|No Limitation on the Types of Claims or Defenses Asserted
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|Author:||admin [ Sat Sep 23, 2006 6:37 am ]|
|Post subject:||No Limitation on the Types of Claims or Defenses Asserted|
No Limitation on the Types of Claims or Defenses Which May Be Asserted
The FTC Holder Rule is unambiguous and, on its face, places no limitation on the types of claims or defenses that a debtor may assert against a creditor-assignee. The only express limitation in the FTC Holder Rule concerns the maximum recovery available to a debtor: "[r]ecovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder." 16 C.F.R. Â§433.2[a]; Beemus v. Interstate Nat. Dealer Services, Inc., 823 A.2d 979 [Pa. Super. 2003]. Consumers seeking affirmative recovery under the FTC Holder Rule are not required to limit their claims to just rescission and restitution or otherwise demonstrate a failure of performance. Beemus v. Interstate Nat. Dealer Services, Inc., 823 A.2d 979 [Pa. Super. 2003].
The minority view addressing the viability of affirmative claims by consumers under the FTC Holder Rule prohibited consumers from using FTC Holder Rule affirmatively against assignee-creditor absent evidence that consumers' claims were so large that they wiped out remainder of any debt. These courts limited consumer affirmative claims, as opposed to assertion of defenses, against the assignee. Some of these courts focused on whether the consumer had received little or no value in the product and whether the consumer made payments under the contract as required. Crews v. Altavista Motors, Inc., 65 F.Supp.2d 388 [U.S.D.C. W.D. Va. 1999]; Boggess v. Lewis Raines Motors, Inc., 20 F.Supp.2d 979 [U.S.D.C. S.D. W.Va. 1998]; Mount v. LaSalle Bank Lake View, 926 F.Supp. 759 [U.S.D.C. N.D. Ill. 1996]; In Re Hillsborough Holdings Corp., 146 B.R. 1015 [Bkrtcy. M.D. Fla. 1992].
The majority view is that all claims or defenses may be asserted which arise under the contract, regardless of size, type or whether any value existed in the product. Reavley v. Toyota Motor Sales U.S. Corp., 2001 WestLaw 127662 [U.S.D.C. N.D. Ill. 2001]; Eachen v. Scott Housing Systems, Inc., 630 F.Supp. 162 [U.S.D.C. M.D. Ala.1986] [refused to engraft onto FTC Holder Rule certain state law provisions restricting consumers to a defensive position]; Oxford Finance Companies v. Velez, 807 S.W.2d 460, 463 [Tex. Ct. App.1991]; Jaramillo v. Gonzales, 132 N.M. 459, 50 P.3d 554 [App. 2002], cert. denied, 132 N.M. 288, 47 P.3d 447 ; Maberry v. Said, 911 F.Supp. 1393 [U.S.D.C. Kan.1995]; Simpson v. Anthony Auto Sales, Inc., 32 F.Supp.2d 405, 409 n. 10 [U.S.D.C. W.D. La.1998] [holding that the Holder Rule permits consumers to bring claims against assignee without regard to whether damages warranted rescission]. The FTC explained that the Rule applies "to all claims or defenses connected with the transaction, whether in tort or contract. When, under state law, a consumer would have a tort claim against the seller that would defeat a seller's right to further payments or allow the consumer to recover affirmatively, this claim is preserved against the holder." Simpson v. Anthony Auto Sales, Inc., 32 F.Supp.2d 405, 410 [U.S.D.C. W.D. La. 1998] [quoting 41 Fed.Reg. 20023-24 ]; Pulphus v. Sullivan, 2003 WestLaw 1964333 [U.S.D.C. N.D. Ill. 2003].
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