Photo of Gregory C. Cook

Gregory is a partner in Balch & Bingham’s Birmingham office and serves as chair of the Financial Services Litigation Practice Group.  His practice centers on commercial litigation, with a concentration on complex litigation. Since joining Balch & Bingham LLP in 1991, Mr. Cook has focused his practice in the area of business and financial services litigation, including concentrating on class action defense (he has been involved in defending over 60 class actions). More recently, Mr. Cook has defended a number of actions and class actions arising out of the mortgage and subprime crisis, including matters for loan servicers, lenders, title insurance agents and settlement services providers. Mr. Cook is listed in Best Lawyers in commercial litigation, has been rated "AV" by Martindale Hubbell and was selected by Super Lawyers in Business Litigation.

On October 19, 2018, the Alabama Court of Civil Appeals issued an opinion in Chandler v. Branch Banking & Trust Company (No. 2160999), holding that a joint owner of property at issue in an ejectment action is a necessary and indispensable party, even where the non-party property owner’s interests are closely aligned with a named party.

Practically, this ruling emphasizes the importance of joining all necessary parties to an ejectment action when it is filed. Mortgage servicers should examine all mortgage documents as well as the property’s deed to ensure that all potential parties with rights in the property subject to the mortgage are added to the action prior to filing. This case in particular shows that even though the named defendant was the only party reflected on the mortgage, the deed would have revealed that his wife was a joint owner with rights in the property.

Continue Reading Lender Must Join All Property Owners in Ejectment Action says Alabama Court of Civil Appeals

In a win for defendants, the Eleventh Circuit recently held that a party does not waive its right to compel arbitration for the claims of unnamed class members even if it has waived that right as to the named class representatives. In Gutierrez v. Wells Fargo Bank, NA, the plaintiffs filed a putative class action against Wells Fargo alleging it had committed certain unlawful practices related to the charging of overdraft fees. The plaintiffs were all former Wells Fargo customers who had accounts governed by customer agreements containing arbitration provisions with class action waivers. After the trial court consolidated similar cases in late 2009, it ordered the defendant banks to file all “merits and non-merits motions directed to the operative complaints,” including motions to compel arbitration, by December 2009. Wells Fargo replied to the trial court’s order stating it would not seek to compel arbitration as to the named plaintiffs but reserved its right to compel arbitration against any plaintiffs “who [might] later join, individually or as putative class members, in this litigation.” Wells Fargo then filed its answer and proceeded with discovery.

Continue Reading Eleventh Circuit: No waiver of arbitration rights despite waiting for class certification

In Dasher v. RBC Bank, the Eleventh Circuit held that a bank could not retroactively apply a newly-inserted arbitration provision in its customer account agreement to a dispute that was already in litigation unless the existence of the arbitration provision was communicated to counsel. Michael Dasher filed suit against RBC Bank arising out of certain practices implemented by RBC Bank related to overdraft fees. In 2012, PNC Bank acquired RBC Bank and issued a newer version of customer account agreements than those issued by RBC Bank in 2008. The PNC Bank agreement did not contain an arbitration provision, but PNC Bank moved to compel arbitration based on an arbitration provision in the 2008 RBC Bank agreement. The trial court denied this motion and the ruling was upheld on appeal.

Continue Reading Eleventh Circuit: Bank cannot add arbitration clause while in litigation

In Technology Training Associates, Inc. v. Buccaneers Limited Partnership, No. 17-11710 (October 26, 2017), the Eleventh Circuit axed an approved class action settlement due to plaintiffs’ counsel’s apparent “desire to grab attorney’s fees” at the expense of “the best possible settlement for the class.”  This case is a strong reminder that when defendants agree to a class action settlement they must take special care in ensure the settlement avoids even the appearance of being a “sweet heart” deal.

Continue Reading 11th Circuit axes class action settlement; Holds objector should have been allowed to intervene

The CFPB is aggressively litigating overdraft issues, which means lenders should proactively review their overdraft policies to avoid the specter of costly litigation with the CFPB. For example,  in Consumer Financial Protection Bureau v. TCF National Bank, No. 17-166 (D. Minn. September 8, 2017), a Minnesota district court allowed the Consumer Financial Protection Bureau to proceed to discovery on its claims against TCF National Bank for deceptive and abusive trade practices relating to overdraft fee “opt-in” programs. The district court concluded that TCF’s practice of enticing new and existing customers to opt-in to its overdraft services program (which subjected them to overdraft fees) could constitute an “unfair, deceptive, or abusive act or practice” under the Consumer Financial Protection Act.

Continue Reading Lenders Beware: Overdraft policies may spur CFPB litigation.

What to do now about the new CFPB rule on arbitration?  (1) begin planning now and (2) begin actual preparation after the 60 days runs.

Congress has 60 days after publication of the new CFPB rule to take action to stop the application of this rule.  Publication occurred on Wednesday (July 19th).  It is impossible to predict what Congress will do.  However, we can be virtually certain that absent such Congressional action, this new rule will apply 180 days after those 60 days expire.  While there are other possible hurdles for this rule (for instance, an expected lawsuit challenging the rule; a possible new CFPB Director in the future; a challenge to the CFPB’s structure, etc.), these other impacts are unlikely to prevent the rule from beginning to have application.

We suggest you use the next 60 days to plan but wait to make any substantial expenditures until it is certain what Congress will do.  Here are some key questions which financial institutions should consider during those 60 days:

Continue Reading What to do now about the new CFPB rule on arbitration?

The Dodd Frank Act expressly provided that any CFPB rule on arbitration would not apply to existing contracts.  12 U.S.C. § 5518(d).  Therefore, the CFPB rule released last week will only bar class action waivers for contracts “entered into after” the applicable date for the regulation (60 days after publication of the rule in the Federal Register and then 180 days after that date).

However, the CFPB has taken an aggressive position on what is an existing contract.  Therefore, for existing customers, lenders and other “covered persons” will need to examine every change in any product or services they offer that is subject to the arbitration rule. If any “new product or service” is given to an existing customer, the new regulation applies to that product or service even if it is covered by the terms of an existing contract (assuming that the new product or service is within the scope of the rule).  In such a case, the lender would need to amend the previous agreement or provide a new agreement for the new product and could not rely on the arbitration clause to avoid a class action.

Continue Reading Are existing agreements governed by the new CFPB Arbitration Rule?

The Consumer Financial Protection Bureau (CFPB) recently finalized various updates to its mortgage disclosure rule, often referred to as “Know Before You Owe” or the TILA-RESPA Integrated Disclosures (TRID).  The updates were proposed approximately one year ago.  They include technical corrections, formal guidance, and a few substantive changes.  Some of the changes include:

  • Adding tolerance provisions for total payments that track existing TILA requirements regarding finance charges
  • Expanding the scope of certain exemptions for housing assistance loans
  • Applying TRID to all cooperative units, regardless of whether the cooperative units are classified as real property under state law
  • Providing guidance on sharing information with third parties

The new rule takes effect 60 days after publication in the Federal Register, but compliance is not mandatory until October 1, 2018.  A copy of the final rule is available here.

Notably absent from the final rule is guidance on the “black hole”—the period of time between issuing the Closing Disclosure and the actual closing date when, in certain instances, lenders may be prevented from resetting tolerances (and passing on closing cost increases to the borrower).  The amendments as originally proposed included a potential fix for this problem.  However, the CFPB decided not to adopt the fix based on conflicting comments that it received.  Instead, the CFPB issued a new proposed rule (with a new comment period) to address the “black hole” issue.  A copy of the proposed rule is available here.

The Consumer Financial Protection Bureau (CFPB) issued a rule on Monday prohibiting class action waivers in arbitration provisions of certain consumer contracts. The rule—to be codified at 12 C.F.R. § 1040—also requires covered businesses to submit records to the CFPB regarding any arbitration filed by or against their customers regarding covered products and services. The provided records will be made public and hosted by the CFPB on a searchable database. The likely impact of this rule (should it be allowed to go into effect) will be significant for financial institutions and dramatically alter their relationships with their customers.

Continue Reading CFPB Kills Class Action Waivers for Consumers Contracts and Makes Arbitration Public

In a victory for defendants, the Eleventh Circuit recently agreed that a mere procedural violation—the kind of injury that has become the favorite of the plaintiffs’ bar—is insufficient to confer Article III standing. More specifically, the Eleventh Circuit concluded that a certified return receipt will satisfy a lender’s obligation under Regulation X to provide written acknowledgment of a request for information within five days. Though this decision is unpublished, it is persuasive authority that may guide the district courts within the Eleventh Circuit.

In Meeks v. Ocwen Loan Servicing, LLC, No. 16-15536, Charles Meeks sent a Request for Information to his mortgage servicer via certified mail. The servicer’s agent signed the return receipt the same day the request was received. The receipt was then returned to the Meeks’ counsel. Several months later, Meeks sued the servicer and attached the certified receipt to his complaint.

Meeks asserted two claims against the servicer: (1) the servicer violated Regulation X by not sending him written acknowledgment of the Request for Information within 5 days and (2) that the servicer had shown a reckless disregard for the requirements of Regulation X. After the case was removed, the district court dismissed the first count for failure to state a claim and the second count for lack of standing. On appeal, the Eleventh Circuit affirmed.

The Court pointed out that no other circuit court has considered whether a certified receipt satisfies the written response obligation under Regulation X. Rather than engage in a lengthy legal analysis, the Court focused on the undisputed facts. Because there was no serious dispute that Meeks had received the certified receipt, Meeks had failed to state a claim under Regulation X. Put another way, a failure to send a notice of acknowledgment is unnecessary when the undisputed evidence shows that the borrower knew the request had been received.

More important, the Court concluded that Meeks lacked standing to bring a pattern or practice claim. Pointing to the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548-49 (2016), the Court noted that an injury must be both concrete and particularized in order to confer Article III standing. Meeks had not suffered an injury because it was undisputed that he had received the return receipt. Even though Meeks argued that this receipt was deficient under Regulation X, the Eleventh Circuit held that this deficiency was nothing more than “a bare procedural violation” that was insufficient to create a “real, concrete injury.”

Meeks is important for two reasons. First, it holds that a procedural deficiency alone—here, the failure to send a written acknowledgment within five days—is insufficient to confer standing when the undisputed evidence shows that the deficiency caused no injury to the plaintiff. On this point, Meeks is in tension with another unpublished Eleventh Circuit decision, Church v. Accretive Health, Inc., 654 F. App’x 990 (11th Cir. 2016), which held that the FDCPA creates a statutory right to receive certain information and that a failure to include this information in the debtor’s letter to the plaintiff was a sufficient injury to confer standing. Because neither opinion is published, neither will be binding on a subsequent Eleventh Circuit panel. Moreover, it may be possible to reconcile the holdings in Meeks and Church. In Meeks, it was undisputed that the plaintiff had received the benefit established by the procedural right while in Church it was not clear that the plaintiff had actually received the information that the statute required.  It is also worth pointing out that many post-Spokeo courts have declined to extend Spokeo to its logical conclusions. At the very least, this apparent contradiction signals that the law on this issue is evolving. The Eleventh Circuit is likely to address this issue in a published opinion in the future.

Second and for purposes of Regulation X specifically, Meeks holds that a certified return receipt can satisfy a lender’s obligations under Regulation X when there is no dispute that the borrower received the return receipt. This holding may be somewhat limited however because plaintiffs’ counsel may not attach the receipts to their complaints or will deny receiving them. Meeks also leaves open the question of what happens if the receipt is received by the borrower more than five days after the lender signs it. Still, lenders should look for ways to bring their case within Meeks as doing so will create a strong argument for dismissal in district courts within the Eleventh Circuit.