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--D
                                                                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 -- again amended on  third
          reading,  ordered reprinted, retaining 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.
                                                                   LBD00927-13-0
        A. 6909--D                          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--D                          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: ___________________.
    13    (b)  The  face  of the envelope shall be addressed to the defendant at
    14  the address at which process was served, and shall contain  the  defend-
    15  ant's  name, address (including apartment number) and zip code. The face
    16  of the envelope also shall state the appropriate clerk's office  as  its
    17  return address.
    18    (c)  The  clerk  promptly  shall  mail  to  the defendant the envelope
    19  containing the additional notice set forth in subdivision  (a)  of  this
    20  section.  No default judgment based on the defendant's failure to answer
    21  shall be entered unless there has been compliance with this section, and
    22  at least twenty days have elapsed from the date of mailing by the clerk.
    23  No default judgment based on the defendant's failure to answer shall  be
    24  entered if the additional notice is returned to the court as undelivera-
    25  ble.  Receipt  of the additional notice by the defendant does not confer
    26  jurisdiction on the court in the absence of proper service of process.
    27    (d) The chief administrative judge shall issue a  Spanish  translation
    28  of  the notice in subdivision (a) of this section and shall maintain and
    29  publish the URL address for the web page containing  consumer  resources
    30  for unrepresented litigants.
    31    §  6.  Subdivision  (a)  of section 3012 of the civil practice law and
    32  rules is amended to read as follows:
    33    (a) Service of  pleadings.  The  complaint  may  be  served  with  the
    34  summons, except that in an action arising out of a consumer credit tran-
    35  saction,  the  complaint  shall be served with the summons. A subsequent
    36  pleading asserting new or additional claims for relief shall  be  served
    37  upon  a party who has not appeared in the manner provided for service of
    38  a summons. In any other case, a pleading shall be served in  the  manner
    39  provided  for service of papers generally. Service of an answer or reply
    40  shall be made within twenty days after service of the pleading to  which
    41  it responds.
    42    §  7.  Rule  3016  of  the  civil practice law and rules is amended by
    43  adding a new subdivision (j) to read as follows:
    44    (j) Consumer credit transactions.  In  an  action  arising  out  of  a
    45  consumer  credit  transaction where a purchaser, borrower or debtor is a
    46  defendant, the contract or other written instrument on which the  action
    47  is  based  shall be attached to the complaint, however, for the purposes
    48  of this section, if the account was  a  revolving  credit  account,  the
    49  charge-off  statement  may  be  attached to the complaint instead of the
    50  contract or other written  instrument,  and  the  following  information
    51  shall be set forth in the complaint:
    52    (1) The name of the original creditor;
    53    (2)  The  last  four  digits of the account number printed on the most
    54  recent monthly statement recording a purchase transaction, last  payment
    55  or balance transfer;
        A. 6909--D                          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 on or about which the final statement  of  account  was
     6  provided to the 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  itemization  of
    13  the  amount  sought,  by:    (i)  the total amount of the debt due as of
    14  charge-off; (ii) the total amount of interest accrued since  charge-off;
    15  (iii)  the  total  amount  of non-interest charges or fees accrued since
    16  charge-off; and (iv) the total amount of payments and/or credits made on
    17  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--D                          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: ____________________.
    39    (b) Exhibits are copies of documents. Exhibits are usually attached to
    40  affidavits.
    41    (4)  Have someone (not you or another defendant in the lawsuit) mail a
    42  copy of your opposition to the plaintiff's attorney  before  your  court
    43  date and have them prepare an affidavit of service by mail.
    44    (5)  Bring  a  copy of your opposition and the affidavit of service to
    45  your court date.
    46    (6) Attend your court date.
    47  IF YOU NEED MORE TIME:
    48  If you need more time to  prepare  your  written  response,  you  should
    49  appear at your court date and ask the judge for more time.  You can also
    50  ask the judge to refer you for legal help.
    51  IF YOU NEED LEGAL HELP:
    52  You  may  seek legal help from a private attorney or a legal aid office.
    53  Some courts have free  legal  assistance  programs  for  people  without
    54  lawyers.    You  can  find  resources on the New York State court system
    55  website at: ____________________.
        A. 6909--D                          6

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

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