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) 2019-06-19 - ordered to third reading rules cal.596 [A06909 Detail]

Download: New_York-2019-A06909-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

            S. 4827--B                                            A. 6909--B

                               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 -- 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 -- reported and referred  to
          the  Committee  on  Rules -- Rules Committee discharged, bill amended,
          ordered reprinted as amended and recommitted to the Committee on Rules

        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.
                                                                   LBD00927-09-9

        S. 4827--B                          2                         A. 6909--B

     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-h 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-h to read as follows:
    13    § 214-h. 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. When the period
    19  within which an action may be commenced under this section has  expired,
    20  the right to collect consumer credit debt is extinguished as well as the
    21  remedy.  Notwithstanding any other provision of law, when the applicable
    22  limitations period expires, any subsequent payment  toward,  written  or
    23  oral  affirmation  of  or  other activity on the debt does not revive or
    24  extend the limitations period.
    25    For purposes of this section, "the right to  collect  consumer  credit
    26  debt" shall mean any attempts by the creditor, third party purchaser, or
    27  other  authorized  third  party  to collect such debt including, but not
    28  limited to, calls, mail or other attempts to collect.
    29    § 5. The civil practice law and rules  is  amended  by  adding  a  new
    30  section 306-d to read as follows:
    31    §  306-d.  Additional  mailing of notice in an action arising out of a
    32  consumer credit transaction. (a) At the time of filing with the clerk of
    33  the proof of service of the summons and complaint in an  action  arising
    34  out  of a consumer credit transaction, the plaintiff shall submit to the
    35  clerk a stamped unsealed envelope addressed to  the  defendant  together
    36  with  a  written  notice  in  clear type of no less than twelve-point in
    37  size,  in  both  English  and  Spanish,  and  containing  the  following
    38  language:
    39                        ADDITIONAL NOTICE OF LAWSUIT

    40  (NAME OF COURT)
    41  (COUNTY)
    42  (STREET ADDRESS, ROOM NUMBER)
    43  (CITY, STATE, ZIP CODE)

    44  (NAME OF DEFENDANT)
    45  (ADDRESS OF DEFENDANT)

    46  Plaintiff:__________________________________
    47  Defendant:__________________________________
    48  Name of original creditor, unless same:______________________________
    49  Index number:_______________________________

    50  Attention:  a  lawsuit  has been filed against you claiming that you owe
    51  money for an unpaid consumer debt.
    52  You may wish to contact an attorney.

        S. 4827--B                          3                         A. 6909--B

     1    You should respond to the lawsuit as soon as  possible  by  filing  an
     2  "answer" which may be done at the court clerk's office listed above.
     3    If  you  do  not  respond  to the lawsuit, the court may enter a money
     4  judgment against you. Once entered, a judgment is good and can  be  used
     5  against  you  for  twenty  years,  and your personal property and money,
     6  including a portion of your paycheck and/or bank account, may  be  taken
     7  from  you.  Also, a judgment may affect your credit score and can affect
     8  your ability to rent a home, find a job, or take out a loan.
     9  You CANNOT be arrested or sent to jail for owing a debt.
    10  Additional information can be found at  the  court  system  website  at:
    11  www.nycourts.gov
    12  Sources of information and assistance:
    13  The  court  encourages  you  to  inform yourself about your options as a
    14  defendant in this lawsuit. In addition  to  seeking  assistance  from  a
    15  private  attorney  or  legal aid office, there are free legal assistance
    16  programs that you can use online to help you represent yourself in  this
    17  lawsuit.
    18  For further information, or to locate an entity or program near you, you
    19  may  visit  the  New  York  state  unified court system's "resources for
    20  unrepresented litigants" website at:
    21  http://ww2.nycourts.gov/RULES/CCR/resources.shtml
    22    (b) The face of the envelope shall be addressed to  the  defendant  at
    23  the  address  at which process was served, and shall contain the defend-
    24  ant's name, address (including apartment number) and zip code. The  face
    25  of  the  envelope also shall state the appropriate clerk's office as its
    26  return address.
    27    (c) The clerk promptly  shall  mail  to  the  defendant  the  envelope
    28  containing  the  additional  notice set forth in subdivision (a) of this
    29  section. No default judgment based on the defendant's failure to  answer
    30  shall be entered unless there has been compliance with this section, and
    31  at least twenty days have elapsed from the date of mailing by the clerk.
    32  No  default judgment based on the defendant's failure to answer shall be
    33  entered if the additional notice is returned to the court as undelivera-
    34  ble. Receipt of the additional notice by the defendant does  not  confer
    35  jurisdiction on the court in the absence of proper service of process.
    36    (d)  The  chief administrative judge shall issue a Spanish translation
    37  of the notice in subdivision (a) of this section.
    38    § 6. Subdivision (a) of section 3012 of the  civil  practice  law  and
    39  rules is amended to read as follows:
    40    (a)  Service  of  pleadings.  The  complaint  may  be  served with the
    41  summons, except that in an action arising out of a consumer credit tran-
    42  saction, the complaint shall be served with the  summons.  A  subsequent
    43  pleading  asserting  new or additional claims for relief shall be served
    44  upon a party who has not appeared in the manner provided for service  of
    45  a  summons.  In any other case, a pleading shall be served in the manner
    46  provided for service of papers generally. Service of an answer or  reply
    47  shall  be made within twenty days after service of the pleading to which
    48  it responds.
    49    § 7. Rule 3016 of the civil practice  law  and  rules  is  amended  by
    50  adding a new subdivision (j) to read as follows:
    51    (j)  Consumer  credit  transactions.  In  an  action  arising out of a
    52  consumer credit transaction where a purchaser, borrower or debtor  is  a
    53  defendant,  the contract or other written instrument on which the action
    54  is based shall be attached to the complaint and the  following  informa-
    55  tion shall be set forth in the complaint:
    56    (1) The name of the original creditor;

        S. 4827--B                          4                         A. 6909--B

     1    (2)  The  last  four  digits  of the account number at the date of the
     2  default giving rise to a cause of action;
     3    (3)  The  date  and  amount  of the last payment or, if no payment was
     4  made, a statement that the purchaser, borrower or debtor made no payment
     5  on the account;
     6    (4) If the complaint contains a cause of action based  on  an  account
     7  stated,  the  date that the final statement of account was mailed to the
     8  defendant;
     9    (5) (A) Except as provided in subparagraph (B) of this  paragraph,  an
    10  itemization  of the amount sought, by (i) principal; (ii) finance charge
    11  or charges; (iii) fees imposed by the original creditor; (iv) collection
    12  costs; (v) attorney's fees; (vi) interest; and (vii) any other fees  and
    13  charges.
    14    (B)  If  the account was a revolving credit account, an itemization of
    15  the amount sought, by (i) the balance  at  the  date  of  default;  (ii)
    16  interest,  fees  and  charges  imposed  after the date of default; (iii)
    17  credits or payments made by or on behalf of the purchaser,  borrower  or
    18  debtor  after  the  date of default; and (iv) if applicable, the date of
    19  charge off and balance at charge off, provided that  any  amount  sought
    20  for  charges  and costs after charge off are itemized as provided for in
    21  subparagraph (A) of this paragraph;
    22    (6) (A) Whether the plaintiff is the original creditor.
    23    (B) If the plaintiff is not the original creditor, the complaint shall
    24  also state (i) the date on which the debt was sold or  assigned  to  the
    25  plaintiff;  (ii) the name of each previous owner of the account from the
    26  original creditor to the plaintiff and the date on which  the  debt  was
    27  assigned to that owner by the original creditor or subsequent owner; and
    28  (iii)  the  amount due at the time of the sale or assignment of the debt
    29  by the original creditor; and
    30    (7) Any matters required to be stated with particularity  pursuant  to
    31  rule 3015 of this article.
    32    § 8. Subdivision (e) of rule 3211 of the civil practice law and rules,
    33  as  amended  by  chapter  616 of the laws of 2005, is amended to read as
    34  follows:
    35    (e) Number, time and waiver of objections; motion to  plead  over.  At
    36  any  time before service of the responsive pleading is required, a party
    37  may move on one or more of the grounds set forth in subdivision  (a)  of
    38  this  rule,  and  no  more  than one such motion shall be permitted. Any
    39  objection or defense based upon a ground set forth  in  paragraphs  one,
    40  three,  four,  five  and  six  of subdivision (a) of this rule is waived
    41  unless raised either by such motion or in  the  responsive  pleading.  A
    42  motion  based  upon a ground specified in paragraph two, seven or ten of
    43  subdivision (a) of this rule may be made at any subsequent time or in  a
    44  later  pleading,  if one is permitted; an objection that the summons and
    45  complaint, summons with notice, or notice of petition and  petition  was
    46  not  properly  served is waived if, having raised such an objection in a
    47  pleading, the objecting party does not move for judgment on that  ground
    48  within  sixty  days after serving the pleading, unless the court extends
    49  the time upon the ground of undue hardship. The foregoing sentence shall
    50  not apply in any proceeding to collect a debt arising out of a  consumer
    51  credit  transaction where a consumer is a defendant or under subdivision
    52  one or two of section seven hundred eleven of the real property  actions
    53  and  proceedings  law.  The  papers  in  opposition to a motion based on
    54  improper service shall contain a copy of the proof of  service,  whether
    55  or  not  previously filed. An objection based upon a ground specified in
    56  paragraph eight or nine of subdivision (a) of this rule is waived  if  a

        S. 4827--B                          5                         A. 6909--B

     1  party  moves  on any of the grounds set forth in subdivision (a) of this
     2  rule without raising such objection or  if,  having  made  no  objection
     3  under  subdivision  (a)  of  this  rule,  he  or she does not raise such
     4  objection  in  the responsive pleading which, in any action to collect a
     5  debt arising out of a consumer credit transaction where a consumer is  a
     6  defendant, includes any amended responsive pleading.
     7    §  9.  Rule  3212  of  the  civil practice law and rules is amended by
     8  adding a new subdivision (j) to read as follows:
     9    (j) Additional notice in any action to collect a debt arising  out  of
    10  a consumer credit transaction where a consumer is a defendant.
    11    1.  At  the  time  of service of a notice of motion any part of  which
    12  requests summary judgment in whole or in part, where the   moving  party
    13  is  a  plaintiff and the respondent is a consumer defendant in an action
    14  to collect a debt arising out of a   consumer  credit  transaction,  and
    15  where the consumer defendant against  whom summary judgment is sought is
    16  not represented by an attorney, the plaintiff shall serve, together with
    17  the  notice  of  motion,  the following additional notice in English and
    18  Spanish to be printed in clear type no less than twelve-point in size:
    19                    Important notice to pro se defendants
    20  (Name of court)
    21  (Street address, room number)
    22  (City, state, zip code)

    23  Plaintiff:
    24  Defendant:
    25  Index number:

    26  Motion return date and time:

    27  Attention CPLR Rule 3212 motion for summary judgment

    28  This notice is to advise you that the plaintiff in this case has filed a
    29  motion for summary judgment against you  pursuant  to  CPLR  Rule  3212,
    30  which  means  that  summary  judgment will be granted if the court finds
    31  that there is no genuine issue as to any  material  fact  and  that  the
    32  plaintiff is entitled to judgment as a matter of law.

    33  Failure  to  respond to this motion for summary judgment may result in a
    34  money judgment being entered against you in favor of the plaintiff.

    35  Once entered, a judgment is good and can be used against you for  twenty
    36  years, and your personal property and money, including a portion of your
    37  paycheck  and/or  bank  account, may be taken from you. Also, a judgment
    38  may affect your credit score and can affect your  ability  to    rent  a
    39  home,  find a job, or take out a loan. You CANNOT be arrested or sent to
    40  jail for owing a  debt.

    41  Opposing this motion for summary judgment:

    42  If you wish to oppose the plaintiff's request for judgment,  you  should
    43  set  forth in a written  response the reasons that the plaintiff has not
    44  shown that it is entitled to judgment as a matter of law, and any  facts
    45  that you believe show that you are not liable to the plaintiff or have a
    46  defense.  You  should submit affidavits or exhibits supporting any facts
    47  that you assert show that you are not liable or  have  a  defense.  Each
    48  affidavit  should  set  forth  relevant  facts  and show that the person

        S. 4827--B                          6                         A. 6909--B

     1  submitting the affidavit has personal knowledge of those facts.  If  you
     2  rely on  exhibits, you should attach copies of them to an affidavit that
     3  explains what they are and how they show that you are not liable or have
     4  a  defense.  You  should  bring your opposition papers   to court on the
     5  court date and mail a copy to the plaintiff's attorney in advance of the
     6  court date. You should also attend court on the return date.

     7  Sources of information and assistance:

     8  The court encourages you to inform yourself  about  your  options  as  a
     9  defendant  in  this  lawsuit.   In addition to seeking assistance from a
    10  private attorney or legal aid office, there may be free   legal  assist-
    11  ance  programs that you may contact for help in representing yourself in
    12  this lawsuit.

    13  For further information, or to locate an entity or program near you, you
    14  may visit the New York  state  unified  court  system's  "resources  for
    15  unrepresented litigants" website at:
    16  http://ww2.nycourts.gov/RULES/CCR/resources.shtml
    17    2.  The plaintiff seeking summary judgment shall file proof of service
    18  of the additional notice  with the court, and no motion for  which  this
    19  additional  notice  is  required shall be granted   unless such proof of
    20  service has been filed.
    21    3. The chief administrative judge shall issue a Spanish translation of
    22  the notice in paragraph one of this subdivision.
    23    § 10. Section 3213 of the civil practice law and rules, as amended  by
    24  chapter 210 of the laws of 1969, is amended to read as follows:
    25    §  3213.  Motion  for  summary  judgment in lieu of complaint. When an
    26  action is based upon an instrument for the payment of money only or upon
    27  any judgment, the plaintiff may serve  with  the  summons  a  notice  of
    28  motion  for  summary  judgment  and  the  supporting papers in lieu of a
    29  complaint. The summons served with such motion papers shall require  the
    30  defendant  to  submit  answering  papers  on  the motion within the time
    31  provided in the notice of motion. The minimum time such motion shall  be
    32  noticed  to be heard shall be as provided by subdivision (a) of rule 320
    33  for making an appearance, depending upon the method of service.  If  the
    34  plaintiff  sets  the  hearing  date of the motion later than the minimum
    35  time therefor, he may require the defendant  to  serve  a  copy  of  his
    36  answering  papers  upon  him  within  such  extended period of time, not
    37  exceeding ten days, prior to such hearing date. No default judgment  may
    38  be  entered  pursuant  to  subdivision  (a) of section 3215 prior to the
    39  hearing date of the motion. If the motion  is  denied,  the  moving  and
    40  answering papers shall be deemed the complaint and answer, respectively,
    41  unless  the  court  orders  otherwise. The additional notice required by
    42  subdivision (j) of rule 3212 shall be applicable to a motion made pursu-
    43  ant to this section in any action to collect a debt  arising  out  of  a
    44  consumer credit transaction where a consumer is a defendant.
    45    §  11.  Subdivision  (f) of section 3215 of the civil practice law and
    46  rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
    47  new subdivision (j) is added to read as follows:
    48    (f)  Proof.  On any application for judgment by default, the applicant
    49  shall file proof of service of the  summons  and  the  complaint,  or  a
    50  summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
    51  subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
    52  constituting the claim, the default and the amount due by affidavit made
    53  by  the party, or where the state of New York is the plaintiff, by affi-

        S. 4827--B                          7                         A. 6909--B

     1  davit made by an attorney from the office of the  attorney  general  who
     2  has  or  obtains knowledge of such facts through review of state records
     3  or otherwise. Where a verified complaint has been served, it may be used
     4  as the affidavit of the facts constituting the claim and the amount due;
     5  in  such case, an affidavit as to the default shall be made by the party
     6  or the party's attorney. In an action arising out of a  consumer  credit
     7  transaction,  if  the plaintiff is not the original creditor, the appli-
     8  cant shall include: (1) an affidavit by the  original  creditor  of  the
     9  facts constituting the debt, the default in payment, the sale or assign-
    10  ment  of the debt, and the amount due at the time of sale or assignment;
    11  (2) for each subsequent assignment or sale of the debt to another  enti-
    12  ty,  an  affidavit  of sale of the debt by the debt seller, completed by
    13  the seller or assignor; and (3) an affidavit of a witness of the  plain-
    14  tiff,  which  includes  a  chain  of title of the debt, completed by the
    15  plaintiff or plaintiff's witness. The chief administrative  judge  shall
    16  issue  form  affidavits  to satisfy the requirements of this subdivision
    17  for consumer credit transactions.  When  jurisdiction  is  based  on  an
    18  attachment  of  property,  the  affidavit  must  state  that an order of
    19  attachment granted in the action has been levied on the property of  the
    20  defendant,  describe  the property and state its value. Proof of mailing
    21  the notice required by subdivision (g) of this section,  where  applica-
    22  ble, shall also be filed.
    23    (j)  Affidavit. A request for a default judgment entered by the clerk,
    24  must be accompanied by an affidavit  by  the  plaintiff  or  plaintiff's
    25  attorney  stating that after reasonable inquiry, he or she has reason to
    26  believe that the statute of limitations has not expired.
    27    § 12. The civil practice law and rules is  amended  by  adding  a  new
    28  section 7516 to read as follows:
    29    §  7516.  Confirmation  of  an award based on a consumer credit trans-
    30  action. In any proceeding under section 7510 of this article to  confirm
    31  an  award  based  on a consumer credit transaction, the party seeking to
    32  confirm the award shall plead the actual terms  and  conditions  of  the
    33  agreement  to  arbitrate. The party shall attach to its petition (a) the
    34  agreement to arbitrate; (b) the demand  for  arbitration  or  notice  of
    35  intention  to  arbitrate, with proof of service; and (c) the arbitration
    36  award, with proof of service. If the award does not contain a  statement
    37  of the claims submitted for arbitration, of the claims ruled upon by the
    38  arbitrator,  and of the calculation of figures used by the arbitrator in
    39  arriving at the award, then the petition shall contain such a statement.
    40  The court shall not grant confirmation of an award based on  a  consumer
    41  credit  transaction  unless  the  party seeking to confirm the award has
    42  complied with this section.
    43    § 13. Subdivision 2 of section 212 of the judiciary law is amended  by
    44  adding a new paragraph (aa) to read as follows:
    45    (aa) Not later than January first, two thousand twenty, make available
    46  Spanish translations of the additional notices in consumer credit trans-
    47  action  actions  and  proceedings required by section 306-d of the civil
    48  practice law and rules and subdivision (i) of rule  3212  of  the  civil
    49  practice  law and rules, and make available form affidavits required for
    50  a motion for default judgment in a consumer credit transaction action or
    51  proceeding required by subdivision (f) of  section  3215  of  the  civil
    52  practice law and rules.
    53    §  14. This act shall take effect immediately; provided, however, that
    54  sections two, three, five, six, seven,  eight,  nine,  ten,  eleven  and
    55  twelve  shall  take  effect  on the first of January next succeeding the
    56  date on which it shall have become a law and shall apply to actions  and

        S. 4827--B                          8                         A. 6909--B

     1  proceedings commenced on or after such date; and provided, further, that
     2  section  four  of this act shall take effect on the one hundred fiftieth
     3  day after this act shall have become a law.
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