Category: 4th Circuit Court of Appeals

4th Circuit: Jones v. College of Southern Maryland- Only Chapter 7 Trustee Has Standing in Non-exempt Personal Injury Case

Summary:

Ms. Jones brought suit against the College of Southern Maryland under the Family and Medical Leave Act and subsequently filed a Chapter 7 bankruptcy petition, eventually listing the lawsuit as an asset in her schedules. The Trustee then settled the lawsuit with the College of Southern Maryland for $75,000, with $25,000 to the attorney, as she was the only party having standing to pursue the claim. Ms. Jones objected to this settlement.

The Court of Appeal affirmed that the Trustee was the sole party with standing to prosecute and settle the claim.

Commentary:

This would not be an issue in North Carolina, unlike Maryland, where personal injury claims, even for non-bodily injuries, also unlike the federal exemption, such as the FMLA, would be fully exempt.… Read More

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4th Circuit: Rusnack v. Cardinal Bank, N.A.- Recoupment and Statutes of Limitation

Summary:

Mr. Rusnack and his then-wife, opened a home equity line of credit (HELOC) with Cardinal Bank in August 2003. Between 2003 and 2006, the Rusnacks periodically drew on the HELOC using checks issued by Cardinal Bank. On June 22, 2006, shortly after the Rusnacks separated, Mr. Rusnack directed Cardinal Bank in writing to freeze further advances from the HELOC and Cardinal Bank acknowledge such freeze. Despite this, Cardinal Bank honored two checks each in the amount of $10,000 from Ms. Rusnack on July 26, 2006, and September 12, 2006. Cardinal Bank sought repayment from Ms. Rusnack, but she did not comply.… Read More

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4th Circuit: Daughtery v.  Ocwen Loan Servicing- Evidence and Excessive Damages for FCRA Violations4th Circuit: Daughtery v.  Ocwen Loan Servicing- Evidence and Excessive Damages for FCRA Violations

Summary:
The Daughterys purchased their home in 1999, with a 15-year balloon note payable in July 2014 in the amount of $82,666.36.  In 2012, the Daughterys had fallen $6,128.39 behind on the regular payments and Ocwen, who had become the mortgage servicer after the first default by the Daughterys, commenced foreclosure, reporting accurately the delinquency and foreclosure proceeding.  Using retirement savings, the Daughters brought the mortgage current within one month with the foreclosure be discontinued.
During this period, Ocwen had discovered that its predecessor had inaccurately reported the origination date of the note and submitted information to correct this error.  Equifax  mistook this for a separate account, creating a new, duplicate trade line for Mr.… Read More

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4th Cir.: Trapp v. SunTrust Bank – Spokeo and ECOA

Summary:

SunTrust denied the application for credit to purchase a boat made by the Trapps due to issues with Mr. Trapp’s Social Security number being linked to a deceased person. The Trapps brought suit under the Equal Credit Opportunity Act (ECOA), 15 U.S.C.A. §§ 1691 to 1691f.

While a party may have an actionable claim if he “ suffers a concrete informational injury where he is denied access to information required to be disclosed by statute, and he suffers, by being denied access to that information, the type of harm Congress sought to prevent by requiring disclosure” Dreher v. Experian Info. Read More

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4th Circuit: Burwick v. Pilkerton- Admissions trump Interrogatories

Summary:

Ms. Burwick denied certain allegations in her answers to Interrogatories but her response to a set of Admissions, sent pursuant to Rule 36, with similar questions was fourteen (14) days late. As such, those admissions were deemed, pursuant to Rule 36 ((b), “conclusively established,” despite any contradiction in the Interrogatories and summary judgment was granted to Pilkerton as there were no genuine disputes of material fact.

Commentary:

The opinion notes that Burwick did move to withdraw her untimely admissions, but the district court did not seem to address this in granting summary judgment. Rule 36(b) does allow for the withdrawal or amendment of admissions, but not necessarily an after-the-fact extension.… Read More

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4th Circuit: In re Jackson – Debtor is Entitled to the Full Means Test Deduction under National or Local Standard

Summary:

The Bankruptcy Administrator moved to dismiss the Debtors case arguing that on the Means Test they were limited to deduction of the lesser of either the actual mortgage and vehicle expenses or the amounts under the applicable National or Local standard. In affirming denial of this motion by the the bankruptcy court, the Court of Appeals held that based on the plan language of 11 U.S.C. § 707(b)(2)(A)(ii)(I) “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards.” 11 U.S.C. § 707(b)(2)(A)(ii)(I) (emphases supplied). In addition to the unambiguous application of the statutory language, the Court held that a contrary result would create the absurd result of “punishing frugal debtors”, by encouraging them to incur secured debts up to the amounts under the standards.… Read More

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4th Circuit: In re Province Grande Olde Liberty- Recharacterization of Debt as Equity

Summary:

Following In re: Official Committee of Unsecured Creditors for Dornier Aviation (North America), Inc., 453 F.3d 225 (2006), the Court of Appeals affirmed the recharacterization by bankruptcy court
of an equity investment as debt. The Dornier factors are:

(1) the names given to the instruments, if any, evidencing the indebtedness;
(2) the presence or absence of a fixed maturity date and schedule of payments;
(3) the presence or absence of a fixed rate of interest and interest payments;
(4) the source of repayments;
(5) the adequacy or inadequacy of capitalization;
(6) the identity of interest between the creditor and the stockholder;
(7) the security, if any, for the advances;
(8) the corporation’s ability to obtain financing from outside lending institutions;
(9) the extent to which the advances were subordinated to the claims of outside creditors;
(10) the extent to which the advances were used to acquire capital assets; and
(11) the presence or absence of a sinking fund to provide repayments.… Read More

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4th Circuit- Conteh v. Shamrock Community Association- FDCPA Violation for Overstatement of Amount Owed

Summary:

Conteh brought suit against Shamrock and its attorney for filing a writ of execution that overstated the amount owed. The actual judgment balance was $1,583.96, but the writ of execution asserted that Conteh owed $1,748.98.

Following Powell v. Palisades Acquisition, 782 F. 3d 119 (4th Cir. 2014) the Court of Appeal reiterated that Conteh’s actual response was not the relevant standard, but instead how “the least sophisticated consumer” would have understood the overstatement. While an overstatement cannot be de minimus, a 10.4% error was sufficient.

For a copy of the opinion, please see:

Conteh v. Shamrock Community Association- FDCPA Violation for Overstatement of Amount Owed Read More

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4th Circuit: RDLG, L.L.C. v. Leonard- Default Judgment as Sanction

Summary:

RDLG filed suit against Leonard alleging a pattern of fraudulent activity. Attorneys Lankford and Neyhart entered appearances for Leonard and were still attorneys-of-record when the district court set a pre-trial conference for October 3, 2012. On September 30, 2012, Lankford and Neyhart filed a motion seeking to both continue the October 3rd hearing and also to withdraw as counsel, due to both a lack of communication and payment from Leonard. Lankford had waited to file such motion because Leonard had indicated that he intended to file bankruptcy on September 28th, which would have precluded the October 3rd hearing. Lankford also indicated that she would be in Puerto Rico on October 3rd.… Read More

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4th Cir.: Kingery v. Quicken Loans- Use of Credit Score in Denial of Loan

Summary:

Ms. Kingery applied to Quicken Loans for a loan to refinance her home mortgage and gave permission for it to retrieve her credit reports. On May 3, 2010, Quicken Loan retrieved her tri-merge credit reports, which showed her credit scores and also that foreclosure had been commenced against her home. Based on the pending foreclosure, as shown by manually entered notes, Quicken Loans denied her refinance request. Subsequently, Quicken Loans transferred Ms. Kingery to its credit repair program. When that was unsuccessful, Quicken Loans sent Ms. Kingery a final denial letter on May 24, 2010, which, among other information, gave Ms.… Read More

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