On October 4, 2016, the U.S. Court of Appeals for the Eleventh Circuit upheld a bankruptcy court’s decision that debtors who surrender real property in bankruptcy cannot contest a foreclosure action at a later date.
The U.S. Supreme Court began its 2016-2017 term on October 3, 2016, with three bankruptcy issues of particular note before the Court: insider claims, structured dismissals and proofs of claim on time-barred debt.
The case — PHH Corp. v. Consumer Financial Protection Bureau — involves mortgage lender PHH Corporation, which asked the appellate court to vacate an enforcement ruling by the CFPB last year that ordered the company to pay $109 million in fines for allegedly violating anti-kickback provisions in the Real Estate Settlement Procedures Act (RESPA).
A California appeals court has ruled in LSREF2 Clover Property 4, LLC v. Festival Retail Fund 1, LP that California’s anti-deficiency statutes prohibiting lenders from obtaining deficiency judgments against borrowers following a nonjudicial foreclosure do not extend to guarantors unless the guarantor is proven to be the principal borrower. The appeals court reversed the trial court’s ruling in favor of the defendant, finding the evidence did not support the trial court’s conclusion that the guarantor was the principal borrower.
The Delaware bankruptcy court has ruled that a creditor’s reclamation rights survive a lender’s security interest when the proceeds from that lender’s post-petition loan are used to repay a debtor’s pre-petition loan.
Senate Bill 1241 amends California Labor Code to prohibit employers from requiring that, as a condition of employment, employees who live and work primarily in the state must agree to adjudicate outside of California any claim arising in the state. Any provision in a contract that violates this prohibition would be declared void and, upon request by the employee, the dispute would then be adjudicated in California under California law. This new law applies to both litigation and arbitration and takes effect on January 1, 2017.
A 2011 U.S. Supreme Court ruling in Stern v. Marshall that concerned the litigation of non-bankruptcy issues in bankruptcy court has led to the development of the Stern Amendments to the Federal Rules of Bankruptcy Procedure, which will become effective on December 1, 2016.
On September 22, 2016, California Governor Jerry Brown signed SB 777 into law, a bill that restores a de minimus exemption to the California Finance Lenders Law (CFLL) to allow a person or entity that makes one commercial loan per year to be exempt from the CFLL’s licensing requirement.
The U.S. District Court for the Central District of California has ruled in favor of the Consumer Financial Protection Bureau (CFPB) in its suit against payday lender CashCall, holding that a tribal bank that originated its loans was not the “true lender,” and therefore the high interest rate loans were subject to California’s usury limits.
The Consumer Financial Protection Bureau (CFPB) has proposed a new rule that would allow the Bureau to share confidential supervisory information with state attorneys general and other agencies that do not have supervisory jurisdiction over CFPB-regulated institutions.