Claims And Issues

FLORIDA FORCE-PLACED PREMIUM PRACTICES: FEDERAL JUSTICE SYSTEM STEPS ASIDE.

It is often pointed out that whenever class action rights are taken away to require that all claims be arbitrated, then small claims will not be made because they are, well, too small to litigate.

Add to that this fact as well:  Claims may be too small for federal courts when the claims stand alone even if they are not too small when they are combined in a class action.

Adele Levine took out a mortgage for a home in Pembroke Pines, Florida.  Ms. Levine died.  Her estate disputed the payment of insurance premiums that were placed by force on her mortgage loan by the lender's mortgage servicer.  Ms. Levine's estate allegedly incurred legal fees of $2,565 in these disputes with the servicer and the lender over the lender force-placed insurance premiums.

Adele Levine opted out of a class action settlement with the mortgage servicer.  Her estate then filed its own lawsuit instead, for alleged violations of the Florida Consumer Collection Practices Act (FCCPA), for alleged violations also of the Florida Unfair and Deceptive Trade Practices Act (FDUTPA), and for what a federal judge called "tortious interference."

Unfortunately for the estate, the only "actual damages" it could allege was the $2,565 in attorney's fees caused by disputes over the LFPI.  This was not enough for federal court, the federal judge ruled, even after adding the potential recovery of an additional $1,000 under FCCPA.

Case dismissed.

The moral of the story is that there is more to the story that when class action rights are taken away to require that claims be arbitrated, then small claims will not be made because they are too small to litigate.  For federal courts, "small" claims can be less than $75,000 which for most people and particularly for those who cannot afford to litigate in federal court, is not a "small" amount by any stretch.  But in this federal case, anything less than $75,000 was, well, too small to litigate.

Dennis Wall is at work on a book about concealed evidence and secret settlements, including cases involving lender force-placed insurance, that take our money, foreclose on our homes, and change our lives. 

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Related articles

Video Displays "Lender Force-placed Insurance Practices".

STANDARD CIVIL AUTHORITY EXCLUSION NOT APPLIED IN KANSAS CASE.

The standard property insurance policy exclusion for loss resulting from an order of a civil authority did not apply, the Kansas Court of Appeals has held, to damage caused to a residence by law enforcement officers' efforts to apprehend a suspect.  The case is Allen v. Marysville Mut. Ins. Co., 404 P.3d 364 (Kan. Ct. App. 2017).

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FLORIDA TRADE SECRET ASSERTION DID NOT PREVAIL, UNTIL IT DID.

Incredible!  Trade secret raised against discovery.  Burden of proof was on the defendant raising the trade secret immunity from discovery.  The Magistrate Judge held that the defendant did not prove a trade secret.

Then, the Magistrate held:  "Thus, its assertion of the trade secret privilege does not prevent discovery of the documents for which it was asserted. Nevertheless, in an abundance of caution, Defendant is permitted to designate documents as trade secrets or confidential and their use is limited to this case."  Say what?  Not trade secrets but treat as trade secrets for everyone else in the world except this case?

The decision came in Hallmark Ins. Co. v. Maxum Cas. Ins. Co., No: 6:16-cv-2063-Orl-37GJK, 2017 WL 3730376 (M.D. Fla. August 14, 2017).

Dennis Wall is at work on a book about how concealed evidence takes our money, forecloses on our homes, and changes our lives.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

EQUIFAX BREACH LEADS DELAWARE TO STRENGTHEN BREACH OF CYBERSECURITY LAWS.

I do not recall having had a guest post, or writing a post with someone else's content.  Until now.

The following article is reprinted with permission from an EMail sent on Friday, November 17, 2017 regarding "Consumer Protection" via the American Bar Association.  I have checked out the new statutes so far as I am able to do so on Westlaw (they do not take effect until April 14, 2018).

So, without further ado, here with his permission is the excellent article written by American University law student David Alexander McGee and circulated via the American Bar Association on November 17, 2017:

Delaware Amends its Breach of Security Laws in Reaction to the Equifax Breach Delaware Amends Title 6 of the Delaware Code Relating to breaches of security including personal information. Signed 8/7/17 and Effective 4/14/18.             Recently, Delaware amended Title 6 of the Delaware Code that updates how companies that collect and retain personal information of Delaware residents must secure that information and handle breaches. The Delaware General Assembly passed this amendment in relation to the Equifax Security Breach. The most significant changes include: Expands the definition of "personal information" to also include state or federal identification cards, credit card number, passport number, a username or email address in combination with a password or security question and answer, medical history, health insurance policy number, unique biometric data, and an individual taxpayer identification number. Prior to the amendments, only driver's license number, social security number, account number, and a debit card number in combination with the security code were considered as "personal information". Requiring that any person conducting business with Delaware residents' personal information must implement and maintain reasonable procedures and practices to prevent unauthorized acquisition of the personal information. There is an additional definition added to what constitutes a "breach of security" which defines "breach of security" as an unauthorized acquisition of encrypted data if the person acquiring the data believes that the encryption key will be included in the data breach of reasonable belief it will be included. When there is a breach of security and personal information is obtained, any "person" (statutory definition which includes corporations, business trust, estate trust, partnership, etc.) who conducts business in Delaware must notify any resident of Delaware whose data was breached no later than 60 days after the breach, unless the breach would result in no harm being done to the resident. If the number of residents affected is over 500, the "person" (statutory definition) is required to give notice shall also provide notice to the Attorney General. If a breach includes residents' Social Security number, then the person much give identity theft prevention services for 1 year and if applicable identity theft mitigation services at no cost. The link to view the full bill is: legis.delaware.gov/BillDetail?LegislationId=26009. ------------------------------ David McGee American University Washington College of Law Class of 2019 Junior Staffer, Journal of Gender, Social Policy & the Law Washington DC ------------------------------

 

 

RESISTING THE TIDAL WAVE UNDER TEXAS LAW.

Resisting the tidal wave of contrary opinions, a Federal appellate judge wrote for a unanimous court in Illinois that, under Texas law in a case of apparent first impression, an insured's assignment of claims against its insurance company in the insured's settlement agreement before adjudication on the merits in the underlying case was held to violate public policy.  Accordingly, the assignment was held invalid and unenforceable in Hendricks v. Novae Corporate Underwriting, Ltd., 868 F.3d 542 (7th Cir. 2017) (case involved Texas substantive law).

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KICKBACKS ARE GOOD AS LONG AS "FILED RATES," BUT ....

.... NOT a defense to claims NOT based on filed rates.

Another Federal Judge has ruled that so long as the defendant alleges that it included kickbacks in filed rates, then claims related to kickbacks are barred in Federal Courts.  Alpert v. Nationstar Mortgage LLC, 243 F. Supp. 3d 1176 (W.D. Wash. 2017) (applying Washington State's filed rate doctrine in case of first impression to insurance company's motion to dismiss mortgagor's complaint actually alleging that kickbacks were included in force-placed insurance premiums charged to mortgagor).

However, even in these cases Federal Judges also hold that other claims which are not based on kickbacks can still be "plausible" and so withstand a motion to dismiss alleging the filed-rate-doctrine.  For example, in the Nationstar Mortgage case itself the same Federal Judge held that the mortgagor's complaint stated a claim against a mortgage servicer for breach of contract and for alleged Washington State Consumer Protection Act (CPA) violations.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

Related articles

Video Displays "Lender Force-placed Insurance Practices".

CREDIT INSURANCE FACTORS INTO MORE THAN JUST CALIFORNIA FINANCE.

The roles of credit insurers and factors in financing are unknown to many.  Quoting undisputed definitions provided by the plaintiff, the Court described their roles as follows in the case of Marble Bridge Funding Grp., Inc. v. Euler Hermes Am. Credit Indem. Co., 225 F. Supp. 3d 1034 (N.D. Cal. 2016):

    This case stems from a type of commercial financing known as “factoring” and the variety of insurance unique to that industry. Plaintiff Marble Bridge Funding Group (“MBFG”) is a “factor,” or a company that provides accounts receivable financing to growing businesses that sell their products or services to other businesses. First Am. Compl. (“FAC”), Dkt No. 176, at ¶ 3. Defendant Euler Hermes American Credit Indemnity Company (“Euler”) sells credit or trade insurance, which is “purchased by sellers of goods or services to insure ...

their accounts receivable against the risk that the debtors should fail to pay on their receivables.

(Emphasis added.)

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HEALTHCARE ENROLLMENT:  "Simply genius!"

People who need healthcare may want to check out health insurance coverage under the Affordable Care Act but they may not know how or when because the money allocated under the ACA to let them know how, has been cut by 90% this year.  Without taking sides whether it is a good thing or a bad thing not to tell people who need health insurance how they can get it themselves, there is a way to respond positively.

Maine Representative Chellie Pingree has shown how to respond positively.  What Representative Pingree did is simply genius.  She has recorded a Public Service Announcement or PSA that is running on TV stations in Maine right now.

In the PSA, Representative Pingree lets people know about the enrollment and direct them to the federal website.  TV stations and radio stations are eager to run Public Service Announcements as a part of their licensing requirements to serve the public.

As Maine goes, so goes the nation, they say.  I have already called my Member of Congress and urged her to do the same.

I have also contacted both of my Senator's offices and left messages urging them to do this.  Both of your Senators work for you regardless of your party affiliation or theirs.  Call your Representative and your Senators and let each of them know that they would be terrific in a PSA informing people that the enrollment period that began on November 1 doesn't end until December 15 and directing them to the federal website where people can check it out for themselves,   https://www.healthcare.gov.

Watching each other's backs is what people in America have always done.  It's what we do now.  Call now! 

PRIOR ACTS EXCLUSION AND LEGACY LENDING PRACTICES IN FLORIDA.

The insurance coverage issue in this case concerned coverage for bank officers before November 2008.  But that was the narrow issue.  More about that in a moment.

First, the opening paragraph of a coverage case that involved the standard prior acts exclusion in Director's and Officer's policies like the one at issue here:

    For want of good corporate officers, BankUnited Financial Corporation engaged in risky lending practices before November 2008. For want of good lending practices, BankUnited became insolvent. For want of solvency, BankUnited's transfers of money to its subsidiary were fraudulent.

Zucker v. U.S. Specialty Ins. Co., 856 F.3d 1343, 1344 (11th Cir. 2017) (Carnes, C.J., for the Court).

The appellate court ended up holding that the subject policy's prior acts exclusion applied, that there was no insurance coverage for acts committed before November 2008, and effectively holding that, in the end, the corporate officers were almost as much out of luck in terms of coverage, as the bank's creditors alleged that they were out of luck in terms of their investments in the bank while the defendants were in charge.

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CAN A DECEASED HOMEOWNER'S ESTATE SUE OVER LENDER FORCE-PLACED INSURANCE?

The decision in Navin v. Wells Fargo Bank, N.A., No. 3:15-cv-671 (MPS), 2017 WL 4401454 (D. Conn. September 29, 2017) may seem inconsistent on its face with a decision of the U.S. District Court for the District of South Carolina, a decision which was addressed on Insurance Claims and Bad Faith Law Blog last week on "Estate of Deceased Homeowner Could Pursue Bad Faith Claims."  In the Navin case, however, the District Judge appears to be consistent with his own legal rulings.  His rulings may also be consistent with the decision in the South Carolina Federal case.

The Judge had previously dismissed the claims of a mortgagor's father-in-law based on the mortgagor having had to pay lender force-placed insurance (LFPI) charges.  The mortgagor, one Mr. Navin, now being deceased, the proper party to pursue his estate's claims was not the father-in-law, one Mr. O'Reilly.

The District Judge, the Honorable Michael P. Shea, gave Mr. O'Reilly leave to amend.  Mr. O'Reilly responded in part with a motion to substitute the deceased mortgagor's administrator.  Judge Shea denied that motion after the administrator refused the substitution.

However, Mr. O'Reilly's motion for substitution was not simply denied.  "As a result," said the District Judge, "Navin's claims are dismissed with prejudice."

Apparently, it was enough that there was no-one left to pursue the deceased mortgagor's LFPI claims, so that the Court could see no alternative to dismissing those claims with prejudice since no-one was available to present them.

Mr. O'Reilly's motion was not helped, in any event, by the Court's denial of Mr. O'Reilly's leave to amend.  Mr. O'Reilly sought leave to file a Second Amended Complaint to add "allegations that the mortgage and assignment at issue are void because American Brokers' Conduit is a fictitious entity, and that use of a fictitious entity in foreclosure actions brought by Defendants was fraudulent[.]"  Parenthetically, it is unclear from the most recent opinion who or what was "American Brokers' Conduit," but presumably they or it was supposedly an assignee or a mortgage servicer, or both.

The District Judge reiterated his previous ruling dismissing each of Mr. O'Reilly's seven counts in his First Amended Complaint, which he rather unfortunately repeated in his Second Amended Complaint.  The Judge previously ruled that the same counts failed to state a claim upon which relief could be granted, essentially all for the same reason:  Mr. O'Reilly was a stranger to the mortgage at bar and he did not pay the LFPI charges.

In the September 2017 opinion, the Judge added four reasons why the new allegations were barred by res judicata in Connecticut.

Finally, as if all that were not enough, the Judge said that "[e]ven if O'Reilly's proposed new allegations were not precluded, they would fail on the merits and could not withstand a motion to dismiss under Rule 12(b)(6)."

So it went for a stranger to the mortgage who did not pay the lender force-placed insurance charges.  His claims failed.  Twice.

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