Daily Archives: April 23, 2015

Important Case in 9th Circuit. Erie Doctrine Analyzed And Confirmed

County of Orange v. U.S. Dist. Court for Cent. Dist. of Cal.

Docket: 14-72343 Opinion Date: April 16, 2015
Areas of Law: Contracts

The County of Orange, California (County) filed a breach of contract action in federal district court against Tata American International Corporation after Tata America did not perform its obligations under the contract to the County’s satisfaction. The complaint included a jury trial demand. Tata America moved to strike the County’s jury demand, arguing that the County waived its right to a jury trial by signing the contract, which contained a jury trial waiver. The district court granted Tata America’s motion to strike, concluding (1) federal law, rather than California law, governed the question of whether the County waived its right to a jury trial in federal court; and (2) the County knowingly and voluntarily waived its right to a jury trial. The Ninth Circuit granted the County’s petition for writ of mandamus, holding (1) the federalism principle announced in Erie R. Co. v. Tompkins requires federal courts sitting in diversity to import state law governing jury trial waivers where, as here, state law is more protective than federal law of the jury trial right; and (2) under California law, the parties’ contractual jury trial waiver was unenforceable, and therefore, the district court erroneously deprived the County of a jury trial when it granted Tata America’s motion to strike.

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CFPB and Federal Trade Commission Take Action Against Green Tree Servicing for Mistreating Borrowers Trying to Save Their Homes

Green Tree to Pay $48 Million in Borrower Restitution and $15 Million Fine for Servicing Failures

WASHINGTON, D.C.– Today, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) took action against Green Tree Servicing, LLC, for mistreating mortgage borrowers who were trying to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers. Green Tree has agreed to pay $48 million in restitution to victims, and a $15 million civil money penalty for its illegal actions.

“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” said CFPB Director Richard Cordray. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”

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Auto finance critic Warren stands firm on CFPB dealership oversight

Sen. Elizabeth Warren is once again calling for direct regulation of auto dealerships by the Consumer Financial Protection Bureau.

In a stinging speech last week, she also advocated for what amounts to a ban on dealer markup on auto loans and equated auto loans with “the pre-crisis housing market,” which helped bring about the 2008-09 recession.

“It’s no coincidence” that auto loans are “the most troubled consumer financial product out there,” said Warren, D-Mass. She said auto finance was “thick with loose underwriting standards, predatory and discriminatory lending practices and increasing repossessions.”

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White House Threatens to Veto Bill That Cuts CFPB Funding

President Barack Obama has threatened to veto a proposed amendment to the Consumer Financial Protection Act of 2010 that the White House claims would reduce the amount of funding the CFPB director can request.

H.R. 1195, known as the Bureau of Consumer Financial Protection Advisory Boards Act, was introduced in the House by Robert Pittenger (R-North Carolina) and Denny Heck (D-Washington) on March 2. The bill calls for the establishment of advisory boards or councils within the CFPB of 15 to 20 members each for small businesses, credit unions, and community banks. The stated purpose of each advisory board or council is to “advise and consult” with the CFPB on issues that impact their respective groups. The bill was approved in the House Financial Services Committee earlier this year by a vote of 53 to 5.

A recently proposed amendment to the bill by House Financial Services Committee Jeb Hensarling (R-Texas), however, reduces the amount of funding the CFPB director can request by about $45 million and $100 million for the fiscal years of 2020 and 2025, respectively. The White House said in its statement that “These reductions to the caps could result in, among other things, undermining critical protections for families from abusive and predatory financial products.”

The bill’s co-sponsor, Heck, is urging his fellow Democrats to oppose the amendment to the bill, saying that Hensarling “put the torch” to his bill.

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Deutsche Bank Set to Pay Record Fine in Libor Case

FRANKFURT—Deutsche Bank AG will as soon as Thursday announce a settlement of more than €2 billion ($2.15 billion) with regulatory authorities in the U.S. and Britain in response to allegations its employees tried to manipulate interest rates, according to people familiar with the issue.

In preparation for the record fine, Deutsche Bank said on Wednesday it expected to book litigation costs of some €1.5 billion in the first quarter when it announces results next week. Germany’s largest lender said it would also announce “near record revenues” and a profit for the first quarter. Litigation costs will dent profits, the bank said.

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Foreclosing After Taking a Deed-In-Lieu of Foreclosure

It seems an incongruous notion: starting or completing a foreclosure action after taking a deed-in-lieu of foreclosure. But it can be done and sometimes it may be imperative to do so. The process of foreclosing on one’s self, though, appears on the surface to be anomalous and so the ability to foreclose is nonetheless often viewed with incredulity. Consequently, considering at least the underpinnings of the pursuit should be worthy. Both the impediment and the solution are found in the doctrine of merger, later discussed here in context.

Basis of Deed-In-Lieu

If it proceeds to a conclusion, a mortgage foreclosure ends with a judicial sale of the mortgaged premises. One goal of the action, therefore, is to arrive at that sale so that the value of the property can be unlocked and the foreclosing lender can be paid whatever that value is, up to the sum owed upon the mortgage debt as assessed by the court in the judgment of foreclosure and sale.1

Should a third party be the successful bidder at the auction sale, the foreclosing plaintiff will have derived whatever the market was willing to pay. There are many variables attendant to the sale issues, but the main point here is that the lender will either have been paid its upset price, or will have elected itself to be the successful bidder.

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Lawsuit: Wells Fargo fired blacks over old convictions

Getting caught by Des Moines police while driving along Keosauqua Way with six baggies of marijuana on his 19th birthday convinced Dwann Jones to get out of the drug business.

He spent more than two weeks in the Polk County Jail on a charge of possession with intent to deliver before bonding out. He got a job at McDonald’s and a deferred judgment, affording him the opportunity to get the charge scrubbed from his criminal record if he stayed out of trouble.

“I found that just being in jail for 17 days around hard-core criminals wasn’t the lifestyle I wanted,” said Jones, now 27.

Iowa’s online court records database no longer shows a trace of that February 2007 arrest. Jones’ record has been clean since.

But the arrest lives on in an FBI database, and it continues to haunt Jones. Twice in 2014, he was offered jobs with Wells Fargo, but the company revoked those offers after the charge popped up on Jones’ criminal background check.

Jones, a married father of two daughters, has a complaint pending with the Iowa Civil Rights Commission and is considering joining a pending lawsuit filed by seven black former employees from Polk County against Wells Fargo.

The seven employees were terminated in 2012 by the banking and mortgage giant after background checks found years-old convictions for crimes such as marijuana possession, illegally receiving welfare benefits and misdemeanor theft.

One plaintiff, James Collier, had worked for Wells Fargo since 2004, when he started as a loan specialist. He hadn’t been convicted of a crime since 2000, when he pleaded guilty to marijuana possession-related charges. But the Des Moines father of two was fired May 15, 2012, and was distraught.

“I deactivated Facebook because you didn’t want to see any of your co-workers,” said Collier, 55. “We were family.”

Lawsuit: Checks are ‘disproportionate’

The lawsuit claims Wells Fargo’s background check policy violates the federal Civil Rights Act of 1964, the landmark legislation that makes it illegal for an employer to enforce policies that have a disproportionate impact on minority employees. In February the suit was moved from state court to U.S. District Court for the Southern District of Iowa.

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