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Volume 48, Issue No 1 (Spring 2019)

According the Federal Reserve, there are 59.5 Billion debit or credit card swipes a year in the United States. That boils down to 165 million swipes/day; approximately 15% of which occur in Texas (25 million/day; 1.8 million/hour; 30,000/minute; 500/second). That’s a lot of plastic, and much of this article will be geared to the type of consumer debt that is created in the retail debt arena. However, “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes” is likely a consumer debt. This paper has traditionally focused on basic regulatory compliance, causes of action, limitations and proof. While all are important to consumer collections, changes in the industry have necessitated a greater emphasis on issues surrounding regulatory compliance. Consumer lawsuits are like any other lawsuit and, as such, the core legal challenges and approaches are not unique to consumer collections. What has been unique and what continues to drive the evolution within the consumer space are the regulatory requirements and transitions which are actively occurring in this area of practice. The purpose of this paper is to address the common areas of law which impact collection work in this arena and to provide a context in which to understand the rapidly changing framework in which consumer debt collection now operates.

The shareholder wealth maximization norm exerts tremendous influence on both business practice and corporate legal scholarship. Widespread acceptance of the norm has produced substantial focus among corporate executives, analysts, and scholars on one key metric: share price. The norm and the related focus on equity prices rest on two key assumptions: (1) that the pursuit of shareholder wealth maximization, as measured by share price, effectively maximizes the wealth of actual shareholders and (2) that the pursuit of shareholder wealth maximization, as measured by share price, is socially beneficial. If the shareholder wealth maximization norm does not truly maximize shareholder wealth, it fails by its own terms. If pursuing shareholder wealth maximization does not produce a net social benefit but instead generates a net social harm, the pursuit of shareholder wealth maximization no longer constitutes a “win-win” for businesses and consumers but instead elevates business interests in a zero-sum competition between the two groups. This Article addresses one context where the pursuit of share price gains both fails to maximize the wealth of all shareholders and fails to benefit society: corporate mergers and acquisitions activity.

The United States Court of Appeals for the Second Circuit addressed whether a nonresident foreign national may be liable based on conspiracy or complicity under the Foreign Corrupt Practices Act (“FCPA”). The court held that the FCPA should be interpreted as it facially states, which contains no express provision assigning liability to nonresident foreign nationals “who lack an agency relationship with a U.S. person.” Additionally, the court reasoned that, from the process that the Senate and House went through while drafting the bill, Congress demonstrated an affirmative legislative policy in the FCPA in order to restrict criminal liability to certain types of defendants. Read the case note below.

On December 31, 2018, the Court of Appeals of Texas for Eastland considered an issue of first impression for Texas. The issue was whether the holder of a prior perfected security interest waives its right to collateral by failing to take affirmative action prior to a junior creditor exercising rights on the same collateral. The Court held that a prior perfected security interest holder does not waive its senior security interest by failing to exercise elective remedies prior to a junior judgment creditor exercising foreclosure rights. Read the case note below.

In the recent appellate decision Woodhaven Dr. 1401 Land Trust v. Citibank, the Dallas Court of Appeals addressed the issue of priority in regard to competing liens on foreclosed real property. Focusing on the facts, the express language of the HOA’s declaration of covenants, conditions and restrictions (“the Declaration”), case law precedent, and the straightforward definition of “mortgage,” found in Black’s Law Dictionary, the court affirmed the holding below. The HOA’s assessment lien was clearly subordinate to Citibank’s first lien and as a result, Woodhaven purchased the property subject to the first lien. Read the case note below.

On February 21, 2018, the United States Supreme Court clarified whether Dodd-Frank’s anti-retaliation provision for “whistleblowers” extends to individuals who have not reported a securities law violation to the Securities and Exchange Commission (“Commission” or “SEC”). The Court unanimously held that protection extends only to those who report a securities law violation to the Commission.

On September 12, 2018, the Supreme Court of Texas considered whether Francisco Calleja-Ahedo (“Calleja”) or his bank must suffer the financial consequences of identity theft. Calleja sued Compass Bank (the “Bank”) to recover stolen funds after his bank account was drained due to a series of fraudulent transactions. Calleja alleged that the Bank was liable for the financial consequences of the identity theft that took place over a two-year time span. Affirming the decision of the district court, the Supreme Court of Texas overruled a decision by the court of appeals and concluded that Texas law shields the Bank from liability for the losses Calleja’s account sustained due to fraudulent activity.

On December 4, 2018, the Texas Court of Appeals for the Fifth Circuit reversed the decision of the Dallas County Court at Law No. 2., holding that ambiguity within a contract constitutes a fact issue for which summary judgment is improper. Although the facts within this case were particularly complicated and intricate, this case stands to show the fundamental principle that ambiguity and fact issues will typically not allow a summary judgment to survive. It is important to remember when drafting a contract that if it contains provisions that are susceptible to more than one interpretation, a court may deem this an ambiguity and thus a fact issue that cannot be properly resolved through summary judgment.