Bill Text: NY A06909 | 2019-2020 | General Assembly | Amended
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
STATE OF NEW YORK ________________________________________________________________________ 6909--E 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 -- again amended on third reading, 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. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD00927-17-0A. 6909--E 2 1 (q-1) Original creditor. The term "original creditor" means the entity 2 that owned a consumer credit account at the date of default giving rise 3 to a cause of action. 4 § 3. Subdivision 2 of section 213 of the civil practice law and rules, 5 as amended by chapter 709 of the laws of 1988, is amended to read as 6 follows: 7 2. an action upon a contractual obligation or liability, express or 8 implied, except as provided in section two hundred thirteen-a or two 9 hundred fourteen-i of this article or article 2 of the uniform commer- 10 cial code or article 36-B of the general business law; 11 § 4. The civil practice law and rules is amended by adding a new 12 section 214-i to read as follows: 13 § 214-i. Certain actions arising out of consumer credit transactions 14 to be commenced within three years. An action arising out of a consumer 15 credit transaction where a purchaser, borrower or debtor is a defendant 16 must be commenced within three years, except as provided in section two 17 hundred thirteen-a of this article or article 2 of the uniform commer- 18 cial code or article 36-B of the general business law. Notwithstanding 19 any other provision of law, when the applicable limitations period 20 expires, any subsequent payment toward, written or oral affirmation of 21 or other activity on the debt does not revive or extend the limitations 22 period. 23 § 5. The civil practice law and rules is amended by adding a new 24 section 306-d to read as follows: 25 § 306-d. Additional mailing of notice in an action arising out of a 26 consumer credit transaction. (a) At the time of filing with the clerk of 27 the proof of service of the summons and complaint in an action arising 28 out of a consumer credit transaction, the plaintiff shall submit to the 29 clerk a stamped, unsealed envelope addressed to the defendant together 30 with a written notice in clear type of no less than twelve-point in 31 size, in both English and Spanish, and containing the following 32 language: 33 ADDITIONAL NOTICE OF LAWSUIT 34 (NAME OF COURT) 35 (COUNTY) 36 (STREET ADDRESS, ROOM NUMBER) 37 (CITY, STATE, ZIP CODE) 38 (NAME OF DEFENDANT) 39 (ADDRESS OF DEFENDANT) 40 Plaintiff: 41 Defendant: 42 Name of original creditor, unless same: 43 Index number: 44 Attention: a lawsuit has been filed against you claiming that you owe 45 money for an unpaid consumer debt. 46 You may wish to contact an attorney. 47 You should respond to the lawsuit as soon as possible by filing an 48 "answer" which may be done at the court clerk's office listed above. 49 If you do not respond to the lawsuit, the court may enter a money 50 judgment against you. Once entered, a judgment is good and can be used 51 against you for twenty years, and your personal property and money, 52 including a portion of your paycheck and/or bank account, may be takenA. 6909--E 3 1 from you. Also, a judgment may affect your credit score and can affect 2 your ability to rent a home, find a job, or take out a loan. 3 You CANNOT be arrested or sent to jail for owing a debt. 4 Additional information can be found at the New York state court system 5 website. 6 Sources of information and assistance: 7 The court encourages you to inform yourself about your options as a 8 defendant in this lawsuit. In addition to seeking assistance from a 9 private attorney or legal aid office, there are free legal assistance 10 computer programs that you can use online to help you represent yourself 11 in this lawsuit. 12 For further information, or to locate a legal aid program near you, you 13 may visit the LawHelpNY website or the New York state court system 14 website, which has information for representing yourself and links to 15 other resources at: ___________________. 16 (b) The face of the envelope shall be addressed to the defendant at 17 the address at which process was served, and shall contain the defend- 18 ant's name, address (including apartment number) and zip code. The face 19 of the envelope also shall state the appropriate clerk's office as its 20 return address. 21 (c) The clerk promptly shall mail to the defendant the envelope 22 containing the additional notice set forth in subdivision (a) of this 23 section. No default judgment based on the defendant's failure to answer 24 shall be entered unless there has been compliance with this section, and 25 at least twenty days have elapsed from the date of mailing by the clerk. 26 No default judgment based on the defendant's failure to answer shall be 27 entered if the additional notice is returned to the court as undelivera- 28 ble. Receipt of the additional notice by the defendant does not confer 29 jurisdiction on the court in the absence of proper service of process. 30 (d) The chief administrative judge shall issue a Spanish translation 31 of the notice in subdivision (a) of this section and shall maintain and 32 publish the URL address for the web page containing consumer resources 33 for unrepresented litigants. 34 § 6. Subdivision (a) of section 3012 of the civil practice law and 35 rules is amended to read as follows: 36 (a) Service of pleadings. The complaint may be served with the 37 summons, except that in an action arising out of a consumer credit tran- 38 saction, the complaint shall be served with the summons. A subsequent 39 pleading asserting new or additional claims for relief shall be served 40 upon a party who has not appeared in the manner provided for service of 41 a summons. In any other case, a pleading shall be served in the manner 42 provided for service of papers generally. Service of an answer or reply 43 shall be made within twenty days after service of the pleading to which 44 it responds. 45 § 7. Rule 3016 of the civil practice law and rules is amended by 46 adding a new subdivision (j) to read as follows: 47 (j) Consumer credit transactions. In an action arising out of a 48 consumer credit transaction where a purchaser, borrower or debtor is a 49 defendant, the contract or other written instrument on which the action 50 is based shall be attached to the complaint, however, for the purposes 51 of this section, if the account was a revolving credit account, the 52 charge-off statement may be attached to the complaint instead of the 53 contract or other written instrument, and the following information 54 shall be set forth in the complaint: 55 (1) The name of the original creditor;A. 6909--E 4 1 (2) The last four digits of the account number printed on the most 2 recent monthly statement recording a purchase transaction, last payment 3 or balance transfer; 4 (3) The date and amount of the last payment or, if no payment was 5 made, a statement that the purchaser, borrower or debtor made no payment 6 on the account; 7 (4) If the complaint contains a cause of action based on an account 8 stated, the date on or about which the final statement of account was 9 provided to the defendant; 10 (5) (A) Except as provided in subparagraph (B) of this paragraph, an 11 itemization of the amount sought, by (i) principal; (ii) finance charge 12 or charges; (iii) fees imposed by the original creditor; (iv) collection 13 costs; (v) attorney's fees; (vi) interest; and (vii) any other fees and 14 charges. 15 (B) If the account was a revolving credit account, an itemization of 16 the amount sought, by: (i) the total amount of the debt due as of 17 charge-off; (ii) the total amount of interest accrued since charge-off; 18 (iii) the total amount of non-interest charges or fees accrued since 19 charge-off; and (iv) the total amount of payments and/or credits made on 20 the debt since charge-off; 21 (6) The account balance printed on the most recent monthly statement 22 recording a purchase transaction, last payment or balance transfer; 23 (7) (A) Whether the plaintiff is the original creditor. 24 (B) If the plaintiff is not the original creditor, the complaint shall 25 also state (i) the date on which the debt was sold or assigned to the 26 plaintiff; (ii) the name of each previous owner of the account from the 27 original creditor to the plaintiff and the date on which the debt was 28 assigned to that owner by the original creditor or subsequent owner; and 29 (iii) the amount due at the time of the sale or assignment of the debt 30 by the original creditor; and 31 (8) Any matters required to be stated with particularity pursuant to 32 rule 3015 of this article. 33 § 8. Subdivision (e) of rule 3211 of the civil practice law and rules, 34 as amended by chapter 616 of the laws of 2005, is amended to read as 35 follows: 36 (e) Number, time and waiver of objections; motion to plead over. At 37 any time before service of the responsive pleading is required, a party 38 may move on one or more of the grounds set forth in subdivision (a) of 39 this rule, and no more than one such motion shall be permitted. Any 40 objection or defense based upon a ground set forth in paragraphs one, 41 three, four, five and six of subdivision (a) of this rule is waived 42 unless raised either by such motion or in the responsive pleading. A 43 motion based upon a ground specified in paragraph two, seven or ten of 44 subdivision (a) of this rule may be made at any subsequent time or in a 45 later pleading, if one is permitted; an objection that the summons and 46 complaint, summons with notice, or notice of petition and petition was 47 not properly served is waived if, having raised such an objection in a 48 pleading, the objecting party does not move for judgment on that ground 49 within sixty days after serving the pleading, unless the court extends 50 the time upon the ground of undue hardship. The foregoing sentence shall 51 not apply in any proceeding to collect a debt arising out of a consumer 52 credit transaction where a consumer is a defendant or under subdivision 53 one or two of section seven hundred eleven of the real property actions 54 and proceedings law. The papers in opposition to a motion based on 55 improper service shall contain a copy of the proof of service, whether 56 or not previously filed. An objection based upon a ground specified inA. 6909--E 5 1 paragraph eight or nine of subdivision (a) of this rule is waived if a 2 party moves on any of the grounds set forth in subdivision (a) of this 3 rule without raising such objection or if, having made no objection 4 under subdivision (a) of this rule, he or she does not raise such 5 objection in the responsive pleading which, in any action to collect a 6 debt arising out of a consumer credit transaction where a consumer is a 7 defendant, includes any amended responsive pleading. 8 § 9. Rule 3212 of the civil practice law and rules is amended by 9 adding a new subdivision (j) to read as follows: 10 (j) Additional notice in any action to collect a debt arising out of 11 a consumer credit transaction where a consumer is a defendant. 12 1. At the time of service of a notice of motion any part of which 13 requests summary judgment in whole or in part, where the moving party 14 is a plaintiff and the respondent is a consumer defendant in an action 15 to collect a debt arising out of a consumer credit transaction, and 16 where the consumer defendant against whom summary judgment is sought is 17 not represented by an attorney, the plaintiff shall submit to the clerk 18 a stamped, unsealed envelope addressed to the defendant together with 19 the following additional notice in English and Spanish to be printed in 20 clear type no less than twelve-point in size: 21 IMPORTANT NOTICE 22 The Plaintiff has asked the Court to enter judgment against you by 23 making a Motion for Summary Judgment. Keep this Notice and the envelope 24 it came in. The Motion for Summary Judgment was separately served on 25 you. To avoid entry of judgment: 26 (1) You must appear in court as directed below: 27 WHERE: Name of Court, Street Address, Room Number 28 WHEN: Date and time 29 (2) You should oppose the motion IN WRITING. 30 HOW TO OPPOSE THE MOTION: 31 (1) State the legal reasons why the court should not enter judgment 32 against you, including your defenses. 33 (2) State the facts that support your defenses. 34 (3) Attach affidavits and/or exhibits to support the facts you assert. 35 (a) Affidavits are sworn statements of witnesses (including you) who 36 state facts they know to be true. The affidavit should state the facts 37 and how the witness knows them. Also, the affidavit should explain any 38 exhibits. An affidavit of service is an affidavit that states how and 39 when papers were served. An affidavit must be signed in front of a 40 notary. Free forms are available on the New York State Court system 41 website at: ____________________. 42 (b) Exhibits are copies of documents. Exhibits are usually attached to 43 affidavits. 44 (4) Have someone (not you or another defendant in the lawsuit) mail a 45 copy of your opposition to the plaintiff's attorney before your court 46 date and have them prepare an affidavit of service by mail. 47 (5) Bring a copy of your opposition and the affidavit of service to 48 your court date. 49 (6) Attend your court date. 50 IF YOU NEED MORE TIME: 51 If you need more time to prepare your written response, you should 52 appear at your court date and ask the judge for more time. You can also 53 ask the judge to refer you for legal help. 54 IF YOU NEED LEGAL HELP: 55 You may seek legal help from a private attorney or a legal aid office. 56 Some courts have free legal assistance programs for people withoutA. 6909--E 6 1 lawyers. You can find resources on the New York State court system 2 website at: ____________________. 3 2. The clerk promptly shall mail to the defendant the envelope 4 containing the additional notice set forth in paragraph one of this 5 subdivision and note the date of mailing in the case record. Summary 6 judgment shall not be entered based on defendant's failure to oppose the 7 motion unless there has been compliance with this section and at least 8 fourteen days have elapsed from the date of mailing by the clerk or 9 nineteen days if the plaintiff's notice of motion demands additional 10 time under subdivision (b) of rule 2214 of this chapter. 11 3. The chief administrative judge shall issue a Spanish translation of 12 the notice in paragraph one of this subdivision and shall maintain and 13 publish the URL address for the web page containing consumer credit 14 resources for unrepresented litigants. 15 § 10. Section 3213 of the civil practice law and rules, as amended by 16 chapter 210 of the laws of 1969, is amended to read as follows: 17 § 3213. Motion for summary judgment in lieu of complaint. When an 18 action is based upon an instrument for the payment of money only or upon 19 any judgment, the plaintiff may serve with the summons a notice of 20 motion for summary judgment and the supporting papers in lieu of a 21 complaint. The summons served with such motion papers shall require the 22 defendant to submit answering papers on the motion within the time 23 provided in the notice of motion. The minimum time such motion shall be 24 noticed to be heard shall be as provided by subdivision (a) of rule 320 25 for making an appearance, depending upon the method of service. If the 26 plaintiff sets the hearing date of the motion later than the minimum 27 time therefor, he may require the defendant to serve a copy of his 28 answering papers upon him within such extended period of time, not 29 exceeding ten days, prior to such hearing date. No default judgment may 30 be entered pursuant to subdivision (a) of section 3215 prior to the 31 hearing date of the motion. If the motion is denied, the moving and 32 answering papers shall be deemed the complaint and answer, respectively, 33 unless the court orders otherwise. The additional notice required by 34 subdivision (j) of rule 3212 shall be applicable to a motion made pursu- 35 ant to this section in any action to collect a debt arising out of a 36 consumer credit transaction where a consumer is a defendant. 37 § 11. Subdivision (f) of section 3215 of the civil practice law and 38 rules, as amended by chapter 453 of the laws of 2006, is amended and a 39 new subdivision (j) is added to read as follows: 40 (f) Proof. On any application for judgment by default, the applicant 41 shall file proof of service of the summons and the complaint, or a 42 summons and notice served pursuant to subdivision (b) of rule 305 or 43 subdivision (a) of rule 316 of this chapter, and proof of the facts 44 constituting the claim, the default and the amount due by affidavit made 45 by the party, or where the state of New York is the plaintiff, by affi- 46 davit made by an attorney from the office of the attorney general who 47 has or obtains knowledge of such facts through review of state records 48 or otherwise. Where a verified complaint has been served, it may be used 49 as the affidavit of the facts constituting the claim and the amount due; 50 in such case, an affidavit as to the default shall be made by the party 51 or the party's attorney. In an action arising out of a consumer credit 52 transaction, if the plaintiff is not the original creditor, the appli- 53 cant shall include: (1) an affidavit by the original creditor of the 54 facts constituting the debt, the default in payment, the sale or assign- 55 ment of the debt, and the amount due at the time of sale or assignment; 56 (2) for each subsequent assignment or sale of the debt to another enti-A. 6909--E 7 1 ty, an affidavit of sale of the debt by the debt seller, completed by 2 the seller or assignor; and (3) an affidavit of a witness of the plain- 3 tiff, which includes a chain of title of the debt, completed by the 4 plaintiff or plaintiff's witness. The chief administrative judge shall 5 issue form affidavits to satisfy the requirements of this subdivision 6 for consumer credit transactions. When jurisdiction is based on an 7 attachment of property, the affidavit must state that an order of 8 attachment granted in the action has been levied on the property of the 9 defendant, describe the property and state its value. Proof of mailing 10 the notice required by subdivision (g) of this section, where applica- 11 ble, shall also be filed. 12 (j) Affidavit. A request for a default judgment entered by the clerk, 13 must be accompanied by an affidavit by the plaintiff or plaintiff's 14 attorney stating that after reasonable inquiry, he or she has reason to 15 believe that the statute of limitations has not expired. The chief 16 administrative judge shall issue form affidavits to satisfy the require- 17 ments of this subdivision for consumer credit transactions. 18 § 12. The civil practice law and rules is amended by adding a new 19 section 7516 to read as follows: 20 § 7516. Confirmation of an award based on a consumer credit trans- 21 action. In any proceeding under section 7510 of this article to confirm 22 an award based on a consumer credit transaction, the party seeking to 23 confirm the award shall plead the actual terms and conditions of the 24 agreement to arbitrate. The party shall attach to its petition (a) the 25 agreement to arbitrate; (b) the demand for arbitration or notice of 26 intention to arbitrate, with proof of service; and (c) the arbitration 27 award, with proof of service. If the award does not contain a statement 28 of the claims submitted for arbitration, of the claims ruled upon by the 29 arbitrator, and of the calculation of figures used by the arbitrator in 30 arriving at the award, then the petition shall contain such a statement. 31 The court shall not grant confirmation of an award based on a consumer 32 credit transaction unless the party seeking to confirm the award has 33 complied with this section. 34 § 13. Subdivision 2 of section 212 of the judiciary law is amended by 35 adding a new paragraph (aa) to read as follows: 36 (aa) Not later than January first, two thousand twenty-one, make 37 available Spanish translations of the additional notices in consumer 38 credit transaction actions and proceedings required by section 306-d and 39 subdivision (j) of rule 3212 of the civil practice law and rules, and 40 make available form affidavits required for a motion for default judg- 41 ment in a consumer credit transaction action or proceeding required by 42 subdivision (f) of section 3215 of the civil practice law and rules. 43 § 14. Subdivision (c) of section 5019 of the civil practice law and 44 rules is amended to read as follows: 45 (c) Change in judgment creditor. A person other than the party recov- 46 ering a judgment who becomes entitled to enforce it, shall file in the 47 office of the clerk of the court in which the judgment was entered or, 48 in the case of a judgment of a court other than the supreme, county or a 49 family court which has been docketed by the clerk of the county in which 50 it was entered, in the office of such county clerk, a copy of the 51 instrument on which his authority is based, acknowledged in the form 52 required to entitle a deed to be recorded, or, if his authority is based 53 on a court order, a certified copy of the order. Upon such filing the 54 clerk shall make an appropriate entry on his docket of the judgment. 55 This subdivision shall not apply when there is a change to the owner ofA. 6909--E 8 1 a debt through a sale, assignment, or other transfer where no judgment 2 exists. 3 § 15. This act shall take effect immediately; provided, however, that 4 sections two, three, five, six, seven, eight, nine, ten, eleven and 5 twelve shall take effect on the one hundred eightieth day after it shall 6 have become a law and shall apply to actions and proceedings commenced 7 on or after such date; and provided, further, that section four of this 8 act shall take effect on the one hundred fiftieth day after this act 9 shall have become a law.
