Bill Text: NY A06909 | 2019-2020 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions.

Spectrum: Partisan Bill (Democrat 26-1)

Status: (Introduced - Dead) 2020-07-23 - amended on third reading 6909e [A06909 Detail]

Download: New_York-2019-A06909-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         6909--C
                                                                Cal. No. 248

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                     March 26, 2019
                                       ___________

        Introduced  by  M.  of  A.  WEINSTEIN,  JAFFEE, COLTON, GALEF, ABINANTI,
          ZEBROWSKI, O'DONNELL, FAHY, PEOPLES-STOKES, L. ROSENTHAL,  M. G. MILL-
          ER, DINOWITZ, SEAWRIGHT, GLICK, WEPRIN, MOSLEY, TAYLOR, BARRON, REYES,
          ORTIZ  --  Multi-Sponsored  by  --  M. of A. CAHILL, COOK, CYMBROWITZ,
          EPSTEIN, GOTTFRIED, McDONOUGH, PERRY -- read once and referred to  the
          Committee  on  Judiciary  -- reported and referred to the Committee on
          Codes -- committee discharged,  bill  amended,  ordered  reprinted  as
          amended  and recommitted to said committee -- reported and referred to
          the Committee on Rules -- Rules Committee  discharged,  bill  amended,
          ordered reprinted as amended and recommitted to the Committee on Rules
          --  ordered to a third reading, amended and ordered reprinted, retain-
          ing its place on the order of third reading

        AN ACT to amend the civil practice law and rules and the judiciary  law,
          in relation to consumer credit transactions

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Short title. This act shall be known and may  be  cited  as
     2  the "consumer credit fairness act".
     3    §  2.  Section  105  of the civil practice law and rules is amended by
     4  adding two new subdivisions (h-1) and (q-1) to read as follows:
     5    (h-1) Finance charge. The term "finance  charge"  means  the  cost  of
     6  consumer credit as a dollar amount, includes any charge payable directly
     7  or  indirectly by the consumer and imposed directly or indirectly by the
     8  creditor as an incident to or a condition of the  extension  of  credit,
     9  and  does  not include any charge of a type payable in a comparable cash
    10  transaction.
    11    (q-1) Original creditor. The term "original creditor" means the entity
    12  that owned a consumer credit account at the date of default giving  rise
    13  to a cause of action.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00927-12-0
        A. 6909--C                          2

     1    § 3. Subdivision 2 of section 213 of the civil practice law and rules,
     2  as  amended  by  chapter  709 of the laws of 1988, is amended to read as
     3  follows:
     4    2.  an  action  upon a contractual obligation or liability, express or
     5  implied, except as provided in section two  hundred  thirteen-a  or  two
     6  hundred  fourteen-i  of this article or article 2 of the uniform commer-
     7  cial code or article 36-B of the general business law;
     8    § 4. The civil practice law and rules  is  amended  by  adding  a  new
     9  section 214-i to read as follows:
    10    §  214-i.  Certain actions arising out of consumer credit transactions
    11  to be commenced within three years. An action arising out of a  consumer
    12  credit  transaction where a purchaser, borrower or debtor is a defendant
    13  must be commenced within three years, except as provided in section  two
    14  hundred  thirteen-a  of this article or article 2 of the uniform commer-
    15  cial code or article 36-B of the general business  law.  Notwithstanding
    16  any  other  provision  of  law,  when  the applicable limitations period
    17  expires, any subsequent payment toward, written or oral  affirmation  of
    18  or  other activity on the debt does not revive or extend the limitations
    19  period.
    20    § 5. The civil practice law and rules  is  amended  by  adding  a  new
    21  section 306-d to read as follows:
    22    §  306-d.  Additional  mailing of notice in an action arising out of a
    23  consumer credit transaction. (a) At the time of filing with the clerk of
    24  the proof of service of the summons and complaint in an  action  arising
    25  out  of a consumer credit transaction, the plaintiff shall submit to the
    26  clerk a stamped, unsealed envelope addressed to the  defendant  together
    27  with  a  written  notice  in  clear type of no less than twelve-point in
    28  size,  in  both  English  and  Spanish,  and  containing  the  following
    29  language:
    30                        ADDITIONAL NOTICE OF LAWSUIT

    31  (NAME OF COURT)
    32  (COUNTY)
    33  (STREET ADDRESS, ROOM NUMBER)
    34  (CITY, STATE, ZIP CODE)

    35  (NAME OF DEFENDANT)
    36  (ADDRESS OF DEFENDANT)

    37  Plaintiff:
    38  Defendant:
    39  Name of original creditor, unless same:
    40  Index number:

    41  Attention:  a  lawsuit  has been filed against you claiming that you owe
    42  money for an unpaid consumer debt.
    43  You may wish to contact an attorney.
    44    You should respond to the lawsuit as soon as  possible  by  filing  an
    45  "answer" which may be done at the court clerk's office listed above.
    46    If  you  do  not  respond  to the lawsuit, the court may enter a money
    47  judgment against you. Once entered, a judgment is good and can  be  used
    48  against  you  for  twenty  years,  and your personal property and money,
    49  including a portion of your paycheck and/or bank account, may  be  taken
    50  from  you.  Also, a judgment may affect your credit score and can affect
    51  your ability to rent a home, find a job, or take out a loan.
    52  You CANNOT be arrested or sent to jail for owing a debt.
        A. 6909--C                          3

     1  Additional information can be found at the New York state  court  system
     2  website.
     3  Sources of information and assistance:
     4  The  court  encourages  you  to  inform yourself about your options as a
     5  defendant in this lawsuit. In addition  to  seeking  assistance  from  a
     6  private  attorney  or  legal aid office, there are free legal assistance
     7  computer programs that you can use online to help you represent yourself
     8  in this lawsuit.
     9  For further information, or to locate a legal aid program near you,  you
    10  may  visit  the  LawHelpNY  website  or  the New York state court system
    11  website, which has information for representing yourself  and  links  to
    12  other  resources at [insert URL for consumer credit resources for unrep-
    13  resented litigants published by the  New  York  state  office  of  court
    14  administration].
    15    (b)  The  face  of the envelope shall be addressed to the defendant at
    16  the address at which process was served, and shall contain  the  defend-
    17  ant's  name, address (including apartment number) and zip code. The face
    18  of the envelope also shall state the appropriate clerk's office  as  its
    19  return address.
    20    (c)  The  clerk  promptly  shall  mail  to  the defendant the envelope
    21  containing the additional notice set forth in subdivision  (a)  of  this
    22  section.  No default judgment based on the defendant's failure to answer
    23  shall be entered unless there has been compliance with this section, and
    24  at least twenty days have elapsed from the date of mailing by the clerk.
    25  No default judgment based on the defendant's failure to answer shall  be
    26  entered if the additional notice is returned to the court as undelivera-
    27  ble.  Receipt  of the additional notice by the defendant does not confer
    28  jurisdiction on the court in the absence of proper service of process.
    29    (d) The chief administrative judge shall issue a  Spanish  translation
    30  of  the notice in subdivision (a) of this section and shall maintain and
    31  publish the URL address for the web page containing  consumer  resources
    32  for unrepresented litigants.
    33    §  6.  Subdivision  (a)  of section 3012 of the civil practice law and
    34  rules is amended to read as follows:
    35    (a) Service of  pleadings.  The  complaint  may  be  served  with  the
    36  summons, except that in an action arising out of a consumer credit tran-
    37  saction,  the  complaint  shall be served with the summons. A subsequent
    38  pleading asserting new or additional claims for relief shall  be  served
    39  upon  a party who has not appeared in the manner provided for service of
    40  a summons. In any other case, a pleading shall be served in  the  manner
    41  provided  for service of papers generally. Service of an answer or reply
    42  shall be made within twenty days after service of the pleading to  which
    43  it responds.
    44    §  7.  Rule  3016  of  the  civil practice law and rules is amended by
    45  adding a new subdivision (j) to read as follows:
    46    (j) Consumer credit transactions.  In  an  action  arising  out  of  a
    47  consumer  credit  transaction where a purchaser, borrower or debtor is a
    48  defendant, the contract or other written instrument on which the  action
    49  is  based  shall be attached to the complaint and the following informa-
    50  tion shall be set forth in the complaint:
    51    (1) The name of the original creditor;
    52    (2) The last four digits of the account number  printed  on  the  most
    53  recent  monthly statement recording a purchase transaction, last payment
    54  or balance transfer;
        A. 6909--C                          4

     1    (3) The date and amount of the last payment  or,  if  no  payment  was
     2  made, a statement that the purchaser, borrower or debtor made no payment
     3  on the account;
     4    (4)  If  the  complaint contains a cause of action based on an account
     5  stated, the date that the final statement of account was mailed  to  the
     6  defendant;
     7    (5)  (A)  Except as provided in subparagraph (B) of this paragraph, an
     8  itemization of the amount sought, by (i) principal; (ii) finance  charge
     9  or charges; (iii) fees imposed by the original creditor; (iv) collection
    10  costs;  (v) attorney's fees; (vi) interest; and (vii) any other fees and
    11  charges.
    12    (B) If the  account  was  a  revolving  credit  account,  an  itemized
    13  accounting  of the debt, including: (i) the total amount of the debt due
    14  as of charge-off; (ii)  the  total  amount  of  interest  accrued  since
    15  charge-off;  (iii)  the  total  amount  of  non-interest charges or fees
    16  accrued since charge-off; and (iv) the total amount of  payments  and/or
    17  credits made on the debt since charge-off;
    18    (6)  The  account balance printed on the most recent monthly statement
    19  recording a purchase transaction, last payment or balance transfer;
    20    (7) (A) Whether the plaintiff is the original creditor.
    21    (B) If the plaintiff is not the original creditor, the complaint shall
    22  also state (i) the date on which the debt was sold or  assigned  to  the
    23  plaintiff;  (ii) the name of each previous owner of the account from the
    24  original creditor to the plaintiff and the date on which  the  debt  was
    25  assigned to that owner by the original creditor or subsequent owner; and
    26  (iii)  the  amount due at the time of the sale or assignment of the debt
    27  by the original creditor; and
    28    (8) Any matters required to be stated with particularity  pursuant  to
    29  rule 3015 of this article.
    30    § 8. Subdivision (e) of rule 3211 of the civil practice law and rules,
    31  as  amended  by  chapter  616 of the laws of 2005, is amended to read as
    32  follows:
    33    (e) Number, time and waiver of objections; motion to  plead  over.  At
    34  any  time before service of the responsive pleading is required, a party
    35  may move on one or more of the grounds set forth in subdivision  (a)  of
    36  this  rule,  and  no  more  than one such motion shall be permitted. Any
    37  objection or defense based upon a ground set forth  in  paragraphs  one,
    38  three,  four,  five  and  six  of subdivision (a) of this rule is waived
    39  unless raised either by such motion or in  the  responsive  pleading.  A
    40  motion  based  upon a ground specified in paragraph two, seven or ten of
    41  subdivision (a) of this rule may be made at any subsequent time or in  a
    42  later  pleading,  if one is permitted; an objection that the summons and
    43  complaint, summons with notice, or notice of petition and  petition  was
    44  not  properly  served is waived if, having raised such an objection in a
    45  pleading, the objecting party does not move for judgment on that  ground
    46  within  sixty  days after serving the pleading, unless the court extends
    47  the time upon the ground of undue hardship. The foregoing sentence shall
    48  not apply in any proceeding to collect a debt arising out of a  consumer
    49  credit  transaction where a consumer is a defendant or under subdivision
    50  one or two of section seven hundred eleven of the real property  actions
    51  and  proceedings  law.  The  papers  in  opposition to a motion based on
    52  improper service shall contain a copy of the proof of  service,  whether
    53  or  not  previously filed. An objection based upon a ground specified in
    54  paragraph eight or nine of subdivision (a) of this rule is waived  if  a
    55  party  moves  on any of the grounds set forth in subdivision (a) of this
    56  rule without raising such objection or  if,  having  made  no  objection
        A. 6909--C                          5

     1  under  subdivision  (a)  of  this  rule,  he  or she does not raise such
     2  objection in the responsive pleading which, in any action to  collect  a
     3  debt  arising out of a consumer credit transaction where a consumer is a
     4  defendant, includes any amended responsive pleading.
     5    §  9.  Rule  3212  of  the  civil practice law and rules is amended by
     6  adding a new subdivision (j) to read as follows:
     7    (j) Additional notice in any action to collect a debt arising  out  of
     8  a consumer credit transaction where a consumer is a defendant.
     9    1.  At  the  time  of service of a notice of motion any part of  which
    10  requests summary judgment in whole or in part, where the   moving  party
    11  is  a  plaintiff and the respondent is a consumer defendant in an action
    12  to collect a debt arising out of a   consumer  credit  transaction,  and
    13  where the consumer defendant against  whom summary judgment is sought is
    14  not  represented by an attorney, the plaintiff shall submit to the clerk
    15  a stamped, unsealed envelope addressed to the  defendant  together  with
    16  the  following additional notice in English and Spanish to be printed in
    17  clear type no less than twelve-point in size:
    18                              IMPORTANT NOTICE
    19  The Plaintiff has asked the Court  to  enter  judgment  against  you  by
    20  making a Motion for Summary Judgment.  Keep this Notice and the envelope
    21  it  came  in.  The  Motion for Summary Judgment was separately served on
    22  you.  To avoid entry of judgment:
    23  (1) You must appear in court as directed below:
    24  WHERE:  Name of Court, Street Address, Room Number
    25  WHEN:  Date and time
    26  (2) You should oppose the motion IN WRITING.
    27  HOW TO OPPOSE THE MOTION:
    28    (1) State the legal reasons why the court should  not  enter  judgment
    29  against you, including your defenses.
    30    (2) State the facts that support your defenses.
    31    (3) Attach affidavits and/or exhibits to support the facts you assert.
    32    (a)  Affidavits  are sworn statements of witnesses (including you) who
    33  state facts they know to be true.  The affidavit should state the  facts
    34  and  how the witness knows them.  Also, the affidavit should explain any
    35  exhibits.  An affidavit of service is an affidavit that states  how  and
    36  when  papers  were  served.    An affidavit must be signed in front of a
    37  notary. Free forms are available on the  New  York  State  Court  system
    38  website  at  [insert URL for consumer credit resources for unrepresented
    39  litigants published by the New  York  State  Office  of  Court  Adminis-
    40  tration].
    41    (b) Exhibits are copies of documents. Exhibits are usually attached to
    42  affidavits.
    43    (4)  Have someone (not you or another defendant in the lawsuit) mail a
    44  copy of your opposition to the plaintiff's attorney  before  your  court
    45  date and have them prepare an affidavit of service by mail.
    46    (5)  Bring  a  copy of your opposition and the affidavit of service to
    47  your court date.
    48    (6) Attend your court date.
    49  IF YOU NEED MORE TIME:
    50  If you need more time to  prepare  your  written  response,  you  should
    51  appear at your court date and ask the judge for more time.  You can also
    52  ask the judge to refer you for legal help.
    53  IF YOU NEED LEGAL HELP:
    54  You  may  seek legal help from a private attorney or a legal aid office.
    55  Some courts have free  legal  assistance  programs  for  people  without
    56  lawyers.    You  can  find  resources on the New York State court system
        A. 6909--C                          6

     1  website at [insert URL for consumer credit resources  for  unrepresented
     2  litigants  published  by  the  New  York  State Office of Court Adminis-
     3  tration].
     4    2.  The  clerk  promptly  shall  mail  to  the  defendant the envelope
     5  containing the additional notice set forth  in  paragraph  one  of  this
     6  subdivision  and  note  the  date of mailing in the case record. Summary
     7  judgment shall not be entered based on defendant's failure to oppose the
     8  motion unless there has been compliance with this section and  at  least
     9  fourteen  days  have  elapsed  from  the date of mailing by the clerk or
    10  nineteen days if the plaintiff's notice  of  motion  demands  additional
    11  time under subdivision (b) of rule 2214 of this chapter.
    12    3. The chief administrative judge shall issue a Spanish translation of
    13  the  notice  in paragraph one of this subdivision and shall maintain and
    14  publish the URL address for the  web  page  containing  consumer  credit
    15  resources for unrepresented litigants.
    16    §  10. Section 3213 of the civil practice law and rules, as amended by
    17  chapter 210 of the laws of 1969, is amended to read as follows:
    18    § 3213. Motion for summary judgment in  lieu  of  complaint.  When  an
    19  action is based upon an instrument for the payment of money only or upon
    20  any  judgment,  the  plaintiff  may  serve  with the summons a notice of
    21  motion for summary judgment and the  supporting  papers  in  lieu  of  a
    22  complaint.  The summons served with such motion papers shall require the
    23  defendant to submit answering papers  on  the  motion  within  the  time
    24  provided  in the notice of motion. The minimum time such motion shall be
    25  noticed to be heard shall be as provided by subdivision (a) of rule  320
    26  for  making  an appearance, depending upon the method of service. If the
    27  plaintiff sets the hearing date of the motion  later  than  the  minimum
    28  time  therefor,  he  may  require  the  defendant to serve a copy of his
    29  answering papers upon him within  such  extended  period  of  time,  not
    30  exceeding  ten days, prior to such hearing date. No default judgment may
    31  be entered pursuant to subdivision (a) of  section  3215  prior  to  the
    32  hearing  date  of  the  motion.  If the motion is denied, the moving and
    33  answering papers shall be deemed the complaint and answer, respectively,
    34  unless the court orders otherwise. The  additional  notice  required  by
    35  subdivision (j) of rule 3212 shall be applicable to a motion made pursu-
    36  ant  to  this  section  in any action to collect a debt arising out of a
    37  consumer credit transaction where a consumer is a defendant.
    38    § 11. Subdivision (f) of section 3215 of the civil  practice  law  and
    39  rules,  as  amended by chapter 453 of the laws of 2006, is amended and a
    40  new subdivision (j) is added to read as follows:
    41    (f) Proof. On any application for judgment by default,  the  applicant
    42  shall  file  proof  of  service  of  the summons and the complaint, or a
    43  summons and notice served pursuant to subdivision (b)  of  rule  305  or
    44  subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
    45  constituting the claim, the default and the amount due by affidavit made
    46  by the party, or where the state of New York is the plaintiff, by  affi-
    47  davit  made  by  an attorney from the office of the attorney general who
    48  has or obtains knowledge of such facts through review of  state  records
    49  or otherwise. Where a verified complaint has been served, it may be used
    50  as the affidavit of the facts constituting the claim and the amount due;
    51  in  such case, an affidavit as to the default shall be made by the party
    52  or the party's attorney. In an action arising out of a  consumer  credit
    53  transaction,  if  the plaintiff is not the original creditor, the appli-
    54  cant shall include: (1) an affidavit by the  original  creditor  of  the
    55  facts constituting the debt, the default in payment, the sale or assign-
    56  ment  of the debt, and the amount due at the time of sale or assignment;
        A. 6909--C                          7

     1  (2) for each subsequent assignment or sale of the debt to another  enti-
     2  ty,  an  affidavit  of sale of the debt by the debt seller, completed by
     3  the seller or assignor; and (3) an affidavit of a witness of the  plain-
     4  tiff,  which  includes  a  chain  of title of the debt, completed by the
     5  plaintiff or plaintiff's witness. The chief administrative  judge  shall
     6  issue  form  affidavits  to satisfy the requirements of this subdivision
     7  for consumer credit transactions.  When  jurisdiction  is  based  on  an
     8  attachment  of  property,  the  affidavit  must  state  that an order of
     9  attachment granted in the action has been levied on the property of  the
    10  defendant,  describe  the property and state its value. Proof of mailing
    11  the notice required by subdivision (g) of this section,  where  applica-
    12  ble, shall also be filed.
    13    (j)  Affidavit. A request for a default judgment entered by the clerk,
    14  must be accompanied by an affidavit  by  the  plaintiff  or  plaintiff's
    15  attorney  stating that after reasonable inquiry, he or she has reason to
    16  believe that the statute of limitations has  not  expired.    The  chief
    17  administrative judge shall issue form affidavits to satisfy the require-
    18  ments of this subdivision for consumer credit transactions.
    19    §  12.  The  civil  practice  law and rules is amended by adding a new
    20  section 7516 to read as follows:
    21    § 7516. Confirmation of an award based on  a  consumer  credit  trans-
    22  action.  In any proceeding under section 7510 of this article to confirm
    23  an award based on a consumer credit transaction, the  party  seeking  to
    24  confirm  the  award  shall  plead the actual terms and conditions of the
    25  agreement to arbitrate. The party shall attach to its petition  (a)  the
    26  agreement  to  arbitrate;  (b)  the  demand for arbitration or notice of
    27  intention to arbitrate, with proof of service; and (c)  the  arbitration
    28  award,  with proof of service. If the award does not contain a statement
    29  of the claims submitted for arbitration, of the claims ruled upon by the
    30  arbitrator, and of the calculation of figures used by the arbitrator  in
    31  arriving at the award, then the petition shall contain such a statement.
    32  The  court  shall not grant confirmation of an award based on a consumer
    33  credit transaction unless the party seeking to  confirm  the  award  has
    34  complied with this section.
    35    §  13. Subdivision 2 of section 212 of the judiciary law is amended by
    36  adding a new paragraph (aa) to read as follows:
    37    (aa) Not later than  January  first,  two  thousand  twenty-one,  make
    38  available  Spanish  translations  of  the additional notices in consumer
    39  credit transaction actions and proceedings required by section 306-d and
    40  subdivision (j) of rule 3212 of the civil practice law  and  rules,  and
    41  make  available  form affidavits required for a motion for default judg-
    42  ment in a consumer credit transaction action or proceeding  required  by
    43  subdivision (f) of section 3215 of the civil practice law and rules.
    44    §  14. This act shall take effect immediately; provided, however, that
    45  sections two, three, five, six, seven,  eight,  nine,  ten,  eleven  and
    46  twelve shall take effect on the one hundred eightieth day after it shall
    47  have  become  a law and shall apply to actions and proceedings commenced
    48  on or after such date; and provided, further, that section four of  this
    49  act  shall  take  effect  on the one hundred fiftieth day after this act
    50  shall have become a law.