Topline Q4 2015

General information

Following denial of a motion for reconsideration by the federal Second Circuit Court of Appeal in Madden v. Midland Funding, CBA and the ABA jointly filed an amicus brief supporting petition to the U.S. Supreme Court. At issue is the enforceability of credit by an assignee under the terms as made by the originator. The decision means, among other things, that any assignee of a national bank’s loans that itself is not a national bank (or its subsidiary or agent) might not necessarily be able to enforce the loans as contracted.

CBA is preparing an amicus brief with the California Supreme Court in McGill v. Citibank, a case that will decide whether an arbitration agreement is enforceable in a representative Business and Professions Code Section 17200 action filed by a bank customer. If the suit is allowed as a class action, the decision would eviscerate the general rule that arbitration agreements are enforceable absent contract defenses, since many actions are brought under Section 17200. 

CBA is preparing an amicus letter to the California Supreme Court supporting Cathay Bank’s petition for review in a case that applies an improper measure of damages in a construction loan dispute. The bank had ceased disbursing loan proceeds because the developer’s project was a “losing contract,” meaning that the project, if completed, would have a market value that is less than the cost to complete.

CBA is seeking publication of a California Court of Appeal decision in which the court allowed the creditor to obtain documents of certain third parties that are related to the judgment debtor, importantly making a distinction between discovery about a third party and discovery from a third party.

CBA is preparing an amicus brief in the California Court of Appeal on a case addressing whether a guarantor on a commercial real estate loan may skirt its contractual guarantee on the argument that it is the “alter ego” of the borrower, and as such is entitled to anti-deficiency protection normally available only to the borrower. The decision, if left to stand and if published, could cast doubt on the enforceability of many similar guarantees since a guarantor is often related in some fashion to a borrower.

Published Regulatory Compliance Bulletins on the following issues:

New California law expands civil rights law to include citizenship, primary language, and immigration status. 

New California law enhances equal pay statute prohibiting employers from paying wages that are less than those paid to employees of the opposite sex for substantially similar work. 

New California law refashions and amends the Uniform Fraudulent Transfer Act as the Uniform Voidable Transaction Act.  

New California law amends the California Revised Uniform Limited Partnership Act which, among other things, should make it easier for lenders that make loans to limited liability companies and their members. 

New California law amends the Fair Debt Buying Practices Act to bolster debtor protections on default judgments.  

New California law amends the state’s data breach security notification law by creating a model form where the key pieces of required information are organized to answer basic questions about the breach.

Summary and analysis of the CFPB’s ATR/QM mortgage rule that gives relief to small and rural mortgage lenders.

Summary and analysis of the FTC’s new rule prohibiting use of “novel” payments in telemarketing, with a focus on the effect on banks.