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Most Influential Cases of 2017 | Akerly Law

Here are a list of the most influential cases of 2017 as determined by Akerly Law. 

  1. Midland Funding LLC v. Johnson, ___U.S.___, 137 S.Ct. 1407, 197 L.Ed.2d 790 (May 15, 2017) the US Supreme Court addressed the issue of whether filing a time-barred proof of claim constituted a violation of the Fair Debt Collection Practices Act (FDCPA).  The SCOTUS ruled that creditors may file “stale” claims – e.g., a claim that is barred by limitations under non-bankruptcy law - in bankruptcy cases without necessarily violating the FDCPA.  The SCOTUS held that application of an Alabama statute of limitations, an affirmative defense, did not prohibit the creditor from receiving payments from the debtor.
  2. Henson v. Santander Consumer USA Inc., ___U.S.___, 137 S.Ct. 1718, 198 L.Ed.2d 177 (June 12, 2017), a unanimous decision of the SCOTUS, holds that a debt buyer – i.e., someone regularly purchasing debts originated by someone else – is not necessarily a “debt collector” within the meaning of and could not be held liable for violations of the FDCPA.  The Court left open the question of whether the debt buyer could be held liable under laws or for other reasons, which issue was not before the Court.
  3. In re Hewitt, No. 16-11240 (Bankr. D. Vt. Nov. 8, 2017).  A man and woman purchased a home in their own names.  They transferred title to the home to a Limited Liability Company (LLC).  They were the sole members of the LLC.  The man lived in the house and paid all expenses and taxes.  The creditor’s judgment lien against the man attached after the house was transferred to the LLC.  The Court held that, in Vermont, to be designated as a homestead, the person must have an ownership interest in the property, occupy the property, and pay expenses.  The owner of an LCC does not “own” the property, the LLC does.  Therefore, no homestead could be claimed.  This case is likely to have application in other jurisdictions with similar homestead provisions.
  4. In WD Equipment v. Cowen (In re Cowen), 849 F.3d 943 (10th Cir. February 27, 2017), the Court held that passively holding an asset of the estate, in the face of a demand for turnover, does not violate the automatic stay in section 362(a)(3) of the Bankruptcy Code, Section 362(a)(3) prohibits an act to “exercise control over property of the estate.”  This effectively requires debtors to commence turnover proceedings to obtain possession of property, e.g., repossessed vehicles or manufacturing equipment – if repossessed or attached before bankruptcy.  There is a split among the circuits.  The Tenth and D.C. Circuits hold the stay is not really automatic while the Second, Seventh, Eighth, Ninth and Eleventh Circuits hold otherwise – a lender or owner must return repossessed property immediately or face contempt charges.  The Fifth Circuit has not yet weighed in on the issue.
  5. In Caldwell-Blow v. Wells Fargo Bank, N.A. (In re Caldwell-Blow), 2017 U.S. App. LEXIS 7241 (5th Cir. April 25, 2017) (unpublished), the debtor defaulted on a loan.  The loan servicer accelerated the debt in 2007 and 2008.  In October 2009, the loan servicer sent a notice stating that the first two notices of acceleration were rescinded.  The loan servicer then sent notices of acceleration in June and August 2012.  Litigation was commenced to collect the loan.  The loan servicer filed a motion for summary judgment in state court that was granted.  However, the debtor filed chapter 11 before an order could be entered.  In bankruptcy, the debtor filed an adversary proceeding asserting that the lien was barred by the statute of limitations.  The Bankruptcy Court granted summary judgment finding that prior notices of acceleration had been abandoned.  On appeal, the Fifth Circuit held that a lender abandons a notice of acceleration when it demands payment for less than the full amount owed.  When the loan servicer rescinded the first two notices of acceleration, it stated that borrower could resume making regular payments.  This was sufficient to abandon the notices of acceleration, including the one that was not specifically mentioned in the letter.  Caveat lender.
Sarah Grace Chastain