Dollar General reported its employee Rebecca Keyes to the police for embezzlement, causing her to be arrested. Keyes later sued Dollar General under a number of legal theories, including malicious prosecution, false imprisonment, and intentional infliction of emotional distress. The trial court ordered arbitration for all of her claims, but the Mississippi Supreme Court reversed for all but one claim. The Court found that disputes over the alleged embezzlement and the fraudulent conversion of property from one’s employer, were not covered under an arbitration provision which defined “covered claims” as those “arising out of your employment with Dollar General.” This decision is but the latest by the Mississippi Supreme Court, one of which we previously wrote about here, refusing to enforce broadly worded arbitration clauses for certain types of claims. These cases are troubling for the financial services industry in that plaintiffs may be able to avoid even very broadly worded arbitration clauses through inflammatory allegations or in cases where there is alleged criminal conduct. The case was styled Rebecca Keyes v. Dollar General Corporation, No. 2017-IA-00010-SCT. Click here to read the opinion in full.
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.
Last month, the Alabama Supreme Court bypassed the statute of frauds and held that, even though one party had clear record title, the dispute over ownership should go to trial. While the opinion purported to apply “well-settled” Alabama law, it is a strong reminder that the statute of frauds does not apply to all real estate transactions and that record title holders may have to defend against an oral contract in certain situations.
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.
If a mortgage servicer fails to comply with its obligations under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. 2601, et seq., or its implementing regulations, a borrower may recover “any actual damages . . . as a result of the failure.” 12 U.S.C. 2605(f)(1)(A). Thus, to prevail on a RESPA claim, a borrower must show “actual damages” sustained as a result of the failure to comply. What constitutes “actual damages” has been the subject of a litany of recent decisions involving RESPA claims. In Baez v. Specialized Loan Servicing, LLC, 2017 WL 4220292 (Sept. 22, 2017), the Eleventh Circuit provided more clarity on the scope of “actual damages” under the statute.
Jaki Baez took out a mortgage loan in 2005, and Specialized Loan Servicing (“SLS”) took over the servicing of the loan a few years later. In January 2015, Baez stopped paying her mortgage to see if she could qualify for a loan modification agreement. She retained a law firm to both help with any ensuing foreclosure and to achieve a loan modification. She agreed to pay the firm a flat fee of $400 per month in connection with those efforts. In September 2015, Baez, through her attorney, sent a written request for information under 12 C.F.R. 1024.36(a) (part of RESPA’s implementing Regulation X, 12 C.F.R. part 1024) to SLS, in which she asked for information about her mortgage loan. SLS acknowledged the letter and later submitted a packet of information in response, but Baez claimed that the packet was deficient because it did not contain a file with SLS’s communications with her. Soon after receiving SLS’s purportedly deficient response, Baez filed suit under RESPA. The trial court granted summary judgment in favor of SLS, finding that Baez failed to show that she had been injured by SLS’s response to her request for information. Baez appealed, and the Eleventh Circuit affirmed.
After a customer pawned a television that he had leased from Rent-A-Center, the manager swore out a criminal complaint for theft of rental property. When the State subsequently retired the charges without prosecution, the customer sued Rent-A-Center and its manager for malicious prosecution and false imprisonment. Relying on language in the arbitration clause that it “shall be interpreted broadly as the law allows” to include “any dispute or controversy . . . based on any legal theory, including, but not limited to allegations based on . . . tort, fraud, . . . , [and] the common law . . . ,” the trial court entered an order compelling arbitration. However, the Mississippi Supreme Court reversed, holding that “the agreement did not contemplate” a criminal complaint, based in part on the fact that such claims were not specifically listed in the arbitration agreement. This case is troubling for the financial services industry in that plaintiffs may be able to avoid even very broadly worded arbitration clauses through inflammatory allegations or allegations related to criminal conduct. The case was styled Brian Ray Pedigo v. Rent-A-Center, Inc., Civil Action No. 2016-CA-00572-SCT.
In a recent surprising loss for mortgage holders, the Alabama Supreme Court held that a failure to strictly comply with the exact terms of the mortgage when conducting a foreclosure sale can result in the sale failing. Thus, lenders should be especially careful to conduct foreclosure proceedings exactly as required by their mortgages or risk expending substantial resources toward only to have this work later undone by a court.
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.
On August 17, 2017, the Eleventh Circuit issued an opinion in Steven Bivens v. Select Portfolio Servicing, Inc. (No. 16-15119), holding that a borrower must send requests for information to a mortgage servicer’s designated addressed before a servicer’s duty to respond under the Real Estate Settlement Procedures Act are triggered. Lenders should take note of this decision because it indicates that the Eleventh Circuit will require plaintiffs to strictly comply with the terms of that statute before holding banks or mortgage servicers liable under that statute.
Earlier this month, in Schweitzer v. Comenity Bank, the Eleventh Circuit held that a consumer can partially revoke consent to be called under the Telephone Consumer Protection Act (TCPA), This decision will only further complicate the already complex and treacherous net of liability cast by that statute.