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S00691 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           691
 
                               2019-2020 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 9, 2019
                                       ___________
 
        Introduced  by  Sen.  FELDER -- read twice and ordered printed, and when
          printed to be committed to the Committee on Judiciary
 
        AN ACT to amend the civil practice law and rules, in relation to consum-
          er 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. Subdivision 2 of section 213 of the civil practice law and rules,
     4  as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
     5  follows:
     6    2.  an  action  upon a contractual obligation or liability, express or
     7  implied, except as provided in section two  hundred  thirteen-a  or  two
     8  hundred  fourteen-g  of this article or article 2 of the uniform commer-
     9  cial code or article 36-B of the general business law;
    10    § 3. The civil practice law and rules  is  amended  by  adding  a  new
    11  section 214-g to read as follows:
    12    §  214-g.  Certain actions arising out of consumer credit transactions
    13  to be commenced within three years. An action arising out of a  consumer
    14  credit  transaction where a purchaser, borrower or debtor is a defendant
    15  must be commenced within three years, except as provided in section  two
    16  hundred  thirteen-a  of this article or article 2 of the uniform commer-
    17  cial code or article 36-B of the general business law. When  the  period
    18  within  which an action may be commenced under this section has expired,
    19  the right to collect consumer credit debt is extinguished as well as the
    20  remedy.
    21    For purposes of this section, "the right to  collect  consumer  credit
    22  debt" shall mean any attempts by the creditor, third party purchaser, or
    23  other  authorized  third  party  to collect such debt including, but not
    24  limited to, calls, mail or other attempts to collect.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00927-01-9

        S. 691                              2
 
     1    § 4. The civil practice law and rules  is  amended  by  adding  a  new
     2  section 306-d to read as follows:
     3    §  306-d.  Additional  mailing of notice in an action arising out of a
     4  consumer credit transaction. (a) At the time of filing with the clerk of
     5  the proof of service of the summons and complaint in an  action  arising
     6  out  of a consumer credit transaction, the plaintiff shall submit to the
     7  clerk a stamped unsealed envelope addressed to  the  defendant  together
     8  with  a  written  notice  in  clear type of no less than twelve-point in
     9  size,  in  both  English  and  Spanish,  and  containing  the  following
    10  language:
    11                        ADDITIONAL NOTICE OF LAWSUIT
 
    12  (NAME OF COURT)
    13  (COUNTY)
    14  (STREET ADDRESS, ROOM NUMBER)
    15  (CITY, STATE, ZIP CODE)
 
    16  (NAME OF DEFENDANT)
    17  (ADDRESS OF DEFENDANT)
 
    18  Plaintiff:__________________________________
    19  Defendant:__________________________________
    20  Name of original creditor, unless same:______________________________
    21  Index number:_______________________________
 
    22  Attention:  a  lawsuit  has been filed against you claiming that you owe
    23  money for an unpaid consumer debt.
    24  You should go to the court clerk's office at the above address  as  soon
    25  as possible to respond to the lawsuit. You may wish to contact an attor-
    26  ney.
    27  If  you do not respond to the lawsuit, the court may enter a money judg-
    28  ment against you. Once entered, a judgment  is  good  and  can  be  used
    29  against  you  for  twenty  years,  and your personal property and money,
    30  including a portion of your paycheck and/or bank account, may  be  taken
    31  from you.  Also, a judgment will affect your credit score and can affect
    32  your ability to rent a home, find a job, or take out a loan.
    33  You CANNOT be arrested or sent to jail for owing a debt.
    34  It  is important that you go to the court clerk's office listed above as
    35  soon as possible. You should bring this notice and any legal papers  you
    36  may  have  received.    Additional information can be found at the court
    37  system website at:  www.nycourts.gov
    38    (b) The face of the envelope shall be addressed to  the  defendant  at
    39  the  address  at which process was served, and shall contain the defend-
    40  ant's name, address (including apartment number) and zip code. The  face
    41  of  the  envelope also shall state the appropriate clerk's office as its
    42  return address.
    43    (c) The clerk promptly  shall  mail  to  the  defendant  the  envelope
    44  containing  the  additional  notice set forth in subdivision (a) of this
    45  section. No default judgment based on the defendant's failure to  answer
    46  shall be entered unless there has been compliance with this section, and
    47  at least twenty days have elapsed from the date of mailing by the clerk.
    48  No  default judgment based on the defendant's failure to answer shall be
    49  entered if the additional notice is returned to the court as undelivera-
    50  ble. Receipt of the additional notice by the defendant does  not  confer
    51  jurisdiction on the court in the absence of proper service of process.

        S. 691                              3
 
     1    §  5.  Subdivision  (a)  of section 3012 of the civil practice law and
     2  rules is amended to read as follows:
     3    (a)  Service  of  pleadings.  The  complaint  may  be  served with the
     4  summons, except that in an action arising out of a consumer credit tran-
     5  saction, the complaint shall be served with the  summons.  A  subsequent
     6  pleading  asserting  new or additional claims for relief shall be served
     7  upon a party who has not appeared in the manner provided for service  of
     8  a  summons.  In any other case, a pleading shall be served in the manner
     9  provided for service of papers generally. Service of an answer or  reply
    10  shall  be made within twenty days after service of the pleading to which
    11  it responds.
    12    § 6.  Rule 3016 of the civil practice law  and  rules  is  amended  by
    13  adding a new subdivision (j) to read as follows:
    14    (j)  Consumer  credit  transactions.  In  an  action  arising out of a
    15  consumer credit transaction where a purchaser, borrower or debtor  is  a
    16  defendant,  the contract or other written instrument on which the action
    17  is based shall be attached to the complaint and the  following  informa-
    18  tion shall be set forth in the complaint:
    19    1. The name of the original creditor;
    20    2. The last four digits of the original account number;
    21    3. The date and amount of the last payment;
    22    4.  If  the  complaint  contains a cause of action based on an account
    23  stated, the date that the final statement of account was mailed  to  the
    24  defendant;
    25    5. An itemization of the amount sought, by (i) principal; (ii) finance
    26  charge  or  charges;  (iii)  fees imposed by the original creditor; (iv)
    27  collection costs; (v) attorney's fees;  (vi)  interest;  and  (vii)  any
    28  other fees and charges. The term "finance charge" means a finance charge
    29  as defined in Regulation Z, 12 C.F.R. § 226.4;
    30    6. Whether the plaintiff is the original creditor. If the plaintiff is
    31  not  the  original creditor, the complaint shall also state (i) the date
    32  on which the debt was sold or assigned to the plaintiff; (ii)  the  name
    33  of each previous owner of the account and the date on which the debt was
    34  assigned to that owner; and (iii) the amount due at the time of the sale
    35  or assignment of the debt by the original creditor; and
    36    7.  Any  matters  required to be stated with particularity pursuant to
    37  subdivision (b) of this rule.
    38    § 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
    39  as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
    40  follows:
    41    (e)  Number,  time  and waiver of objections; motion to plead over. At
    42  any time before service of the responsive pleading is required, a  party
    43  may  move  on one or more of the grounds set forth in subdivision (a) of
    44  this rule, and no more than one such  motion  shall  be  permitted.  Any
    45  objection  or  defense  based upon a ground set forth in paragraphs one,
    46  three, four, five and six of subdivision (a)  of  this  rule  is  waived
    47  unless  raised  either  by  such motion or in the responsive pleading. A
    48  motion based upon a ground specified in paragraph two, seven or  ten  of
    49  subdivision  (a) of this rule may be made at any subsequent time or in a
    50  later pleading, if one is permitted; in any action other than an  action
    51  arising out of a consumer credit transaction where a purchaser, borrower
    52  or  debtor  is a defendant, an objection that the summons and complaint,
    53  summons with notice, or notice of petition and petition was not properly
    54  served is waived if, having raised such an objection in a pleading,  the
    55  objecting  party  does not move for judgment on that ground within sixty
    56  days after serving the pleading, unless the court extends the time  upon

        S. 691                              4
 
     1  the  ground of undue hardship. The foregoing sentence shall not apply in
     2  any proceeding under subdivision one or two  of  section  seven  hundred
     3  eleven  of  the real property actions and proceedings law. The papers in
     4  opposition to a motion based on improper service shall contain a copy of
     5  the  proof  of  service,  whether  or not previously filed. An objection
     6  based upon a ground specified in paragraph eight or nine of  subdivision
     7  (a)  of  this  rule is waived if a party moves on any of the grounds set
     8  forth in subdivision (a) of this rule without raising such objection  or
     9  if,  having  made no objection under subdivision (a) of this rule, he or
    10  she does not raise such objection in the responsive pleading.
    11    § 8. Subdivision (f) of section 3215 of the  civil  practice  law  and
    12  rules,  as  amended by chapter 453 of the laws of 2006, is amended and a
    13  new subdivision (j) is added to read as follows:
    14    (f) Proof. On any application for judgment by default,  the  applicant
    15  shall  file  proof  of  service  of  the summons and the complaint, or a
    16  summons and notice served pursuant to subdivision (b)  of  rule  305  or
    17  subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
    18  constituting the claim, the default and the amount due by affidavit made
    19  by the party, or where the state of New York is the plaintiff, by  affi-
    20  davit  made  by  an attorney from the office of the attorney general who
    21  has or obtains knowledge of such facts through review of  state  records
    22  or otherwise. Where a verified complaint has been served, it may be used
    23  as the affidavit of the facts constituting the claim and the amount due;
    24  in  such case, an affidavit as to the default shall be made by the party
    25  or the party's attorney. In an action arising out of a  consumer  credit
    26  transaction,  if  the plaintiff is not the original creditor, the appli-
    27  cant shall include: (1) an affidavit by the  original  creditor  of  the
    28  facts constituting the debt, the default in payment, the sale or assign-
    29  ment  of the debt, and the amount due at the time of sale or assignment;
    30  (2) for each subsequent assignment or sale of the debt to another  enti-
    31  ty,  an  affidavit  of sale of the debt by the debt seller, completed by
    32  the seller or assignor; and (3) an affidavit of a witness of the  plain-
    33  tiff,  which  includes  a  chain  of title of the debt, completed by the
    34  plaintiff or plaintiff's witness.  When  jurisdiction  is  based  on  an
    35  attachment  of  property,  the  affidavit  must  state  that an order of
    36  attachment granted in the action has been levied on the property of  the
    37  defendant,  describe  the property and state its value. Proof of mailing
    38  the notice required by subdivision (g) of this section,  where  applica-
    39  ble, shall also be filed.
    40    (j)  A  request  for  a default judgment entered by the clerk, must be
    41  accompanied by an affidavit by the debt collector (who may be the plain-
    42  tiff or plaintiff's attorney) stating that after reasonable inquiry,  he
    43  or  she  has  reason  to believe that the statute of limitations has not
    44  expired.
    45    § 9. The civil practice law and rules  is  amended  by  adding  a  new
    46  section 7516 to read as follows:
    47    §  7516.  Confirmation  of  an award based on a consumer credit trans-
    48  action. In any proceeding under section 7510 of this article to  confirm
    49  an  award  based  on a consumer credit transaction, the party seeking to
    50  confirm the award shall plead the actual terms  and  conditions  of  the
    51  agreement  to  arbitrate. The party shall attach to its petition (a) the
    52  agreement to arbitrate; (b) the demand  for  arbitration  or  notice  of
    53  intention  to  arbitrate, with proof of service; and (c) the arbitration
    54  award, with proof of service. If the award does not contain a  statement
    55  of the claims submitted for arbitration, of the claims ruled upon by the
    56  arbitrator,  and of the calculation of figures used by the arbitrator in

        S. 691                              5
 
     1  arriving at the award, then the petition shall contain such a statement.
     2  The court shall not grant confirmation of an award based on  a  consumer
     3  credit  transaction  unless  the  party seeking to confirm the award has
     4  complied with this section.
     5    § 10. This act shall take effect on the first of January next succeed-
     6  ing  the  date  on which it shall have become a law, except that section
     7  three of this act shall take effect on  the  one  hundred  fiftieth  day
     8  after this act shall have become a law.
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