Skip to main content

Search

Unfair and Deceptive Acts and Practices: 10.1.1 Factors in Selecting Defendants

One of the most important practical decisions for a consumer litigant bringing a UDAP action is determining which parties to join as defendants. Those most responsible for deceptive practices may be the most difficult to serve with process or least likely to pay a monetary judgment. The parties with the “deepest pockets,” such as financers, shareholders, or corporate officers may be attractive candidates as defendants, if they do not have legal defenses insulating them from liability.

Unfair and Deceptive Acts and Practices: 10.2.3.4 Principal’s Liability for Actions of Independent Contractor

Companies commonly argue that salespersons guilty of deception are independent contractors, separate and apart from the company, and not agents. Contracts between the company and salespersons indicating that the salespersons are independent contractors do not make them so where the salespersons were in substance agents.48 The substance, not the form, of the relationship is the determining factor.49

Unfair and Deceptive Acts and Practices: 10.3.2.1 General

Corporate officers, managers, directors, shareholders, owners, and parent companies are liable, just as corporate agents are liable,62 to the extent that they are directly involved in deceptive or unfair activity.63 The same rule applies to other players, such as assignees64 (although there are also other grounds to hold assignees and other financers liable65).

Unfair and Deceptive Acts and Practices: 10.3.2.2 Conduct Sufficient to Create Liability

Courts take a flexible view of what type of participation is sufficient to hold an officer, director, or shareholder liable under a UDAP statute.67 Evidence indicating that an officer, director, or shareholder directed, participated in, or facilitated the challenged deceptive practice should be enough to join that individual in the UDAP action.68 Officers do not need to make deceptive representations themselves, as long as they knowingly entered into the deceptive scheme,

Unfair and Deceptive Acts and Practices: 10.3.5 Liability of Co-Venturers, Partners

Where two or more companies or persons are organized or operating as a joint venture, all co-venturers are jointly and severally liable for actions of other co-venturers.108 Joint UDAP violators may have claims for indemnity or contribution against each other under state law,109 but these claims should not affect the liability of each co-venturer to the consumer.

Unfair and Deceptive Acts and Practices: 10.4.2.3.1 General

All or almost all jurisdictions recognize civil conspiracy as a cause of action, provided that the allegation of conspiracy does not stand alone.160 Civil conspiracy targets an unnaturally close relationship between the party engaging in the misconduct and a lender or other party.161

Unfair and Deceptive Acts and Practices: 10.4.3.2 Liability of Entities Involved in Credit Card Payments

In most individual cases, the consumer’s best approach when the payment for a fraudulent purchase was made by a credit card is to assert against the card issuer one of three rights that federal law provides: that the charge is unauthorized, that the charge involves a billing error, or that the consumer is asserting seller-related claims or defenses. While these rights have specific requirements that must be followed, they are relatively straightforward, they will often resolve the consumer’s concerns, and they may not even require a consumer to obtain legal representation.

Mortgage Lending: 1.1.1.2 Topics Covered in This Treatise

Mortgage Lending examines federal and state restrictions on the origination and terms of mortgage loans, and federal preemption of the state restrictions. It addresses underwriting, appraisals, mortgage brokers, third-party fees, interest rates and other loan terms, reverse mortgages and other less common types of mortgages, and litigating mortgage lending claims.

Mortgage Lending: 1.1.1.3 Related Topics Covered in Other NCLC Treatises

Other NCLC treatises cover related topics or treat certain topics in greater depth. NCLC’s Mortgage Servicing and Loan Modifications2 examines issues arising after the loan’s origination concerning mortgage loan servicing and loan modification. Home Foreclosures covers foreclosure issues.3 A number of the federal substantive limits on mortgage loan originations are codified in the Truth in Lending Act, including restrictions on mortgage loan originator compensation.

Mortgage Lending: 1.3.2.1 The Federal Home Loan Bank System

Among the many tragic consequences of the Great Depression was the widespread foreclosure of many home mortgages. Early attempts to resolve foreclosures focused on encouraging banks and homeowners to renegotiate loan terms through mediation boards and other voluntary arrangements.37 Like similar efforts after the collapse of 2007, these attempts proved grossly inadequate.38