by Hearthstone Legal Group | May 26, 2026 | creditors, Fair Credit Reporting Act
A very important legal principle is, “If it’s not in writing, it didn’t happen.” And this is as much true of business transactions as it is in the realm of legal precedents.
When it comes to Court of appeals opinions, they must actually be published to become law. And a recent opinion, LVNV Funding v. Rodriguez, was published, and is now the law with regard to debt collection. Rodriguez v. LVNV Funding, LLC (2024)106 Cal.App.5th 717.
In that case, a creditor filed a collection lawsuit against Yolanda Rodriguez, but soon realized that she was not the same Rodriguez as the person who owed the debt. Apparently, the Rodriguez who was actually sued had communicated with the lender, and tried to prevail upon the creditor not to sue, due to the misidentification. The lender went ahead, however, and filed the lawsuit.
What the matter came before the Court, and the defendant proved that she was not the debtor, the creditor decided to dismiss. But the damage had been done. Ms. Rodriguez had been dragged in the court. She had been forced to answer at the bar. She had been embarrassed. So she sued the creditor.
The trial court, however, found for the creditor, on a type of “litigation priviliege” (specifically here, argued as Anti-SLAPP law), and ruled that Ms. Rodriguez’s suit was barred.
The Fifth Appellate District Court of Appeal (Fresno) forcefully disagreed, and did not keep the matter secret. The creditor has reason to know they sued the wrong person. Ms. Rodriguez’s successful appeal, under California and Federal law, was published, so now the interpretation of the Rosenthal Act and FDCPA in favor of the debtor, can be seen by and cited to by other debtors and their attorneys. That case now stands for the proposition that where the creditor has a reason to know that it is pursuing the wrong person, it does so at its peril. There is no free pass. That Ms. Rodriguez who was sued was allowed to vindicate her rights under California’s new Rosenthal Act, and the Federal Fair Debt Collection Practices Act.
The case is straightforward but has important implications. Research shows that 25% of all civil cases in California are now debt collection. This enormous number unfortunately gives rise to a great potential for abuse. Many debtors do not open their mail, move, and are not aware of lawsuits. And there’s obvious mischief that can be caused by debtors who share the same name, and a creditor who is not careful in determining who is exactly whom.
The second point is that lenders, who have much in the way of resources, are cautioned now to be very careful when suing a defendant who may be misidentified, or who has a legitimate defense to a debt. Simply plowing ahead for the sake of driving a debtor into the dirt is an act which may eventually be punished, and punished very publicly.
FOR EDUCATIONAL PURPOSES ONLY; THIS POST DOES NOT CONSTITUTE LEGAL ADVICE, NOR DOES IT CREATE AN ATTORNEY-CLIENT RELATIONSHIP. PLEASE CONSULT AN ATTORNEY
by Hearthstone Legal Group | Dec 28, 2023 | bankruptcy, BANKRUPTCY LAW, Fair Credit Reporting Act, Fair Lending
A recent decision by no less than the California Supreme Court points once again to the difficulty of trying to sue National Banks under California law.
In Sheen v. Wells Fargo Bank (2002) 12 Cal.5th 905, 290 Cal. Rptr. 3d 834, Plaintiff Borrower refinanced his home, using the equity to acquire 2 loans from Wells Fargo. A few years later, borrower experienced financial problems, and sought to refinance. He asked the bank to renegotiate the loan.
Borrower sent in an application, to which Wells Fargo responded, without specifically addressing the modification question. Plaintiff understood the response to mean that Wells Fargo would not foreclose. Eventually, Wells Fargo sold the loan to a secondary lender, who foreclosed.
The California Supreme Court framed the basic question as follows:
“In this case, we address the issue dividing the lower courts: Does a lender owe the borrower a tort duty sounding in general negligence principles to (in plaintiff’s words) “process, review and respond carefully and completely to [a borrower’s] loan modification application,” such that upon a breach of this duty the lender may be liable for the borrower’s economic losses — i.e., pecuniary losses unaccompanied by property damage or personal injury? (See, e.g., Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 398, 247 Cal.Rptr.3d 632, 441 P.3d 881 (Gas Leak Cases).) We conclude that there is no such duty, and thus Wells Fargo’s demurrer to plaintiff’s negligence claim was properly sustained.” 12 Cal.5th at 915.
The California Supreme Court, by Chief Justice Cantil-Sakauye, pointed out that there was no contract to renegotiate, and thus no breach of contract. Wells Fargo had no duty, either under contract or under common law, to grant the loan modification. Because there was no duty, failure to modify the loan meant that there was no negligence.
Furthermore, the Court held that plaintiff could only recover “economic damages,” i.e., no pain and suffering. Because there was no breach of a common law duty, Plaintiff’s damages would appear limited to the value of the home at the time of foreclosure.
The California Supreme Court did suggest that other causes of action, such as promissory estoppel or negligent misrepresentation, might proceed past demurrer, given sufficient allegations. But those causes of action were not part of Sheen’s complaint. 12 Cal.5th at 916.
Plaintiffs might consider looking to federal law, such as the Equal Credit Opportunity Act (“ECOA”), or the Truth in Lending laws, for greater protection with a national bank. Of course, the facts alleged must be adequate for such a complaint, which could also include state law claims. See, for example, 15 USC Sec. 1691; Taylor v. Accredited Home Lenders, Inc., 580 F.Supp.2d 1062, (D.C.S.D.CA, 2008) [each monthly mortgage payment constituted a continuing violation of Plaintiff’s rights under ECOA]; Schlegel v. Wells Fargo Bank, N.A., 720 F.3d 1204 (2013) [ECOA applies to mortgage loans]; Office of the Comptroller of the Currency, Examiner’s Handbook: Fair Lending, (2010); Schwemm & Taren, “Discretionary Pricing, Mortgage Discrimination, and the Fair Housing Act,” 45 Harvard Civil Rights-Civil Liberties Law Review 375, 417 (2010); Peterson, “Predatory Structured Finance,” 28 Cardozo Law Review 2185; Totten, “The Enforcers and the Great Recession,” 36 Cardozo Law Review 1611 (2015).
by Hearthstone Legal Group | Oct 15, 2021 | bankruptcy, creditors, Fair Credit Reporting Act, TRUTH IN LENDING
TRUTH IN LENDING: : If a consumer feels that the information in her credit file (i.e., information held by the credit reporting agency, but not necessarily sent to inquiring lenders or other agencies) is inaccurate, her ultimate remedy is to file a lawsuit pursuant to the Fair Credit Reporting Act, 15 U.S.C. Secs. 1681–1681x. To succeed in such a lawsuit, however, the Plaintiff will need to compile evidence. For example, the courts have held that “to state a claim under § 1681i [incorrect information in credit file], the plaintiff must show that the agency’s report contained factually inaccurate information, and that damages followed as a result.” Collins v. Experian Info. Sols., Inc., 775 F.3d 1330, 1335 (11th Cir. 2015) (“A `consumer report’ requires communication to a third party, while a `file’ does not.”); cited in Losch v. Nationstar Mortgage, LLC, 995 F.3d 937, 944 (Ninth Circuit, 2021). [Quotations reproduced as commentary.]
by Hearthstone Legal Group | Oct 8, 2021 | bankruptcy, creditors, Fair Credit Reporting Act, TRUTH IN LENDING
TRUTH IN LENDING: If a consumer feels that the information in her credit report (i.e., information actually sent to inquiring lenders or other agencies) is inaccurate, her ultimate remedy is to file a lawsuit pursuant to the Fair Credit Reporting Act, 15 U.S.C. Secs. 1681–1681x. To succeed in such a lawsuit, however, the Plaintiff will need to compile evidence. For example, the courts have held that “to state a claim under § 1681e [inaccurate report], the plaintiff must show that the agency’s report contained factually inaccurate information, that the procedures it took in preparing and distributing the report weren’t “reasonable,” and that damages followed as a result.” Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1157, 1160 (11th Cir. 1991); Nagle v. Experian Info. Sols., Inc., 297 F.3d 1305, 1307 (11th Cir. 2002). [Quotations reproduced as commentary.]
by Hearthstone Legal Group | Oct 1, 2021 | bankruptcy, Fair Credit Reporting Act, Fair Lending, TRUTH IN LENDING
The Fair Credit Reporting Act, 15 U.S.C. Secs. 1681–1681x, is part of the Federal Consumer Protection Act. It is intended to protect consumers by assuring the accuracy of a consumer’s credit information held and disclosed by the credit reporting agencies. The statute allows a consumer to challenge information in his/her report that is allegedly inaccurate, and requires the credit reporting agencies to investigate alleged inaccuracies, and make corrections, if necessary.
