Articles Posted in Consumer Law

by
Enacted in 2005, in response to the "debt treadmill," NRS Chapter 604A regulates the payday loan industry, including deferred deposit loans and loans with an annual interest rate greater than 40 percent. If a borrower cannot repay such a loan within 35 days, NRS 604A.480 subsection 1 allows for an extension but a licensee cannot extend the period beyond 60 days and cannot "add any unpaid interest or other charges accrued ... to the principal amount of the new deferred deposit loan or high-interest loan." However, under subsection 2, certain new deferred deposit or high-interest loans are exempt from those restrictions: A licensee may offer a new loan to satisfy an outstanding loan for a period of not less than 150 days and at an interest rate of less than 200 percent. The licensee must follow all of subsection 2's requirements for the new loan to be exempted. Subsection (2)(f) permits a loan under subsection 2 if the licensee does “not commence any civil action or process of alternative dispute resolution on a defaulted loan or any extension or repayment plan thereof." Reversing the district court, the Nevada Supreme Court held that NRS 604A.480(2)(f) bars a licensee from bringing any type of enforcement action on a refinancing loan made under NRS 604A.480(2) and is not merely a condition precedent to making a refinancing loan under the subsection. View "State of Nevada Department of Business and Industry, Financial Institutions Division v. Dollar Loan Center., LLC" on Justia Law

Posted in: Banking, Consumer Law

by
NRS 604A.480(2)(f) bars a licensee from bringing any type of enforcement action on a refinancing loan made under NRS 604A.480(2). In this case, the Nevada Supreme Court held that the district court erred in concluding that NRS 604A.480 does not prohibit certain payday loan licensees from filing suit against borrowers who default on the loans. The state supreme court noted that the bar against future civil action on loans made under subsection 2(f) puts an end to the debt treadmill. Accordingly, the state supreme court reversed the judgment. View "Nevada Department of Business & Industry v. Dollar Loan Center, LLC" on Justia Law

Posted in: Consumer Law

by
Appellant, a payday loan company, provided loans to the named plaintiffs. The named plaintiffs and other borrowers did not repay their loans, prompting Appellant to file several thousand individual collection actions. Appellant secured thousands of default judgments against the named plaintiffs. It was later discovered that the process server hired by Appellant falsified affidavits of service. The named plaintiffs sued Appellant, alleging that Appellant improperly obtained its default judgments against them and other similarly situated borrowers without their knowledge. Appellant moved to compel arbitration based on the arbitration provisions in its loan agreements. The district court denied Appellant’s motions, holding that Appellant waived its right to arbitrate by bringing collection actions in justice court and obtaining default judgments based on falsified affidavits of service. The Supreme Court affirmed, holding that the district court correctly concluded that Appellant waived its right to an arbitral forum where the named plaintiffs’ claims all concerned the validity of the default judgments Appellant obtained against them in justice court. View "Principal Investments v. Harrison" on Justia Law

by
Appellants brought this action against BAC Home Loans Servicing, LP, asserting fraud and consumer fraud. The district court granted BAC’s motion to dismiss but allowed Appellants leave to file an amended complaint. Thereafter, Appellants filed a first amended complaint, again asserting fraud and consumer fraud. The district court dismissed the amended complaint, allowing Appellants leave to amend. Instead of filing a second amended complaint, however, Appellants appealed. The Supreme Court dismissed the appeal for lack of jurisdiction, holding that the district court’s order granting BAC’s second motion to dismiss was not final and appealable because it allowed Appellants leave to amend. View "Bergenfield v. BAC Home Loans Servicing, LP" on Justia Law

by
The purchasers of condominiums at a Las Vegas resort filed suit against approximately forty defendants, including JDI Loans, LLC and JDI Realty, LLC (collectively, the JDI entities), alleging that the resort’s marketing material represented that it was in a partnership with the JDI entities, that several defendants engaged in actionable wrongdoings, and that the JDI entities were liable for these actionable wrongdoings under Nev. Rev. Stat. 87.160(1), which codifies the partnership-by-estoppel doctrine. The district court granted summary judgment for the JDI entities as to their liability under section 87.160(1), concluding that a “reference to a ‘strategic partner’” in the marketing materials was insufficient to establish partnership by estoppel. The Supreme Court reversed after clarifying the partnership-by-estoppel doctrine, holding that genuine issues of material fact precluded summary judgment to the JDI entities with regard to their liability under Nev. Rev. Stat. 87.160(1). View "In re Cay Clubs" on Justia Law

by
Check City filed a complaint for declaratory relief seeking clarification of Nev. Rev. Stat. 604A.425, which limits the amount of a deferred deposit loan to twenty-five-percent of a borrower’s expected gross monthly income. At issue was whether the twenty-five-percent cap includes only the principal borrowed or the principal amount plus any interest or fees charged. The district court granted Check City’s motion for summary judgment, concluding that the cap only applied to the principal borrowed. The Supreme Court reversed, holding (1) section 604A.425’s twenty-five-percent cap on deferred deposit loans includes both the principal amount loaned and any interest or fees charged; (2) section 604A.050 defines the phrase “deferred deposit loan” to include principal, interest, and fees; and (3) neither statute is ambiguous. View "State, Dep’t of Bus. & Indus. v. Check City P’ship, LLC" on Justia Law

Posted in: Consumer Law

by
Plaintiff sued Defendants for fraud and deceptive trade practices in connection with a real estate purchase and loan arrangement. The jury found in favor of Plaintiff and awarded him compensatory damages consisting of actual damages and emotional distress damages, as well as punitive damages. The Supreme Court reversed the judgment as to consequential damages and remanded for a redetermination of punitive damages. On remand, the district court instructed the jury that it was to decide “what amount, if any, [Plaintiff] was entitled to for punitive damages.” After punitive damages were awarded, Defendants appealed. The Supreme Court reversed the district court’s punitive damages award and remanded for a new trial, holding (1) Nev. Rev. Stat. 42.005(3) requires a second jury on remand to reassess whether punitive damages are warranted before that jury may determine the amount of punitive damages to be awarded; and (2) because the jury instruction did not require the jury to make the threshold determination of whether punitive damages could be awarded, the case must be remanded for a new trial on punitive damages. View "D.R. Horton, Inc. v. Betsinger" on Justia Law

by
Respondent purchased a luxury sports car from Desert Audi. Defendant contracted with Nex-Day Auto Transport, Inc. to facilitate delivery of the vehicle to Washington. Nex-Day negotiated with Dynamic Transit Company/Knights Company (Knights) for delivery of the vehicle. Knights picked up the car, transported it to Washington, but demanded that Nex-Day tender payment for its unrelated past-due invoices before it would proceed with the delivery. Nex-Day failed to do so, and Knights refused to deliver Respondent's vehicle. Respondent brought an action against Knights, alleging various state-law claims. After filing its answer, Knights filed a motion to dismiss Respondent's complaint, asserting that Respondent's state-law claims were preempted by the Carmack Amendment's federal liability limitation for interstate cargo carriers. The district court concluded that the Carmack Amendment was inapplicable and denied Knights' motion. The district court then granted judgment in Respondent's favor. The Supreme Court affirmed, holding (1) the district court properly denied Knights' motion to dismiss; (2) substantial evidence supported the district court's judgment; and (3) the district court's award of damages was proper. View "Dynamic Transit v. Trans Pac. Ventures" on Justia Law

by
In this appeal the Supreme Court considered whether the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), an act that governs the disposition of failed financial institutions' assets, divests a court of jurisdiction to consider any defense or affirmative defense not first adjudicated through FIRREA's claims process. The Supreme Court concluded that while FIRREA's jurisdictional bar divests a district court of jurisdiction to consider claims and counterclaims asserted against a successor in interest to the Federal Deposit Insurance Corporation (FDIC) not first adjudicated through FIRREA's claims process, it does not apply to defenses or affirmative defenses raised by a debtor in response to the successor in interest's complaint for collection. In this case, the Court reversed the district court's grant of summary judgment to Successor in Interest on its breach of contract and breach of personal guaranty claims against Debtor, as Debtor's affirmative defenses were not barred by FIRREA. Remanded. View "Schettler v. RalRon Capital Corp." on Justia Law

by
Appellants signed a note secured by a deed of trust on their home. Respondents, Regional Trustee Services Corporation (RTSC) and One West Bank, were the trustee and beneficiary of the deed of trust. After Appellants stopped making payments, RTSC initiated judicial foreclosure. Appellants elected mediation under the foreclosure mediation program (FMP), which provides proof of compliance with the state's law requiring mediation upon homeowner request before a nonjudicial foreclosure sale can proceed on an owner-occupied residence. When RTSC failed to attend the mediation, the district court declared RTSC in bad faith and directed that RTSC be denied the FMP certificate needed to conduct a valid foreclosure sale. RTSC later reinitiated nonjudicial foreclosure. Appellants sought to enjoin Respondents from pursuing foreclosure, arguing that the order denying the FMP certificate permanently prevented foreclosure. The district court denied Appellants' request and directed the parties to return to FMP mediation. The Supreme Court affirmed, holding that under the circumstances of this case, a lender who has been denied an FMP certificate for failing to mediate in good faith can reinitiate foreclosure by means of a new notice of default and election to sell and rescission of the original, thereby restarting the FMP process. View "Holt v. Reg'l Tr. Servs. Corp." on Justia Law