Lesson from the Department of Justice: It Doesn’t Pay to File a Lien Against a Federal Judge

I love the Department of Justice Press Releases.

 

They always seem to be the best source for serious (and interesting) offenses committed against the Federal Government. If you ever want proof that it is not a good idea to mess with the Feds, just go to the DOJ’s website. Or you can take a look at their latest press release.

 

On Friday, a federal jury in Omaha, Nebraska, found Donna Marie Kozak guilty on Friday of conspiracy to file and filing false liens against two U.S. District Court judges, the U.S. Attorney for the District of Nebraska, two Assistant U.S. Attorneys and an Internal Revenue Service (IRS) special agent.

 

Ms. Kozak was apparently affiliated with the Republic for the United States of America

 

I know, do a double take. This is not the good ole’ U.S.A, but, an anti-government organization. As the Republic identifies itself:

 

the Republic for the United States is operating as a parallel government peacefully co-existing with the corporate UNITED STATES and has, in effect, already “broken away” from the current U.S. corporation. Lawfully, the Republic should be able to exercise oversight of the corporation.

 

– I wonder how many countries are recognizing the Republic’s sovereign status?

 

 

 

According to the DOJ, some of the illegal activity Ms. Kozak engaged in included:

  • placing her property in sham trusts,
  • establishing a sham charitable foundation,
  • sending harassing correspondence to IRS employees
  • filing bogus tax returns, trust returns, private-foundation returns and other false documents with the IRS.
  • In 2008, she filed a tax return based on fictitious income and tax withholdings on Form 1099-OID statements that claimed a refund of $660,000.

 

“Kozak was remanded into custody pending sentencing.  The maximum prison term for each false lien charge is 10 years.”

 

I only highlight this story partly because it is interesting (and just silly to file a lien against a judge), but also partly to highlight that defrauding the government is a big deal.

 

 

 

 

 

 

 

 

Business Law Update: Michigan Supreme Court’s July 15, 2014 Shareholder Oppression Decision

Happy Monday!

 

On July 15th the Michigan Supreme Court came out with its much anticipated (at least in the legal community) decision in Madugula v Taub, dealing with the Michigan shareholder oppression statute.

 

This decision was much needed to clarify some vague areas in the statute, including:

 

Is a shareholder entitled to a Jury Trial if he sues under the Act?

 

Is a shareholder’s breach of the Bylaws just a “breach of contract” claim, or can it be evidence of “oppressive” conduct?

 

Is there oppression when a shareholder has been fired from his employment, but still retains a seat on the board of directors?

 

See my guest blog post from Grand Rapids Area Professionals for Excellence on this topic by going to the link here

 

Questions? Comments”

Email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Can Lobbyists be Trusted?

As a lawyer, I am always interested in legislation – what new laws are enacted, and what laws are being proposed.  Just check out my last blog post about a new proposed bill affecting business

 

Lobbyists certainly play a role in legislation. But what do they do?

 

In a nut shell, lobbyists are advocates for interest groups, individuals, or businesses who represent their interest to government. State, local, and/or Federal.

 

 

One thing is for sure, if you know anything about Lobbyists you know that:

 

Lobbyists get a bad rap.

 

If you perform a simple google search, you can see many articles asking the question: is lobbying bribery?

 

Can Lobbyists Be Trusted?

 

Some of the bad press given to lobbyists seems to clearly be warranted, just look at a news headline that came out just today regarding  New York Governor Andrew Cuomo.

 

 

The Huffington Post Reports that the Mayor is Under Fire for Meddling in the Anti-Corruption Panel that HE created.

 

One of the allegations seems to involve special treatment for lobbyists. In the panel’s opinion, one allegation  warrants “deeper investigation” is that the Governor provided:

 

“a carveout from the minimum wage law for one retailer, an exemption from an independent contractor law for a favored company and a series of laws tailored to benefit the clients of one lobbyist.”

 

One Harvard Law Professor recently expressed his opinion  that if the allegations are true, the governor should resign. See his blog post here

 

So, can Lobbyists be trusted?

 

The answer is:  the right ones can.

 

This provides me an opportunity to unabashedly promote a man whose character I respect enough to put him in my blog post, my father-in-law, Jeff McAlvey, founding partner of McAlvey Merchant & Associates, a Michigan lobbying firm located in downtown Lansing.

 

Jeff worked  nearly 14 years with Governor John Engler, starting in 1984 when Engler began serving as Senate Majority Leader.When Engler was elected Governor in 1991, Jeff assumed the role of the Governor’s Director of Legislative Relations. In that position, he coordinated all of the activities of the Engler Administration in the Michigan Legislature. This included the development of the Governor’s initiatives into legislation and the planning and execution of the strategies necessary to secure the successful passage of that legislation.
Jeff was basically Engler’s lobbyist to the legislature.

 

When Jeff left Engler’s office,  Governor Engler had this to say about him:

 

For the past 14 years, Jeff McAlvey has faithfully served me,”  “He was a close friend and advisor and an invaluable employee. His reputation as a legislative strategist and negotiator was unparalleled. His impressive skills will serve him well as he makes the transition to the private sector. I will miss him, and I wish Jeff, Carole and their family continued success.”

 

A high praise from Gov. Engler speaks volumes.

 

 

One of the sources that I found a good snapshot is a blog interview that Jeff did through The Gospel Coalition

 

In that article, Jeff talks about what he loves about being a lobbyist.

I get to be actively involved in public policy, which I have a passion for. I enjoy and feel good about the policy I am able to push for since my partner and I have carefully refused to represent anyone who we believe would lead us to lobby for anything that we would ethically disagree with or that would hurt our witness. Another blessings is that I get to meet and work with lots of different people for all over the state with many different backgrounds.

 

Final thoughts:

 

Lobbyists are like lawyers in a lot of ways – we are advocates for our clients.

 

Those roles can be abused, as the Governor Cuomo news, if true, demonstrates.

 

Character matters. 

 

And advocates that you can trust are indispensable.

 

 

So if you are business, non-profit, or other interest group and need an advocate for your interest at a governmental level, consult a lobbyist.

 

 

Just make sure they are people of high character and integrity, like Jeff McAlvey.

 

 

 

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

 

 

 

 

via @tgc

Business Law Update: Proposed Michigan Bill To Limit Non-Competition Covenants.

 

A Michigan Bill proposes amending the Michigan Antitrust Reform Act to narrow the scope of when covenants not-to-compete are enforceable in Michigan.

You can look at the June 12th proposed amendment, here

 

The Narrowing of  the Covenants Not-t0-Compete (CNC) will do as follows:

1. Make CNC unenforceable if the employee is terminated (CNC would only apply if an employee resigns)

 

2. Make CNC unenforceable unless the employer does the following:

a. at the time of the initial offer of employment notifies employee in writing that employment is conditioned upon entering a CNC; and

b. give the same notice to applicants in any job posting.

 

 

The Bill was referred to the committee on commerce – and that is where it has been for the last few weeks.

 

This Bill does not affect other covenants that protect legitimate business interests such as:

 

  • Covenants not to solicit; (employees, vendors, clients, etc…)

 

  • Confidentiality Covenants (protect trade secrets, customer lists, files, etc…)

(which are typically easier to enforce in court, anyway)

 

 

questions? Comments?

 

Email me: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Dreaded Words for Business Owners: “Personally Liable”.

I just read an interesting article on the ABAJournal about the co-founder of “Buckyballs”

 

Evidently this product has caused serious harm to children and not only has the product been recalled, but personal liability has been assessed to a co-founder.

 

That is a big deal!

 

The ABA Journal reports the story here:

 

The Company that produced Buckyballs, Maxfield & Oberton Holdings, LLC, filed for a dissolution at the end of 2012.

 

That a shareholder in a company would be held personally liable for the debts/liabilities of a dissolved  company is is an usual outcome for sure.

 

Even in dissolution, under Michigan law, the members are not anymore personally liable for the obligations of the Company than they would otherwise have been. See MCL 450.4805, applied to limited liability companies:

(2) The members or managers that are winding up a limited liability company’s affairs shall continue to function, for the purpose of winding up, in accordance with the procedures established by this act, the articles of organization, and operating agreements, shall not be held to a greater standard of conduct than that described in section 404,1 and are not subject to any greater liabilities than would apply in the absence of dissolution.

In summary of some of the previous items I have hit on in prior blog posts regarding personal liability of corporate debts, business owners should make sure to:
1. Comply with all corporate formalities, operating agreement/bylaws, make sure company is and remains in good standing with the State of Michigan; 
2. Don’t commingle business/personal assets; and
3. Personal Guarantees = Personally Liable
4. If you dissolve your company – you are entitled to take actions to “wind up” the company.  However, if you continue to do business under the company name you are opening yourself up to be held personally liable.  You may be operating under the name of the company, but you are most likely acting as a sole proprietor now.
Questions? Comments?
Email: Jeshua@dwlawpc.com

 

Great Lessons for Real Estate Professionals From Unfortunate Local Construction News and Recent Case Law

Court cases and local headlines have a way of grabbing our attention – they also provide useful lessons.

I had a builder client come to me recently about concerns with their construction contract.
The owner that my builder was beginning a job for had a question about the indemnity provision in the contract (which I drafted).
Basically, the owner looked at the contract and asked: how does this indemnity clause protect me?
The short answer was, it doesn’t.
Contracts are all about “risk allocation” – how much risk is each side willing to bear?
Since my client had me draft the contract, naturally, I am going to be looking out to protect my client where I think its business most needs to be protected, in the event worst case scenario happens.
Lamar Construction’s Shutdown
I look at the unfortunate, and quite unexpected, news about the shutdown of Lamar Construction 
Many Affected.
Many relationships are affected by this shutdown, least of all the couple hundred employees.  By the way, great job by the Associated Builders and Contractors, Inc. for offering help to place the many displaced Lamar employees into new jobs.
The Landlord for Lamar Construction is filing to evict Lamar. This is not surprising. What is surprising to me is that they are doing so after Lamar getting behind over $45,000 in past rent.
Suppliers are affected. Those who have supplied materials to projects lead by Lamar and now have no ability to get their supplies back, or get paid what they are owed.
Subcontractors are affected. Those who also have purchased materials, provided labor and will not get paid.
Since Lamar filed bankruptcy, where are they left standing?
All creditors who don’t have a secured interest will stand in line and share pro-rata with all the other unsecured creditors.
Some options for suppliers or contractors might be to record a claim of lien on projects. However, this isn’t ideal for several reasons, one of which is that likely anyone else who wasn’t paid on a Lamar project will likely file a lien as well. There will be more “standing in line” with everyone else who is owed.
Further, they are likely all standing behind the first mortgage on the project, filed by Lamar’s (previous) lender.  Likely, the Bank will cover it’s losses first.
The legal battles have already begun, as the news articles have highlighted – from the landlord, to the bankruptcy action to a federal class action lawsuit.  Yes, this will be a messy ordeal.
How This Ties In to Indemnity Clauses
It doesn’t, directly. But it proves my point: Lawyers are here to protect our clients from worse case scenarios:  Like Lamar’s shutdown.
A recent Michigan Court of Appeals case decided in April of this year provides a good example of the place of indemnity clauses in development contracts.
The case is Sachse Const & Dev Co, LLC v AZD Assoc, Inc, No. 310026, 2014 WL 1351397 (Mich Ct App April 3, 2014)
Law of Indemnity: “Common-law” v.s. “Contractual”
Common law Indemnification…springs from equity: namely, that an innocent party should not be liable for the wrongful acts of another.5 Lakeside Oakland Dev, LC v. H & J Beef Co, 249 Mich.App 517, 531; 644 NW2d 765 (2002).
It is intended “only to make whole … a party held vicariously liable to another through no fault of his own.” Peeples v. City of Detroit, 99 Mich.App 285, 292; 297 NW2d 839 (1980).  Sachse Const & Dev Co, LLC v AZD Assoc, Inc, No. 310026, 2014 WL 1351397 (Mich Ct App April 3, 2014)
to prevail on a claim for common-law indemnification, the party seeking indemnification must show that:
(1) it has been held liable for the acts of another; and

(2) it is free from fault in the underlying wrongful act that gave rise to the liability at issue

Sachse Const & Dev Co, LLC v AZD Assoc, Inc, No. 310026, 2014 WL 1351397 (Mich Ct App April 3, 2014)
Common-law indemnification is different than “contractual” Indemnification, which is an agreement to indemnify that springs from the parties contractual agreement. (essentially, the language that lawyers like me put in our clients’ contracts to protect them).  This language is typically much broader, and protects the client more fully.
In Sachse, the owner of a condominium project claimed there were many defects in the project. Contractor, likely did not have a contractual indemnity agreement, and so it sued the other parties to the project for common law indemnity.
The Court held that the owner of the project was only attempting to hold the contractor, Sachse, responsible for its own direct damages, and therefore the Court denied Sacshe’s claim for common law indemnity.
Lesson:
  • Lawyers protect our clients from worst case scenarios. This is particularly important in the real estate industry where multiple layers of contractual relationships exist.
  • Lamar Construction provides an example of worst case scenario and the multiple relationships that it affects.
  • One of the ways to protect yourself is to have a contractual indemnity provision – so that you aren’t left like Sachse, trying to unsuccessfully rely on common law indemnity.
Email: Jeshua@dwlawpc.com

Michigan Businesses: Before Jumping Into a Lawsuit Consider Kesler Assoc. Inc v Wellman Plastics Recycling, LLC

“You will be hearing from my Lawyer!”

 

Many a lawsuit begins with those parting words.

 

I will occasionally get a call from a business client who is a little fired up (if you’re reading this and you are a business client of mine, I’m definitely not talking about you :)). Maybe he or she got off the phone with a vendor, customer or a business parter, or maybe the client just sent the last shot in a string of e-mail exchanges over a contract dispute.

 

Regardless, my first goal in advising a business client on a dispute is to help them make a good business decision and resolve their conflict as quickly and as cost-effectively as possible.

 

This usually means NOT jumping into a lawsuit.

 

Why?

 

One particular reason – lawsuits are expensive.  Lawyers are expensive.

 

Lawsuits are much more expensive if you have to end up paying the opposing party’s legal fees as well as your own.

 

Legal Fees and the AMERICAN RULE

 

Generally, the “American Rule” does not allow for the recovery of attorney fees from the losing party, in a lawsuit unless there is an exception carved out by statute or court rule. Haliw v. City of Sterling Hts., 471 Mich. 700, 707, 691 N.W.2d 751 (2005).

So if you find yourself in a lawsuit, regardless of whether or not you initiated it, you are expected to bear your own legal fees.
This could change if:
1. You entered a contract that the prevailing party to a lawsuit will get their attorney fees paid for (some examples –  a business operating agreement in an LLC, or by laws in a corporation if the dispute is between a shareholder and the company, a non-disclosure agreement between an independent contractor and a company, or maybe a commercial lease agreement;
2. You are in a case evaluation and you reject the case evaluation recommendation (if you want to learn more about case evaluation, feel free to shoot me an e-mail), and the opposing party accepts; or
3. There is a specific statute that could allow for the recovery of attorney fees.

 

Exceptions 1 and 3 should give you pause before filing a lawsuit. Exception 2 is a point to consider at some time while you are engage in litigation.

 

 

The March 2014 Decision of Kesler Assoc v Wellman Plastics.

I was reviewing a recent order from a long-drawn out business lawsuit in the federal courts for the eastern district of Michigan.

 

In that case, I am sure the Plaintiff looks back and wishes he never filed suit.

 

The case was in litigation for 4 years. It involved a dispute over commissions allegedly owed. Basically, Plaintiff claimed it was owed commissions by the Defendant.  Defendant claimed it owed no amount to Defendant.

 

After 4 years of litigation and a 10 day bench trial the jury found in favor of Defendant – Plaintiff recovered nothing.

 

Bad? Yes. Not only did Plaintiff not recover anything, but it had paid, likely, six figures in legal fees.

 

Then it got worse…

 

Plaintiff sued Defendant under a statute that granted the prevailing party attorney fees. Defendant was the prevailing party. Defendant was entitled to have Plaintiff pay its attorney fees.

An excerpt from the Court’s opinion:
“Defendant argues for attorney fees and costs under Mich. Comp. Law § 600.2961(6) (2013) because it was the “prevailing party” in the lawsuit. SCRA awards attorney fees and costs to the prevailing party. The Defendant has provided the Court with itemized documentation addressing the reasonableness of attorney fees and costs. Petterman v. Haverhill Farms, Inc., 125 Mich.App. 30, 33, 335 N.W.2d 710, 712 (1983) (“The party requesting fees, the prevailing party, has the burden of proving the reasonableness of attorney fees.”). The Plaintiff has not filed a response opposing the motion for attorney fees.” Kesler Assoc, Inc v Wellman Plastics Recycling, LLC, No. 10-CV-13390, 2014 WL 897357 (ED Mich March 6, 2014)
The Court ordered Plaintiff to pay Defendant’s attorney fees, which amounted to over $100,000.
Lesson: 
Disputes happen in business. Before you run into a lawsuit, take a breath and work through all of the possible solutions to your dispute. Also, make sure you review any contracts and statutes that your dispute could implicate and determine whether or not there is an attorney fee provision that could potentially result in you paying all attorney fees.
questions? comments?
email me: Jeshua@dwlawpc.com

Contractors, Lawsuits, and Incarceration – Lessons from Local and National Headlines.

Contractor Sentenced Today to Imprisonment
Today the Department of Justice reported  that Roderic J. Smith, a subcontractor for the federal government, was sentenced to 48 months in prison for bribing a public official. See the press release here.
According to the press release:
Smith was the co-founder and president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command.   In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public official.
yikes.
In local Grand Rapids news…
A local construction contractor is being sued by a customer, and didn’t appear in Court. You can visit the article here
This was happening a lot more in 2008 – 2010. I would say that it appears that the downturn in the economy weeded out a lot of the disreputable contractors and builders.
For most contractors, the risk isn’t quite that they are going to end up like Roderic Smith, but if contractors don’t have their procedures in order they run the risk of doing a poor job, or potentially violating Michigan law, including Builder Trust Fund Act violations, which come with criminal penalties.
A recent Sixth Circuit court of Appeals case high lights some of the complicating issues involved in a real estate development project.  The case is Performance Contracting Inc v DynaSteel Corp, No. 13-1364, 2014 WL 1663077 (CA 6 April 28, 2014)
I. Facts
“This case concerns the interplay between three parties:
  • a general contractor,
  • the owner of a power plant, and
  • a subcontractor.

The general contractor—and a defendant is DynaSteel, a company that had operations in Tennessee and Mississippi.

(Just to recap, 3 different parties involved in a project, involving multiple jurisdictions.)
The facts get a little complicated, as these cases usually are.   To summarize Consumers Energy paid DynaSteel over $2.9 million for DynaSteel’s work, but DynaSteel did not reimburse PCI for PCI’s work, owing PCI $1,542,890.
DynaSteel had also not reimbursed PCI for PCI’s work done on a few other projects,  Instead of paying PCI the remaining money it owed or segregating the funds into a separate trust, DynaSteel placed the funds it received from Consumers Energy into a general account in which DynaSteel allegedly comingled it with funds from other projects.

In sum, it ended up in one big mess.
Builders Trust Fund Act
The Builder Trust Fund Act is found at MCL 570.151 and provides that:
In the building construction industry, the building contract fund paid by any person to a contractor, or by such person or contractor to a subcontractor, shall be considered by this act to be a trust fund, for the benefit of the person making the payment.

Contractors: When you are paid for a job – the funds are to be held in “trusts” for the benefits of the person making the payment.
The  elements of a civil cause of action” under the Trust Fund Act as follows:
(1) the defendant is a contractor or subcontractor engaged in the building construction industry,
(2) a person paid the contractor or subcontractor for labor or materials provided on a construction project,
(3) the defendant retained or used those funds, or any part of those funds,
(4) for any purpose other than to first pay laborers, subcontractors, and materialmen,
(5) who were engaged by the defendant to perform labor or furnish material for the specific project.
Performance Contracting Inc v DynaSteel Corp, No. 13-1364, 2014 WL 1663077 (CA 6 April 28, 2014)
Penalties:
The possible penalties include reimbursement of amounts wrongfully converted, being convicted with a felony, incarceration, and fines. MCL 570.152.
Lesson:
Most people in business probably don’t start out with an intent to steal from their clients. As these headlines from local and national news demonstrate, some people do end up in those situations. I would imagine that it starts with simply cutting corners, and making small compromises. Then the small compromises add up and  one day you find yourself defrauding a home owner and violating the MBT, or serving a federal sentence for defrauding the federal government!
These are extreme examples, but now is the time to get your procedures and protections in order so that you know you are doing the right things with your business. Don’t make small compromises. Your reputation is too important to compromise.
email: jeshua@dwlawpc.com

Real Estate Brokers and Salespersons: New Law Will Ease CE Preapproval and Reporting Requirements Effective January 1, 2015

2015 will be less burdensome on Real Estate Brokers and Agents from a Continual Education reporting standpoint.

Real Estate Rama Reports the  significant changes that will affect RE Brokers and Agents.

Beginning January 1, 2015, continuing education courses will no longer require preapproval by LARA and schools will not be required to report the hours as a condition of renewal of a real estate broker or sales-person license. Licensees will continue to be required to complete at least 18 clock hours of continuing education per 3-year license cycle, with 2 hours per calendar year involving law, rules, and court cases regarding real estate.

go to the link for the full story.

 

For a detailed review of all of the impacts of Senate Bill 641, you can check out the House Fiscal Agency’s Legislative Analysis here

 

 

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

RE Professionals take heed: Fed Govt’s Billion Dollar Settlement with Sun Trust Related to Mortgage Loan Abuse

 

The Department of Justice issued a press release today regarding a billion dollar settlement it reached with Sun Trust, you can see that press release here.

 

This, and other settlements entered into as a result of DOJ litigation against financial giants should, at a minimum, serve as a good reminder of why real estate investors and servicers should always reflect on their business procedures and practices to make sure everything is above board.

 

The Sun Trust Admissions

The Press release has the full story, but I find the following admissions of particular interest:

  • SunTrust admitted that between January 2006 and March 2012, it originated and underwrote FHA-insured mortgages that did not meet FHA requirements;
  • that it failed to carry out an effective quality control program to identify non-compliant loans, and
  • that it failed to self-report to HUD even the defective loans it did identify. 
  • SunTrust also admitted that numerous audits and other documents disseminated to its management between 2009 and 2012 described significant flaws and inadequacies in SunTrust’s origination, underwriting, and quality control processes,
  • and notified SunTrust management that as many as 50 percent or more of SunTrust’s FHA-insured mortgages did not comply with FHA requirements.

 

 

Other Billion Dollar Settlements

Sun Trust isn’t the only mortgage loan servicer to go under federal government scrutiny.

December 13, 2013 the Department of Justice sued Ocwen Loan Servicing over similar deficiencies in loan servicing and foreclosure practices.

The Consumer Finance Protection Bureau issued a statement on its home page in this regard:

 

“The CFPB and its partner states believe that Ocwen was engaged in significant and systemic misconduct that occurred at every stage of the mortgage servicing process. According to the complaint filed in the federal district court in the District of Columbia, Ocwen’s violations of consumer financial protections put thousands of people across the country at risk of losing their homes.” – Consumer Finance Protection Bureau, press release December 19, 2013¹

¹ http://www.consumerfinance.gov/newsroom/cfpb-state-authorities-order-ocwen-to-provide-2-billion-in-relief-to-homeowners-for-servicing-wrongs/

 

In fact, check out this May 20, 2014 article about a recent class action lawsuit filed in Pennsylvania against Ocwen.

 

Non-Originators and Subsequent Loan Servicers – Take Heed

There are various federal and state laws that are intended to protect consumers from unfair debt collection practices, including the  Fair Debt Collection Practice Act 15 U.S.C. 1692 et seq and  the Michigan Collection Practices Act.

 

FDCPA

under the FDCPA, the debt collector pursuant to 1692(a)(6)(F)(iii) includes any non-originating debt holder that either acquired a debt in default or has treated the debt as if it were in default at the time of acquisition.’ It matters not whether such treatment was due to a clerical mistake, other error, or intention. In re Tolliver, No. 09-21742, 2012 WL 2952239 (Bankr ED Ky July 19, 2012).

Therefore, a non-originating note holder (or servicer) could find itself implicated by the FDCPA, as well as the MCA.

 

MCA

The MCA is violated by a “regulated person” who, among other things, “mak[es] an inaccurate, misleading, untrue, or deceptive statement or claim in a communication to collect a debt.” M.C.L. § 445.252(e). “A state or federally chartered bank when collecting its own claim” is a “regulated person” under the Act. M.C.L. § 445.251(g)(ii) Martin v. Bank of Am., N.A., 2014 U.S. Dist. LEXIS 66662, at *5-6 (May 14, 2014).

 

What to make of these settlements?

 

I think these settlements are a good sign that hopefully will lead to sound business practices for lending and servicing institutions.

 

For those investors who are purchasing/servicing loans in default, the fact that the DOJ is coming down on these financial industry giants should also give them pause to review their own practices. At a minimum, protect yourself from borrowers/debtors who might be quick to raise these claims without merit.  Knowing that a loan holder could be implicated in violating the FDCPA or the  MCA should give you pause to make sure you are doing the right things in your business.

 

 

My contact info:

email: jeshua@dwlawpc.com

http://www.dwlawpc.com