STATE OF NEW YORK ________________________________________________________________________ S. 4827--A A. 6909--A 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 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee 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, BARRON -- 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 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. LBD00927-07-9S. 4827--A 2 A. 6909--A 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-h 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-h to read as follows: 10 § 214-h. 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. When the period 16 within which an action may be commenced under this section has expired, 17 the right to collect consumer credit debt is extinguished as well as the 18 remedy. Notwithstanding any other provision of law, when the applicable 19 limitations period expires, any subsequent payment toward, written or 20 oral affirmation of or other activity on the debt does not revive or 21 extend the limitations period. 22 For purposes of this section, "the right to collect consumer credit 23 debt" shall mean any attempts by the creditor, third party purchaser, or 24 other authorized third party to collect such debt including, but not 25 limited to, calls, mail or other attempts to collect. 26 § 5. The civil practice law and rules is amended by adding a new 27 section 306-d to read as follows: 28 § 306-d. Additional mailing of notice in an action arising out of a 29 consumer credit transaction. (a) At the time of filing with the clerk of 30 the proof of service of the summons and complaint in an action arising 31 out of a consumer credit transaction, the plaintiff shall submit to the 32 clerk a stamped unsealed envelope addressed to the defendant together 33 with a written notice in clear type of no less than twelve-point in 34 size, in both English and Spanish, and containing the following 35 language: 36 ADDITIONAL NOTICE OF LAWSUIT 37 (NAME OF COURT) 38 (COUNTY) 39 (STREET ADDRESS, ROOM NUMBER) 40 (CITY, STATE, ZIP CODE) 41 (NAME OF DEFENDANT) 42 (ADDRESS OF DEFENDANT) 43 Plaintiff:__________________________________ 44 Defendant:__________________________________ 45 Name of original creditor, unless same:______________________________ 46 Index number:_______________________________ 47 Attention: a lawsuit has been filed against you claiming that you owe 48 money for an unpaid consumer debt. 49 You may wish to contact an attorney. 50 You should respond to the lawsuit as soon as possible by filing an 51 "answer" which may be done at the court clerk's office listed above.S. 4827--A 3 A. 6909--A 1 If you do not respond to the lawsuit, the court may enter a money 2 judgment against you. Once entered, a judgment is good and can be used 3 against you for twenty years, and your personal property and money, 4 including a portion of your paycheck and/or bank account, may be taken 5 from you. Also, a judgment may affect your credit score and can affect 6 your ability to rent a home, find a job, or take out a loan. 7 You CANNOT be arrested or sent to jail for owing a debt. 8 Additional information can be found at the court system website at: 9 www.nycourts.gov 10 Sources of information and assistance: 11 The court encourages you to inform yourself about your options as a 12 defendant in this lawsuit. In addition to seeking assistance from a 13 private attorney or legal aid office, there are free legal assistance 14 programs that you can use online to help you represent yourself in this 15 lawsuit. 16 For further information, or to locate an entity or program near you, you 17 may visit the New York state unified court system's "resources for 18 unrepresented litigants" website at: 19 http://ww2.nycourts.gov/RULES/CCR/resources.shtml 20 (b) The face of the envelope shall be addressed to the defendant at 21 the address at which process was served, and shall contain the defend- 22 ant's name, address (including apartment number) and zip code. The face 23 of the envelope also shall state the appropriate clerk's office as its 24 return address. 25 (c) The clerk promptly shall mail to the defendant the envelope 26 containing the additional notice set forth in subdivision (a) of this 27 section. No default judgment based on the defendant's failure to answer 28 shall be entered unless there has been compliance with this section, and 29 at least twenty days have elapsed from the date of mailing by the clerk. 30 No default judgment based on the defendant's failure to answer shall be 31 entered if the additional notice is returned to the court as undelivera- 32 ble. Receipt of the additional notice by the defendant does not confer 33 jurisdiction on the court in the absence of proper service of process. 34 (d) The chief administrative judge shall issue a Spanish translation 35 of the notice in subdivision (a) of this section. 36 § 6. Subdivision (a) of section 3012 of the civil practice law and 37 rules is amended to read as follows: 38 (a) Service of pleadings. The complaint may be served with the 39 summons, except that in an action arising out of a consumer credit tran- 40 saction, the complaint shall be served with the summons. A subsequent 41 pleading asserting new or additional claims for relief shall be served 42 upon a party who has not appeared in the manner provided for service of 43 a summons. In any other case, a pleading shall be served in the manner 44 provided for service of papers generally. Service of an answer or reply 45 shall be made within twenty days after service of the pleading to which 46 it responds. 47 § 7. Rule 3016 of the civil practice law and rules is amended by 48 adding a new subdivision (j) to read as follows: 49 (j) Consumer credit transactions. In an action arising out of a 50 consumer credit transaction where a purchaser, borrower or debtor is a 51 defendant, the contract or other written instrument on which the action 52 is based shall be attached to the complaint and the following informa- 53 tion shall be set forth in the complaint: 54 (1) The name of the original creditor; 55 (2) The last four digits of the account number at the date of the 56 default giving rise to the action;S. 4827--A 4 A. 6909--A 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) An itemization of the amount sought, by (i) principal; (ii) 8 finance charge or charges; (iii) fees imposed by the original creditor; 9 (iv) collection costs; (v) attorney's fees; (vi) interest; and (vii) any 10 other fees and charges. 11 (B) If he account was a revolving credit account prior to charge off, 12 the itemization requirement for the balance accrued prior to charge off 13 shall be satisfied by attaching the twelve months of statements prior to 14 charge off, provided that any amount sought for charges and costs after 15 charge off are itemized as provided for in subparagraph (A) of this 16 paragraph; 17 (6) (A) Whether the plaintiff is the original creditor. 18 (B) If the plaintiff is not the original creditor, the complaint shall 19 also state (i) the date on which the debt was sold or assigned to the 20 plaintiff; (ii) the name of each previous owner of the account from the 21 original creditor to the plaintiff and the date on which the debt was 22 assigned to that owner by the original creditor or subsequent owner; and 23 (iii) the amount due at the time of the sale or assignment of the debt 24 by the original creditor; and 25 (7) Any matters required to be stated with particularity pursuant to 26 rule 3015 of this article. 27 § 8. Subdivision (e) of rule 3211 of the civil practice law and rules, 28 as amended by chapter 616 of the laws of 2005, is amended to read as 29 follows: 30 (e) Number, time and waiver of objections; motion to plead over. At 31 any time before service of the responsive pleading is required, a party 32 may move on one or more of the grounds set forth in subdivision (a) of 33 this rule, and no more than one such motion shall be permitted. Any 34 objection or defense based upon a ground set forth in paragraphs one, 35 three, four, five and six of subdivision (a) of this rule is waived 36 unless raised either by such motion or in the responsive pleading. A 37 motion based upon a ground specified in paragraph two, seven or ten of 38 subdivision (a) of this rule may be made at any subsequent time or in a 39 later pleading, if one is permitted; an objection that the summons and 40 complaint, summons with notice, or notice of petition and petition was 41 not properly served is waived if, having raised such an objection in a 42 pleading, the objecting party does not move for judgment on that ground 43 within sixty days after serving the pleading, unless the court extends 44 the time upon the ground of undue hardship. The foregoing sentence shall 45 not apply in any proceeding to collect a debt arising out of a consumer 46 credit transaction where a consumer is a defendant or under subdivision 47 one or two of section seven hundred eleven of the real property actions 48 and proceedings law. The papers in opposition to a motion based on 49 improper service shall contain a copy of the proof of service, whether 50 or not previously filed. An objection based upon a ground specified in 51 paragraph eight or nine of subdivision (a) of this rule is waived if a 52 party moves on any of the grounds set forth in subdivision (a) of this 53 rule without raising such objection or if, having made no objection 54 under subdivision (a) of this rule, he or she does not raise such 55 objection in the responsive pleading which, in any action to collect aS. 4827--A 5 A. 6909--A 1 debt arising out of a consumer credit transaction where a consumer is a 2 defendant, includes any amended responsive pleading. 3 § 9. Rule 3212 of the civil practice law and rules is amended by 4 adding a new subdivision (j) to read as follows: 5 (j) Additional notice in any action to collect a debt arising out of 6 a consumer credit transaction where a consumer is a defendant. 7 1. At the time of service of a notice of motion any part of which 8 requests summary judgment in whole or in part, where the moving party 9 is a plaintiff and the respondent is a consumer defendant in an action 10 to collect a debt arising out of a consumer credit transaction, and 11 where the consumer defendant against whom summary judgment is sought is 12 not represented by an attorney, the plaintiff shall serve, together with 13 the notice of motion, the following additional notice in English and 14 Spanish to be printed in clear type no less than twelve-point in size: 15 Important notice to pro se defendants 16 (Name of court) 17 (Street address, room number) 18 (City, state, zip code) 19 Plaintiff: 20 Defendant: 21 Index number: 22 Motion return date and time: 23 Attention CPLR Rule 3212 motion for summary judgment 24 This notice is to advise you that the plaintiff in this case has filed a 25 motion for summary judgment against you pursuant to CPLR Rule 3212, 26 which means that summary judgment will be granted if the court finds 27 that there is no genuine issue as to any material fact and that the 28 plaintiff is entitled to judgment as a matter of law. 29 Failure to respond to this motion for summary judgment may result in a 30 money judgment being entered against you in favor of the plaintiff. 31 Once entered, a judgment is good and can be used against you for twenty 32 years, and your personal property and money, including a portion of your 33 paycheck and/or bank account, may be taken from you. Also, a judgment 34 may affect your credit score and can affect your ability to rent a 35 home, find a job, or take out a loan. You CANNOT be arrested or sent to 36 jail for owing a debt. 37 Opposing this motion for summary judgment: 38 If you wish to oppose the plaintiff's request for judgment, you should 39 set forth in a written response the reasons that the plaintiff has not 40 shown that it is entitled to judgment as a matter of law, and any facts 41 that you believe show that you are not liable to the plaintiff or have a 42 defense. You should submit affidavits or exhibits supporting any facts 43 that you assert show that you are not liable or have a defense. Each 44 affidavit should set forth relevant facts and show that the person 45 submitting the affidavit has personal knowledge of those facts. If you 46 rely on exhibits, you should attach copies of them to an affidavit that 47 explains what they are and how they show that you are not liable or have 48 a defense. You should bring your opposition papers to court on theS. 4827--A 6 A. 6909--A 1 court date and mail a copy to the plaintiff's attorney in advance of the 2 court date. You should also attend court on the return date. 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 may be free legal assist- 7 ance programs that you may contact for help in representing yourself in 8 this lawsuit. 9 For further information, or to locate an entity or program near you, you 10 may visit the New York state unified court system's "resources for 11 unrepresented litigants" website at: 12 http://ww2.nycourts.gov/RULES/CCR/resources.shtml 13 2. The plaintiff seeking summary judgment shall file proof of service 14 of the additional notice with the court, and no motion for which this 15 additional notice is required shall be granted unless such proof of 16 service has been filed. 17 3. The chief administrative judge shall issue a Spanish translation of 18 the notice in paragraph one of this subdivision. 19 § 10. Section 3213 of the civil practice law and rules, as amended by 20 chapter 210 of the laws of 1969, is amended to read as follows: 21 § 3213. Motion for summary judgment in lieu of complaint. When an 22 action is based upon an instrument for the payment of money only or upon 23 any judgment, the plaintiff may serve with the summons a notice of 24 motion for summary judgment and the supporting papers in lieu of a 25 complaint. The summons served with such motion papers shall require the 26 defendant to submit answering papers on the motion within the time 27 provided in the notice of motion. The minimum time such motion shall be 28 noticed to be heard shall be as provided by subdivision (a) of rule 320 29 for making an appearance, depending upon the method of service. If the 30 plaintiff sets the hearing date of the motion later than the minimum 31 time therefor, he may require the defendant to serve a copy of his 32 answering papers upon him within such extended period of time, not 33 exceeding ten days, prior to such hearing date. No default judgment may 34 be entered pursuant to subdivision (a) of section 3215 prior to the 35 hearing date of the motion. If the motion is denied, the moving and 36 answering papers shall be deemed the complaint and answer, respectively, 37 unless the court orders otherwise. The additional notice required by 38 subdivision (j) of rule 3212 shall be applicable to a motion made pursu- 39 ant to this section in any action to collect a debt arising out of a 40 consumer credit transaction where a consumer is a defendant. 41 § 11. Subdivision (f) of section 3215 of the civil practice law and 42 rules, as amended by chapter 453 of the laws of 2006, is amended and a 43 new subdivision (j) is added to read as follows: 44 (f) Proof. On any application for judgment by default, the applicant 45 shall file proof of service of the summons and the complaint, or a 46 summons and notice served pursuant to subdivision (b) of rule 305 or 47 subdivision (a) of rule 316 of this chapter, and proof of the facts 48 constituting the claim, the default and the amount due by affidavit made 49 by the party, or where the state of New York is the plaintiff, by affi- 50 davit made by an attorney from the office of the attorney general who 51 has or obtains knowledge of such facts through review of state records 52 or otherwise. Where a verified complaint has been served, it may be used 53 as the affidavit of the facts constituting the claim and the amount due;S. 4827--A 7 A. 6909--A 1 in such case, an affidavit as to the default shall be made by the party 2 or the party's attorney. In an action arising out of a consumer credit 3 transaction, if the plaintiff is not the original creditor, the appli- 4 cant shall include: (1) an affidavit by the original creditor of the 5 facts constituting the debt, the default in payment, the sale or assign- 6 ment of the debt, and the amount due at the time of sale or assignment; 7 (2) for each subsequent assignment or sale of the debt to another enti- 8 ty, an affidavit of sale of the debt by the debt seller, completed by 9 the seller or assignor; and (3) an affidavit of a witness of the plain- 10 tiff, which includes a chain of title of the debt, completed by the 11 plaintiff or plaintiff's witness. The chief administrative judge shall 12 issue form affidavits to satisfy the requirements of this subdivision 13 for consumer credit transactions. When jurisdiction is based on an 14 attachment of property, the affidavit must state that an order of 15 attachment granted in the action has been levied on the property of the 16 defendant, describe the property and state its value. Proof of mailing 17 the notice required by subdivision (g) of this section, where applica- 18 ble, shall also be filed. 19 (j) Affidavit. A request for a default judgment entered by the clerk, 20 must be accompanied by an affidavit by the plaintiff or plaintiff's 21 attorney stating that after reasonable inquiry, he or she has reason to 22 believe that the statute of limitations has not expired. 23 § 12. The civil practice law and rules is amended by adding a new 24 section 7516 to read as follows: 25 § 7516. Confirmation of an award based on a consumer credit trans- 26 action. In any proceeding under section 7510 of this article to confirm 27 an award based on a consumer credit transaction, the party seeking to 28 confirm the award shall plead the actual terms and conditions of the 29 agreement to arbitrate. The party shall attach to its petition (a) the 30 agreement to arbitrate; (b) the demand for arbitration or notice of 31 intention to arbitrate, with proof of service; and (c) the arbitration 32 award, with proof of service. If the award does not contain a statement 33 of the claims submitted for arbitration, of the claims ruled upon by the 34 arbitrator, and of the calculation of figures used by the arbitrator in 35 arriving at the award, then the petition shall contain such a statement. 36 The court shall not grant confirmation of an award based on a consumer 37 credit transaction unless the party seeking to confirm the award has 38 complied with this section. 39 § 13. Subdivision 2 of section 212 of the judiciary law is amended by 40 adding a new paragraph (aa) to read as follows: 41 (aa) Not later than January first, two thousand twenty, make available 42 Spanish translations of the additional notices in consumer credit trans- 43 action actions and proceedings required by section 306-d of the civil 44 practice law and rules and subdivision (i) of rule 3212 of the civil 45 practice law and rules, and make available form affidavits required for 46 a motion for default judgment in a consumer credit transaction action or 47 proceeding required by subdivision (f) of section 3215 of the civil 48 practice law and rules. 49 § 14. This act shall take effect immediately; provided, however, that 50 sections two, three, five, six, seven, eight, nine, ten, eleven and 51 twelve shall take effect on the first of January next succeeding the 52 date on which it shall have become a law and shall apply to actions and 53 proceedings commenced on or after such date; and provided, further, that 54 section four of this act shall take effect on the one hundred fiftieth 55 day after this act shall have become a law.