Author Topic: SOL on Consumer Debt in Arizona May Take Longer  (Read 1120 times)

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Klaxon

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #15 on: April 14, 2017 09:18:09 PM »
Wow. We have had endless arguments here about when SOL starts, especially during a spate of suits that were brought right on the cusp.

At least arb has been 100% effective in AZ, and the commissioner that handles justice court appeals has ruled that arb must be granted if it's in the contract.

Bruno the JDB Killer

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #16 on: April 14, 2017 09:34:51 PM »
If arb should be granted per the contract, the other terms in the contract that define default should also be honored. No court should make for parties a contract they did not make for themselves.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

CleaningUp

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #17 on: April 15, 2017 02:40:09 AM »
This is going back to the days when banks called in the indebtedness.

From both a legal and a business practice, it make sense.  But if the call is made by certified mail, the consumer is going to lose some wiggle room on the "not mine" defenses that have become so popular.

In many ways, the calling in of the note is like the service of a summons.

Consumer may not like this in the end.

Jane007

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #18 on: April 15, 2017 06:13:31 AM »
From Mertola LLC v. Santos;

Quote from: selected portions of Mertola opinion:
Mertola contends, however, that because the lender did not exercise its option to accelerate the debt, the Santoses' repeated failures to pay as agreed only gave rise to a series of claims for the unpaid minimum monthly payments. Mertola argues that the limitations period does not begin to run on a claim for the outstanding balance owed on a credit card unless and until the lender exercises its power to accelerate the debt.

The Santoses argue that principles applicable to installment debt do not apply to a credit-card account, under which a cardholder's monthly payment obligation is not fixed, but varies, depending on how much the cardholder charges and pays during the prior interval. To be sure, a credit-card account is more akin to a line of credit, in which the borrower has the power to choose to borrow, or not, within the limits of the agreement. But the Santoses present no reasoned argument why, for this purpose, credit-card debt should not be treated like installment debt. At the heart of both periodic credit arrangements, the borrower is obligated to make payments at certain intervals but, absent acceleration, is not obligated to pay the balance owed on the account.

Nor is there any evidence that the bank or Mertola ever demanded the Santoses pay off the balance. Accordingly, the statute of limitations did not bar Mertola's 2014 claim for payment of the balance on the account.

The Mertola opinion relies on Baseline Financial Services v. Madison and Navy Federal Credit Union v. Jones.

From Baseline Financial Services v. Madison;

Quote from: selected portions of Baseline opinion:
Baseline may not recover for installment payments that fell due more than four years before suit was filed. See Jones, 187 Ariz. at 495, 930 P.2d at 1009 (citations omitted) ("[T]he statute of limitations runs against each installment from the time it becomes due.").

From Navy Federal Credit Union v. Jones:

Quote from: selected portions of Navy opinion:
NFCU is also partly correct, however, because it exercised the optional acceleration clause by demanding full payment of the note before all installments became due. When this occurs, most jurisdictions rule that the statute of limitations runs as to future installments from the date the creditor exercises the acceleration clause.

In Mertola, the court is treating the subject credit card account like an installment account for the purpose of determining when the statute of limitations begins to accrue.  But the court is only selectively applying Baseline and Navy, in which it held that only future payments could be accelerated.

It is also mentioned in the opinion that Mertola argued:

"that because the lender did not exercise its option to accelerate the debt" and;
"the limitations period does not begin to run on a claim for the outstanding balance owed on a credit card unless and until the lender exercises its power to accelerate the debt."

On a credit card with a 14k balance in 2008, assuming a 2.5% minimum monthly payment, some number of "installment" payments would have been payments that were due in the past, not future payments that could possibly be accelerated.  Per Navy, "[T]he statute of limitations runs against each installment from the time it becomes due."

Perhaps there is some distinction between "accelerating the debt" and "demanding the full account balance".  But Mertola argues only about accelerating the debt.

If Mertola sued (in 2014) for the entire outstanding balance that included even one previously billed minimum payment that could not have been properly accelerated (and therefore had an independent statute of limitations), then some portion of the entire outstanding balance was out of statute - exactly as the court applied in Navy.

So, did the court apply Navy to Mertola unselectively and consistently?
« Last Edit: April 15, 2017 06:49:24 AM by Jane007 »

Bruno the JDB Killer

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #19 on: April 15, 2017 01:54:57 PM »
If this keeps up with these crazy decisions, somebody is going to have to argue that state courts have no regulatory authority over national banks..... only the comptroller of the currency does. If the banks are in compliance with TILA and other federal laws, the court should not interpose itself and start reinterpreting federal statutes, especially when they alter what the banks and the consumers agreed to.


‘‘Statutory aggrievement exists by legislative fiat, not by judicial analysis of the particular facts of the case. In other words, in cases of statutory aggrievement, particular legislation grants standing to those who claim injury to an interest protected by that legislation.’’

 Terese B. v. Commissioner
of Children & Families, 68 Conn. App. 223,
228, 789 A.2d 1114 (2002)


 If Allen may hold the premises for a year on the ground that his expenditures, made with Whitely's knowledge, indicated that both the parties contemplated a renting for a year, then if Allen holds for a year he must pay the rent then agreed on. The court cannot make a contract for the parties which they did not make. If there was a renting for a year it was at $700.00 a month or over, and the proof all shows that Allen cannot pay this from the business. If there was a contract between the parties it was a contract binding on both the parties.

ALLEN v. WHITELY
209 Ky. 234
238
 (Ky. Ct. App. 1925)
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

Flyingifr

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #20 on: April 15, 2017 02:33:07 PM »
Alternative interpretation of the decision:

Since the SOL on the entire debt does not begin until the debt is accelerated and the entire balance is then due, then as each payment is missed and demanded, each payment accrues its own separate and distinct SOL. Accelerating the debt does not change or erase that SOL because acceleration is a matter of contract, not law, while the SOL is a matter of law, not contract and contracts cannot erase law, while law may erase contracts. Therefore, a creditor had be very careful when they sue, because it is possible that a creditor may sue for a payment whose SOL has expired (even while the SOLs for OTHER payments have not expired), and if that creditor suing is subject to FDCPA (such as a CA or a JDB) then the creditor commits a FDCPA violation with regard to the OOS payment.

How many ways can to spell "administrative headache"?
« Last Edit: April 15, 2017 02:38:07 PM by Flyingifr »
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

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Jane007

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #21 on: April 15, 2017 08:33:41 PM »
Flyingifr, exactly! Your analysis is a more clear and concise explanation of the point I was trying to get across in my previous post.

In both Navy and Baseline, some number of "installment" payments were payments that were due in the past, not future payments that could possibly be accelerated.  Those individual installment payments could not possibly be accelerated and were each subject to an independent statute of limitations.

For every month the creditors in the Navy and Baseline cases delayed acceleration of the debt, more past due installment payments went out of statute.  In Mertola, the court seems to imply that any previously billed minimum payments could forever be incorporated into some future acceleration of the debt.

If the Court of Appeals insists on treating the subject credit card account in Mertola like an installment account, then any minimum payments billed before the account was charged off should be treated just like the court treated the past due installment payments in both Navy and Baseline, not subject to acceleration and each having an independent statute of limitations from any payments due in the future that could be accelerated and for which a new accrual date established.

If the court doesn't treat payments that were due in the past for Mertola like it treated those payments in Navy and Baseline, then the statute of limitations law is essentially nullified for credit card accounts.

I can't tell if Mertola properly removed individual minimum payments that were out of statute from its claims. But like you say, if they left in even one, it is still a potential FDCPA violation.  Maybe Mertola did filter out those payments, and if so this point is moot.  It is not clear from the Mertola opinion that the entire outstanding balance couldn't be accelerated, regardless of the age of previously due minimum payments there were incorporated into that balance.

Even if the court recognizes an an independent statute of limitations for previously due minimum payments on credit card accounts, this is no big win.  Debt buyers will be happy to get some percentage of debts that previously appeared to be stale.

The "administrative headache" to which you refer stems from the court's attempt to shoehorn open-ended credit card accounts into the installment account framework.  Credit card accounts just aren't that analogous to installment accounts.  The court is attempting to make tractable the changes to the SOL law that distinguish open-ended accounts from credit card accounts.  But I don't think that they need to do this work.  It is  possible for a credit card to be a type of open-ended account with a different statute of limitations than other types of open-ended accounts and for all of this to be consistent with current SOL law.  I think the biggest mistake in Mertola is the attempt to treat credit card accounts like installment accounts at all.  I don't think that any argument along those lines will go very far with the court though.

Jane007

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #22 on: July 13, 2017 05:06:55 PM »
Santos did file a Petition for Review with the Arizona Supreme Court on May 4, 2017.

On June 21, 2017, the Arizona Chapter of The National Consumer Advocates filed a amicus curiae brief in support of the Petition for Review (Santos).

On July 10, 2017, Mertola filed a response to the amicus curiae brief.

ASC-CV-CV170109
Docket: CV170109.PDF

davephx

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #23 on: September 12, 2017 02:21:42 AM »
Does anyone happen to know if we can read these briefs?  Assume public.  Can not find anyplace online.  I am in Phoenix and will try calling the court to see if can see the file in person.  I am used to reading lots of briefs on the Superior Court's system but it doesn't cover Appeals or Supreme filings.

davephx

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #24 on: September 13, 2017 12:29:43 AM »
I found the easy answer - amazingly easy vs the typical government office.
You call 602-452-3396 or email scclerk@courts.az.gov with the case number Cv-17-0109-PR and request the opening, reply, Amitus and that reply briefs.

I called got a really nice guy and within 5 minutes he emailed all the briefs to me!

Jane007

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #25 on: September 13, 2017 07:37:22 PM »
I found the easy answer - amazingly easy vs the typical government office.
You call 602-452-3396 or email scclerk@courts.az.gov with the case number Cv-17-0109-PR and request the opening, reply, Amitus and that reply briefs.

I called got a really nice guy and within 5 minutes he emailed all the briefs to me!
Please post or link to them for others to see.

davephx

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #26 on: September 18, 2017 10:16:38 AM »
If this works... 4 briefs for the AZ SOL case before the Supreme Court are attached.

Hmm only 1 attached trying again.

davephx

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #27 on: September 18, 2017 10:21:53 AM »
Does anyone know if a case is now ongoing with a SOL issue where this Supreme Court case is critical, is there a way to stay the case until the issue is ruled on by the SC?

CleaningUp

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #28 on: September 18, 2017 02:38:23 PM »
Question:   Does Arizona have a statutory "right-to-cure" provision?

The appeal seems only be addressing this point tangentially.

But even if they did, I would think that the statute of limitations would override the right to cure in that the creditor would be required to present the demand notice in timely fashion to avoid running afoul of the SOL.


kevinmanheim

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Re: SOL on Consumer Debt in Arizona May Take Longer
« Reply #29 on: Yesterday at 12:11:00 AM »
Does anyone know if a case is now ongoing with a SOL issue where this Supreme Court case is critical, is there a way to stay the case until the issue is ruled on by the SC?
Yes, you can file a motion to stay pending the SC's decision.

Ask the court to hold off on their decision until the SC provides an opinion. Explain why the pending case will affect your case, and how the outcome is likely to lead to a dismissal of your opponent's claims.