Justia Contracts Opinion Summaries

After Stratton stopped making payments on her credit card, GE “charged off” Stratton’s $2,630.95 debt, as uncollectible. GE stopped charging Stratton interest. By charging off the debt and ceasing to charge interest GE could take a bad-debt tax deduction, I.R.C. 166(a)(2), and avoid the cost of sending Stratton statements. A year later, GE assigned Stratton’s charged-off debt to PRA, a “debt buyer.” Two years later, PRA filed suit in state court, alleging that Stratton owed interest during the 10 months after GE charged off her debt, before GE sold that debt, and that Stratton owed 8% interest rather than the 21.99% rate established in her contract with GE. The 8% rate is the default rate under Kentucky’s usury statute, KRS 360.010. Stratton filed a putative class action, alleging that PRA’s attempt to collect 8% interest for the 10-month period violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, in that the 8% interest was not “expressly authorized by the agreement creating the debt or permitted by law,” that PRA had falsely represented the “character” of Stratton’s debt and the “amount” owed, and that PRA’s suit was a “threat” to take “action that cannot legally be taken.” The district court dismissed. The Sixth Circuit reversed. Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest; any attempt to collect statutory interest when it is “not permitted by law” violates the FDCPA.View "Stratton v. Portfolio Recovery Assocs., LLC" on Justia Law

Jeffrey Wright and Myron Allenstein filed separate complaints against A-1 Exterminating Company, Inc.; Terry Buchanan; Edward Wrenn; and David Wrenn (collectively, "A-1"). In the complaints, plaintiffs alleged that, on the date of the initial termite bonds they were issued, A-1 Exterminating promised to identify and recommend the appropriate services to protect the plaintiffs' houses or property from termites. Plaintiffs stated that in their contract with A-1, plaintiffs had paid for the initial service, the issuance of the termite bond, and annual renewal premiums. During subsequent periodic visits to the subject properties, A-1 sprayed liquids and either represented to plaintiffs or led plaintiffs to believe that those applications were treatments for termites. But in the last two years, A-1 had admitted that the periodic sprays were not to prevent or control termites; and that Buchanan, a State-licensed pest-control operator who worked for A-1 Exterminating, had admitted that the spray was a regular, watered-down pesticide that might only be strong enough to kill ants and possibly spiders. The two complaints included counts alleging fraud, including promissory fraud; breach of warranty; negligence, including negligence per se, and wantonness; breach of contract; and negligent training, supervision, and retention. It also included a request for "equitable relief, including unjust enrichment." The trial court entered an amended protective order in both cases. Plaintiffs then filed petitions for the writ of mandamus with the Supreme Court seeking a rescission. The Supreme Court found the protective orders overbroad: "the trial court should balance its interest in protecting A-1's right to a fair trial against the First Amendment rights of the plaintiffs and their attorneys. Further, any protective order in this regard must be narrowly tailored so that it uses the least restrictive means necessary to protect A-1's right to a fair trial." The Court granted plaintiffs' petitions for mandamus relief, and remanded the cases for further proceedings.View "Wright v. A-1 Exterminating Company, Inc., et al." on Justia Law

Alasko Foods, Inc. (“Alasko”), a Canadian corporation that sells frozen produce to retail outlets, and Foodmark, Inc. (“Foodmark”), a Massachusetts corporation that assists food manufacturers in marketing branded-label and private-label products to retailers, entered into a “U.S. Representation Agreement [and] Sales Management Agreement” wherein Alasko retained Foodmark to market Alasko’s products in the United States. Five years later, Alasko terminated the Agreement. Foodmark filed a complaint against Alasko, alleging that Alasko’s refusal to pay the “Non-Renewal Termination Fee” contemplated by the Agreement constituted a breach of the Agreement and of its covenant of good faith and fair dealing. A federal district court entered summary judgment for Foodmark and awarded $1.1 million in damages. The First Circuit affirmed, holding that there were no genuine issues of fact, and Foodmark was entitled to a termination fee in the amount calculated by the district court.View "Foodmark, Inc. v. Alasko Foods, Inc." on Justia Law

Plaintiff filed suit against Chase, alleging violations of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2605(e); conversion; breach of contract; wrongful attempted foreclosure; and trespass. On appeal, plaintiff challenged the district court's grant of summary judgment in favor of Chase on all of plaintiff's claims. The court concluded that the district court properly granted summary judgment on the breach of contract claims where, although the court recognized that HUD regulations are enforceable terms of the contract, plaintiff failed to put forward any evidence of damages caused by the purported breach of these contract terms or seek any cognizable relief; plaintiff's trespass claim failed because plaintiff was admittedly in default and any visits by Chase's agents to the property at issue were permitted; plaintiff's wrongful attempted foreclosure claim failed where Chase believed it was entitled to foreclose on the property at the time and plaintiff attributed the problems with Chase only to its inability to fully keep track of her payments and communicate her payment status to her; and plaintiff's RESPA claim failed where Chase's response to plaintiff's requests was adequate and there were no damages as a matter of law from an inadequate response. Accordingly, the court affirmed the district court's grant of summary judgment in favor of Chase on all claims.View "Bates v. JPMorgan Chase Bank, NA" on Justia Law

The Fleets applied to have their Bank of America (BofA) home loan modified in 2009 under the Making Homes Affordable Act. The result of multiple telephone calls and letters to various BofA-related personnel, the Fleets were either (a) assured the Fleets that everything was proceeding smoothly or (b) told BofA had no knowledge of any loan modification application. Finally, in November 2011, BofA informed the Fleets they had been approved for a trial period plan under a Fannie Mae modification program. All they had to do, was to make three monthly payments starting on December 1, 2011. If they made the payments, then they would move to the next step (verification of financial hardship); if they passed that test, their loan would be permanently modified. The Fleets made the first two payments, for December 2011 and January 2012, which BofA acknowledged receiving, and therefore foreclosure proceedings had been suspended. Toward the end of January 2012, their house was sold at a trustee’s sale. Two days after the sale, a representative of the buyer showed up at the house with a notice to quit. The Fleets informed him that the house had significant structural problems, and he said he was going to rescind the sale. The Fleets continued to try to communicate with BofA regarding the property. A BofA representative left voice mail messages to the effect that BofA wanted to discuss a solution to the dispute, but otherwise it appeared that productive conversation between the Fleets and BofA and between the Fleets and the buyer had ceased. In light of this silence (which they interpreted to mean the buyer was trying to rescind the sale), the Fleets spent $15,000 to repair a broken sewer main, which was leaking sewage onto the front lawn. They were evicted in August 2012. In June 2012, the Fleets sued BofA, the trustee under their deed of trust, BofA officers and some of the employees who had been involved in handling their loan modification, and the buyer of the property and its representative. BofA’s demurrer to the first amended complaint was sustained without leave to amend as to the remaining causes of action promissory estoppel, breach of contract, fraud, and accounting. All of the BofA defendants were dismissed. The Court of Appeal reversed: "Although the Fleets’ amended complaint spreads the fraud allegations over three causes of action and contains a great deal of extraneous information, it also alleges the requisite elements of promissory fraud. [. . .] This cause of action may or may not be provable; what it definitely is not is demurrable." The Court sustained the demurrer to the Fleets' action for promissory estoppel, and affirmed the trial court in all other respects. The case was remanded for further proceedings. View "Fleet v. Bank of America" on Justia Law

Appellee, Peter Rosenow, brought a class-action complaint individually and on behalf of similarly situated persons against Appellants, Alltel Corporation and Alltel Communications, Inc. (collectively, Alltel), alleging violations of the Arkansas Deceptive Trade Practices Act and unjust enrichment arising from Alltel’s imposition of an early termination fee on its cellular-phone customers. Alltel filed a motion seeking to compel arbitration based on an arbitration clause contained in its “Terms and Conditions.” The circuit court denied the motion, concluding that Alltel’s arbitration provision lacked mutuality. The Supreme Court affirmed, holding that the circuit court did not err in finding that a lack of mutuality rendered the instant arbitration agreement invalid.View "Alltel Corp. v. Rosenow" on Justia Law

Plaintiffs, appellants, and cross-respondents were consumers who purchased vehicles from defendant, respondent, and cross-appellant Raceway Ford. Plaintiffs raised numerous causes of action based on laws proscribing certain acts against consumers, unfair competition, and deceptive business practices, bringing both individual claims and claims on behalf of two certified classes. After a bench trial, the trial court entered judgment in favor of Raceway and against plaintiffs on all causes, except that a single plaintiff was granted rescission on a single cause of action. Separately, the trial court awarded attorneys’ fees and costs to Raceway. In consolidated appeals, plaintiffs challenged the trial court’s judgment on the merits (case No. E054517) and fee order (case No. E056595); Raceway cross-appealed regarding one aspect of the trial court’s fee order. In their appeal, plaintiffs specifically argued that, as a matter of law, Raceway’s previous practice of “backdating” second or subsequent contracts for sale of a vehicle to the original date of sale violated the Automobile Sales Finance Act (also known as the Rees-Levering Motor Vehicle Sales and Finance Act (ASFA)), the Consumer Legal Remedies Act (CLRA), and the Unfair Competition Law (UCL). The Court of Appeal agreed that the practice of backdating could have resulted in inaccurate disclosures to class members, thereby violating the ASFA, at least in some cases. On the record, however, the Court declined to order entry of judgment in favor of the plaintiff class, rather reversed the trial court’s judgment in favor of Raceway with respect to plaintiffs’ backdating claims. Plaintiffs also appealed the judgment in favor of Raceway with respect to claims of a second certified class, consisting of Raceway customers who purchased used diesel vehicles from Raceway and who were charged fees for smog checks and smog certifications that were only properly applicable to purchases of gasoline vehicles. The Court of Criminal Appeals affirmed the trial court’s judgment with respect to plaintiffs’ smog fee claims. Additionally, plaintiffs appealed the judgment in favor of Raceway on certain individual plaintiffs’ claims that Raceway violated the ASFA by failing to provide them with copies of their credit applications. The Court found plaintiffs’ evidence in support of these claims was insufficient to overturn the trial court's decision, so that ruling was also affirmed. Lastly, plaintiffs appealed the judgment in favor of Raceway with respect to claims under the UCL and the CLRA brought by plaintiff Francisco Salcedo in his individual capacity. The trial court found in favor of Mr. Salcedo on his claim of fraud, and granted him the remedy of rescission, though it declined to award any punitive damages. Plaintiffs contended that the judgment in Mr. Salcedo’s favor on his fraud claim established as a matter of law that he should also have judgment entered in his favor on his UCL and CLRA claims. The Court of Appeal agreed, and reversed. The basis for the trial court’s award of fees to Raceway was, in part, undermined by the Court's partial reversal of the judgment. The case was therefore remanded with respect to Raceway's claims in light of remand on other issues. View "Raceway Ford Cases" on Justia Law

The issue this appeal presented for the New Jersey Supreme Court's review centered on an agreement for the sale of a residential property and a subsequent lease and repurchase agreement, specifically whether the transactions collectively gave rise to an equitable mortgage, violated consumer protection statutes, or contravened its decision in "In re Opinion No. 26 of the Committee on the Unauthorized Practice of Law," (139 N.J. 323 (1995)). In 2007, defendant Barbara Felton faced foreclosure proceedings with respect to her unfinished, uninhabitable home and the land on which it was situated. Felton and plaintiff Tahir Zaman, a licensed real estate agent, entered into a written contract for the sale of the property. A week later, at a closing in which neither party was represented by counsel, Felton and Zaman entered into two separate agreements: a lease agreement under which Felton became the lessee of the property, and an agreement that gave her the option to repurchase the property from Zaman at a substantially higher price than the price for which she sold it. For more than a year, Felton remained on the property, paying no rent. She did not exercise her right to repurchase. Zaman filed suit, claiming that he was the purchaser in an enforceable land sale agreement, and that he therefore was entitled to exclusive possession of the property and to damages. Felton asserted numerous counterclaims, alleging fraud, slander of title, violations of the Consumer Fraud Act (CFA), and violations of other federal and state consumer protection statutes. She claimed that the parties’ transactions collectively comprised an equitable mortgage and constituted a foreclosure scam, entitling her to relief under several theories. She further contended that the transactions were voidable by virtue of an alleged violation of "In re Opinion No. 26." A jury rendered a verdict in Zaman’s favor with respect to the question of whether Felton knowingly sold her property to him. The trial court subsequently conducted a bench trial and rejected Felton’s remaining claims, including her contention that the transactions gave rise to an equitable mortgage and her allegation premised upon In re Opinion No. 26. An Appellate Division panel affirmed the trial court’s judgment. The Supreme Court affirmed in part and reversed in part the Appellate Division’s determination. The Court affirmed the jury’s determination that Felton knowingly sold her property to Zaman. Furthermore, the Court affirmed the trial court and Appellate Division's decisions that Felton had no claim under the CFA, that this case did not implicate "In re Opinion No. 26," and that Felton’s remaining claims were properly dismissed. The Court reversed, however, the portion of the Appellate Division’s opinion that affirmed the trial court’s dismissal of Felton’s claim that the parties’ agreements constituted a single transaction that gave rise to an equitable mortgage, adopting an eight-factor standard for the determination of an equitable mortgage set forth by the United States Bankruptcy Court in "O’Brien v. Cleveland," (423 B.R. 477 (Bankr. D.N.J. 2010)). The case was remanded to the trial court for application of that standard to this case, and, in the event that the trial court concludes that an equitable mortgage was created by the parties, for the adjudication of two of Felton’s statutory claims based on alleged violations of consumer lending laws, as well as several other claims not adjudicated by the trial court. View "Zaman v. Felton" on Justia Law

Lillian Lewellen brought an action against Chad Franklin National Auto Sales North, LLC (National) and its owner, Chad Franklin, for fraudulent misrepresentation and unlawful merchandising practices under the Missouri Merchandising Practice Act. A jury awarded Lewellen actual damages of $25,000, assessed jointly and severally against both defendants. The jury also awarded Lewellen $1 million in punitive damages against Franklin and National on both counts. Pursuant to Mo. Rev. Stat. 510.265, the circuit court reduced the punitive damages awards against Franklin and National to $500,000 and $539,050, respectively. Lewellen appealed her punitive damages award, claiming that her constitutional right to trial by jury was violated when the trial court reduced the punitive damages award on her fraudulent misrepresentation claim against Franklin. The Supreme Court affirmed the circuit court’s judgment in all respects except for the portion applying section 510.265 to the punitive damages award assessed against Franklin for fraudulent misrepresentation, holding that the mandatory reduction of Lewellen’s punitive damages award against Franklin under section 510.265 violated Lewellen’s right to a trial by jury. View "Lewellen v. Franklin" on Justia Law

In 2007, plaintiffs Sylvia and Stanley Stroup sued defendants Peter Doran and Peter Doran Landscape Design, LLC for breach of contract, fraud, and consumer fraud after defendants failed to perform landscaping for plaintiffs. Plaintiffs obtained a judgment against defendants. Defendants failed to pay the judgment. Plaintiffs obtained a writ of execution, and the court approved plaintiffs’ motion for trustee process to attach funds owned by defendants and held by Brattleboro Savings and Loan Association (BSL). BSL disclosed to plaintiffs that it held a balance of $2,853.05 in a checking account titled in the name of one of the defendants. A few days later, the parties stipulated that BSL would release $750 to plaintiffs, and that BSL would then be discharged as a trustee and defendant’s account would be free of any lien or charge benefitting plaintiffs. Defendants further agreed to pay $3,500 to plaintiffs before January 31, 2008. BSL paid plaintiffs $750. Plaintiffs claim that defendants never paid the remainder of their debt. In 2013, plaintiffs served BSL with another trustee summons. BSL did not reply within thirty days, and on August 27 plaintiffs moved for default against BSL and entry of judgment against it as trustee for $24,155.12, the balance due under the judgment. The court ordered the clerk to schedule a hearing on plaintiffs’ motion, and directed that a copy of plaintiffs’ motion and the notice of hearing be served on BSL. On September 16, BSL filed a trustee disclosure indicating that it did not have any of defendants’ property in its possession. The court subsequently entered an order denying plaintiffs’ motion for default judgment against BSL. The court stated that “[a]lthough Trustee failed to make a timely disclosure, its disclosure now made in response to Plaintiff[s’] motion for default shows that it holds no assets for the benefit of Defendant[s]. Default judgment under these circumstances would be inequitable.” Plaintiffs appealed. Plaintiffs argued that the trial court erred in denying their motion for default because applicable Vermont law makes default mandatory when a trustee fails to serve a disclosure within thirty days. Plaintiffs did not contest the information contained in the trustee’s disclosure form or request an evidentiary hearing below. See V.R.C.P. 4.2(g) (stating that party who intends to contest information contained in trustee’s disclosure is entitled to evidentiary hearing upon written request). Nor do they contest the information on appeal. Their sole argument before this Court is that default was mandatory under 12 V.S.A. § 3062 and V.R.C.P. 4.2(f). Finding no reversible error, the Supreme Court affirmed. View "Stroup v. Doran" on Justia Law