Monday, April 23, 2018

FYI: 11th Cir Holds Debtors' Counsel Violates BK Code by Advising Debtor to Pay Legal Fees by Credit Card

In an action against a Florida consumer plaintiffs' firm that also functions as consumer bankruptcy debtors' counsel, the U.S. Court of Appeals for the Eleventh Circuit recently held that a bankruptcy attorney violates section 526(a)(4) of the Bankruptcy Code if he instructs a client to pay his legal fees using a credit card.

 

In so ruling, the Court held that there is no requirement under the statute that the advice be given for an invalid purpose designed to manipulate the bankruptcy process.

 

A copy of the opinion is available at:  Link to Opinion

 

A debtor retained a bankruptcy law firm, agreeing to pay $1,700 in legal fees in installments. The debtor paid the installments using two credit cards.

 

The debtor terminated his relationship with the law firm and sued it, alleging that it violated 11 U.S.C. § 526(a)(4), which provides that a "'debt relief agency'"— including a law firm that provides bankruptcy-related services —'shall not … advise' a client 'to incur more debt in contemplation of such person filing a case under this title or to pay an attorney' for bankruptcy-related legal services."

 

The law firm moved to dismiss for failure to state a claim.  The trial court granted the motion, holding that "the mere advice to use credit cards to pay for legal fees does not violate" § 526(a)(4). The trial court reasoned, based on the Supreme Court's decision 2010 in Milavetz, Gallop & Milavetz, P.A. v. United States, that "Section 526(a)(4) only 'prohibits  debt relief agency from advising a debtor to incur additional debt for an invalid purpose.'"

 

Because the debtor alleged no facts from which the trial court could infer an improper purpose or intent to manipulate the bankruptcy system, the trial court concluded the debtor failed to state a claim upon which relief could be granted under the statute.

 

On appeal, the debtor argued that the statute does not contain any improper purpose requirement when a lawyer advises a client to incur debt to pay bankruptcy-related legal fees. The law firm argued that the trial court "correctly interpreted the statute to impose an invalid-purpose element, but that even if [debtor] had stated a claim, the statute violates the First Amendment."

 

The Eleventh Circuit began by analyzing the text of § 526(a)(4), explaining that "the parties agree that the statute contains two distinct prohibitions — one about incurring debt in anticipation of bankruptcy filings generally, and the other about incurring debt to pay for bankruptcy-related legal services more specifically."

 

The Court reasoned that there was there different ways to interpret the statute's "two prohibitions." Under the first, "suggested (obliquely) by the Supreme Court's opinion in Milavetz[,] … in which the hinge — the word 'either' in the Court's paraphrase -- comes before the words 'to incur more debt,' the statute would separately prohibit advice (a) 'to incur more debt in contemplation of' filing for bankruptcy and (2) 'to pay an attorney' for bankruptcy-related representation." The Court rejected this reading of the statute because it would prohibit any advice about paying an attorney for bankruptcy representation, which didn't make sense since Bankruptcy Code contains other provisions "that clearly contemplate that attorneys will get paid for bankruptcy-related services."

 

Under the second interpretation, argued by the law firm, "the statute prohibits a lawyer from advising his client to incur debt to pay for bankruptcy-related legal services only if that advice was given for an 'invalid purpose.'" The Court disagreed, distinguishing Milavetz because it "addressed only Section 526(a)(4)'s first prohibition; it said nothing about the second." It also reasoned that the Supreme Court's reasoning in Milavetz did not "sensibly apply to the statute's second prohibition."

 

First, the Eleventh Circuit reasoned that this second interpretation did not make syntactical sense because it would read as follows: "A lawyer shall not advise his client 'to incur more debt in contemplation of … to pay an attorney." Second, "reading the phrase 'in contemplation of' to apply to both prohibitions renders the second prohibition essentially meaningless."

 

The Court found that the third possible interpretation was the correct one, reasoning that "[u]der this reading, the hinge comes after the phrase 'to incur more debt,' such that the statute prohibits advice 'to incur more debt' either (1) 'in contemplation of' a bankruptcy filing or (2) 'to pay an attorney' for bankruptcy-related services. Unlike the first two interpretations, this one doesn't produce goofy results, defy the usual rules of syntax, or render a phrase meaningless."

 

The Eleventh Circuit explained that "[i]mportantly, this second prohibition—unlike the first, which is modified by the 'in contemplation of' phrase of art that drove the result in Milavetz—entails no invalid-purpose requirement. In contrast to the first prohibition, under which the "'in contemplation of' clause acts as a divining rod of sorts to separate the abusive advice from the salutary[,]" the second prohibition … is aimed at one specific kind of misconduct—in essence, a bankruptcy lawyer say to his client, 'You should take on additional debt to pay me!' That sort of advice is inherently abusive … [because first,] it puts the attorney's financial interest—getting paid in full—ahead of the debtor-client's. … Second, it puts the lawyer's own interests ahead of the creditors' in that, while ensuring he lawyer's full payment, it leaves a diminished estate on which creditors can draw. .. Section 526(a)(4)'s second prohibition, then, has no need for any further invalid-purpose gloss, because the advice it targets is, in effect, suspect per se.

 

Accordingly, the Eleventh Circuit held that the trial court erred in concluding that the debtor "was required to allege that [the law firm's] advice was given for some additional, invalid purpose. Rather, the statute required only that he allege that he was 'advise[d] … to incur more debt … to pay an attorney' for bankruptcy-related legal services."

 

The Court then turned to address whether the debtor's allegations state a claim "under the statute's second prohibition[,]" concluding that they were sufficient because the debtor alleged that the law firm "instructed [him] to pay the initial retainer and all subsequent payment by credit card." This satisfied both the statute's requirement of "advice" and "incur more debt."

 

Finally, the Eleventh Circuit rejected the law firm's argument that even if the debtor stated a claim under section 526(a)(4), "that provision is unconstitutional because it improperly restricts [the law firm's] attorney-client communications." The Court reasoned that first, the debtor never claimed, and the Court didn't hold, "that the statute flatly prevents a lawyer from advising a client to pay legal fees." Second, "[s]ection 526(a)(4) doesn't prevent [law firms] … from discussing with debtors potential options and their legal consequences. It merely prohibits them from giving their clients 'affirmative advice' to incur more debt in order to pay for bankruptcy-related representation."

 

Accordingly, the Court held that:

 

"(1) a debt-relief agency (including a law firm) violates 11 U.S.C. § 526(a)(4) if it advises a client to incur additional debt to pay for bankruptcy-related legal representation, without respect to whether the advice was given for some independently 'invalid purpose''; and

 

(2) that  [the debtor's] … allegation that [the law firm] instructed him to pay his bankruptcy-related legal bills by credit card states a viable claim under Section 526(a)(4); and (3) that none of the constitutional arguments the [the law firm] presented to use warrants invalidating the statute on First Amendment grounds."

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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Friday, April 20, 2018

FYI: 9th Cir Holds Party That Obtains Cell Number Indirectly May Have TCPA Consent

The U.S. Court of Appeals for the Ninth Circuit recently held that calls from a survey company who received the called party's contact information through an intermediary did not violate the federal Telephone Consumer Protection Action, 47 U.S.C. § 227 (TCPA), because the called party provided prior express consent.

 

In so ruling, the Court held that "a party that receives an individual's phone number indirectly may nevertheless have consent to call that individual," and it did not matter that the defendant, rather than the entity that actually obtained the called party's consent, placed the calls.

 

A copy of the opinion is available at:  Link to Opinion

 

Plaintiff enrolled in an insurance plan with an insurance provider ("Insurer"). Upon enrolling, plaintiff completed an Enrollment Form and provided her phone number.  The relevant terms of the Enrollment Form are as follows:

 

THE USE AND DISCLOSURE OF PROTECTED HEALTH INFORMATION: I acknowledge and understand that health care providers may disclose health information about me . . . to [Insurer] entities . . . . [Insurer] entities. . . may disclose this information for purposes of treatment, payment and health plan operations, including but not limited to, utilization management, quality improvement, disease or case management programs.

 

Thereafter, Insurer assigned plaintiff to a medical group ("Group") and selected a doctor ("Doctor") from the Group to serve as her primary physician.  The Group was an affiliated medical group of a provider network ("Provider Network") the Insurer utilized. 

 

The Provider Network had a contract with defendant to conduct patient satisfaction surveys and quality-of-care analyses regarding the Provider Network's affiliated medical groups.  Another of the Provider Network's affiliated medical groups ("Manager") managed the defendant's operations on behalf of the Group.

 

Plaintiff visited the Doctor's office twice.  During the first visit, plaintiff completed an Intake Form and listed her phone number again.  Manager received plaintiff's contact information directly from the Provider Network and passed the information along to defendant.  Defendant was given plaintiff's name, contact information, treating physician's name, and date of office visit so defendant could conduct quality assurance survey calls.  Defendant called plaintiff several times to discuss the quality of her experience with the Doctor.

 

Plaintiff brought suit alleging that defendant violated the TCPA by calling her.  The trial court granted defendant's motion for summary judgment finding that plaintiff had given "prior express consent" under 47 U.S.C. § 227(b)(1) when she submitted the Enrollment Form.  Plaintiff appealed.

 

The issue on appeal was whether plaintiff gave "prior express consent" to receiving defendant's calls. 

 

As you may recall, the TCPA prohibits "any person within the United States" from using an "automatic telephone dialing system or an artificial or prerecorded voice" to call a phone number assigned to a "cellular telephone service."  47 U.S.C. § 227(b)(1).  However, the statute excepts calls made with a recipient's "prior express consent." Id.

 

The Ninth Circuit noted that, in the federal communication commission's ("FCC") view, the very act of turning over one's phone number demonstrates a willingness to be called about certain things, barring instructions to the contrary. Citing In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C. Rcd. 8752, 8769 (1992). 

 

However, the Court explained that merely providing a phone number does not evince a willingness to be called for any reason.  The "transactional context matters in determining the scope of a consumer's consent to contact."  Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1045–46 (9th Cir. 2017).  Thus, "to fall within the 'prior express consent' exception, a call must relate to the reason why the called party provided his or her phone number in the first place." Id.

 

The Ninth Circuit further explained that the "scope of consent must be determined upon the facts of [the] situation [in which the person gave consent]."  In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 F.C.C. Rcd. 7961, 7990 (2015).  Thus, the analysis under the FCC's rulings turns on whether the called party granted permission to be called regarding a particular topic, not on how the calling party received the number.  Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1123–24 (11th Cir. 2014).

 

Therefore, the Court held, "a party that receives an individual's phone number indirectly may nevertheless have consent to call that individual." 

 

The Ninth Circuit noted that the plaintiff provided her number on the Enrollment Form and agreed that the Provider could disclose her information "for purposes of treatment, payment and health plan operations, including but not limited to, utilization management, quality improvement, disease or case management programs."  (emphasis added.)  The Court found that this is exactly what happened.  The Provider Network, albeit through an intermediary (Manager), provided the defendant with plaintiff's phone number.  Defendant then called plaintiff for a purpose expressly described on the Enrollment Form, i.e. to assess the quality of plaintiff's healthcare.

 

The Court found that plaintiff consent to receive calls meant to improve the quality of her health plan by submitting the Enrollment Form.  The Court further found that the calls plaintiff received from defendant, to assess her satisfaction with the Doctor's services, "were undoubtedly made with the purpose of improving the quality of Plaintiff's care."  Thus, the Court held, the calls fell within the scope of the consent plaintiff gave.

 

The Ninth Circuit rejected plaintiff's argument that her consent only extended to calls concerning the quality of the Insurer's services, not calls concerning the quality of the Doctor's services.  The Court noted that the language in the Enrollment Form was broad and plaintiff "authorized calls pertaining to the operation of her health plan and, relatedly, to the quality of her health plan."  The calls at issue were intended to measure plaintiff's experience with the Doctor assigned through the Provider Network's health plan was satisfactory, and therefore, were related to improving the quality of plaintiff's health plan generally.

 

The Court further explained that it did not matter that the defendant, rather than the Insurer, placed the phone calls, as the "FCC's rulings in this area make no distinction between directly providing one's cell phone number . . . and taking steps to make that number available through other methods, like consenting to disclose that number to other entities for certain purposes."  Baisden v. Credit Adjustments, Inc., 813 F.3d 338, 346 (6th Cir. 2016).

 

The Ninth Circuit explained that plaintiff "took steps" to make her number available to defendant by authorizing the Insurer to disclose her phone number for certain purposes.  Thus, plaintiff authorized the someone other than the Insurer to make calls for those purposes. 

 

The Court also rejected plaintiff's argument that the calls at issue fall outside the "prior express consent" exception because defendant did not demonstrate the calls were made on the Insurer's behalf. 

 

The Ninth Circuit explained that the TCPA's purpose is to curb calls that a person does not expect to receive.  Here, plaintiff authorized "callers to whom [Insurer] disclosed her information to make a particular type of call — one relating to the quality of Plaintiff's healthcare." Thus, the Court held that the defendant fell within the group of permissible callers and the calls it placed where in the category of calls plaintiff agreed to receive. 

 

The Court again cited Baisden v. Credit Adjustments, Inc., 813 F.3d 338, 346 (6th Cir. 2016) as illustrative.  There, as here, the dispositive factor was the scope of contact the plaintiff authorized.

 

Thus, the Ninth Circuit found that plaintiff granted the Insurer broad authority to disclose her information for certain purposes, including quality assurance, and therefore, by completing the Enrollment Form, plaintiff gave "prior express consent" to receive the calls at issue from defendant.

 

Accordingly, the Ninth Circuit affirmed the ruling of the trial court granting summary judgment in favor of the defendant.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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Wednesday, April 18, 2018

FYI: 7th Cir Holds Non-Cardholder Must "Directly Benefit" to Be Bound by Cardholder Agreement

The U.S. Court of Appeals for the Seventh Circuit recently held that the minor child of the credit card account holder was not bound by the arbitration clause in the cardholder agreement because she did not become an authorized user of the account by using the credit card.

 

The Seventh Circuit also held that the doctrine of estoppel did not bind the minor to the arbitration clause because the minor did not "directly benefit" from her parent's use of the credit card.

 

A copy of the opinion is available at:  Link to Opinion

 

In 2003, the cardholder opened a credit card account with the defendant.  In 2010, the cardholder used her minor daughter's cell phone to call the defendant to access her account.  The defendant used caller ID capture software and associated the cell phone number to the cardholder's account.

 

The cardholder fell behind on payments and the defendant began calling the cell phone number previously stored with her account in attempt to collect the debt. 

 

The cardholder's daughter ("plaintiff") filed a putative class action alleging that the defendant violated the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. ("TCPA"), by supposedly using an automatic telephone dialing system to call her cell phone without her prior express consent.

 

The cardholder signed a standard cardholder agreement when she opened the account.  This agreement included, among other things, an arbitration clause and class action waiver, which stated:

 

Agreement to Arbitrate:

 

You and we agree that either you or we may, without the other's consent, require that any controversy or dispute between you and us (all of which are called "Claims"), be submitted to mandatory, binding arbitration. This arbitration provision is made pursuant to a transaction involving interstate commerce, and shall be governed by, and enforceable under, the Federal Arbitration Act (the "FAA"), 9 U.S.C. § 1 et seq., and (to the extent State law is applicable), the State law governing this Agreement.

 

Claims subject to arbitration include not only Claims made directly by you, but also Claims made by anyone connected with you or claiming through you, such as a co-applicant or authorized user of your account, your agent, representative or heirs, or a trustee in bankruptcy.

 

If you or we require arbitration of a particular Claim, neither you, we, nor any other person may pursue the Claim in any litigation, whether as a class action, private attorney general action, other representative action or otherwise

 

After discovery, the defendant sought to compel arbitration based on the arbitration clause in the cardholder agreement.  The only evidence that the plaintiff ever used the credit card was the cardholder's deposition testimony that, on at least one occasion, she preordered smoothie drinks for her daughter and herself from the local mall and sent the plaintiff to pick them up.  The plaintiff was fourteen years old at the time of this transaction.

 

The trial court determined that the cardholder authorized the plaintiff to use the account and plaintiff derived a "direct benefit" under the contract.  Therefore, the trial court held that the plaintiff was bound by the arbitration provision in the cardholder agreement.

 

The plaintiff filed a motion to reconsider, or, in the alternative, to certify the arbitration question for interlocutory appeal under 28 U.S.C. §  1292(b).  The trial court denied the motion to reconsider but granted the motion to certify the ruling for interlocutory appeal.  The Seventh Circuit granted the petition for certification.

 

The Seventh Circuit began its analysis by determining whether the plaintiff was bound by the arbitration clause under ordinary principles of contract law.

 

As you may recall, arbitration agreements generally cannot bind a non-signatory.  Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005).  However, arbitration agreements may be enforceable in limited circumstances depending on the applicable state law.  These limited exceptions are: (1) assumption, (2) agency, (3) estoppel, (4) veil piercing, and (5) incorporation by referenced.  Id.

 

The defendant argued that the plaintiff was bound by the cardholder agreement as an authorized user.  The cardholder agreement states, in relevant part:

 

3. AUTHORIZED USER: At your request, we may, at our discretion, issue an additional card in the name of an Authorized User with your credit card account number. If you allow someone to use your Account, that person will be an Authorized User. By designating an Authorized User who is at least fifteen years of age, you understand that: 1) you will be solely responsible for the use of your Account and each card issued on your Account including all charges and transactions made by the Authorized User and any fees resulting from their actions to the extent of the credit limit established for the Account; 2) the Authorized User will have access to certain account information including balance, available credit and payment information ; 3) we reserve the right to terminate the Card Account privileges of an Authorized User by closing your Account and issuing you a new account number; 4) the Account may appear on the credit report of the Authorized User ; 5) the Authorized User can make payments, report the card lost or stolen and remove him or herself from the Account; 6) you can request the removal of the Authorized User from your Account via mail or telephone.

 

The defendant argued that the arbitration clause specifically applied to claims "made by anyone connected with" the account holder, "such as a co-applicant or authorized user" of the account.  As an authorized user of the credit card, the defendant argued that the plaintiff was required to arbitrate her TCPA claims.

 

However, the Seventh Circuit found that the cardholder agreement established a specific procedure that an account holder must follow to add an authorized user to the account.  Under this provision, the Court held, an individual does not become an authorized user simply by using the credit card as the defendant argued.  Rather, the Court noted, the account holder must notify the defendant that she wishes to add an authorized user to the account. 

 

The Seventh Circuit found that neither the cardholder nor the defendant took any step to add the plaintiff as an authorized user.  For example, the defendant never assessed the annual fee for adding an authorized user and the plaintiff did not have any rights under the cardholder agreement that the contract gave to true authorized users. 

 

Most importantly, the Seventh Circuit explained that the plaintiff was only fourteen years old at the time of the smoothie transaction and was not eligible to become an authorized user under the cardholder agreement.

 

The defendant argued that the authorized user clause created more than one category of authorized users:  those who are authorized users because the account holder allowed them to use the account, and those who were at least fifteen years of age and subject to all of the rights and responsibilities identified in the authorized user provision.

 

However, the Seventh Circuit noted that even if someone can become an authorized user just by using the credit card, "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit."  United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960).  The Seventh Circuit found that the plaintiff, as a minor at the time of the smoothie transaction, did not have legal capacity to enter a contractual relationship with the defendant and never consented to arbitrate her claims.

 

Therefore, the Seventh Circuit held that the terms of the cardholder agreement did not bind the plaintiff.

 

Next, the Seventh Circuit turned to the issue of whether principles of equity and fairness required the plaintiff to arbitrate with the defendant. 

 

The cardholder agreement specified that Nevada law applied to disputes arising under the contract.  Under Nevada law, estoppel is an equitable doctrine that prevents a non-signatory "from refusing to comply with an arbitration clause when it receives a 'direct benefit' from a contract containing an arbitration clause."  Truck Ins. Exch. v. Palmer J. Swanson, Inc., 189 P.3d 656, 616 (Nev. 2008).

 

The defendant argued that the plaintiff directly benefited under the cardholder agreement because the cardholder asked her to make purchases with the card.  According to the defendant, the plaintiff received the same type of contractual benefit as the cardholder did. 

 

However, the Seventh Circuit disagreed, reasoning that any benefit the plaintiff received was limited to following her mother's instructions to pick up the smoothies that her mother had ordered.  In the Seventh Circuit's view, this limited direction derived from the mother-daughter relationship, not from a relationship between the plaintiff and the defendant.

 

The defendant also argued that the TCPA does not apply to autodialed calls that are made with the called party's prior express consent.  Because under the terms of the cardholder agreement, the authorized user provided her prior express consent by contract, the defendant argued that whether the plaintiff consented to the calls depended on the terms on the cardholder agreement, and thus, she was asserting rights under the contract.

 

The Seventh Circuit rejected this argument.  According to the Seventh Circuit, the cardholder consented to phone calls from the defendant as a party to the cardholder agreement.  The defendant's affirmative defense depended on whether the cardholder's consent under the cardholder agreement can be imputed to plaintiff.  This does not, as the Seventh Circuit explained, transform the plaintiff's TCPA claim into one that relied on the cardholder agreement.

 

Moreover, the Seventh Circuit explained that the consent is an affirmative under the TCPA that the defendant must establish.  Because consent was not part of the plaintiff's case, the plaintiff did not have to prove that she did not consent to the calls in order to succeed on her TCPA claim.

 

Accordingly, the Seventh Circuit reversed the judgment of the trial court and remanded for further proceedings.  

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC   |   Wisconsin

 

 

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INVITATION: CCFL Chicago 2018 Annual Consumer Financial Services Conference

Please join us at the Annual Consumer Financial Services Conference organized by The Conference on Consumer Finance Law, and hosted at the Loyola University Chicago School of Law.

 

 

REGISTRATION:  http://www.ccflonline.org/conference

(or you can use the attached to register by mail)

 

WHEN:  May 31-June 1, 2018

WHERE:  Chicago, Illinois

CLE:  12.0 CLE Credits to Be Provided, including 1.0 hr of Ethics

PRICE:  $495 before April 14, 2018

DETAILS:  See attached

 

Please circulate this Invitation to any other people -- inside or outside your firm or company -- whom you think might be interested in attending.

 

 

The Conference will include presentations by 35+ of the best and brightest speakers and practitioners in the country on various topics.

 

We look forward to seeing you!

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC   |   Wisconsin

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


Our updates and webinar presentations are available on the internet, in searchable format, at:

 

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and

 

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Monday, April 16, 2018

FYI: Fla Sup Ct Bars Vexatious Borrower from Future Pro Se Filings

The Supreme Court of Florida recently denied a pro se borrower's petition to invoke the jurisdiction of the Court, and imposed sanctions against him for filing numerous meritless and inappropriate petitions for relief pertaining to trial court foreclosure proceedings to which he is a defendant.

 

In so doing, the Supreme Court barred the borrower from filing any future pleadings, motions or requests for relief in the Supreme Court related to his foreclosure proceedings, unless filed in good faith by an attorney in good standing.

 

A copy of the opinion is available at:  Link to Opinion

 

A pro se borrower ("Borrower") who is the named defendant in foreclosure proceedings before the Fifteenth Judicial Circuit in and for Palm Beach County, Florida (the "Foreclosure Action"), filed a petition to the Supreme Court of Florida (the "Supreme Court") seeking to invoke its jurisdiction based upon express and direct conflict.

 

As you may recall, Article V, Section 3(b)(3) of the Florida Constitution provides that the Florida Supreme Court "[m]ay review any decision of a district court of appeal that expressly declares valid a state statute, or that expressly construes a provision of the state or federal constitution, or that expressly affects a class of constitutional or state officers, or that expressly and directly conflicts with a decision of another district court of appeal or of the supreme court on the same question of law."

 

As the Supreme Court's opinion noted, the Borrower had filed five pro se actions in the Florida Supreme Court against the plaintiff lender in the Foreclosure Action in 2017— four in November 2017 alone — and two additional actions in 2018.  All of the prior actions had been denied review or dismissed, but for one petition that was transferred to the appellate court.

 

During the pendency of the instant petition, the Florida Supreme Court directed the Borrower to show cause as to why he should not be barred from filing any future pro se pleadings, motions, or other requests for relief in the Supreme Court pertaining to the Foreclosure Action.

 

After considering the Borrower's response, the Florida Supreme Court concluded that he failed to show cause why he should not be sanctioned as a result of his history of pro se filings before the Supreme Court that were devoid of merit or inappropriate for review.

 

Accordingly, the Clerk of the Supreme Court was instructed to reject any future pleadings, petitions, motions, documents or other filings submitted by the Borrower pertaining to his foreclosure proceedings, unless filed on behalf of a member in good standing of the Florida Bar who determines any such proceeding has merit and can be brought in good faith, and denied the Borrower's petition. 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Indiana   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC   |   Wisconsin

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


Our updates and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

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and

 

Webinars

 

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