Latest 4 Cases This Week: Preston v. Midland Credit Management, Inc. (7th Cir.), Steffek v. Client Services, Inc. (7th Cir.), Estate of David Bass ...

The Unacknowledged Clash Between the Supreme Court’s Interpretation of the Religion Clauses and the Free Speech Clause of the First Amendment

VIKRAM DAVID AMAR, ALAN E. BROWNSTEIN

Illinois law dean Vikram David Amar and UC Davis law professor emeritus Alan Brownstein comment on a largely unacknowledged clash between religious accommodations and exemptions on the one hand, and core free speech principles which the U.S. Supreme Court has repeatedly recognized, on the other. Amar and Brownstein describe this apparent conflict and suggest that the Court begin to resolve the conflict when it decides two cases later this term presenting the question of the scope of the “ministerial exception.”

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Preston v. Midland Credit Management, Inc.

Court: US Court of Appeals for the Seventh Circuit

Docket: 18-3119

Opinion Date: January 21, 2020

Judge: Kenneth Francis Ripple

Areas of Law: Banking, Consumer Law

Preston brought a putative class action, claiming that Midland Credit sent him a collection letter that violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692–1692[. He claimed the words “TIME SENSITIVE DOCUMENT” on the envelope violated section 1692f(8)’s prohibition against “sing any language or symbol,” other than the defendant’s business name or address, on the envelope of a debt collection letter. He claimed that those words, and the combination statements about discounted payment options with a statement that Midland was not obligated to renew those offers, in the body of the letter, were false and deceptive, under section 1692e(2) and (10). The district court dismissed the complaint, citing a "benign‐language exception" to the statutory language because the language “TIME SENSITIVE DOCUMENT” did not create any privacy concerns or expose Preston to embarrassment. The court also rejected Preston’s section 1692e claims. The Seventh Circuit reversed in part: the language of section 1692f(8) is clear and its application does not lead to absurd results. The prohibition of any writing on an envelope containing a debt collection letter represents a rational policy choice by Congress. The language on the envelope and in the letter does not, however, violate section 1692e(2) and (10). Midland accurately and appropriately used safe‐harbor language as described in precedent.

Steffek v. Client Services, Inc.

Court: US Court of Appeals for the Seventh Circuit

Docket: 19-1491

Opinion Date: January 21, 2020

Judge: HAMILTON

Areas of Law: Banking, Consumer Law

The plaintiffs received form notices from Client Services with a header stated only “RE: CHASE BANK USA, N.A.,” with an account number. The letters continued: “The above account has been placed with our organization for collections.” The letters did not say whether Chase Bank still owned the accounts or had sold the debts. The Fair Debt Collection Practices Act, 15 U.S.C. 1692, requires the collector of consumer debt to send the consumer-debtor a written notice containing, among other information, “the name of the creditor to whom the debt is owed.” The plaintiffs argued that Client Services’ letters failed to identify clearly the current holder of the debt. The district court certified a plaintiff class of Wisconsin debtors who received substantially identical notices from Client Services, found that Chase Bank was actually the current creditor, and granted Client Services summary judgment. The Seventh Circuit reversed and remanded. The actual identity of the current creditor does not control the result. The question under the statute is whether the letters identified the then-current creditor clearly enough that an unsophisticated consumer could identify it without guesswork. The notices here failed that test.

Estate of David Bass v. Regions Bank, Inc.

Court: US Court of Appeals for the Eleventh Circuit

Dockets: 17-13048, 18-12917

Opinion Date: January 21, 2020

Judge: Tjoflat

Areas of Law: Banking, Trusts & Estates

The administrator brought separate actions against Regions and Fidelity, alleging claims arising from the decedent's transfer of his entire retirement savings account to his sister before his death. The Eleventh Circuit held that the district court properly granted Fidelity's Rule 12(b)(6) motion regarding the Count III breach of contract and Count IV breach of fiduciary duty claims; vacated the district court's Rule 12(b)(1) dismissals of the Count II Georgia UCC claims in both complaints because those rulings were incapable of meaningful review; and affirmed the district court's dismissal of the Count I common law conversion and Count II common law negligence claims because they were preempted by Georgia Code 11-3-420.

Williams v. 21st Mortgage Corp.

Court: California Courts of Appeal

Docket: A153307(First Appellate District)

Opinion Date: January 22, 2020

Judge: Tucher

Areas of Law: Banking, Consumer Law, Contracts, Real Estate & Property Law

Plaintiff alleges she bought her Richmond home in 1973, refinanced her mortgage in 2005, and unsuccessfully applied for a loan modification in 2015. Plaintiff was not allowed to make payments in the interim and owed $20,000 in arrears. Plaintiff sought Chapter 13 bankruptcy relief. She was required to make monthly payments to cover her pre-petition mortgage arrears plus her regular monthly mortgage payments. Plaintiff failed to make her regular October 2016 mortgage payment. Defendant sought relief from the automatic bankruptcy stay. The bankruptcy court approved an agreement that she would pay the October and November payments over a period beginning in January 2017. Plaintiff claims defendant violated that agreement, that her attempts to make those payments failed, and that she was unable to contact the defendant’s “single point of contact” for foreclosure avoidance (Civil Code 2923.7) Defendant obtained relief from the bankruptcy stay and would not accept the January 2017 payment. At the time of the bankruptcy sale, plaintiff’s home was worth approximately $550,000; defendant sold the home for $403,000. The court of appeal reversed the dismissal of plaintiff’s claim that she should have been able to avoid foreclosure by tendering the amount in default (Civ. Code 2924c) and that it was unlawful for defendant also to demand payment on amounts subject to a confirmed bankruptcy plan and reversed the dismissal of the section 2923.7 claim but upheld the dismissal of breach of contract, negligence, and elder abuse claims.