Bill Text: NY S04827 | 2019-2020 | General Assembly | Introduced

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 11-0)

Status: (Introduced - Dead) 2020-07-22 - PRINT NUMBER 4827E [S04827 Detail]

Download: New_York-2019-S04827-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
            S. 4827                                                  A. 6909
                               2019-2020 Regular Sessions
                SENATE - ASSEMBLY
                                     March 26, 2019
                                       ___________
        IN  SENATE -- Introduced by Sen. THOMAS -- read twice and ordered print-
          ed, and when printed to be committed to the Committee on Judiciary
        IN ASSEMBLY -- Introduced by M. of A. WEINSTEIN, JAFFEE, COLTON,  GALEF,
          ABINANTI,  ZEBROWSKI,  O'DONNELL,  FAHY, PEOPLES-STOKES, L. ROSENTHAL,
          M. G. MILLER, DINOWITZ, SEAWRIGHT, GLICK, WEPRIN,  MOSLEY,  TAYLOR  --
          Multi-Sponsored  by  --  M.  of  A. CAHILL, COOK, CYMBROWITZ, EPSTEIN,
          GOTTFRIED, McDONOUGH, PERRY -- read once and referred to the Committee
          on Judiciary
        AN ACT to amend the civil practice law and rules, in relation to consum-
          er 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. Subdivision 2 of section 213 of the civil practice law and rules,
     4  as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
     5  follows:
     6    2.  an  action  upon a contractual obligation or liability, express or
     7  implied, except as provided in section two  hundred  thirteen-a  or  two
     8  hundred  fourteen-h  of this article or article 2 of the uniform commer-
     9  cial code or article 36-B of the general business law;
    10    § 3. The civil practice law and rules  is  amended  by  adding  a  new
    11  section 214-h to read as follows:
    12    §  214-h.  Certain actions arising out of consumer credit transactions
    13  to be commenced within three years. An action arising out of a  consumer
    14  credit  transaction where a purchaser, borrower or debtor is a defendant
    15  must be commenced within three years, except as provided in section  two
    16  hundred  thirteen-a  of this article or article 2 of the uniform commer-
    17  cial code or article 36-B of the general business law. When  the  period
    18  within  which an action may be commenced under this section has expired,
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00927-06-9
        S. 4827                             2                            A. 6909
     1  the right to collect consumer credit debt is extinguished as well as the
     2  remedy.
     3    For  purposes  of  this section, "the right to collect consumer credit
     4  debt" shall mean any attempts by the creditor, third party purchaser, or
     5  other authorized third party to collect such  debt  including,  but  not
     6  limited to, calls, mail or other attempts to collect.
     7    §  4.  The  civil  practice  law  and rules is amended by adding a new
     8  section 306-d to read as follows:
     9    § 306-d. Additional mailing of notice in an action arising  out  of  a
    10  consumer credit transaction. (a) At the time of filing with the clerk of
    11  the  proof  of service of the summons and complaint in an action arising
    12  out of a consumer credit transaction, the plaintiff shall submit to  the
    13  clerk  a  stamped  unsealed envelope addressed to the defendant together
    14  with a written notice in clear type of  no  less  than  twelve-point  in
    15  size,  in  both  English  and  Spanish,  and  containing  the  following
    16  language:
    17                        ADDITIONAL NOTICE OF LAWSUIT
    18  (NAME OF COURT)
    19  (COUNTY)
    20  (STREET ADDRESS, ROOM NUMBER)
    21  (CITY, STATE, ZIP CODE)
    22  (NAME OF DEFENDANT)
    23  (ADDRESS OF DEFENDANT)
    24  Plaintiff:__________________________________
    25  Defendant:__________________________________
    26  Name of original creditor, unless same:______________________________
    27  Index number:_______________________________
    28  Attention: a lawsuit has been filed against you claiming  that  you  owe
    29  money for an unpaid consumer debt.
    30  You may wish to contact an attorney.
    31    You  should  respond  to  the lawsuit as soon as possible by filing an
    32  "answer" which may be done at the court clerk's office listed above.
    33    If you do not respond to the lawsuit, the  court  may  enter  a  money
    34  judgment  against  you. Once entered, a judgment is good and can be used
    35  against you for twenty years, and  your  personal  property  and  money,
    36  including  a  portion of your paycheck and/or bank account, may be taken
    37  from you.  Also, a judgment may affect your credit score and can  affect
    38  your ability to rent a home, find a job, or take out a loan.
    39  You CANNOT be arrested or sent to jail for owing a debt.
    40  Additional  information  can  be  found  at the court system website at:
    41  www.nycourts.gov
    42  Sources of information and assistance:
    43  The court encourages you to inform yourself  about  your  options  as  a
    44  defendant  in  this  lawsuit.  In  addition to seeking assistance from a
    45  private attorney or legal aid office, there are  free  legal  assistance
    46  programs  that you can use online to help you represent yourself in this
    47  lawsuit.
    48  For further information, or to locate an entity or program near you, you
    49  may visit the New York  state  unified  court  system's  "resources  for
    50  unrepresented litigants" website at:
    51  http://ww2.nycourts.gov/RULES/CCR/resources.shtml
        S. 4827                             3                            A. 6909
     1    (b)  The  face  of the envelope shall be addressed to the defendant at
     2  the address at which process was served, and shall contain  the  defend-
     3  ant's  name, address (including apartment number) and zip code. The face
     4  of the envelope also shall state the appropriate clerk's office  as  its
     5  return address.
     6    (c)  The  clerk  promptly  shall  mail  to  the defendant the envelope
     7  containing the additional notice set forth in subdivision  (a)  of  this
     8  section.  No default judgment based on the defendant's failure to answer
     9  shall be entered unless there has been compliance with this section, and
    10  at least twenty days have elapsed from the date of mailing by the clerk.
    11  No default judgment based on the defendant's failure to answer shall  be
    12  entered if the additional notice is returned to the court as undelivera-
    13  ble.  Receipt  of the additional notice by the defendant does not confer
    14  jurisdiction on the court in the absence of proper service of process.
    15    § 5. Subdivision (a) of section 3012 of the  civil  practice  law  and
    16  rules is amended to read as follows:
    17    (a)  Service  of  pleadings.  The  complaint  may  be  served with the
    18  summons, except that in an action arising out of a consumer credit tran-
    19  saction, the complaint shall be served with the  summons.  A  subsequent
    20  pleading  asserting  new or additional claims for relief shall be served
    21  upon a party who has not appeared in the manner provided for service  of
    22  a  summons.  In any other case, a pleading shall be served in the manner
    23  provided for service of papers generally. Service of an answer or  reply
    24  shall  be made within twenty days after service of the pleading to which
    25  it responds.
    26    § 6. Rule 3016 of the civil practice  law  and  rules  is  amended  by
    27  adding a new subdivision (j) to read as follows:
    28    (j)  Consumer  credit  transactions.  In  an  action  arising out of a
    29  consumer credit transaction where a purchaser, borrower or debtor  is  a
    30  defendant,  the contract or other written instrument on which the action
    31  is based shall be attached to the complaint and the  following  informa-
    32  tion shall be set forth in the complaint:
    33    1. The name of the original creditor;
    34    2. The last four digits of the original account number;
    35    3. The date and amount of the last payment;
    36    4.  If  the  complaint  contains a cause of action based on an account
    37  stated, the date that the final statement of account was mailed  to  the
    38  defendant;
    39    5. An itemization of the amount sought, by (i) principal; (ii) finance
    40  charge  or  charges;  (iii)  fees imposed by the original creditor; (iv)
    41  collection costs; (v) attorney's fees;  (vi)  interest;  and  (vii)  any
    42  other fees and charges. The term "finance charge" means a finance charge
    43  as defined in Regulation Z, 12 C.F.R. § 226.4;
    44    6. Whether the plaintiff is the original creditor. If the plaintiff is
    45  not  the  original creditor, the complaint shall also state (i) the date
    46  on which the debt was sold or assigned to the plaintiff; (ii)  the  name
    47  of each previous owner of the account and the date on which the debt was
    48  assigned to that owner; and (iii) the amount due at the time of the sale
    49  or assignment of the debt by the original creditor; and
    50    7.  Any  matters  required to be stated with particularity pursuant to
    51  rule three thousand fifteen of this article.
    52    § 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
    53  as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
    54  follows:
    55    (e)  Number,  time  and waiver of objections; motion to plead over. At
    56  any time before service of the responsive pleading is required, a  party
        S. 4827                             4                            A. 6909
     1  may  move  on one or more of the grounds set forth in subdivision (a) of
     2  this rule, and no more than one such  motion  shall  be  permitted.  Any
     3  objection  or  defense  based upon a ground set forth in paragraphs one,
     4  three,  four,  five  and  six  of subdivision (a) of this rule is waived
     5  unless raised either by such motion or in  the  responsive  pleading.  A
     6  motion  based  upon a ground specified in paragraph two, seven or ten of
     7  subdivision (a) of this rule may be made at any subsequent time or in  a
     8  later  pleading,  if one is permitted; an objection that the summons and
     9  complaint, summons with notice, or notice of petition and  petition  was
    10  not  properly  served is waived if, having raised such an objection in a
    11  pleading, the objecting party does not move for judgment on that  ground
    12  within  sixty  days after serving the pleading, unless the court extends
    13  the time upon the ground of undue hardship. The foregoing sentence shall
    14  not apply in any proceeding to collect a debt arising out of a  consumer
    15  credit  transaction where a consumer is a defendant or under subdivision
    16  one or two of section seven hundred eleven of the real property  actions
    17  and  proceedings  law.  The  papers  in  opposition to a motion based on
    18  improper service shall contain a copy of the proof of  service,  whether
    19  or  not  previously filed. An objection based upon a ground specified in
    20  paragraph eight or nine of subdivision (a) of this rule is waived  if  a
    21  party  moves  on any of the grounds set forth in subdivision (a) of this
    22  rule without raising such objection or  if,  having  made  no  objection
    23  under  subdivision  (a)  of  this  rule,  he  or she does not raise such
    24  objection in the responsive pleading which, in any action to  collect  a
    25  debt  arising out of a consumer credit transaction where a consumer is a
    26  defendant, includes any amended responsive pleading.
    27    § 8. Rule 3212 of the civil practice  law  and  rules  is  amended  by
    28  adding a new subdivision (j) to read as follows:
    29    (j)  Additional notice in any action to collect a debt arising  out of
    30  a consumer credit transaction where a consumer is a defendant.
    31    1. At the time of service of a notice of motion any  part  of    which
    32  requests  summary  judgment in whole or in part, where the  moving party
    33  is a plaintiff and the respondent is a consumer defendant in  an  action
    34  to  collect  a  debt  arising out of a  consumer credit transaction, and
    35  where the consumer defendant against  whom summary judgment is sought is
    36  not represented by an attorney, the plaintiff shall serve, together with
    37  the notice of motion, the following additional notice to be  printed  in
    38  clear type no less than twelve-point in size:
    39                    Important notice to pro se defendants
    40  (Name of court)
    41  (Street address, room number)
    42  (City, state, zip code)
    43  Plaintiff:
    44  Defendant:
    45  Index number:
    46  Motion return date and time:
    47  Attention CPLR Rule 3212 motion for summary judgment
    48  This notice is to advise you that the plaintiff in this case has filed a
    49  motion  for  summary  judgment  against  you pursuant to CPLR Rule 3212,
    50  which means that summary judgment will be granted  if  the  court  finds
    51  that  there  is  no  genuine  issue as to any material fact and that the
    52  plaintiff is entitled to judgment as a matter of law.
        S. 4827                             5                            A. 6909
     1  Failure to respond to this motion for summary judgment may result  in  a
     2  money judgment being entered against you in favor of the plaintiff.
     3  Once  entered, a judgment is good and can be used against you for twenty
     4  years, and your personal property and money, including a portion of your
     5  paycheck and/or bank account, may be taken from you.  Also,  a  judgment
     6  may  affect  your  credit  score  and can affect your ability to  rent a
     7  home, find a job, or take out a loan. You CANNOT be arrested or sent  to
     8  jail for owing a  debt.
     9  Opposing this motion for summary judgment:
    10  If  you  wish to oppose the plaintiff's request for judgment, you should
    11  set forth in a written  response the reasons that the plaintiff has  not
    12  shown  that it is entitled to judgment as a matter of law, and any facts
    13  that you believe show that you are not liable to the plaintiff or have a
    14  defense. You should submit affidavits or exhibits supporting  any  facts
    15  that  you  assert  show  that you are not liable or have a defense. Each
    16  affidavit should set forth relevant  facts  and  show  that  the  person
    17  submitting  the  affidavit has personal knowledge of those facts. If you
    18  rely on  exhibits, you should attach copies of them to an affidavit that
    19  explains what they are and how they show that you are not liable or have
    20  a defense. You should bring your opposition papers    to  court  on  the
    21  court date and mail a copy to the plaintiff's attorney in advance of the
    22  court date. You should also attend court on the return date.
    23  Sources of information and assistance:
    24  The  court  encourages  you  to  inform yourself about your options as a
    25  defendant in this lawsuit.   In addition to seeking  assistance  from  a
    26  private  attorney  or legal aid office, there may be free  legal assist-
    27  ance programs that you may contact for help in representing yourself  in
    28  this lawsuit.
    29  For further information, or to locate an entity or program near you, you
    30  may  visit  the  New  York  state  unified court system's "resources for
    31  unrepresented litigants" website at:
    32  http://ww2.nycourts.gov/RULES/CCR/resources.shtml
    33    2. The plaintiff seeking summary judgment shall file proof of  service
    34  of  the  additional notice  with the court, and no motion for which this
    35  additional notice is required shall be granted   unless  such  proof  of
    36  service has been filed.
    37    §  9.  Section 3213 of the civil practice law and rules, as amended by
    38  chapter 210 of the laws of 1969, is amended to read as follows:
    39    § 3213. Motion for summary judgment in  lieu  of  complaint.  When  an
    40  action is based upon an instrument for the payment of money only or upon
    41  any  judgment,  the  plaintiff  may  serve  with the summons a notice of
    42  motion for summary judgment and the  supporting  papers  in  lieu  of  a
    43  complaint.  The summons served with such motion papers shall require the
    44  defendant to submit answering papers  on  the  motion  within  the  time
    45  provided  in the notice of motion. The minimum time such motion shall be
    46  noticed to be heard shall be as provided by subdivision (a) of rule  320
    47  for  making  an appearance, depending upon the method of service. If the
    48  plaintiff sets the hearing date of the motion  later  than  the  minimum
    49  time  therefor,  he  may  require  the  defendant to serve a copy of his
    50  answering papers upon him within  such  extended  period  of  time,  not
        S. 4827                             6                            A. 6909
     1  exceeding  ten days, prior to such hearing date. No default judgment may
     2  be entered pursuant to subdivision (a) of  section  3215  prior  to  the
     3  hearing  date  of  the  motion.  If the motion is denied, the moving and
     4  answering papers shall be deemed the complaint and answer, respectively,
     5  unless  the  court orders otherwise.   The additional notice required by
     6  subdivision (j) of rule thirty-two hundred twelve of this article  shall
     7  be applicable to a motion made pursuant to this section in any action to
     8  collect  a  debt  arising  out  of a consumer credit transaction where a
     9  consumer is a defendant.
    10    § 10. Subdivision (f) of section 3215 of the civil  practice  law  and
    11  rules,  as  amended by chapter 453 of the laws of 2006, is amended and a
    12  new subdivision (j) is added to read as follows:
    13    (f) Proof. On any application for judgment by default,  the  applicant
    14  shall  file  proof  of  service  of  the summons and the complaint, or a
    15  summons and notice served pursuant to subdivision (b)  of  rule  305  or
    16  subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
    17  constituting the claim, the default and the amount due by affidavit made
    18  by the party, or where the state of New York is the plaintiff, by  affi-
    19  davit  made  by  an attorney from the office of the attorney general who
    20  has or obtains knowledge of such facts through review of  state  records
    21  or otherwise. Where a verified complaint has been served, it may be used
    22  as the affidavit of the facts constituting the claim and the amount due;
    23  in  such case, an affidavit as to the default shall be made by the party
    24  or the party's attorney. In an action arising out of a  consumer  credit
    25  transaction,  if  the plaintiff is not the original creditor, the appli-
    26  cant shall include: (1) an affidavit by the  original  creditor  of  the
    27  facts constituting the debt, the default in payment, the sale or assign-
    28  ment  of the debt, and the amount due at the time of sale or assignment;
    29  (2) for each subsequent assignment or sale of the debt to another  enti-
    30  ty,  an  affidavit  of sale of the debt by the debt seller, completed by
    31  the seller or assignor; and (3) an affidavit of a witness of the  plain-
    32  tiff,  which  includes  a  chain  of title of the debt, completed by the
    33  plaintiff or plaintiff's witness.  When  jurisdiction  is  based  on  an
    34  attachment  of  property,  the  affidavit  must  state  that an order of
    35  attachment granted in the action has been levied on the property of  the
    36  defendant,  describe  the property and state its value. Proof of mailing
    37  the notice required by subdivision (g) of this section,  where  applica-
    38  ble, shall also be filed.
    39    (j)  A  request  for  a default judgment entered by the clerk, must be
    40  accompanied by an affidavit by the  plaintiff  or  plaintiff's  attorney
    41  stating  that  after reasonable inquiry, he or she has reason to believe
    42  that the statute of limitations has not expired.
    43    § 11. The civil practice law and rules is  amended  by  adding  a  new
    44  section 7516 to read as follows:
    45    §  7516.  Confirmation  of  an award based on a consumer credit trans-
    46  action. In any proceeding under section 7510 of this article to  confirm
    47  an  award  based  on a consumer credit transaction, the party seeking to
    48  confirm the award shall plead the actual terms  and  conditions  of  the
    49  agreement  to  arbitrate. The party shall attach to its petition (a) the
    50  agreement to arbitrate; (b) the demand  for  arbitration  or  notice  of
    51  intention  to  arbitrate, with proof of service; and (c) the arbitration
    52  award, with proof of service. If the award does not contain a  statement
    53  of the claims submitted for arbitration, of the claims ruled upon by the
    54  arbitrator,  and of the calculation of figures used by the arbitrator in
    55  arriving at the award, then the petition shall contain such a statement.
    56  The court shall not grant confirmation of an award based on  a  consumer
        S. 4827                             7                            A. 6909
     1  credit  transaction  unless  the  party seeking to confirm the award has
     2  complied with this section.
     3    § 12. This act shall take effect on the first of January next succeed-
     4  ing  the  date  on which it shall have become a law, except that section
     5  three of this act shall take effect on  the  one  hundred  fiftieth  day
     6  after this act shall have become a law.