Sundie v. Haren, 253 So. 2d 857 (Fla. 1971), for the proposition that “[a]s to non-party persons, a purchase at an execution sale pursuant to a judgment afterwards reversed is final.” Id. at 859. Sundie is distinguishable in many respects, not least of which is that the third-party bidder there, unlike Mr. Palacios, was not contesting the final judgment of foreclosure or objecting to the sale. Moreover, the supreme court ultimately dismissed Mr. Sundie’s petition for certiorari, deciding it was without jurisdiction because there was no conflict between the decision on which he sought review, Haren v. Sundie, 233 So. 2d 417 (Fla. 3d DCA 1970), and Horn v. Horn, 73 So. 2d 905 (Fla. 1954). This result left standing the Third District’s decision to reverse and remand to the circuit court with directions to enter a final judgment of foreclosure and proceed with a new foreclosure sale.
Most telling of all is the supreme court’s warning that the result in Sundie “is limited to those situations in which the person required to make restitution was connected with the litigation. It is settled law that reversal of a decree on appeal does not affect the rights under that decree as to persons who were not parties to the appeal.” 253 So. 2d at 859. Thus, the supreme court’s dictum in Sundie regarding non-party persons is not controlling here.
It is the Third District’s opinion in Sundie that is more persuasive here. In its decision, the Third District had stated: “[T]he [foreclosed mortgagors] urge that the final judgment should have ordered a sale of the property so that they might exercise their right of redemption. It is apparent that a sale pursuant to a judgment which has been reversed is not a valid sale.” 233 So. 2d at 418 (emphasis added). Thus, although the final judgment of foreclosure sale in Mr. Palacios’ case was not technically reversed on appeal, the circuit court in fact reversed itself when it modified the final judgment by modifying it from $60,136.09 to $16,427.28.
Conclusion
“Whether the complaining party has made the showing necessary to set aside a [foreclosure] sale is a discretionary decision by the trial court, which may be reversed only when the court has grossly abused its discretion.” Ingorvaia v. Horton, 816 So. 2d 1256, 1259 (Fla. 2d DCA 2002) (quoting United Cos. Lending Corp. v. Abercrombie, 713 So. 2d 1017, 1018 (Fla. 2d DCA 1998)). We conclude that the circuit court grossly abused its discretion in declining to vacate the foreclosure sale when the final judgment of foreclosure was substantially modified after the sale. Mr. Palacios made the necessary showing to set aside the sale and his motion to vacate the sale should have been granted.
Reversed and remanded with directions to vacate the sale and proceed thereon in accordance with established procedure based on the amended final summary judgment of foreclosure filed July 1, 2008, that awarded $16,427.28 to Florida Funding. (KELLY and CRENSHAW, JJ., Concur.)
__________________
1Mr. Palacios’ original pleading was an untitled pro se “petition” to release purchase money; it was renamed to “supplemental/amended motion to vacate sale,” filed by newly retained counsel.
Background Facts
The facts of this case are undisputed, and only Mr. Palacios and the second mortgagee, Appellee Wachovia Bank, N.A., are interested parties in this appellate proceeding. On April 15, 2008, the circuit court entered a final summary judgment of foreclosure in favor of Florida Funding for $60,136.09. On May 9, 2008, the Clerk conducted the foreclosure sale, at which Mr. Palacios and Florida Funding were the only bidders. Florida Funding bid $40,000 and Mr. Palacios ultimately prevailed with a bid of $41,000. Shortly thereafter, Mr. Palacios moved to release his money from the Clerk because he discovered that there was a second mortgage on the property. Then, on May 19, 2008, Wachovia moved to set aside the foreclosure judgment and the sale, claiming that it had not been properly served in the initial proceedings and that there were substantial unexplained irregularities in the final judgment concerning the proper amount owed to Florida Funding. At the hearing on Wachovia’s motion, the circuit court determined that instead of more than sixty thousand dollars, Florida Funding was owed in total only $16,427.28 on its first mortgage because its contract did not properly secure future advances on the mortgage. The circuit court denied Wachovia’s motion to set aside the final judgment of foreclosure and sale and instead merely modified the final judgment to reflect the newly corrected amount owed to Florida Funding. This postsale modification left over twenty-four thousand dollars in excess of the first mortgage to satisfy junior lien holders like Wachovia. The circuit court also retained jurisdiction to later consider Mr. Palacios’ pending motion to return his money.
Mr. Palacios then amended his pending motion to change tack,1 claiming that the amended final judgment of foreclosure and foreclosure sale should be vacated because the judgment was substantially modified after the sale was held. He cited section 45.031, Florida Statutes (2007), which states that a judicial sale will be held no sooner than twenty days after entry of the final judgment. His motion argued that allowing the sale to stand when such a substantial change was made to the final judgment would defeat the intent of the statute and result in a fraud on and injustice to the third-party bidder who has a right to rely on the affidavits and judgments filed prior to a sale. The circuit court heard argument on this motion from Mr. Palacios and Wachovia at a hearing but denied the motion. The circuit court reasoned that there were no known irregularities before the sale, distinguishing 601 West 26 Corp. v. Equity Capital Co., 174 So. 2d 626 (Fla. 3d DCA 1965), on this point. Further, because the amended final judgment decreased rather than increased the amount due, the circuit court concluded that the third-party bidder was neither disadvantaged at the time of the sale nor thereafter. We do not agree.
Analysis
Wachovia adopts the circuit court’s reasoning on appeal, emphasizing that because there were no irregularities noted before the sale, all requirements of the statute were complied with. This is true but misses the point. The statutory notice requirements are meant to ensure that the public, i.e., a potential third-party bidder like Mr. Palacios, is adequately on notice in order to determine his fair market bidding price at the foreclosure sale. Mr. Palacios was prejudiced here by the faulty original foreclosure judgment because it misled him as to the property’s foreclosure market value. Had the correct amount due to Florida Funding under its first mortgage — approximately $16,427 — been known and set forth in the final judgment of foreclosure at the time of the sale, Mr. Palacios would not have been required to outbid Florida Funding’s interest by offering $41,000; a bid of slightly more than $16,427 would have sufficed. At that point, a junior lienor would have been required to bid more or lose its interest in the foreclosed property. Thus, Wachovia, which had a position subordinate to Florida Funding in the foreclosure sale process, would have been required to bid higher or lose the property. Depending on what a junior lien holder would have done at the sale, Mr. Palacios could have bid higher — or not — depending on his evaluation of his particular circumstances. He may not have had to bid much more than $16,000 to acquire the property.
To conduct a fair foreclosure sale, the correct amount needed to pay off the foreclosing first mortgagee must be known to all potential bidders, be they outsiders like Mr. Palacios or junior lien holders like Wachovia. This is so each bidder can assess the situation corresponding to that bidder’s individual circumstance and decide what the bidder is willing to pay to protect that bidder’s interest. When the true circumstances became known to the circuit court, it should have set aside the final judgment of foreclosure and the sale. Instead, the process the circuit court utilized conferred a benefit to the subordinate lien holder, and a corresponding detriment to Mr. Palacios, by awarding Wachovia the amount remaining after satisfaction of the first mortgage, a benefit to which Wachovia was not entitled by law.
Wachovia cites Sundie v. Haren, 253 So. 2d 857 (Fla. 1971), for the proposition that “[a]s to non-party persons, a purchase at an execution sale pursuant to a judgment afterwards reversed is final.” Id. at 859. Sundie is distinguishable in many respects, not least of which is that the third-party bidder there, unlike Mr. Palacios, was not contesting the final judgment of foreclosure or objecting to the sale. Moreover, the supreme court ultimately dismissed Mr. Sundie’s petition for certiorari, deciding it was without jurisdiction because there was no conflict between the decision on which he sought review, Haren v. Sundie, 233 So. 2d 417 (Fla. 3d DCA 1970), and Horn v. Horn, 73 So. 2d 905 (Fla. 1954). This result left standing the Third District’s decision to reverse and remand to the circuit court with directions to enter a final judgment of foreclosure and proceed with a new foreclosure sale.
Most telling of all is the supreme court’s warning that the result in Sundie “is limited to those situations in which the person required to make restitution was connected with the litigation. It is settled law that reversal of a decree on appeal does not affect the rights under that decree as to persons who were not parties to the appeal.” 253 So. 2d at 859. Thus, the supreme court’s dictum in Sundie regarding non-party persons is not controlling here.
It is the Third District’s opinion in Sundie that is more persuasive here. In its decision, the Third District had stated: “[T]he [foreclosed mortgagors] urge that the final judgment should have ordered a sale of the property so that they might exercise their right of redemption. It is apparent that a sale pursuant to a judgment which has been reversed is not a valid sale.” 233 So. 2d at 418 (emphasis added). Thus, although the final judgment of foreclosure sale in Mr. Palacios’ case was not technically reversed on appeal, the circuit court in fact reversed itself when it modified the final judgment by modifying it from $60,136.09 to $16,427.28.
Conclusion
“Whether the complaining party has made the showing necessary to set aside a [foreclosure] sale is a discretionary decision by the trial court, which may be reversed only when the court has grossly abused its discretion.” Ingorvaia v. Horton, 816 So. 2d 1256, 1259 (Fla. 2d DCA 2002) (quoting United Cos. Lending Corp. v. Abercrombie, 713 So. 2d 1017, 1018 (Fla. 2d DCA 1998)). We conclude that the circuit court grossly abused its discretion in declining to vacate the foreclosure sale when the final judgment of foreclosure was substantially modified after the sale. Mr. Palacios made the necessary showing to set aside the sale and his motion to vacate the sale should have been granted.
Reversed and remanded with directions to vacate the sale and proceed thereon in accordance with established procedure based on the amended final summary judgment of foreclosure filed July 1, 2008, that awarded $16,427.28 to Florida Funding. (KELLY and CRENSHAW, JJ., Concur.)
__________________
1Mr. Palacios’ original pleading was an untitled pro se “petition” to release purchase money; it was renamed to “supplemental/amended motion to vacate sale,” filed by newly retained counsel.
Oil Spill in Gulf
WE SHOULD NOT BE DRILLING IN THE GULF PEOPLE !!!!!!!!!!!!!!!!!!!!!!!!!!
WE ARE KILLING THE ENVIRONMENT AND WILL END UP KILLING OURSELVES.
AN ESTIMATED 500 MILLION TONS A DAY ARE BEING DUMPED INTO THE GULF FROM THE LEAK----GET READY FOR A LOT MORE DEAD SEA LIFE
SCOTT v. TAYLOR- still good law
SCOTT v. TAYLOR
(Supreme Court of Florida. Feb. 6, 1912.)
A mortgage executed as security for the payment of a negotiable promissory note is a mere incident of and ancillary to such note. When it comes to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Hence payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not in possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was in possession of the papers at the time of such payment, unless he had expressly or impliedly authorized such payment.
The duty of a maker of a negotiable note to see that the person to whom he pays it has it in his possession before making the payment is not affected by the fact that the note was on its face payable at the office of the person to whom he makes the payment.
The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time of such payment, or to such owner’s authorized agent. If the recipient of the money is not actually authorized, the payment is ineffectual, unless induced by unambiguous direction from the owner, or justified by actual possession of the note. This rule applies generally to all negotiable paper, independently of the existence of any mortgage or other security.
TAYLOR, J. The appellee Emma H. Tay: lor filed her bill In equity in the circuit court of Escambla county for foreclosure of mortgage against the appellant J. Conrad Scott and his wife, Alice K. Scott, and the Pensacola Home & Savings Association, a corporation.
The bill alleged, In substance: That the said J. Conrad Scott, being Indebted to D. Hale Wilson In the sum of $400, executed and delivered to the said D. Hale Wilson his promissory note, whereby he did promise to pay to the order of the said D. Hale Wilson •?400, with Interest at the rate of 8 per cent, per annum from date until paid, interest payable quarter annually, said principal sum to be paid two years after the date of said note. By the terms of said note it was provided that It should be payable at the office of said D. Hale Wilson & Co., Pensacola, Fla., and that after default In payment, and the note should have been placed In the hands of an attorney for collection, the maker would pay an attorney’s fee of 5 per cent. If paid before suit, and 10 per cent, if paid after suit and all costs of collection. That said note is long since past due aud Is unpaid, and before its maturity for a valuable consideration the same was Indorsed and transferred to your oratrlx, Emma H. Taylor, by the said D. Hale Wilson, aud she Is now the owner and holder of same. That to secure the payment of the said note the said J. Conrad Scott and his wife, Alice K. Scott, on the same day, March 24, 1906, did execute and deliver to the said D. Hale Wilson their certain mortgage deed as security for the payment of the said note, thereby conveying to the said D. Hale Wilson, his heirs and assigns, the following real estate situated in the city of Pensacola, Escambla county, Fla., to wit: Lots 3, 4, and 5, in. block 170, New City tract, according to шар published by Thos. C. Watson in 1SS4.
By the terms of said mortgage it was provided: That it was Intended to secure the payment of the promissory note above mentioned, and that the mortgagors would keep perfect and unimpaired the security thereby given, and that the said Indebtedness covered by said mortgage should become immediately due and said mortgage foreclosable for all sums secured thereby, if the said Indebtedness or any part thereof or the interest or any Installment thereof should not be paid according to the terms of the said note, and that, if foreclosure of said mortgage should be had or a suit to foreclose same be rightfully begun, the mortgagors would pay all costs and expenses of said suit, including an attorney’s fee to the attorney of the complainant foreclosing of $15, and 10 per cent, upon the amount decreed to the complainant, which costs and fees should be included in the lien of said mortgage and In the sum decreed upon foreclosure. That said mortgage was duly recorded on the 20th day of March, 1906, in the clerk’s office of Escambia county. That at the time of the Indorsement, transfer, and assignment of snld nromfsporv note to your oratrlx, Emma H. Taylor, the said D. Hale Wilson transferred and assigned me said mortgage to your oratrix and delivered to her said note and mortgage, and said note and mortgage have been In her possession ever since. That subsequent to the making and recording of said note and mortgage, to wit, on or about March 3, 1909. and long subsequent to the time when вяГЯ note and mortgage had been assigned and Indorsed to your oratrix by the said D. Hale Wilson, and at a time when the said note and mortgage were not in possession of said D. Hale Wilson, but were in possession of your oratrix, the said D. Hale Wilson executed what purported to be a cancellation of said mortgage, and procured same to be entered upon the mortgage cancellation records of Escambia county, Fia., but at the time of the execution of said cancellation the said D. Hale Wilson vras not the agent of your oratrix or authorized to act for her. That the amount due upon the said note and mortgage was reduced by a payment made on July 24, 1908, of $200, but that the balance with interest and attorney’s fees is still due and unpaid. That said cancellation was executed and placed upon record without the knowledge or consent of your oratrix, and without the payment to her of any sum whatever, and she never knew the same until during the summer of the year 1910, when her attention was called to the fact by some person who had examined the records, and found such cancellation apparently of record. The bill expressly waives oath to the answer of the defendant.
The defendants J. Conrad Scott and his wife answered the bill, In which they admit the execution and delivery of the note and mortgage as alleged, but deny that the same is long past due and unpaid, and disclaim any knowledge of the indorsement and transfer of the same to the complainant, or that she is now the owner and holder of said note. The answer further alleges that the defendants on or about March 3, 1909, without any knowledge that the said note and mortgage had been assigned and indorsed to complainant by the said D. Hale Wilson, and without any knowledge that the said note and mortgage was not in the possession of said D. Hale Wilson, and without any knowledge that the said note and mortgage was in the possession of complainant as alleged, paid to said D. Hale Wilson the amount of the said mortgage, and secured a cancellation from the said D. Hale Wilson which was duly recorded upon the mortgage cancellation records of Escambia county. The answer disclaims any knowledge as to whether the said D. Hale Wilson was or not the agent of the complainant And the answer further alleges that the whole of said Indebtedness has been paid, and denies that any part of the original due as alleged. The answer further alleges that until about the time of the filing of complainant’s bill and long after same had been paid they had no knowledge whatever that the said note and mortgage had been sold and transferred by the said D. Hale Wilson to complainant as alleged in her bill, and that such knowledge was acquired after the said note and mortgage had been fully paid and satisfied as hereinbefore alleged.
The answer further asserts that, by reason of complainant’s failure to notify defeudants of said acquisition and ownership of the said note and mortgage as alleged, complainant constituted said D. Hale Wilson as her agent, and the payments so made by defendant on account of the said note and mortgage to the said D. Hale Wilson ae aforesaid were made to complainant’s agent for the use and benefit of complainant. The answer further asserts that the said note contained the statement that “this note secured by mortgage,” and that the note and the mortgage were part and parcel of but one and the same transaction, and that by reason of the conditions contained in the mortgage as to the mortgagor keeping the premises insured for the benefit of the mortgagee, and keeping the taxes on the property paid up, and that, In default In the mortgagor in these respects, the mortgagee might pay the same upon which the mortgage Hen should extend to and cover all such payments for insurance and taxes, and that the said mortgage and all sums secured to be paid thereby should at once become due and foreclosable in the event of default in the payment of any sum due thereon or in the payment of any Installment of interest when due, and the covenant in said mortgage to pay attorney’s fees of $15 and 10 per cent, of the amount duo for principal and interest, all rendered and made the said note nonnegotiable, and that the same was merely assigned by said D. Hale Wilson to complainant, who took the same subject to all equities existing between the said Wilson and defendants, and, because of the assignment of said nonnegotiable note and mortgage to complainant by said Wilson, it became and was the duty of complainant to give the defendants due notice of such assignment, that defendants might make their future payments to complainant. The cause was heard before the chancellor on the bill, and exhibits of the original mortgage and note, and the answer of the defendants, and a final decree rendered in favor of the complainant and against the defendants foreclosing the said mortgage for the total sum of $390.06, inclusive of interest and attorney’s fees, and adjudging the mortgaged property to be sold to pay the same. From this final decree, the defendant J. Conrad Scott took his appeal* to this court, and assigns the said decree to be error.
the payment of a negotiable promissory note Is a mere incident of and ancillary to such note. When it conies to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not In possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was In possession of the papers at the time of payment, unless he had expressly or impliedly authorized such payment. Smith v. First Nat. Bank of Cadiz, Ohio, 23 Okl. 411, 104 Рас. 1080, 29 L. R. Л. (N. S.) 676, and authorities cited in notes, 138 Am. St. Rep. 850.
The duty of a maker of a negotiable note to see that the person to whom he pays it has It In his possession before making the payment is not affected by the fact that the note was on its face made payable at the office of the person to whom he makes the payment Powers v. Woolfolk, 132 Mo. App. 354, 111 S. W. 1187; Hoffmaster v. Black, 78 Ohio St. 1, 84 N. E. 423, 21 L. R. A. (N. S.) 62, 125 Am. St. Rep. 679, 14 Ann. Cas. 877; Baxter v. Little, 6 Mete. (Mass.) 7, 39 Am. Dee. 707.
The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time of such payment, or to such owner’s authorized agent If the recipient of the money is not actually authorized, the payment is ineffectual, unless Induced by unambiguous direction from the owner or justified by actual possession of the note. This rule applies generally to all negotiable paper, Independently of the existence of any mortgage or other security. Marling v. Nonimensen, 127 Wis. 363, 106 N. W. 844, 5 L. R. A. (N. S.) 412, 115 Am. St. Rep. 1017, 7 Ann. Oas. 364 ; Baumgartner v. Peterson. 93 Iowa, 572, 62 N. W. 27 ; Burhans v. Ilutcheson, 25 Kan. 625, 37 Am. Rep. 274; Birket v. El ward, €8 Kan. 295, 74 Рас. 1100, 64 L. R. A. 568, 104 Am. St. Rep. 405, 1 Ann. Cas. 272; Smith v. Lawson, 18 \V. Va. 212, 41 Am. Rep. 688 ; Carpenter v. Longan, 16 Wall. 271, 21 L. Ed. 313; Swift v. Bank of Washington, 114 Fed. 643, 52 C. O. A. 339.
Under the rules of law governing negotiable Instruments as announced In the foregoing authorities, we think the decree of the court below appealed from in this case was proper.
• The defendant knew that he had made and delivered to D. Hale Wilson a negotiable promissory note that was transferable byindorsement to another, and yet, without Inquiring as to such transfer and without production of the note and mortgage, he pays the amount due upon such note to Wilson, the original payee, when such note had been transferred to the complainant and was then held and owned by her, and without any delegation of authority from her to said Wilson either express or implied to receive such payment Under these circumstances, such payment to Wilson was unauthorized, and the complainant Is not affected thereby. There is no merit in the contention that the conditions expressed in the mortgage rendered the note nonnegotiable. Neither Is there anything disclosed by the circumstances set forth in the pleadings from which It can legally be Implied that Wilson was authorized to act as agent for the complainant in receiving payment of this note from the defendant
Finding no error, the decree appealed from Is hereby affirmed at the costs of appellant
WHITFIEbD, C. J., and SHACKLEFORD, COCKRELL, and HOCKER, JJ., concur.
If you pay the wrong mortgage company for your house and they are not the original holder of the note (guess what) your out the money. This is even a better reason to fight!
Thank you Matt Weidner for the reminder!
(Supreme Court of Florida. Feb. 6, 1912.)
A mortgage executed as security for the payment of a negotiable promissory note is a mere incident of and ancillary to such note. When it comes to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Hence payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not in possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was in possession of the papers at the time of such payment, unless he had expressly or impliedly authorized such payment.
The duty of a maker of a negotiable note to see that the person to whom he pays it has it in his possession before making the payment is not affected by the fact that the note was on its face payable at the office of the person to whom he makes the payment.
The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time of such payment, or to such owner’s authorized agent. If the recipient of the money is not actually authorized, the payment is ineffectual, unless induced by unambiguous direction from the owner, or justified by actual possession of the note. This rule applies generally to all negotiable paper, independently of the existence of any mortgage or other security.
TAYLOR, J. The appellee Emma H. Tay: lor filed her bill In equity in the circuit court of Escambla county for foreclosure of mortgage against the appellant J. Conrad Scott and his wife, Alice K. Scott, and the Pensacola Home & Savings Association, a corporation.
The bill alleged, In substance: That the said J. Conrad Scott, being Indebted to D. Hale Wilson In the sum of $400, executed and delivered to the said D. Hale Wilson his promissory note, whereby he did promise to pay to the order of the said D. Hale Wilson •?400, with Interest at the rate of 8 per cent, per annum from date until paid, interest payable quarter annually, said principal sum to be paid two years after the date of said note. By the terms of said note it was provided that It should be payable at the office of said D. Hale Wilson & Co., Pensacola, Fla., and that after default In payment, and the note should have been placed In the hands of an attorney for collection, the maker would pay an attorney’s fee of 5 per cent. If paid before suit, and 10 per cent, if paid after suit and all costs of collection. That said note is long since past due aud Is unpaid, and before its maturity for a valuable consideration the same was Indorsed and transferred to your oratrlx, Emma H. Taylor, by the said D. Hale Wilson, aud she Is now the owner and holder of same. That to secure the payment of the said note the said J. Conrad Scott and his wife, Alice K. Scott, on the same day, March 24, 1906, did execute and deliver to the said D. Hale Wilson their certain mortgage deed as security for the payment of the said note, thereby conveying to the said D. Hale Wilson, his heirs and assigns, the following real estate situated in the city of Pensacola, Escambla county, Fla., to wit: Lots 3, 4, and 5, in. block 170, New City tract, according to шар published by Thos. C. Watson in 1SS4.
By the terms of said mortgage it was provided: That it was Intended to secure the payment of the promissory note above mentioned, and that the mortgagors would keep perfect and unimpaired the security thereby given, and that the said Indebtedness covered by said mortgage should become immediately due and said mortgage foreclosable for all sums secured thereby, if the said Indebtedness or any part thereof or the interest or any Installment thereof should not be paid according to the terms of the said note, and that, if foreclosure of said mortgage should be had or a suit to foreclose same be rightfully begun, the mortgagors would pay all costs and expenses of said suit, including an attorney’s fee to the attorney of the complainant foreclosing of $15, and 10 per cent, upon the amount decreed to the complainant, which costs and fees should be included in the lien of said mortgage and In the sum decreed upon foreclosure. That said mortgage was duly recorded on the 20th day of March, 1906, in the clerk’s office of Escambia county. That at the time of the Indorsement, transfer, and assignment of snld nromfsporv note to your oratrlx, Emma H. Taylor, the said D. Hale Wilson transferred and assigned me said mortgage to your oratrix and delivered to her said note and mortgage, and said note and mortgage have been In her possession ever since. That subsequent to the making and recording of said note and mortgage, to wit, on or about March 3, 1909. and long subsequent to the time when вяГЯ note and mortgage had been assigned and Indorsed to your oratrix by the said D. Hale Wilson, and at a time when the said note and mortgage were not in possession of said D. Hale Wilson, but were in possession of your oratrix, the said D. Hale Wilson executed what purported to be a cancellation of said mortgage, and procured same to be entered upon the mortgage cancellation records of Escambia county, Fia., but at the time of the execution of said cancellation the said D. Hale Wilson vras not the agent of your oratrix or authorized to act for her. That the amount due upon the said note and mortgage was reduced by a payment made on July 24, 1908, of $200, but that the balance with interest and attorney’s fees is still due and unpaid. That said cancellation was executed and placed upon record without the knowledge or consent of your oratrix, and without the payment to her of any sum whatever, and she never knew the same until during the summer of the year 1910, when her attention was called to the fact by some person who had examined the records, and found such cancellation apparently of record. The bill expressly waives oath to the answer of the defendant.
The defendants J. Conrad Scott and his wife answered the bill, In which they admit the execution and delivery of the note and mortgage as alleged, but deny that the same is long past due and unpaid, and disclaim any knowledge of the indorsement and transfer of the same to the complainant, or that she is now the owner and holder of said note. The answer further alleges that the defendants on or about March 3, 1909, without any knowledge that the said note and mortgage had been assigned and indorsed to complainant by the said D. Hale Wilson, and without any knowledge that the said note and mortgage was not in the possession of said D. Hale Wilson, and without any knowledge that the said note and mortgage was in the possession of complainant as alleged, paid to said D. Hale Wilson the amount of the said mortgage, and secured a cancellation from the said D. Hale Wilson which was duly recorded upon the mortgage cancellation records of Escambia county. The answer disclaims any knowledge as to whether the said D. Hale Wilson was or not the agent of the complainant And the answer further alleges that the whole of said Indebtedness has been paid, and denies that any part of the original due as alleged. The answer further alleges that until about the time of the filing of complainant’s bill and long after same had been paid they had no knowledge whatever that the said note and mortgage had been sold and transferred by the said D. Hale Wilson to complainant as alleged in her bill, and that such knowledge was acquired after the said note and mortgage had been fully paid and satisfied as hereinbefore alleged.
The answer further asserts that, by reason of complainant’s failure to notify defeudants of said acquisition and ownership of the said note and mortgage as alleged, complainant constituted said D. Hale Wilson as her agent, and the payments so made by defendant on account of the said note and mortgage to the said D. Hale Wilson ae aforesaid were made to complainant’s agent for the use and benefit of complainant. The answer further asserts that the said note contained the statement that “this note secured by mortgage,” and that the note and the mortgage were part and parcel of but one and the same transaction, and that by reason of the conditions contained in the mortgage as to the mortgagor keeping the premises insured for the benefit of the mortgagee, and keeping the taxes on the property paid up, and that, In default In the mortgagor in these respects, the mortgagee might pay the same upon which the mortgage Hen should extend to and cover all such payments for insurance and taxes, and that the said mortgage and all sums secured to be paid thereby should at once become due and foreclosable in the event of default in the payment of any sum due thereon or in the payment of any Installment of interest when due, and the covenant in said mortgage to pay attorney’s fees of $15 and 10 per cent, of the amount duo for principal and interest, all rendered and made the said note nonnegotiable, and that the same was merely assigned by said D. Hale Wilson to complainant, who took the same subject to all equities existing between the said Wilson and defendants, and, because of the assignment of said nonnegotiable note and mortgage to complainant by said Wilson, it became and was the duty of complainant to give the defendants due notice of such assignment, that defendants might make their future payments to complainant. The cause was heard before the chancellor on the bill, and exhibits of the original mortgage and note, and the answer of the defendants, and a final decree rendered in favor of the complainant and against the defendants foreclosing the said mortgage for the total sum of $390.06, inclusive of interest and attorney’s fees, and adjudging the mortgaged property to be sold to pay the same. From this final decree, the defendant J. Conrad Scott took his appeal* to this court, and assigns the said decree to be error.
the payment of a negotiable promissory note Is a mere incident of and ancillary to such note. When it conies to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not In possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was In possession of the papers at the time of payment, unless he had expressly or impliedly authorized such payment. Smith v. First Nat. Bank of Cadiz, Ohio, 23 Okl. 411, 104 Рас. 1080, 29 L. R. Л. (N. S.) 676, and authorities cited in notes, 138 Am. St. Rep. 850.
The duty of a maker of a negotiable note to see that the person to whom he pays it has It In his possession before making the payment is not affected by the fact that the note was on its face made payable at the office of the person to whom he makes the payment Powers v. Woolfolk, 132 Mo. App. 354, 111 S. W. 1187; Hoffmaster v. Black, 78 Ohio St. 1, 84 N. E. 423, 21 L. R. A. (N. S.) 62, 125 Am. St. Rep. 679, 14 Ann. Cas. 877; Baxter v. Little, 6 Mete. (Mass.) 7, 39 Am. Dee. 707.
The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time of such payment, or to such owner’s authorized agent If the recipient of the money is not actually authorized, the payment is ineffectual, unless Induced by unambiguous direction from the owner or justified by actual possession of the note. This rule applies generally to all negotiable paper, Independently of the existence of any mortgage or other security. Marling v. Nonimensen, 127 Wis. 363, 106 N. W. 844, 5 L. R. A. (N. S.) 412, 115 Am. St. Rep. 1017, 7 Ann. Oas. 364 ; Baumgartner v. Peterson. 93 Iowa, 572, 62 N. W. 27 ; Burhans v. Ilutcheson, 25 Kan. 625, 37 Am. Rep. 274; Birket v. El ward, €8 Kan. 295, 74 Рас. 1100, 64 L. R. A. 568, 104 Am. St. Rep. 405, 1 Ann. Cas. 272; Smith v. Lawson, 18 \V. Va. 212, 41 Am. Rep. 688 ; Carpenter v. Longan, 16 Wall. 271, 21 L. Ed. 313; Swift v. Bank of Washington, 114 Fed. 643, 52 C. O. A. 339.
Under the rules of law governing negotiable Instruments as announced In the foregoing authorities, we think the decree of the court below appealed from in this case was proper.
• The defendant knew that he had made and delivered to D. Hale Wilson a negotiable promissory note that was transferable byindorsement to another, and yet, without Inquiring as to such transfer and without production of the note and mortgage, he pays the amount due upon such note to Wilson, the original payee, when such note had been transferred to the complainant and was then held and owned by her, and without any delegation of authority from her to said Wilson either express or implied to receive such payment Under these circumstances, such payment to Wilson was unauthorized, and the complainant Is not affected thereby. There is no merit in the contention that the conditions expressed in the mortgage rendered the note nonnegotiable. Neither Is there anything disclosed by the circumstances set forth in the pleadings from which It can legally be Implied that Wilson was authorized to act as agent for the complainant in receiving payment of this note from the defendant
Finding no error, the decree appealed from Is hereby affirmed at the costs of appellant
WHITFIEbD, C. J., and SHACKLEFORD, COCKRELL, and HOCKER, JJ., concur.
If you pay the wrong mortgage company for your house and they are not the original holder of the note (guess what) your out the money. This is even a better reason to fight!
Thank you Matt Weidner for the reminder!
Proposal for Non-Judicial Foreclosure Stalls in Florida Legislature
http://www.tampabay.com/news/politics/proposal-for-nonjudicial-foreclosure-stalls-in-florida-legislature/1088111
http://www.leg.state.fl.us/lobbyist/index.cfm?Lobbyists=View_Principal_Info&Tab=lobbyist&Submenu=2&Principal=Conference%20of%20Circuit%20Judges%20of%20Florida&Lobbyist_ID=000475&Title=-%3E2010-%3EL-%3EConference%20of%20Circuit%20Judges%20of%20Florida
http://www.leg.state.fl.us/lobbyist/index.cfm?Lobbyists=View_Principal_Info&Tab=lobbyist&Submenu=2&Principal=Conference%20of%20Circuit%20Judges%20of%20Florida&Lobbyist_ID=000475&Title=-%3E2010-%3EL-%3EConference%20of%20Circuit%20Judges%20of%20Florida
Floreclosure Mills Covered by Debt Collection Act
JERMAN v. CARLISLE, MCNELLIE, RINI, KRAMER & ULRICH LPA ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
No. 08–1200. Argued January 13, 2010—Decided April 21, 2010
The Fair Debt Collection Practices Act (FDCPA), 15 U. S. C. §1692 et seq., imposes civil liability on “debt collector[s]” for certain prohibited debt collection practices. A debt collector who “fails to comply with any [FDCPA] provision . . . with respect to any person is liable to such person” for “actual damage[s],” costs, “a reasonable attorney’s fee as determined by the court,” and statutory “additional damages.” §1692k(a). In addition, violations of the FDCPA are deemed unfair or deceptive acts or practices under the Federal Trade Commission Act (FTC Act), §41 et seq., which is enforced by the Federal Trade Commission (FTC). See §1692l. A debt collector who acts with “actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is [prohibited under the FDCPA]” is subject to civil penalties enforced by the FTC. §§45(m)(1)(A), (C). A debt collector is not liable in any action brought under the FDCPA, however, if it “shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” §1692k(c).
Held: The bona fide error defense in §1692k(c) does not apply to a violation resulting from a debt collector’s mistaken interpretation of the legal requirements of the FDCPA. Pp. 6–30. a) A violation resulting from a debt collector’s misinterpretation of the legal requirements of the FDCPA cannot be “not intentional” under §1692k(c). It is a common maxim that “ignorance of the law will not excuse any person, either civilly or criminally.” Barlow v. United States, 7 Pet. 404, 411. When Congress has intended to provide a mistake-of-law defense to civil liability, it has often done so more explicitly than here. In particular, the administrative-penalty provisions of the FTC Act, which are expressly incorporated into the FDCPA, apply only when a debt collector acts with “actual knowledge or knowledge fairly implied on the basis of objective circumstances” that the FDCPA prohibited its action. §§45(m)(1)(A), (C). Given the absence of similar language in §1692k(c), it is fair to infer that Con gress permitted injured consumers to recover damages for “intentional” conduct, including violations resulting from a mistaken interpretation of the FDCPA, while reserving the more onerous administrative penalties for debt collectors whose intentional actions.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
No. 08–1200. Argued January 13, 2010—Decided April 21, 2010
The Fair Debt Collection Practices Act (FDCPA), 15 U. S. C. §1692 et seq., imposes civil liability on “debt collector[s]” for certain prohibited debt collection practices. A debt collector who “fails to comply with any [FDCPA] provision . . . with respect to any person is liable to such person” for “actual damage[s],” costs, “a reasonable attorney’s fee as determined by the court,” and statutory “additional damages.” §1692k(a). In addition, violations of the FDCPA are deemed unfair or deceptive acts or practices under the Federal Trade Commission Act (FTC Act), §41 et seq., which is enforced by the Federal Trade Commission (FTC). See §1692l. A debt collector who acts with “actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is [prohibited under the FDCPA]” is subject to civil penalties enforced by the FTC. §§45(m)(1)(A), (C). A debt collector is not liable in any action brought under the FDCPA, however, if it “shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” §1692k(c).
Held: The bona fide error defense in §1692k(c) does not apply to a violation resulting from a debt collector’s mistaken interpretation of the legal requirements of the FDCPA. Pp. 6–30. a) A violation resulting from a debt collector’s misinterpretation of the legal requirements of the FDCPA cannot be “not intentional” under §1692k(c). It is a common maxim that “ignorance of the law will not excuse any person, either civilly or criminally.” Barlow v. United States, 7 Pet. 404, 411. When Congress has intended to provide a mistake-of-law defense to civil liability, it has often done so more explicitly than here. In particular, the administrative-penalty provisions of the FTC Act, which are expressly incorporated into the FDCPA, apply only when a debt collector acts with “actual knowledge or knowledge fairly implied on the basis of objective circumstances” that the FDCPA prohibited its action. §§45(m)(1)(A), (C). Given the absence of similar language in §1692k(c), it is fair to infer that Con gress permitted injured consumers to recover damages for “intentional” conduct, including violations resulting from a mistaken interpretation of the FDCPA, while reserving the more onerous administrative penalties for debt collectors whose intentional actions.
Florida Default Law Group Subject of Attorney General Investigation
Forward to them assignments, affidavits of fees, especially affidavits of attorneys fees. MAKE SURE YOU SEND ANY INFORMATION CERTIFIED MAIL AND MAKE SURE YOU FOLLOW UP TO CONFIRM RECEIPT.
From the Attorney General's Website:
The case file cited below relates to a civil -- not a criminal -- investigation. The existence of an investigation does not constitute proof of any violation of law.
Case Number: L10-3-1095
Subject of investigation:
Florida Default Law Group, PL
Subject's address:
9119 Corporate Lake Drive, Suite 300, Tampa, Florida 33634
Subject's business:
Law Firm, Foreclosures
Allegation or issue being investigated:
Appears to be fabricating and/or presenting false and misleading documents in foreclosure cases. These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient. Presenting faulty bank paperwork due to the mortgage crisis and thousands of foreclosures per month. This firm is one of the largest foreclosure firms in the State. This firm appears to be one of Docx, LLC a/k/a Lender Processing Services' clients, who this office is also investigating.
AG unit handling case: Economic Crimes Division in Ft. Lauderdale, Florida
From the Attorney General's Website:
The case file cited below relates to a civil -- not a criminal -- investigation. The existence of an investigation does not constitute proof of any violation of law.
Case Number: L10-3-1095
Subject of investigation:
Florida Default Law Group, PL
Subject's address:
9119 Corporate Lake Drive, Suite 300, Tampa, Florida 33634
Subject's business:
Law Firm, Foreclosures
Allegation or issue being investigated:
Appears to be fabricating and/or presenting false and misleading documents in foreclosure cases. These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient. Presenting faulty bank paperwork due to the mortgage crisis and thousands of foreclosures per month. This firm is one of the largest foreclosure firms in the State. This firm appears to be one of Docx, LLC a/k/a Lender Processing Services' clients, who this office is also investigating.
AG unit handling case: Economic Crimes Division in Ft. Lauderdale, Florida
http://myfloridalegal.com/__85256309005085AB.nsf/0/A4F1B85DCC5D5ACD852577130045B63F?Open&Highlight=0,florida,default,law
Wednesday, April 28, 2010
House Panel Approves FHA Reform Measure
A bill to crack down on fraudulent brokers and lenders moved out of the House Financial Services Committee yesterday after majority Democrats warded off GOP amendments to require higher down payments and tougher lending standards for Federal Housing Administration mortgages, CongressDaily reported today. Rep. Ron Klein (D-Fla.) along with co-sponsor Rep. Maxine Waters (D-Calif.) said the bill also creates a cash incentive for mortgage servicers to reach out to financially troubled homeowners and advise them on options to avoid foreclosure. The bill could be on the floor as early as next week.
Thanks to ABA Headline News
Thanks to ABA Headline News
Tuesday, April 27, 2010
Case Law Update
7th Circuit Court of Appeals, April 15, 2010
In the Matter of Altheimer & Gray, --- F.3d ---, 2010 WL ----------------- (7th Cir 2010)(In a law firm chapter 11, partner's claim not paid as the reorganization plan subordinated partners' claim to those of other creditors, and here, petitioner is a non-unit partner under the plan)
8th Circuit Court of Appeals, April 13, 2010
Bremer Bank, N.A. v. John Hancock Life Ins. Co., --- F.3d ---, 2010 WL ----------------- (8th Cir 2010)(plaintiff's equity in an aircraft and lease was not improperly extinguished by a bank, acting on defendant's instructions, where: 1) the bank properly informed plaintiff that the lease of the aircraft was in default, as required by the lease agreement; 2) given the lease's expansive language, it was reasonable to consider as a remedy the 11 U.S.C. section 1110(b) stipulations requiring the airline to maintain the aircraft and to make monthly payments despite the bankruptcy stay)
9th Circuit Court of Appeals, April 13, 2010
In re Sabban, --- F.3d ---, 2010 WL ----------------- (9th Cir 2010)(monetary award under California's unlicensed contractor statute, Cal. Bus. & Prof. Code section 7031(b), was dischargeable, since under section 523(a)(2)(A) it was not premised on either fraud or actual harm)
Thanks to Findlaw.com and BankruptcyProf
In the Matter of Altheimer & Gray, --- F.3d ---, 2010 WL ----------------- (7th Cir 2010)(In a law firm chapter 11, partner's claim not paid as the reorganization plan subordinated partners' claim to those of other creditors, and here, petitioner is a non-unit partner under the plan)
8th Circuit Court of Appeals, April 13, 2010
Bremer Bank, N.A. v. John Hancock Life Ins. Co., --- F.3d ---, 2010 WL ----------------- (8th Cir 2010)(plaintiff's equity in an aircraft and lease was not improperly extinguished by a bank, acting on defendant's instructions, where: 1) the bank properly informed plaintiff that the lease of the aircraft was in default, as required by the lease agreement; 2) given the lease's expansive language, it was reasonable to consider as a remedy the 11 U.S.C. section 1110(b) stipulations requiring the airline to maintain the aircraft and to make monthly payments despite the bankruptcy stay)
9th Circuit Court of Appeals, April 13, 2010
In re Sabban, --- F.3d ---, 2010 WL ----------------- (9th Cir 2010)(monetary award under California's unlicensed contractor statute, Cal. Bus. & Prof. Code section 7031(b), was dischargeable, since under section 523(a)(2)(A) it was not premised on either fraud or actual harm)
Thanks to Findlaw.com and BankruptcyProf
FTC Shuts Down Credit Repair and Loan Scammers
The Federal Trade Commission obtained a court order banning eight companies and their principals from selling credit repair and mortgage relief services, and requiring them to pay more than $7.5 million for deceiving consumers throughout the United States.
The FTC charged seven of the companies and three officers with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, charge-offs, collections, inquiries, delinquencies, judgments, and accounts discharged in bankruptcy. According to the FTC, the defendants charged consumers up to $2,000, including illegally charging an advance payment of $300, and failed to provide written contracts and other materials required by law.
The FTC also asserted that various of the defendants falsely claimed they would help consumers get mortgage loan modifications or stop foreclosure in all or virtually all instances. The court entered default judgments against all of the defendants except Gerald Serino, also known as Jerry Serino, after they failed to respond to the lawsuit.
The credit repair defendants are United Credit Adjusters, Inc., doing business as United Credit Adjustors and UCA; United Credit Adjustors, Inc., d/b/a United Credit Adjusters and UCA; United Counseling Association, Inc., d/b/a UCA; Bankruptcy Masters Corp., National Bankruptcy Services Corp., Federal Debt Solutions, Ltd., United Money Tree, Inc., Ahron E. Henoch, Ezra Rishty, and Gerald Serino. The loan modification defendants are The Loan Modification Shop, Ltd., Casey Lynn Cohen, a/k/a Casey Lynn Collins, and Rishty.
The court order prohibits the credit repair companies and their owners from selling credit repair services, and it bans the loan modification companies and their individual owners from selling mortgage loan modification and foreclosure relief services. The order also prohibits the defendants from misleading consumers about financial goods and services, such as loan terms or rates, how much a consumer will save by enrolling in a debt relief service, and credit terms other than those a lender actually offers. The order also bars the defendants from misleading consumers about any good or service, such as refund terms, government affiliation, and total cost.
In addition, the order bars the defendants from trying to collect payment from their customers, and from selling or otherwise disclosing their customers’ personal or financial information. The order imposes a $7,500,334 judgment against the credit repair defendants, and a $32,710 judgment against the loan modification defendants. Litigation will continue against Serino.
The FTC charged seven of the companies and three officers with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, charge-offs, collections, inquiries, delinquencies, judgments, and accounts discharged in bankruptcy. According to the FTC, the defendants charged consumers up to $2,000, including illegally charging an advance payment of $300, and failed to provide written contracts and other materials required by law.
The FTC also asserted that various of the defendants falsely claimed they would help consumers get mortgage loan modifications or stop foreclosure in all or virtually all instances. The court entered default judgments against all of the defendants except Gerald Serino, also known as Jerry Serino, after they failed to respond to the lawsuit.
The credit repair defendants are United Credit Adjusters, Inc., doing business as United Credit Adjustors and UCA; United Credit Adjustors, Inc., d/b/a United Credit Adjusters and UCA; United Counseling Association, Inc., d/b/a UCA; Bankruptcy Masters Corp., National Bankruptcy Services Corp., Federal Debt Solutions, Ltd., United Money Tree, Inc., Ahron E. Henoch, Ezra Rishty, and Gerald Serino. The loan modification defendants are The Loan Modification Shop, Ltd., Casey Lynn Cohen, a/k/a Casey Lynn Collins, and Rishty.
The court order prohibits the credit repair companies and their owners from selling credit repair services, and it bans the loan modification companies and their individual owners from selling mortgage loan modification and foreclosure relief services. The order also prohibits the defendants from misleading consumers about financial goods and services, such as loan terms or rates, how much a consumer will save by enrolling in a debt relief service, and credit terms other than those a lender actually offers. The order also bars the defendants from misleading consumers about any good or service, such as refund terms, government affiliation, and total cost.
In addition, the order bars the defendants from trying to collect payment from their customers, and from selling or otherwise disclosing their customers’ personal or financial information. The order imposes a $7,500,334 judgment against the credit repair defendants, and a $32,710 judgment against the loan modification defendants. Litigation will continue against Serino.
GSE/ Regulators Announce Anti Mod Scam Campaign
Fannie Mae, Freddie Mac and various federal agencies recently announced a national campaign to prevent loan modification scams through the formation of a Loan Modification Scam Prevention Network, as well as a consolidation website.
As part of the campaign, the network has launched a website, www.PreventLoanScams.org, which is designed to support national, state and local law enforcement efforts. The website serves as a nationwide clearinghouse and destination for loan modification scam information on complaints filed, laws and regulations, and enforcement actions. The website includes: (1) an electronic complaint form for scam victims; (2) names of individuals and organizations identified by enforcement agencies to have allegedly committed a loan modification scam; (3) information on how to avoid a loan modification scam; (4) state-by-state information about rules, regulations and resources available to homeowners; and (5) news and information on enforcement efforts.
Prominent contributors to the campaign include: the Treasury Department, FDIC, the Department of Housing and Urban Development, the Federal Trade Commission, the Conference of State Bank Supervisors, the National Association of Attorneys General, the Justice Department and FBI.
As part of the campaign, the network has launched a website, www.PreventLoanScams.org, which is designed to support national, state and local law enforcement efforts. The website serves as a nationwide clearinghouse and destination for loan modification scam information on complaints filed, laws and regulations, and enforcement actions. The website includes: (1) an electronic complaint form for scam victims; (2) names of individuals and organizations identified by enforcement agencies to have allegedly committed a loan modification scam; (3) information on how to avoid a loan modification scam; (4) state-by-state information about rules, regulations and resources available to homeowners; and (5) news and information on enforcement efforts.
Prominent contributors to the campaign include: the Treasury Department, FDIC, the Department of Housing and Urban Development, the Federal Trade Commission, the Conference of State Bank Supervisors, the National Association of Attorneys General, the Justice Department and FBI.
Monday, April 26, 2010
Consumer bankruprtcy Filings Continue to Rise
The 149268 consumer filings in March were up 23 percent over the March 2009 total, according to the American Bankruptcy Institute.
Case Law Update
2nd Circuit Court of Appeals, April 08, 2010
In re Kalikow, --- F.3d --- (2nd Cir. 2010)(Motion to reopen chapter 11 affirmed where: 1) service on creditors' law firm constituted proper service on them; and 2) creditors violated sections 1141 and 524 and the express terms of the Plan and Confirmation Order. However, the order is reversed where creditors were not holders of pre-confirmation claims discharged in bankruptcy who would normally be bound by the provisions of the Plan, and thus the sanctions awarded against them were improper)
Thanks to Findlaw.com
In re Kalikow, --- F.3d --- (2nd Cir. 2010)(Motion to reopen chapter 11 affirmed where: 1) service on creditors' law firm constituted proper service on them; and 2) creditors violated sections 1141 and 524 and the express terms of the Plan and Confirmation Order. However, the order is reversed where creditors were not holders of pre-confirmation claims discharged in bankruptcy who would normally be bound by the provisions of the Plan, and thus the sanctions awarded against them were improper)
Thanks to Findlaw.com
Pending Student Loan Legislation
Thanks to David Goch who posted this on the Bankruptcy Roundtable Listserve:
Yesterday, the House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on H.R. 5043, "The Private Student Loan Bankruptcy Fairness Act of 2010".
H.R. 5043, according to Rep. Cohen (D-TN), the bills sponsor along with Rep. Davis (D-Ill.), "is very narrowly tailored to make debt resulting from student loans issued by private, for-profit institutions dischargeable in bankruptcy."
H.R. 5043 amends Bankruptcy Code Section 523(a)(8), eliminating Section 523(a)(8)(B), which currently makes debt from private loans issued by for-profit lenders nondischargeable in bankruptcy absent undue debtor or debtor's dependents hardship. The bill also amends Section 523(a)(8)(A)(i) to clarify that only loans for which substantially all of the funds were provided by a nonprofit institution remain nondischargeble in bankruptcy.
Deanne Loonin, a staff attorney for the National Consumer Law Center, pointed out that student loan borrowers are a very diverse group of people but they chare one common trait: "they're all trying to better themselves through education" and are all struggling with student loan debt. However, Loonin stated "[B]ankruptcy is not and should not be the entire safety net" for borrowers who cannot repay their student loans."
Loonin said she supports H.R. 5043, not because bankruptcy is the best option, but because it is the only option some have to be able to move on with their lives.
According to John Hupalo, managing director at Ramirez Capital Advisors, a group specializing in student loan finance, whether or not to permit bankruptcy discharge of private student loan debt is a complex issue. Huppalo indicated he understood the intended benefit of repealing non-dischargeability of private student loans, but went on to state he is concerned the bill would be "counter-productive to the country's shared goal of making a college education more accessible to the greatest number of students possible."
Adrian Lapas, a solo practitioner testifying on behalf of the National Association of Consumer Bankruptcy Attorneys, voiced support of H.R. 5403, noting that the legislation will "restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt."
Meanwhile, in an April 21 letter to Cohen, more than two dozen organizations representing students, consumers, institutions of higher education and civil rights and public policy organizations expressed their support for the bill. Among the groups signing the letter: The American Council on Education, Consumer Action, Consumer Federation of America, Consumers Union, Demos: A Network for Ideas & Action, Rock the Vote, U.S. Public Information Research Group, UNCF, and the National Association for Equal Opportunity in Higher Education.
Yesterday, the House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on H.R. 5043, "The Private Student Loan Bankruptcy Fairness Act of 2010".
H.R. 5043, according to Rep. Cohen (D-TN), the bills sponsor along with Rep. Davis (D-Ill.), "is very narrowly tailored to make debt resulting from student loans issued by private, for-profit institutions dischargeable in bankruptcy."
H.R. 5043 amends Bankruptcy Code Section 523(a)(8), eliminating Section 523(a)(8)(B), which currently makes debt from private loans issued by for-profit lenders nondischargeable in bankruptcy absent undue debtor or debtor's dependents hardship. The bill also amends Section 523(a)(8)(A)(i) to clarify that only loans for which substantially all of the funds were provided by a nonprofit institution remain nondischargeble in bankruptcy.
Deanne Loonin, a staff attorney for the National Consumer Law Center, pointed out that student loan borrowers are a very diverse group of people but they chare one common trait: "they're all trying to better themselves through education" and are all struggling with student loan debt. However, Loonin stated "[B]ankruptcy is not and should not be the entire safety net" for borrowers who cannot repay their student loans."
Loonin said she supports H.R. 5043, not because bankruptcy is the best option, but because it is the only option some have to be able to move on with their lives.
According to John Hupalo, managing director at Ramirez Capital Advisors, a group specializing in student loan finance, whether or not to permit bankruptcy discharge of private student loan debt is a complex issue. Huppalo indicated he understood the intended benefit of repealing non-dischargeability of private student loans, but went on to state he is concerned the bill would be "counter-productive to the country's shared goal of making a college education more accessible to the greatest number of students possible."
Adrian Lapas, a solo practitioner testifying on behalf of the National Association of Consumer Bankruptcy Attorneys, voiced support of H.R. 5403, noting that the legislation will "restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt."
Meanwhile, in an April 21 letter to Cohen, more than two dozen organizations representing students, consumers, institutions of higher education and civil rights and public policy organizations expressed their support for the bill. Among the groups signing the letter: The American Council on Education, Consumer Action, Consumer Federation of America, Consumers Union, Demos: A Network for Ideas & Action, Rock the Vote, U.S. Public Information Research Group, UNCF, and the National Association for Equal Opportunity in Higher Education.
Sunday, April 25, 2010
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