Southeast Financial Litigation Monitor

Legal Developments Affecting the Financial Services Industry in Alabama, Florida, Georgia & Mississippi

When attempting to collect time-barred debts, law firms often send standard letters which merely omit an express threat to sue. Earlier this month, the Eleventh Circuit held a least sophisticated consumer might view such a letter as an implicit threat to sue and, therefore, the letter might violate the FDCPA. The Court reasoned it would be easy to include language to the effect, “Because of the age of your debt, . . . we will not sue you for…
In Obduskey v. McCarthy & Holthus, LLP, the United States Supreme Court unanimously held the Fair Debt Collection Practices Act does not apply to a law firm conducting a nonjudicial foreclosure. While the law firm prevailed in Obduskey, the Court’s opinion suggested several circumstances in which the law firm might have been subject to the FDCPA.  Practically speaking, many firms instituting nonjudicial foreclosures will likely remain subject to the FDCPA. According to Obduskey, a law…
In September 2018, the Alabama Supreme Court issued an opinion in GHB Constr. and Dev. Co., Inc. v. West Alabama Bank and Trust, No. 1170484, that caused considerable concern for Alabama lenders. The Court held that future-advance mortgages do not come into existence until funds are actually advanced regardless of when the mortgage was recorded. Last Friday, the Alabama Supreme Court reversed its September 2018 opinion and held that the priority of a future-advance mortgage…
Last week, the U.S. District Court for the Middle District of Alabama denied Southern Independent Bank’s (“Southern Independent’s”) motion for class certification following a data breach which allegedly affected over 2,000 financial institutions across the country. Southern Independent, a community bank located in south Alabama, brought a class action complaint against Fred’s in response to a data breach in which hackers, using malware installed on servers, harvested payment data from consumer debit cards used at…
Last month, the Eleventh Circuit revisited the U.S. Supreme Court’s controversial decision in Spokeo, Inc. v. Robins, and appears to have set a low bar for plaintiffs to clear in establishing standing. The case, Muransky v. Godiva Chocolatier, Inc., Case No. 16-16486 (11th Cir. October 3, 2018) came before the Eleventh Circuit on appeal from the United States District Court for the Southern District of Florida after the district court approved a settlement plan…
Earlier this month, the United States Court of Appeals for the Eleventh Circuit issued a decision that could make it easier for manufacturers to force consumers into arbitration via “shrinkwrap” agreements—packaged contracts which bind consumers by merely opening and keeping a product.  In Dye v. Tamko Building Products, Inc., Case No. 17-14052 (11th Cir. Nov. 2, 2018), the Eleventh Circuit considered an appeal of a district court’s order compelling arbitration and dismissing a lawsuit by…
Georgia regulates the small loan industry with usury laws like the Payday Lending Act and Industrial Loan Act. But, as the Georgia Supreme Court recently held, these Acts can reach only as far as their texts allow. In Ruth v. Cherokee Funding, LLC, the Georgia Supreme Court held money advanced by a litigation finance company is not a “loan” under either the PLA or the ILA where the litigant’s obligation to repay depends on the…
The Alabama Civil Court of Appeals recently issued a decision, International Management Group, Inc. v. Bryant Bank, No. 2170744, which, among other things, limits the potential for summary judgment in fraudulent transfer cases, especially where actual fraud must be proven. In this case, Bryant Bank sued International Management Group (“IMG”) following its alleged insolvency, seeking to void a series of insider transfers of mortgages securing promissory notes to Bryant Bank. IMG’s principal, Michael Carter had…
On October 19, 2018, the Alabama Court of Civil Appeals issued an opinion in Chandler v. Branch Banking & Trust Company (No. 2160999), holding that a joint owner of property at issue in an ejectment action is a necessary and indispensable party, even where the non-party property owner’s interests are closely aligned with a named party. Practically, this ruling emphasizes the importance of joining all necessary parties to an ejectment action when it is filed.…