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After expecting a quiet close of 2019 at the federal level after the submission of RMAI’s comments for the CFPB debt collection rule, we find we are busier than usual.  News that the CFPB will issue a supplemental proposed debt collection rule specifically on time barred debt disclosures assures another busy time, as RMAI will again spend time and resources on developing comments.  We anticipate the supplemental proposed rule will be published relatively soon, and that the final overall rule will not be published until the time barred debt disclosure rule can be incorporated.

On Capitol Hill, we have seen a full agenda of legislation introduced amending various sections of the FDCPA.  The legislation comes with titles written to sensationalize abusive practices.  Examples of recently introduced legislation includes:

  • HR 4403:  Stop Debt Collection Abuse Act
  • HR 3948:  Debt Collection Practices Harmonization Act
  • HR 3490:  Small Business Lending Fairness Act
  • HR 4664:  Monitoring and Curbing Abusive Debt Collection Practices Act

RMAI is actively monitoring over 200 bills that may impact the receivables industry in both positive and negative ways. Here are a few noteworthy bills that have been introduced:

Massachusetts HB 3949 – This bill would require passive debt buyers to be licensed as debt collectors in Massachusetts. Currently, third party collection agencies and active debt buyers are regulated and licensed by the Massachusetts Division of Banks while passive debt buyers are regulated by the Attorney General’s Office and not required to be licensed. This bill would also exempt debt buying companies from bonding requirements and allow affiliated companies to be licensed under a single license and subject to a single examination [This bill was unanimously reported out of the Joint Committee on Consumer Protection & Professional Licensure on 7/1/19. RMAI has been advocating for uniformity and consistency in state licensing laws. Maintaining the Massachusetts bifurcated regulatory scheme does not make sense and adds to industry and consumer confusion. RMAI has retained a Massachusetts lobbyist to assist us in our efforts and anticipate a successful outcome.]

New York AB 6909-B/SB 4827-B – This bill called the “Consumer Credit Fairness Act” would: (1) reduce the statute of limitations from six to three years on consumer credit transactions; (2) “extinguish” the right to collect on consumer debt past the statute of limitations; (3) require the mailing of a notice by the court clerk after filing proof of service of the summons and complaint; (4) require specific data to be included in the complaint; and (5) require the provision of form affidavits. [RMAI has a New York lobbyist and is working closely with a coalition of industry lobbyists to fight this bill. The coalition is scheduled to participate in a roundtable discussion with the Senate sponsor and consumer groups on November 26th in New York City in an attempt to find some common ground.]

Ohio HB 251 – This bill would decrease the statute of limitations from 8 years to 6 years on a written contract and 4 years on an oral contract. [RMAI and a coalition of RMAI members were able to prevent an amendment to the bill that would further reduce the SOL to 3 years. In addition, language was added to end the Ohio borrowing statute in certain circumstances. The bill passed out of House Committee and is headed to the House floor for action.]

If you are interested in obtaining a copy of the RMAI state tracking list, please contact David Reid at dreid@rmaintl.org.

Ontario Systems

Calif. App. Court (1st Dist) Refuses to Enforce Predispute Jury Waiver Despite Forum Selection Clause

Handoush v. Lease Fin. Grp., LLC, No. A150863, 2019 Cal. App. LEXIS 1078 (Ct. App. 2019)

The Court of Appeal of the State of California, First Appellate District, recently held that a forum selection clause in favor of a New York forum was unenforceable where the clause included a predispute jury trial waiver, which is unenforceable under California law but which would have been enforceable under New York law.

The plaintiff storeowner filed a lawsuit against the defendant company alleging that the defendant supposedly defrauded the plaintiff regarding a lease agreement for credit card processing equipment.

The complaint alleged causes of action for fraud, rescission, injunctive relief, and violation of the California Business and Professions Code section 17200.  The complaint also attached a lease agreement, which provided that New York law would apply to all disputes between the parties, and that all disputes “shall be instituted and prosecuted exclusively in the federal or state court located in the State and County of New York.”  Further, the agreement provided that “YOU AND WE WAIVE, INSOFAR AS PERMITTED BY LAW, TRIAL BY JURY IN ANY DISPUTE.”

The defendant moved to dismiss the complaint based on the forum selection clause of the lease agreement.  The trial court granted the dismissal, and the matter was appealed.

On appeal, the court first observed that “California favors contractual forum selection clauses so long as they are entered into freely and voluntarily, and their enforcement would not be unreasonable,” but “California courts will refuse to defer to the selected forum if to do so would substantially diminish the rights of California residents in a way that violates our state’s public policy.”

The Appellate Court also noted that a party opposing enforcement of a forum selection clause ordinarily bears the burden of proving why it should not be enforced, but the burden is “reversed when the claims at issue are based on unwaivable rights created by California statutes [in which case] the party seeking to enforce the forum selection clause bears the burden to show litigating the claims in the contractually designated forum” will not diminish the substantive rights afforded under California law.

Siding with the plaintiff, the Appellate Court held that “enforcing the forum selection claim here would be contrary to California’s fundamental public policy protecting the jury trial right and prohibiting courts from enforcing predispute jury trial waivers.” Although the plaintiff’s claims were not based on a statutory scheme which includes an antiwaiver provision, the “complaint includes a demand for a jury trial, which [the plaintiff] correctly argues is unwaivable in predispute contracts under California law.”  The right to a jury trial “is inviolate under the California Constitution, and which may only be waived by the methods enumerated by the Legislature,” while “under New York law there is no similar prohibition.”  The court went on to explain that “[b]ecause New York permits predispute jury trial waivers, and California does not, enforcing the forum selection clause has the potential to operate as a waiver of a right the Legislature and our high court have declared unwaivable.”

Reversing the order of the trial court, the appellate court concluded “the trial court erred in enforcing the forum selection clause in favor of a New York forum where the clause includes a predispute jury trial waiver, which . . . is unenforceable under California law.”

 

5th Cir. Holds Bankruptcy Courts Cannot Enforce Discharge Injunctions From Other Districts

Crocker v. Navient Sols., L.L.C. (In re Crocker), No. 18-20254, 2019 U.S. App. LEXIS 31300 (5th Cir. 2019)

The U.S. Court of Appeals for the Fifth Circuit has held that a bankruptcy court lacks the power to enforce discharge injunctions entered in other districts, and that the debtors’ particular private education loans were not excepted from discharge.

Two debtors obtained private student loans that transferred to a loan servicing company.  Both debtors filed for Chapter 7 bankruptcy, one in Texas and the other in Virginia. Both listed the loans on their schedules and neither disputed the debt. Both received general discharges. After the discharges, the loan servicer made telephone calls and sent e-mails demanding repayment.

One of the debtors filed an adversary proceeding in the same Texas bankruptcy court that granted him the discharge, seeking a temporary injunction, a declaratory judgment that his student loan had been discharged and an order holding the loan servicer in contempt for violating the discharge injunction.  The other debtor joined in an amended complaint “seeking to certify a nationwide class of those who: (1) obtained prepetition private education loans from [the loan servicer] or related companies to cover expenses at an institution not accredited under Title IV; (2) later filed for bankruptcy and were issued discharge orders; (3) never reaffirmed their prepetition private education loan debt; and (4) are being induced to pay their allegedly discharged private education loans.”

The loan servicer moved for summary judgment which was denied by the bankruptcy court which explained “the general rule giving an issuing court sole authority to enforce its own injunctions [does not apply] to the automatic injunction created by statute when a bankruptcy court grants a discharge under 11 U.S.C. § 727.” The court also held that the private loans “were not within the ambit of the Bankruptcy Code’s bar on the discharge of some student loans.”

On appeal, the Fifth Circuit first addressed whether “a bankruptcy court other than the one that granted the discharge [may] enforce the injunction.”  After analyzing the history of the bankruptcy discharge injunction, the Court found that “Congress’s decision to eliminate language that seemed to allow enforcement of the discharge injunction in a new district gives weight to the argument that after the 1978 Bankruptcy Code was adopted, enforcement in . . . a different district was prohibited.”

The Fifth Circuit “adopt[ed] the language of the Second Circuit that returning to the issuing bankruptcy court to enforce an injunction is required at least in order to uphold ‘respect for judicial process” and concluded that “[t]he bankruptcy court erred in holding that it could address contempt for violations of injunctions arising from discharges by bankruptcy courts in other districts.”

Turning to the issue of whether the subject loans were dischargeable, the Court concluded “[t]he loans at issue here, though obtained in order to pay expenses of education, do not qualify as ‘an obligation to repay funds received as an educational benefit, scholarship, or stipend’ [under subsection 523(a)(8)(A)(ii)] because their repayment was unconditional. They therefore are dischargeable.”

Accordingly, the Fifth Circuit reversed the bankruptcy court’s determination that it had authority to enforce a discharge injunction entered by a different district’s bankruptcy court and affirmed the finding that the subject loans were dischargeable.

Fla. App. Court (2nd DCA) Holds FCCPA Claims for Workplace Injury Bills Not Negated by Workers Comp Law

Davis v. Sheridan Healthcare, Inc., 44 Fla. L. Weekly 2535 (App. 2019)

The District Court of Appeal for the State of Florida, Second District, recently reversed the dismissal of a plaintiff’s Florida Consumer Collection Practices Act (FCCPA) claims relating to collection activities for medical bills for a workplace injury.

The plaintiff was injured in the course of her employment in December 2013.  As part of her worker’s compensation benefits, she had certain medical procedures performed.

Despite the procedures being covered by worker’s compensation, several of the healthcare providers contacted plaintiff by mail and by telephone to collect the debts.  As a result, the plaintiff filed separate suits against the providers alleging violations of the FCCPA for attempting to collect an illegitimate debt and for disclosing false information to a collection agency.

In response to each suit, the providers argued that the employee’s FCCPA claims depend on her showing an illegitimate debt, and that the law determining the legitimacy of that debt is Florida’s Workers Compensation Law which grants exclusive jurisdiction to the Department of Financial Services over “any matters concerning reimbursement.”  Fla. Stat. Ann. § 440.13(11)(c).  Accordingly, the providers moved for judgment on the pleadings arguing the trial courts lacked subject matter jurisdiction.

The trial courts granted the motions and the cases were consolidated on appeal.

The appellate court first looked to the plain language of the WCL and FCCPA to determine the legislative intent.  The WCL, in relevant part, provides that the Department of Financial Services “has exclusive jurisdiction to decide any matters concerning reimbursement, to resolve any overutilization dispute under subsection (7), and to decide any question concerning overutilization under subsection (8) . . .” Fla. Stat. Ann. § 440.13(11)(c).

On the other hand, the FCCPA provides, in part, that it is a violation for any person to “[c]laim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist” and to “[d]isclose to a person other than the debtor or her or his family information affecting the debtor’s reputation . . . with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false.” Fla. Stat. Ann. § 559.72(9), (5).

The Court noted the distinction between the dictionary definitions of the terms “reimbursement” and “collection,” and concluded that “collection” is not the same concept or type of activity as “reimbursement,” even if a transaction sometimes involves both.  Applying the ordinary meanings of the terms, the Court held that the employee’s claims for illegal “collection” practices were not “matters concerning reimbursement.”

Thus, the Court held that the employee’s claims that the providers engaged in unlawful practices to “collect” consumer debts under the FCCPA were not “matters concerning reimbursement” committed to the exclusive jurisdiction of the Department of Financial Services under section and accordingly reversed the dismissal of the FCCPA claims.

Calif. App. Court (2nd Dist) Upholds Over 60% Reduction on Consumer Plaintiff’s Attorney Fee Award

Morris v. Hyundai Motor Am., 41 Cal. App. 5th 24 (2019)

The Court of Appeals of California, Second District, upheld a trial court’s ruling reducing the amount of a plaintiff’s attorney’s fee award in a consumer litigation action to less than 40% of the amount sought by the plaintiff’s counsel.

A car buyer sued the manufacturer under California’s Song-Beverly Consumer Warranty Act, Civ. Code, § 1790 et seq., for alleged defects that the manufacturer refused to repurchase. The parties settled the litigation with the manufacturer agreeing to pay the plaintiff $85,000 plus reasonable attorney fees and expenses.

The plaintiff moved for a fee award using the lodestar method that consisted of a $127,792.50 base amount with a 1.5 multiplier, for a total of $191,688.75. However, the trial court awarded only $73,864 in fees.

On appeal, the appellate court noted that “it is inappropriate and an abuse of a trial court’s discretion to tie an attorney fee award to the amount of the prevailing buyer/plaintiff’s damages or recovery in a Song-Beverly Act action.”  A “‘rule of proportionality’ would make it difficult for individuals with meritorious consumer rights claims to obtain redress from the courts when they cannot expect a large damages award.”

Pointing to various statements by the trial judge at the hearing on attorney’s fees, the plaintiff argued that the trial court engaged in a prohibited proportionality analysis in setting the attorney fee award.  However, the court noted that “the trial court’s final written order in the instant case did not suggest in any respect that the court reduced the attorney fee award based on the size of the settlement award.”

Instead, the appellate court noted that the trial court’s order indicated a fee reduction was warranted because it was unreasonable to have six different lawyers from two different law firms for the plaintiff “staffing a case that did not present complex or unique issues, did not involve discovery motions, and did not go to trial.” In addition, the trial court found the attorneys’ hourly rates of $500 per hour to over $600 per hour to be unreasonably high.

The plaintiff also argued that “the trial court arbitrarily cut 83.5 hours of reasonably incurred fees billed by six attorneys who worked on the case, citing concerns about inefficiencies and duplication,” but without referencing “any specific examples of inefficiencies or redundancies as a result of the number of attorneys staffing the case.”

The Appellate Court agreed that it would be inappropriate to make “[a]n across-the-board reduction in hours claimed based on the percentage of total time entries that were flawed, without respect to the number of hours that were actually included in the flawed entries.”  Here, however, it was legitimate for the trial court to “reduce a fee award based on its reasonable determination that a routine, non-complex case was overstaffed to a degree that significant inefficiencies and inflated fees resulted.”

Finally, the plaintiff argued the trial court improperly reduced the hourly rates of $500 to $650 per hour for her attorneys to $300 per hour, even though she “submitted ample evidence, which Defendant failed to rebut, that her counsel’s rates were reasonable and commensurate with other consumer attorneys’ rates.”

The Appellate Court again disagreed, noting that the trial court “reasonably could have reduced the rates based on its finding that the matter was not complex; that it did not go to trial; that the name partners were doing work that could have been done by lower-billing attorneys; and that all the attorneys were doing work that could have been done by paralegals.”  In sum, the Appellate Court held that the plaintiff failed to meet “her burden to show an abuse of discretion in the trial court’s reduction of the attorneys’ hourly rates.”

UPCOMING WEBINARS

LIVE MONTHLY WEBINARS (Free to Members)

CHIEF COMPLIANCE OFFICER WEBINAR SERIES (4 Webinars for $200 – for Members)

  • Managing Organizational Expectations – Tuesday, August 27, 2019 (recording available)
  • What Every Compliance Professional Ought to Know About Staying Abreast of State and Local Laws, Regulations, and Rules – Wednesday, September 18, 2019 (recording available)
  • Managing A Risk Event – October 22, 2019 at 9:00am PT/12:00pm ET (recording available)
  • Best Data Privacy Practices for 2020 and Beyond – November 19, 2019

 ***All recorded monthly webinars are FREE to our members. Special series and select required courses for certification are paid at member rate.

DID YOU KNOW RMAI OFFERS TWO (2) TYPES OF CERTIFICATION DESIGNATIONS?

Business/Vendor Certification: complete a series of standards geared towards your business type along with an external audit every 3 years to maintain a single compliance footprint for the receivables management industry.

NOTE: An individual within your business MUST obtain Individual Certification prior to obtaining Business/Vendor Certification.

Individual Certification: complete 24 education credits within two (2) years and receive your Certified Receivables Compliance Professional (CRCP) designation.

Visit RMAI’s Certification Page for more information.

               

CONGRATULATIONS TO OUR NEW AND RENEWAL CERTIFIED BUSINESSES, VENDORS, AND INDIVIDUALS!

New Vendor
National Loan Exchange, Inc. (NLEX)

Renewed Vendor
DebtTrader

New Businesses
Spring Oaks Capital, LLC
Stone, Higgs & Drexler
Resurgent Acquisitions LLC
Resurgent Receivables LLC

Renewed Businesses
Frontline Asset Strategies, LLC
Capio Partners, LLC
Cascade Capital, LLC

New Individuals
Stacy Stein – Mountain Peak Law Group, PC
Eric Rosenkoetter – Maurice Wutscher LLP
Steven Zahn – PRA Group, Inc.
George Higgs – Stone, Higgs & Drexler
Bridget Myers – CDS Software

Renewed Individuals
Michael Boyle – C & E Acquisition Group
David Maczka – Diverse Funding Associates
Bob Hodges – Capio Partners, LLC
Patrick Lausen – Convergence Acquisitions, LLC
Kaye Dreifuerst – Security Credit Services, LLC
Josh Sipera – Coastal Settlement Recovery Inc.
Michael Johnson – Lawgix Lawyers, LLC
David Acheatel – Credit Corp Solutions Inc.
Shannon Rodden – Premier 40 Financial, LLC

View all certified businesses and vendors                              

View all certified individuals

For questions about certification, contact Caitlyn Vaden at (916) 482-2462 or cvaden@rmaintl.org.

Welcome new RMAI members!

Advanced Business Claims, LLC, Associate Collection Agency – SC
Business and Professional Collection Service, Inc., Associate Collection Agency – NV
Conn’s Home Plus, Originating Creditor – TX
Granby Laredo Solutions, Inc., Associate Debt Buyer – CO
Midwest Fidelity Services, LLC, Associate Collection Agency – KS
Neustar, Inc., Affiliate – VA
Pairity, Inc., Affiliate – NY
Stephen Einstein & Associates, P.C., Associate Law Firm –  NY
Telrock Systems, Inc., Affiliate – GA

Read more about these and other members on the Member Search page.

Membership Renewals … December 31, 2019 is the deadline to renew!

  • Do you need a new W-9 form?
    Email Shannon Parod at sparod@rmaintl.org
  • Has your company moved?
    If so, please contact bsouza@rmaintl.org with your new mail address.
  • Do you work remotely and haven’t seen your renewal?
    Chances are your renewal invoice was mailed to the corporate office.

 

HR Spotlight Brought to You by the RMAI & Insperity Partnership:
Boost Employee Performance

RMAI works hard to open new markets and promote the industry at various conferences and events.

IACC 2020 Annual Convention | January 15-17, 2020

Featuring Jan Stieger RMAI Executive Director Presenting State of the Industry Session
RMAI members can register at a discounted rate, using this special registration form.

RMAI Annual Conference | February 4-6, 2020

RMAI Executive Summit | July 28-30, 2020

Contribute Now

Thank you to our November 2018 – November 2019 legislative fund contributors!

Diamond ($25,000)

Certified Debt Buyer
Cavalry Portfolio Services, LLC
Portfolio Recovery Associates, LLC

Associate Collection Agency
Financial Recovery Services, Inc.

Titanium ($15,000)

Certified Debt Buyer
Unifund CCR LLC

Platinum ($10,000)

Certified Debt Buyer
Encore Capital Group

Gold ($7,500)

Certified Debt Buyer
Crown Asset Management, LLC
Second Round, LP

Silver ($5,000)

Certified Debt Buyer
Jefferson Capital Systems, LLC
Plaza Services, LLC

Affiliate
Digital Recognition Network

Bronze ($2,500)

Certified Debt Buyer
Absolute Resolutions Corp
Federal Pacific Credit Company
First Financial Portfolio Service, LLC. FFAM360
Resurgence Capital, LLC
Security Credit Services, LLC
The Bureaus, Inc.
Winn Law Group, APC

Associate Collection Agency
Glass Mountain Capital

Affiliate
National Loan Exchange NLEX

Brass ($1,000)

Certified Debt Buyer
Indiana Receivables, Inc.
The Cadle Company

Certified Law Firm
Peroutka, Miller, Klima & Peters, P.A.

Certified Collection Agency
Resurgent Holdings
TrueAccord

Associate Debt Buyer
Kino Financial Co., LLC

Associate Law Firm
Andreu, Palma, Lavin & Solis, PLLC
Malone and Martin, PLLC
Rausch, Sturm, Isreal, Enerson & Hornik, LLC
Stenger & Stenger P.C.

Affiliate
Geist Holdings, Inc.

Individuals
Jan Stieger
Jon Mazzoli
Mike Colby
In Memory of Trish Baxter

Other

Certified Debt Buyer
Acctcorp International, Inc.
Capio Partners, LLC
C & E Acquisition Group
Collins Asset Group LLC
Dynamic Recovery Solutions
Federal Pacific Credit Company, LLC
Galaxy Capital Acquisitions, LLC
Icon Equities, LLC
Mid Atlantic Portfolios, LLC
NCB Management Services, Inc.
NDS, LLC
PCA Acquisitions V, LLC
Pharus Funding, LLC
Poser Investments, Inc.
Troy Capital, LLC
West Bay Recovery, Inc.

Certified Law Firm
Reynolds Sims & Associates, P.C.
Law Offices of Daniel C. Consuegra, P.L.
Law Offices of Steven Cohen, LLC

Certified Collection Agency
Full Circle Financial Services, LLC
Halsted Financial Services, LLC
National Recovery Solutions, LLC

Associate Debt Buyer
Atlas Acquisitions
Balbec Capital
Conquest Receivables
Fort Crook Financial
Genesis Recovery Services
International Debt Buying Consultants, LLC
National Recovery Solutions, LLC
NDA Investments
POM Recoveries, Inc.
Sandia Resolution Company, LLC

Associate Law Firm
Butler & Associates, P.A.
Hudson Cook, LLP
Hunt & Henriques
Kirschenbaum & Phillips, PC
London & London
Maurice Wutscher LLP
Mullooly, Jeffrey, Rooney & Flynn, LLP
Pressler, Felt and Warshaw, LLP
RAS LaVrar, Inc.
The Law Offices of Ronald S. Canter, LLC
Tobin & Marohn
Vargo & Janson, P.C.
Venable LLP

Associate Collection Agency
Central Portfolio Control, Inc.
Credit Control, LLC
FMS, Inc.
Noble Financial Solutions, Inc.
Viking Client Services, Inc.
ZenResolve

Affiliate
Accelerated Data Systems
Attunely, Inc.
Clear Payment Solutions
CMS Services
ComplyARM, Inc.
Comtronic Systems, LLC
DebtTrader
Diversified Consultants, Inc.
Equifax, Inc.
FLOCK Specialty Finance
Harvest Strategy Group, Inc.
Metronome Financial, LLC
MicroBilt Corporation
MRS BPO, LLC
Ontario Systems, LLC
Payment Brokers Group, LLC
PCI Group Inc.
Resource Management Services, Inc.
SAM, Inc. – Solutions for Account Management
Tag Process Service, Inc.
TransUnion
VoApps

Originating Creditor
Capital Solutions Bancorp, LC

Individual
David Reid