Bill Text: NY A02382 | 2021-2022 | General Assembly | Introduced
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 17-0)
Status: (Introduced - Dead) 2021-06-02 - substituted by s153 [A02382 Detail]
Download: New_York-2021-A02382-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2382 2021-2022 Regular Sessions IN ASSEMBLY January 19, 2021 ___________ Introduced by M. of A. WEINSTEIN, GALEF, ZEBROWSKI, O'DONNELL, FAHY, PEOPLES-STOKES, L. ROSENTHAL, DINOWITZ, SEAWRIGHT, GLICK, WEPRIN, TAYLOR -- Multi-Sponsored by -- M. of A. CAHILL, CYMBROWITZ, GOTT- FRIED, McDONOUGH -- read once and referred to the Committee on Judici- ary 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. 14 § 3. Subdivision 2 of section 213 of the civil practice law and rules, 15 as amended by chapter 709 of the laws of 1988, is amended to read as 16 follows: 17 2. an action upon a contractual obligation or liability, express or 18 implied, except as provided in section two hundred thirteen-a or two 19 hundred fourteen-i of this article or article 2 of the uniform commer- 20 cial code or article 36-B of the general business law; 21 § 4. The civil practice law and rules is amended by adding a new 22 section 214-i to read as follows: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD00040-01-1A. 2382 2 1 § 214-i. Certain actions arising out of consumer credit transactions 2 to be commenced within three years. An action arising out of a consumer 3 credit transaction where a purchaser, borrower or debtor is a defendant 4 must be commenced within three years, except as provided in section two 5 hundred thirteen-a of this article or article 2 of the uniform commer- 6 cial code or article 36-B of the general business law. Notwithstanding 7 any other provision of law, when the applicable limitations period 8 expires, any subsequent payment toward, written or oral affirmation of 9 or other activity on the debt does not revive or extend the limitations 10 period. 11 § 5. The civil practice law and rules is amended by adding a new 12 section 306-d to read as follows: 13 § 306-d. Additional mailing of notice in an action arising out of a 14 consumer credit transaction. (a) At the time of filing with the clerk of 15 the proof of service of the summons and complaint in an action arising 16 out of a consumer credit transaction, the plaintiff shall submit to the 17 clerk a stamped, unsealed envelope addressed to the defendant together 18 with a written notice in clear type of no less than twelve-point in 19 size, in both English and Spanish, and containing the following 20 language: 21 ADDITIONAL NOTICE OF LAWSUIT 22 (NAME OF COURT) 23 (COUNTY) 24 (STREET ADDRESS, ROOM NUMBER) 25 (CITY, STATE, ZIP CODE) 26 (NAME OF DEFENDANT) 27 (ADDRESS OF DEFENDANT) 28 Plaintiff: 29 Defendant: 30 Name of original creditor, unless same: 31 Index number: 32 Attention: a lawsuit has been filed against you claiming that you owe 33 money for an unpaid consumer debt. 34 You may wish to contact an attorney. 35 You should respond to the lawsuit as soon as possible by filing an 36 "answer" which may be done at the court clerk's office listed above. 37 If you do not respond to the lawsuit, the court may enter a money 38 judgment against you. Once entered, a judgment is good and can be used 39 against you for twenty years, and your personal property and money, 40 including a portion of your paycheck and/or bank account, may be taken 41 from you. Also, a judgment may affect your credit score and can affect 42 your ability to rent a home, find a job, or take out a loan. 43 You CANNOT be arrested or sent to jail for owing a debt. 44 Additional information can be found at the New York state court system 45 website. 46 Sources of information and assistance: 47 The court encourages you to inform yourself about your options as a 48 defendant in this lawsuit. In addition to seeking assistance from a 49 private attorney or legal aid office, there are free legal assistance 50 computer programs that you can use online to help you represent yourself 51 in this lawsuit.A. 2382 3 1 For further information, or to locate a legal aid program near you, you 2 may visit the LawHelpNY website or the New York state court system 3 website, which has information for representing yourself and links to 4 other resources at: ___________________. 5 (b) The face of the envelope shall be addressed to the defendant at 6 the address at which process was served, and shall contain the defend- 7 ant's name, address (including apartment number) and zip code. The face 8 of the envelope also shall state the appropriate clerk's office as its 9 return address. 10 (c) The clerk promptly shall mail to the defendant the envelope 11 containing the additional notice set forth in subdivision (a) of this 12 section. No default judgment based on the defendant's failure to answer 13 shall be entered unless there has been compliance with this section, and 14 at least twenty days have elapsed from the date of mailing by the clerk. 15 No default judgment based on the defendant's failure to answer shall be 16 entered if the additional notice is returned to the court as undelivera- 17 ble. Receipt of the additional notice by the defendant does not confer 18 jurisdiction on the court in the absence of proper service of process. 19 (d) The chief administrative judge shall issue a Spanish translation 20 of the notice in subdivision (a) of this section and shall maintain and 21 publish the URL address for the web page containing consumer resources 22 for unrepresented litigants. 23 § 6. Subdivision (a) of section 3012 of the civil practice law and 24 rules is amended to read as follows: 25 (a) Service of pleadings. The complaint may be served with the 26 summons, except that in an action arising out of a consumer credit tran- 27 saction, the complaint shall be served with the summons. A subsequent 28 pleading asserting new or additional claims for relief shall be served 29 upon a party who has not appeared in the manner provided for service of 30 a summons. In any other case, a pleading shall be served in the manner 31 provided for service of papers generally. Service of an answer or reply 32 shall be made within twenty days after service of the pleading to which 33 it responds. 34 § 7. Rule 3016 of the civil practice law and rules is amended by 35 adding a new subdivision (j) to read as follows: 36 (j) Consumer credit transactions. In an action arising out of a 37 consumer credit transaction where a purchaser, borrower or debtor is a 38 defendant, the contract or other written instrument on which the action 39 is based shall be attached to the complaint, however, for the purposes 40 of this section, if the account was a revolving credit account, the 41 charge-off statement may be attached to the complaint instead of the 42 contract or other written instrument, and the following information 43 shall be set forth in the complaint: 44 (1) The name of the original creditor; 45 (2) The last four digits of the account number printed on the most 46 recent monthly statement recording a purchase transaction, last payment 47 or balance transfer; 48 (3) The date and amount of the last payment or, if no payment was 49 made, a statement that the purchaser, borrower or debtor made no payment 50 on the account; 51 (4) If the complaint contains a cause of action based on an account 52 stated, the date on or about which the final statement of account was 53 provided to the defendant; 54 (5) (A) Except as provided in subparagraph (B) of this paragraph, an 55 itemization of the amount sought, by (i) principal; (ii) finance charge 56 or charges; (iii) fees imposed by the original creditor; (iv) collectionA. 2382 4 1 costs; (v) attorney's fees; (vi) interest; and (vii) any other fees and 2 charges. 3 (B) If the account was a revolving credit account, an itemization of 4 the amount sought, by: (i) the total amount of the debt due as of 5 charge-off; (ii) the total amount of interest accrued since charge-off; 6 (iii) the total amount of non-interest charges or fees accrued since 7 charge-off; and (iv) the total amount of payments and/or credits made on 8 the debt since charge-off; 9 (6) The account balance printed on the most recent monthly statement 10 recording a purchase transaction, last payment or balance transfer; 11 (7) (A) Whether the plaintiff is the original creditor. 12 (B) If the plaintiff is not the original creditor, the complaint shall 13 also state (i) the date on which the debt was sold or assigned to the 14 plaintiff; (ii) the name of each previous owner of the account from the 15 original creditor to the plaintiff and the date on which the debt was 16 assigned to that owner by the original creditor or subsequent owner; and 17 (iii) the amount due at the time of the sale or assignment of the debt 18 by the original creditor; and 19 (8) Any matters required to be stated with particularity pursuant to 20 rule 3015 of this article. 21 § 8. Subdivision (e) of rule 3211 of the civil practice law and rules, 22 as amended by chapter 616 of the laws of 2005, is amended to read as 23 follows: 24 (e) Number, time and waiver of objections; motion to plead over. At 25 any time before service of the responsive pleading is required, a party 26 may move on one or more of the grounds set forth in subdivision (a) of 27 this rule, and no more than one such motion shall be permitted. Any 28 objection or defense based upon a ground set forth in paragraphs one, 29 three, four, five and six of subdivision (a) of this rule is waived 30 unless raised either by such motion or in the responsive pleading. A 31 motion based upon a ground specified in paragraph two, seven or ten of 32 subdivision (a) of this rule may be made at any subsequent time or in a 33 later pleading, if one is permitted; an objection that the summons and 34 complaint, summons with notice, or notice of petition and petition was 35 not properly served is waived if, having raised such an objection in a 36 pleading, the objecting party does not move for judgment on that ground 37 within sixty days after serving the pleading, unless the court extends 38 the time upon the ground of undue hardship. The foregoing sentence shall 39 not apply in any proceeding to collect a debt arising out of a consumer 40 credit transaction where a consumer is a defendant or under subdivision 41 one or two of section seven hundred eleven of the real property actions 42 and proceedings law. The papers in opposition to a motion based on 43 improper service shall contain a copy of the proof of service, whether 44 or not previously filed. An objection based upon a ground specified in 45 paragraph eight or nine of subdivision (a) of this rule is waived if a 46 party moves on any of the grounds set forth in subdivision (a) of this 47 rule without raising such objection or if, having made no objection 48 under subdivision (a) of this rule, he or she does not raise such 49 objection in the responsive pleading which, in any action to collect a 50 debt arising out of a consumer credit transaction where a consumer is a 51 defendant, includes any amended responsive pleading. 52 § 9. Rule 3212 of the civil practice law and rules is amended by 53 adding a new subdivision (j) to read as follows: 54 (j) Additional notice in any action to collect a debt arising out of 55 a consumer credit transaction where a consumer is a defendant.A. 2382 5 1 1. At the time of service of a notice of motion any part of which 2 requests summary judgment in whole or in part, where the moving party 3 is a plaintiff and the respondent is a consumer defendant in an action 4 to collect a debt arising out of a consumer credit transaction, and 5 where the consumer defendant against whom summary judgment is sought is 6 not represented by an attorney, the plaintiff shall submit to the clerk 7 a stamped, unsealed envelope addressed to the defendant together with 8 the following additional notice in English and Spanish to be printed in 9 clear type no less than twelve-point in size: 10 IMPORTANT NOTICE 11 The Plaintiff has asked the Court to enter judgment against you by 12 making a Motion for Summary Judgment. Keep this Notice and the envelope 13 it came in. The Motion for Summary Judgment was separately served on 14 you. To avoid entry of judgment: 15 (1) You must appear in court as directed below: 16 WHERE: Name of Court, Street Address, Room Number 17 WHEN: Date and time 18 (2) You should oppose the motion IN WRITING. 19 HOW TO OPPOSE THE MOTION: 20 (1) State the legal reasons why the court should not enter judgment 21 against you, including your defenses. 22 (2) State the facts that support your defenses. 23 (3) Attach affidavits and/or exhibits to support the facts you assert. 24 (a) Affidavits are sworn statements of witnesses (including you) who 25 state facts they know to be true. The affidavit should state the facts 26 and how the witness knows them. Also, the affidavit should explain any 27 exhibits. An affidavit of service is an affidavit that states how and 28 when papers were served. An affidavit must be signed in front of a 29 notary. Free forms are available on the New York State Court system 30 website at: ____________________. 31 (b) Exhibits are copies of documents. Exhibits are usually attached to 32 affidavits. 33 (4) Have someone (not you or another defendant in the lawsuit) mail a 34 copy of your opposition to the plaintiff's attorney before your court 35 date and have them prepare an affidavit of service by mail. 36 (5) Bring a copy of your opposition and the affidavit of service to 37 your court date. 38 (6) Attend your court date. 39 IF YOU NEED MORE TIME: 40 If you need more time to prepare your written response, you should 41 appear at your court date and ask the judge for more time. You can also 42 ask the judge to refer you for legal help. 43 IF YOU NEED LEGAL HELP: 44 You may seek legal help from a private attorney or a legal aid office. 45 Some courts have free legal assistance programs for people without 46 lawyers. You can find resources on the New York State court system 47 website at: ____________________. 48 2. The clerk promptly shall mail to the defendant the envelope 49 containing the additional notice set forth in paragraph one of this 50 subdivision and note the date of mailing in the case record. Summary 51 judgment shall not be entered based on defendant's failure to oppose the 52 motion unless there has been compliance with this section and at least 53 fourteen days have elapsed from the date of mailing by the clerk or 54 nineteen days if the plaintiff's notice of motion demands additional 55 time under subdivision (b) of rule 2214 of this chapter.A. 2382 6 1 3. The chief administrative judge shall issue a Spanish translation of 2 the notice in paragraph one of this subdivision and shall maintain and 3 publish the URL address for the web page containing consumer credit 4 resources for unrepresented litigants. 5 § 10. Section 3213 of the civil practice law and rules, as amended by 6 chapter 210 of the laws of 1969, is amended to read as follows: 7 § 3213. Motion for summary judgment in lieu of complaint. When an 8 action is based upon an instrument for the payment of money only or upon 9 any judgment, the plaintiff may serve with the summons a notice of 10 motion for summary judgment and the supporting papers in lieu of a 11 complaint. The summons served with such motion papers shall require the 12 defendant to submit answering papers on the motion within the time 13 provided in the notice of motion. The minimum time such motion shall be 14 noticed to be heard shall be as provided by subdivision (a) of rule 320 15 for making an appearance, depending upon the method of service. If the 16 plaintiff sets the hearing date of the motion later than the minimum 17 time therefor, he may require the defendant to serve a copy of his 18 answering papers upon him within such extended period of time, not 19 exceeding ten days, prior to such hearing date. No default judgment may 20 be entered pursuant to subdivision (a) of section 3215 prior to the 21 hearing date of the motion. If the motion is denied, the moving and 22 answering papers shall be deemed the complaint and answer, respectively, 23 unless the court orders otherwise. The additional notice required by 24 subdivision (j) of rule 3212 shall be applicable to a motion made pursu- 25 ant to this section in any action to collect a debt arising out of a 26 consumer credit transaction where a consumer is a defendant. 27 § 11. Subdivision (f) of section 3215 of the civil practice law and 28 rules, as amended by chapter 453 of the laws of 2006, is amended and a 29 new subdivision (j) is added to read as follows: 30 (f) Proof. On any application for judgment by default, the applicant 31 shall file proof of service of the summons and the complaint, or a 32 summons and notice served pursuant to subdivision (b) of rule 305 or 33 subdivision (a) of rule 316 of this chapter, and proof of the facts 34 constituting the claim, the default and the amount due by affidavit made 35 by the party, or where the state of New York is the plaintiff, by affi- 36 davit made by an attorney from the office of the attorney general who 37 has or obtains knowledge of such facts through review of state records 38 or otherwise. Where a verified complaint has been served, it may be used 39 as the affidavit of the facts constituting the claim and the amount due; 40 in such case, an affidavit as to the default shall be made by the party 41 or the party's attorney. In an action arising out of a consumer credit 42 transaction, if the plaintiff is not the original creditor, the appli- 43 cant shall include: (1) an affidavit by the original creditor of the 44 facts constituting the debt, the default in payment, the sale or assign- 45 ment of the debt, and the amount due at the time of sale or assignment; 46 (2) for each subsequent assignment or sale of the debt to another enti- 47 ty, an affidavit of sale of the debt by the debt seller, completed by 48 the seller or assignor; and (3) an affidavit of a witness of the plain- 49 tiff, which includes a chain of title of the debt, completed by the 50 plaintiff or plaintiff's witness. The chief administrative judge shall 51 issue form affidavits to satisfy the requirements of this subdivision 52 for consumer credit transactions. When jurisdiction is based on an 53 attachment of property, the affidavit must state that an order of 54 attachment granted in the action has been levied on the property of the 55 defendant, describe the property and state its value. Proof of mailingA. 2382 7 1 the notice required by subdivision (g) of this section, where applica- 2 ble, shall also be filed. 3 (j) Affidavit. A request for a default judgment entered by the clerk, 4 must be accompanied by an affidavit by the plaintiff or plaintiff's 5 attorney stating that after reasonable inquiry, he or she has reason to 6 believe that the statute of limitations has not expired. The chief 7 administrative judge shall issue form affidavits to satisfy the require- 8 ments of this subdivision for consumer credit transactions. 9 § 12. The civil practice law and rules is amended by adding a new 10 section 7516 to read as follows: 11 § 7516. Confirmation of an award based on a consumer credit trans- 12 action. In any proceeding under section 7510 of this article to confirm 13 an award based on a consumer credit transaction, the party seeking to 14 confirm the award shall plead the actual terms and conditions of the 15 agreement to arbitrate. The party shall attach to its petition (a) the 16 agreement to arbitrate; (b) the demand for arbitration or notice of 17 intention to arbitrate, with proof of service; and (c) the arbitration 18 award, with proof of service. If the award does not contain a statement 19 of the claims submitted for arbitration, of the claims ruled upon by the 20 arbitrator, and of the calculation of figures used by the arbitrator in 21 arriving at the award, then the petition shall contain such a statement. 22 The court shall not grant confirmation of an award based on a consumer 23 credit transaction unless the party seeking to confirm the award has 24 complied with this section. 25 § 13. Subdivision 2 of section 212 of the judiciary law is amended by 26 adding a new paragraph (aa) to read as follows: 27 (aa) Not later than January first, two thousand twenty-two, make 28 available Spanish translations of the additional notices in consumer 29 credit transaction actions and proceedings required by section 306-d and 30 subdivision (j) of rule 3212 of the civil practice law and rules, and 31 make available form affidavits required for a motion for default judg- 32 ment in a consumer credit transaction action or proceeding required by 33 subdivision (f) of section 3215 of the civil practice law and rules. 34 § 14. Subdivision (c) of section 5019 of the civil practice law and 35 rules is amended to read as follows: 36 (c) Change in judgment creditor. A person other than the party recov- 37 ering a judgment who becomes entitled to enforce it, shall file in the 38 office of the clerk of the court in which the judgment was entered or, 39 in the case of a judgment of a court other than the supreme, county or a 40 family court which has been docketed by the clerk of the county in which 41 it was entered, in the office of such county clerk, a copy of the 42 instrument on which his authority is based, acknowledged in the form 43 required to entitle a deed to be recorded, or, if his authority is based 44 on a court order, a certified copy of the order. Upon such filing the 45 clerk shall make an appropriate entry on his docket of the judgment. 46 This subdivision shall not apply when there is a change to the owner of 47 a debt through a sale, assignment, or other transfer where no judgment 48 exists. 49 § 15. 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 one hundred eightieth day after it shall 52 have become a law and shall apply to actions and proceedings commenced 53 on or after such date; and provided, further, that section four of this 54 act shall take effect on the one hundred fiftieth day after this act 55 shall have become a law.