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    The Lawletter Blog

    Charlene J. Hicks

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    CREDITOR’S RIGHTS: IRS Form 1099-C—Reporting Requirement or Debt Extinguishment Trap?

    Posted by Charlene J. Hicks on Thu, Nov 29, 2018 @ 09:11 AM

    The Lawletter Vol 43 No 7

    Charlene Hicks—Senior Attorney, National Legal Research Group        

                To date, no consensus has been reached among courts throughout the United States on the question as to whether a creditor’s issuance of an IRS Form1099-C results in the extinguishment of the reported debt in favor of the debtor. Form 1099-C bears the title “Cancellation of Debt,” and, according to the IRS, a creditor should issue this form to the debtor for any year in which a debt is cancelled. Depending on the state in which the debtor resides, a creditor’s issuance of a Form 1099-C may have the effect of barring further collection efforts and of completely discharging the reported debt.

                The two divergent approaches taken by courts on this issue result in opposite outcomes. The majority approach is illustrated by the Fourth Circuit’s opinion in FDIC v. Cashion, 720 F.3d 169 (4th Cir. 2013). 

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    Topics: Charlene Hicks, creditor's rights, debt extinguishment, Form 1099-C

    CONTRACTS: The Importance of Distinguishing a Contracting Party from a Stranger

    Posted by Charlene J. Hicks on Wed, Jun 13, 2018 @ 09:06 AM

    The Lawletter Vol 43 No 3

    Charlene Hicks—Senior Attorney, National Legal Research Group

         Although the law generally does not allow a contracting party to bring a tort claim against another party to the same contract, this protection does not extend to persons or entities that are classified as "strangers" to the contract. Thus, a contracting party may maintain a viable claim for tortious interference with contractual relations against a stranger to the agreement. In practice, however, the performance of a contract is often contingent on the acts and approval of persons or entities that did not formally enter into the agreement. This makes it difficult to distinguish between a protected contracting "party" and an unprotected "stranger."

         The popular Trader Joe's grocery chain recently found itself pushed into the murky realm of being classified as a "stranger" to a contract between two parties to which Trader Joe's had close business ties.

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    Topics: contracts, tort claims, tortious interference with contract, Trader Joe's

    CREDITORS RIGHTS/CONTRACTS LAW: Revoking Contractual Consent to Receive Creditor Phone Calls

    Posted by Charlene J. Hicks on Mon, Jan 8, 2018 @ 10:01 AM

    The Lawletter Vol 42 No 10

    Charlene Hicks, Senior Attorney, National Legal Research Group

                In what has been termed a groundbreaking opinion, the Second Circuit recently held that the federal Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b), bars a consumer-buyer from revoking his or her contractual consent to receive creditor calls concerning the underlying contract or account.  The case, Reyes v. Lincoln Automotive Financial Services, 861 F.3d 51 (2d Cir. 2017), provides creditors with a strong defense against consumers who issue complaints about the creditors’ debt collection processes.

                In the case, Alberto Reyes Jr. (“Reyes”) leased a new Lincoln MKZ luxury sedan from a Ford dealership. The lease was financed by Lincoln. One provision of the lease stated that Reyes expressly consented to electronic or verbal contact from Ford and Lincoln and their agents, affiliates, and representatives. Id. at 53-54. This contact included manual calling methods, prerecorded voice messages, texts, and emails to any email or telephone number that Reyes provided, “now or in the future, including a number for a cellular phone or wireless device[.]” Id. at 54. In his lease application, Reyes provided Lincoln with his cell phone number.

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    Topics: creditor's rights, contracts, creditor's phone calls, bar to revocation of contract consent

    CONTRACTS—Arbitration: Nonexistence of Designated Arbitral Institution at Time of Dispute May Void Mandatory Arbitration Requirement

    Posted by Charlene J. Hicks on Fri, Jul 14, 2017 @ 15:07 PM

    The Lawletter Vol 42 No 5

    Charlene Hicks, Senior Attorney, National Legal Research Group

                Despite the federal policy favoring arbitration, prospective plaintiffs continue to push courts to reexamine the enforceability parameters of arbitration agreements. These efforts have met with some success in cases where the arbitration agreement designates a particular arbitral institution to resolve a dispute between the parties, and the designated institution no longer exists at the time an actual dispute arises.

                This factual scenario has unveiled a degree of uncertainty in the meaning of the Federal Arbitration Act ("FAA"). The FAA provides that if "there shall be a lapse in the naming of an arbitrator . . . or in filling a vacancy, then upon the application of either party to the controversy the court shall designate and appoint an arbitrator[.]" 9 U.S.C. § 5. It is unclear from the statute whether the nonexistence of an arbitral institution designated in an arbitration agreement to resolve disputes between the parties constitutes a "lapse in the naming of an arbitrator" such that the court is authorized to appoint a substitute arbitrator. If the designated institution's nonexistence does not fall within the dictates of 9 U.S.C. § 5, then the court does not have the power to appoint a substitute. To do so would violate the long-established contractual principle that a party cannot be compelled to arbitrate a dispute that he or she has not agreed to submit to arbitration.

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    Topics: contracts, arbitration, arbitral institution, enforceability

    GOVERNMENT CONTRACTS: Supreme Court Decision Aids Veteran-Owned Business

    Posted by Charlene J. Hicks on Tue, Oct 18, 2016 @ 11:10 AM

    The Lawletter Vol 41 No 9

    Charlene Hicks, Senior Attorney, National Legal Research Group

         In Kingdomware Technologies, Inc. v. United States, 136 S. Ct. 1969 (2016), the United States Supreme Court recently declared that the Department of Veterans Affairs (the "VA") is required to give priority to veteran-owned businesses in the bidding process for government contracts as long as two or more veteran-owned small businesses may reasonably be expected to submit fair and reasonable bids. This unanimous decision should provide a boon to veteran-owned businesses and should also give government agencies pause in assessing bids for contract work.

         The Kingdomware dispute originated shortly after the enactment of the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the "VA Act"). The VA Act provides that the VA must restrict bid competitions to veteran-owned companies as long as the "rule of two" is satisfied. Specifically, 38 U.S.C. § 8127(d) states:

    Except as provided in subsections (b) and (c), for purposes of meeting the goals under subsection (a), and in accordance with this section, a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.

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    Topics: Charlene J. Hicks, The Lawletter Vol 41 No 9, government contracts, veteran-owned business, VA priority

    WRONGFUL DEATH: Apportioning Wrongful Death Proceeds Between Decedent's Survival Claim and Beneficiaries' Wrongful Death Claim

    Posted by Charlene J. Hicks on Thu, Jan 28, 2016 @ 15:01 PM

    The Lawletter Vol 41 No 1

    Charlene Hicks, Senior Attorney, National Legal Research Group

         When a catastrophic accident causes one or more people to die, multiple legal questions inevitably arise. Among these is the issue as to whether and to what extent the deceased person's medical insurance company is entitled to recoup the costs it paid for the person's medical treatment prior to death from any wrongful death settlement or verdict eventually entered in favor of the decedent's estate and/or beneficiaries.

         Although the answer to this question depends on the law of each particular state, an examination of Administrative Committee of Dillard's, Inc. Group Health, Dental & Vision Plan v. Sarrough, No. 1:14-CV-01165, 2015 WL 3466568 (N.D. Ohio June 1, 2015), appeal dismissed, No. 15-3718 (6th Cir. Aug. 12, 2015), may be illuminating. There, Hanan Saah was injured in a February 2011 car accident in Ohio. Her employer, Dillard's, paid $260,000 of her medical expenses pursuant to a federal Employee Retirement Security Act of 1974 ("ERISA") health plan. Saah subsequently died in July 2011. Her estate was eventually awarded $300,000 in various wrongful death settlements. Dillard's then claimed a right to the settlement proceeds in order to recoup its $260,000 in medical costs.

         The district court determined that, as an initial matter, it was important to distinguish, and to allocate the amount of funds attributable to, the two different components of the settlement: Saah's survival claim versus the wrongful death claim. Dillard's, as the ERISA-approved health benefit plan, had a right to obtain reimbursement of medical expenses paid from net settlement proceeds allocable to the survival portion of the settlement. Under Ohio law, the survival action belongs to the decedent's estate and, therefore, was subject to subrogation.

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    Topics: wrongful death, Charlene J. Hicks, The Lawletter Vol 41 No 1, subrogation to medical benefit plan, apportionment, survival claim

    CIVIL PROCEDURE: Filing of Postjudgment Motion Tolls Deadline to Move for Attorney's Fees

    Posted by Charlene J. Hicks on Wed, Oct 14, 2015 @ 17:10 PM

    The Lawletter Vol 40 No 9

    Charlene Hicks, Senior Attorney, National Legal Research Group

         For a prevailing party in a civil lawsuit to obtain attorney's fees, he or she must file a motion requesting fees by a statutory deadline. Problematically, however, many state statutes do not specify whether this deadline is tolled by the filing of a postjudgment motion. As a result, counsel may be placed in the awkward position of deciding whether to move for attorney's fees while the losing party's postjudgment motion is pending before the court.

          The effect of a postjudgment motion on the time in which a prevailing party must move for attorney's fees was recently addressed in Barbara Ann Hollier Trust v. Shack, Nos. 63308, 64047, 2015 WL 4656697 (Nev. Aug. 6, 2015). There, the court noted that Rule 54(d) of the Nevada Rules of Civil Procedure requires a prevailing party to move for attorney's fees within 20 days after service of notice of entry of judgment. However, in the case before the court, the losing party filed a motion for judgment notwithstanding the verdict or, alternatively, for a new trial before the prevailing party moved for attorney's fees. The prevailing party did not file any motion for attorney's fees until after the court denied the losing party's postjudgment motions.

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    Topics: civil procedure, tolling, Charlene J. Hicks, motion for attorney's fees, The Lawletter Vol 40 No 9

    ARBITRATION: FAA Preempts N.Y. Statute Prohibiting Mandatory Arbitration Clauses in Consumer Contracts

    Posted by Charlene J. Hicks on Thu, Jul 9, 2015 @ 12:07 PM

    The Lawletter Vol 40 No 5

    Charlene Hicks, Senior Attorney, National Legal Research Group

          In a matter of first impression, the New York Supreme Court, Appellate Term, recently ruled that a state law prohibiting mandatory arbitration clauses in consumer contracts was preempted by the Federal Arbitration Act ("FAA"). In Schiffer v. Slomin’s, Inc., No. 2013-1867NC, 2015 WL 1566198 (N.Y. App. Term Mar. 30, 2015), consumers filed a lawsuit against a security systems provider that sold and installed home security systems. The complaint contained causes of action against the security systems provider for breach of contract, breach of warranty, and fraud. In response, the security systems provider filed a motion to compel arbitration pursuant to an unsigned contract provided to the buyers that contained a mandatory arbitration clause.

         A New York state law, General Business Law section 399-c, generally prohibits mandatory arbitration clauses in consumer contracts. The Schiffer plaintiffs were homeowners-consumers; therefore, the arbitration clause the security systems provider sought to enforce was void under New York state law.

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    Topics: Federal Arbitration Act, arbitration clause, Charlene J. Hicks, The Lawletter Vol 40 No 5, consumer contract

    CIVIL PROCEDURE: Simultaneous Involvement in Cobell Settlement Claim Bars Plaintiffs' Mineral Lease Complaint Against United States

    Posted by Charlene J. Hicks on Thu, Mar 19, 2015 @ 12:03 PM

    The Lawletter Vol 40 No 1

    Charlene Hicks, Senior Attorney, National Legal Research Group

         A class action settlement may have far-reaching, unintended effects for particular class members who choose not to opt out of the settlement. This point is highlighted in a recent decision by the U.S. Court of Federal Claims in Two Shields v. United States, No. 13-90 L, 2015 WL 513315 (Fed. Cl. Feb. 6, 2015).

         In that case, two Native Americans filed claims against the United States, alleging that the Government had breached its fiduciary duty to prudently manage their mineral rights, which were held in trust by the United States. The plaintiffs were allottees of Indian lands on the Fort Berthold Indian Reservation who, in 2007 and 2008, had granted oil leases to a private party known as Dakota-3. The plaintiffs alleged that the United States had rubber-stamped its approval of the leases at below-market rates. In November 2010, Dakota-3 re-leased the plaintiffs' allotments for a bonus price roughly 20 times the original lease rate. The plaintiffs alleged that the United States had breached its duties under the Indian Long-Term Leasing Act, 25 U.S.C. § 396, which requires the Government to approve only those mineral leases that are in the best interests of the Indian owners.

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    Topics: civil procedure, class action, opt-out option

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