Litigation

By: Nancy J. Glidden

The old adage, “ignorance of the law is no excuse,” has been underscored in the context of debt collection practices in a recent decision issued by the United States Supreme Court. In Jerman v. Carlisle (2010 WL 1558977 U.S.), the Court held that the “bona fide error” defense to civil liability under the Fair Debt Collection Practices Act (“FDCPA”) has no application to mistakes of law. The decision resolves a split within the District Courts that have addressed the issue.

The mistake committed by the creditor’s attorney in Jerman, was relatively subtle. In a statutorily-required communication with the debtor, the attorney advised the debtor that the debt would be presumed valid unless the debtor disputed the debt in writing. The FDCPA, however, contains no such in writing requirement. It mattered not whether the addition of the in writing language was inadvertent or intentional - it was a mistake of law insofar as it constituted a misinterpretation of the statute by the creditor’s attorney.

In reaching its decision, the Court strictly construed the statute, and invited Congress to address whether the FDCPA should be amended to provide enhanced safeguards for creditors and their attorneys. Such action is unlikely to happen any time soon, however, so for the foreseeable future, attorneys representing creditors are advised to exercise the utmost caution, and closely scrutinize and understand all provisions of the FDCPA in order to avoid the prospect of liability, (with attorney’s fees and enhanced damages).

For more information contact Nancy Glidden.

By: Nancy J. Glidden

Pennsylvania businesses seeking to minimize class action exposure and generally seeking to enforce arbitration provisions should be aware of a recent decision issued by the Federal District Court for the Eastern District of Pennsylvania, Clerk v. Ace Cash Express, Inc..  Historically, Pennsylvania courts have enforced arbitration provisions in contracts. Recently, the Court (applying Pennsylvania law) added to the body of law which favors enforcing arbitration provisions.

At issue in Clerk was the enforceability of an Arbitration Agreement that was part of a loan transaction, and which mandated submitting all disputes to arbitration on an individual (ie. non-class action) basis.   The Court found the Arbitration Agreement was neither procedurally nor substantively unconscionable, and enforced the Agreement according to its terms – which eliminated all class claims and required Clerk to arbitrate her individual claims.

Significant to the outcome was the fact that the Arbitration Agreement gave Clerk thirty (30) days to opt-out without any adverse effect on the terms of the underlying loan transaction, but Clerk failed to exercise the opt-out.

Clerk is a good read because the analysis it provides concerning the elements necessary for arbitration provisions to survive challenge is useful background when drafting.

Please contact Nancy J. Glidden for more information.

By: Nancy J. Glidden

When can a member of a closely held LLC be held personally liable for the LLC’s debts? According to the U.S. Bankruptcy Court for the Middle District of Pennsylvania, liability is established when a member deals with creditors personally, without identifying himself or herself as an agent for the LLC.

In the case In re LMcD, LLC, the Trustee for a Chapter 7 bankruptcy estate offered up several theories in an attempt to tag the LLC members with personal liability for certain of the LLC’s debts. The Court, however, rejected each of the arguments advanced by the Trustee and instead seized upon the fact that a member of the LLC did not clearly identify that he was acting as an agent for the LLC when transacting business with several creditors whose debts the LLC sought to avoid in the bankruptcy.

For a more in depth explanation of the case click here.

By: Nancy J. Glidden

It is not unusual when registering for something on-line to “click” a box by which you agree to accept certain terms governing the transaction. Before you “click” the box, have you actually read what it is you are agreeing to?

Increasingly eBay users are surprised to learn that if a problem develops with an eBay transaction, any claims against eBay must be brought exclusively in Santa Clara, California. This is because eBay includes a forum selection clause in its User Agreement. If you agree to the terms, and a problem develops down the line for which you believe eBay is responsible, more likely than not your rights will be determined in a California courtroom.

A Pennsylvania litigant surprised by eBay’s forum selection clause recently waged an unsuccessful challenge to the validity of the clause. The litigant, Dominic Tricome, filed suit in Pennsylvania and tried to fend off eBay’s attempts to dismiss or transfer the case by arguing that eBay’s User Agreement was procedurally and/or substantively unconscionable, and that litigating in California would be unduly burdensome. Judge C. Darnell Jones II of the U.S. District Court for the Eastern District of Pennsylvania, however, disagreed and found eBay’s forum selection clause to be “presumptively valid.” See Tricome v. eBay Inc, 2009 WL 3365873 (E.D.Pa.)

So, whether you are completing a registration for eBay or some other on-line business, to avoid surprise be sure to read the User Agreement and understand what it provides before you “click” to accept its terms.

For more information, please contact our office.

By: Nancy J. Glidden

In this difficult real estate market selling a home without using a realtor or attorney may seem like a good idea. The money saved, however, can easily be paid out in legal fees and damages if a seller fails to comply with certain statutory duties.

Did you know that in Pennsylvania, residential real estate sales require a homeowner/seller to provide a Real Estate Seller’s Disclosure? Conversely, if you are buying a home, have you been provided with a Real Estate Seller’s Disclosure?

For a seller, failing to comply does not invalidate the sale, but it does expose a seller to liability for damages sustained by a buyer. For a buyer who purchases a home without having received a proper disclosure, unanticipated expenses could mount to repair problems with the home that should have been disclosed prior to the sale. Often these matters wind up in litigation.

If you do not know what a Real Estate Seller’s Disclosure is, how to complete one to properly discharge your disclosure duties, how to interpret a disclosure that has been provided to you, or what to do if you are experiencing problems with your home that were not disclosed, you may want to consider consulting an attorney.

For more information on the legal rights and responsibilities associated with residential home purchases and sales, contact our office.