Mortgage Lending: 5.12.8.3 Common Law Defenses to Lender Contract Enforcement Claims
Common law defenses to the enforcement of contracts include duress and undue influence.
Common law defenses to the enforcement of contracts include duress and undue influence.
It seems only fair that lenders who quietly reward brokers for bringing borrowers to them, passing on the cost of that reward to the borrower,594 should share blame for the brokers’ breach of duty, which naturally follows. One common-law claim that may help borrowers challenge lenders for suborning this breach of fiduciary duty is intentional interference with a contractual relationship.595
A large attorney fee award being taxable to the client can result in a sizeable tax liability for the client. This liability can adversely affect the client’s ability to claim important credits, such as education credits, the child tax credit, and the Earned Income Credit.1419 The alternative minimum tax (AMT) also may be implicated.
The third requirement for Article III standing articulated by Supreme Court decisions is that the plaintiff’s injury must be one “that is likely to be redressed by a favorable judicial decision.”2128 An unpublished Seventh Circuit opinion holds that an FDCPA plaintiff’s failure to pray explicitly for actual damages did not mean that her injury, which included a modest expenditure for postage, was not redressable by a favorable decision.
The availability of statutory damages eliminates the need to put a value on a consumer’s injury, but it does not eliminate the constitutional requirement for an injury in fact. Article III, section 2 of the United States Constitution limits the judicial power of federal courts to cases and controversies. Article III standing when seeking statutory damages under a federal consumer protection statute, such as TILA, has become an important issue since the Supreme Court’s 2016 decision in Spokeo, Inc. v.
In its 2016 decision Spokeo, Inc. v. Robins,1438 the Supreme Court for the first time addressed the issue of constitutional standing in a case under a chapter of the federal Consumer Credit Protection Act—the Act that includes the FDCPA.
Most of Ramirez’s holdings increase the difficulty of supporting standing in federal court consumer actions. However, Ramirez also solidifies the view that three types of injury should be sufficient for constitutional standing in federal court:
Spokeo very clearly holds that “the judgment of Congress” plays an “important role[]” in determining whether an intangible injury is concrete.1485 The decision holds that, “because Congress is well positioned to identify intangible harms that meet minimum Article III requirements, its judgment is also instructive and important.”1486 It quotes with approval two of its earlier decisions, holding that Congress may “elevat[e] to the status of legally cognizable injuries concrete, de
Ramirez appears to cut back on the principle that Spokeo seemed to adopt, that “the risk of real harm” can be a concrete injury in a suit seeking money damages.1500 Where there is only a risk of harm, the majority opinion in Ramirez states that standing is confined to suits seeking prospective relief, such as an injunction.1501 This statement appears to be dicta, because the Court concluded on the facts that the plaintiffs
Some courts have held that confusion due to a misleading or unclear collection communication is a concrete injury1706 Ramirez adds some weight to this view, in that it cites the fact that the plaintiffs, other than Ramirez himself, did not present any evidence “that they were confused, distressed, or relied on the information in any way” as support for its conclusion that the plaintiffs had not alleged a concret
The Ramirez Court addressed several additional issues with respect to the plaintiff’s claims that were based on TransUnion’s failure to comply with the FCRA’s file disclosure requirement and its duty to include a summary of consumer rights with a file disclosure.
Some courts have held that confusion due to a misleading or unclear collection communication is a concrete injury1723 Ramirez adds some weight to this view, in that it cites the fact that the plaintiffs, other than Ramirez himself, did not present any evidence “that they were confused, distressed, or relied on the information in any way” as support for its conclusion that the plaintiffs had not alleged a concret
In framing an FDCPA claim, it may be helpful to present it as a violation of a substantive rather than a procedural right to the extent possible. In Spokeo, the Supreme Court drew a distinction between “procedural” rights and “substantive” rights. It characterized the rights involved in the case as procedural, and held that, at least in some circumstances, a “bare procedural violation” without some other concrete harm would not establish standing.1636
Spokeo and Ramirez make clear that both tangible and intangible injuries can meet the concreteness requirement.1648 Concrete harms that would satisfy the injury-in-fact requirement and that an individual consumer might suffer as a result of nondisclosure, false, deceptive, or misleading statements, telephone harassment, or other FDCPA violations might include:
There are strong reasons to treat emotional distress as a concrete harm that meets Article III’s requirements.
A 2021 Supreme Court decision, Uzuegbunam v.
Congress identified deceptive debt collection practices as one of its primary concerns when it enacted the FDCPA.1764 Many provisions of the FDCPA protect debtors from false, deceptive, or misleading practices.
Some courts have held that confusion due to a misleading or unclear collection communication is a concrete injury1706 Ramirez adds some weight to this view, in that it cites the fact that the plaintiffs, other than Ramirez himself, did not present any evidence “that they were confused, distressed, or relied on the information in any way” as support for its conclusion that the plaintiffs had not alleged a concret
A common consumer claim is that a debt collector has overstated the amount of the debt in a letter or a pleading in violation of FDCPA § 1692e(2)(A), often in combination with parallel claims under sections 1692e(5), 1692e(10), and 1692f(1). Prior to the Supreme Court’s 2021 opinion in TransUnion L.L.C. v.
Section 1692e(8) of the FDCPA prohibits collectors from reporting or threatening to report false credit information to any person.1827 This section includes a requirement that, when a collector communicates with a credit reporting agency about a debt that the consumer has disputed, it must indicate that the debt is disputed.1828
FDCPA § 1692e(11) requires a debt collector to identify itself as such in communications with the consumer and, in initial communications, to disclose the debt collection purpose of the communication.
Other types of false, deceptive, or misleading acts that some courts have held to cause concrete harm to consumers and meet the requirements for Article III jurisdiction are: