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Holder-in-Due Course

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In RAFAL LOJEWSKI, SMITH GARCIA, DANIELLE GARCIA, MANUEL ACEVEDO, ISAMAR DELACRUZ, on behalf of themselves & all others similarly situated, Plaintiffs, v. GROUP SOLAR USA, LLC, SOLAR MOSAIC, INC., SALAL CREDIT UNION, DANIEL YOMTOBIAN CORP D/B/A SOLAR PROGRAM, Defendants., No. 22 CIV. 10816 (PAE), 2023 WL 8850586, at *1 (S.D.N.Y. Dec. 21, 2023), Plaintiff filed a class action in part… Read More

In Grayot v. Bank of Stockton, No. C097061, 2023 WL 8797493, at *3–4 (Cal. Ct. App. Dec. 20, 2023), the Court of Appeal held that an assignee of an automobile retail installment sales contract could not deprive itself of "holder" status under the FTC Holder Rule contained in the RISC by re-tendering assignment of the RISC back to the assignor after… Read More

In Hernandez v. Apple Auto Wholesalers of Waterbury LLC, 2022 U.S. Dist. LEXIS 179567, No. 3:17-cv-1857 (VAB) (Sept. 30, 2022), the district court addressed whether a finance company who re-tendered the contract back to the dealer remained liable under the FTC Holder Rule.  After referring the case to the Connecticut Supreme Court, the District Court followed the Supreme Court's ruling that… Read More

The California Supreme Court today ruled on whether the FTC Holder Rule caps the amount fees that a prevailing consumer can recover from the holder of a Retail Installment Sales Contract that contains the FTC's "Holder Rule" language in the RISC.  A copy of the Supreme Court's decision in Pulliam v. TD Auto Finance can be found here. Read More

In Flores v. Westlake Servs., No. B308288, 2021 Cal. App. Unpub. LEXIS 7876, at *13-14 (Dec. 16, 2021), the Court of Appeal found in an unpublished decision that the FTC Holder did not cap attorneys' fees.  The Pulliam case, on which the Court of Appeal relied, is on appeal to the California Supreme Court. Upon considering these factors, Pulliam concluded the FTC's… Read More

In Henry v. Vantage Credit Union, No. 4:20-cv-01865-SRC, 2021 U.S. Dist. LEXIS 101571 (E.D. Mo. May 28, 2021), Judge Clark granted an auto finance company’s motion to compel arbitration. As stated above, state law governs the validity of an arbitration agreement and Henry's argument has been explicitly rejected in Missouri. See Boulds v. Chase Auto Finance Corp., 266 S.W.3d 847… Read More

The FTC today issued a press release on whether the FTC Holder Rule applies to large transactions. The staff of the Federal Trade Commission has issued a note correcting previous staff guidelines on the FTC’s Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses—commonly known as the Holder Rule. The Holder Rule protects consumers who enter into credit contracts… Read More

The California Supreme Court denied review and declined to depublish the Court of Appeal's decision in Spikener.  https://appellatecases.courtinfo.ca.gov/search/case/dockets.cfm?dist=0&doc_id=2322739&doc_no=S263361&request_token=NiIwLSEmXkg%2FWyBdSCJNSElIIDg0UDxTJSIuSzxTICAgCg%3D%3D Spikener held that the FTC Holder Rule pre-empted Civil Code section 1459.5, which legislatively sought to overrule the Lafferty decision's finding that the FTC Holder Rule capped attorneys' fees recoverable under the Rule.  https://www.severson.com/consumer-finance/court-of-appeal-cal-says-legislative-effort-to-overrule-laffertys-cap-on-attorneys-fees-under-the-ftc-holder-rule-is-preempted/ Read More

In Spikener v. Ally Financial, Inc. , the Court of Appeal deferred to the FTC's 2019 interpretation of the FTC Holder Rule, holding that the Holder Rule limits recovery, including attorneys' fees, against the holder to the amount that the debtor paid under the assigned contract.  Civil Code 1459.5, which was enacted post-Lafferty to allow a debtor to recover uncapped attorneys'… Read More

In Hernandez v. Apple Auto Wholesalers of Waterbury Llc, No. 3:17-cv-1857 (VAB), 2020 U.S. Dist. LEXIS 86672 (D. Conn. May 18, 2020), Judge Bolden certified an FTC Holder Rule question to the Connecticut Supreme Court. The FTC Holder Rule language "preserves a consumer's right to assert the same legal claims and defenses against the assignee of a credit contract as… Read More

A Superior Court judge ruled on the applicability of Civil Code 1459.5 to an attorney fee motion brought against a Holder.  The Superior Court held: The Court is unwilling to apply pending Civil Code 1459.5.  It does not take effect until January 1, 2020 and is pre-empted by the Federal Trade Commission's May 2, 2019 ruling on the issue of… Read More

In Timmons v. SunTrust Bank, No. A19A1262, 2019 Ga. App. LEXIS 547, at *1-6 (Ct. App. Oct. 9, 2019), the Georgia Court of Appeals held that an auto finance lender was not a holder-in-due-course, but instead was subject to the FTC Holder Rule contained in the RISC. [O]n July 9, 2015, the Plaintiffs purchased a 2015 GMC Sierra from the… Read More

On July 12, the Governor chartered AB 1821, which seeks to overturn Lafferty’s cap on the Holder Rule.  AB 1821 adds Civil Code 1459.5 to the Civil Code, which now states A plaintiff who prevails on a cause of action against a defendant named pursuant to Title 16, Part 433 of the Code of Federal Regulations or any successor thereto, or… Read More

As FY 2015 came to a close, the FTC asked for commentary on its Holder Rule for assignee liability.  Consumers and Industry responded in early 2016.  Three years in the making, the FTC finally responded, issuing its commentary today in the Federal Register, and it's first official commentary since the Rule was promulgated in 1975.  FTC Commentary on Holder Rule 5-2-19. … Read More

In Lafferty v. Wells Fargo Bank, N.A., 2018 WL 3470748, at *2 (Cal.App. 3 Dist., 2018), the Court of Appeal held: We conclude the Laffertys are limited under the plain meaning of the Holder Rule to recovering no more than the $68,000 they paid under terms of the loan with Wells Fargo. Consistent with Lafferty I, we continue to “hold—to… Read More

In Duran v. Quantum Auto Sales, Inc., 2017 WL 6334220, at *5 (Cal.App. 4 Dist., 2017), the Court of Appeal held in an unpublished decision held that the FTC Holder Rule does not limit attorneys' fees but the Plaintiff's recovery against the Holder is limited to those fees/costs that resulted from litigation of claims against it. We therefore turn to Veros's alternative… Read More

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