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S00153 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           153
 
                               2021-2022 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 6, 2021
                                       ___________
 
        Introduced  by  Sen.  THOMAS -- 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 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:
    23    § 214-i. Certain actions arising out of consumer  credit  transactions
    24  to  be commenced within three years. An action arising out of a consumer
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00040-01-1

        S. 153                              2
 
     1  credit transaction where a purchaser, borrower or debtor is a  defendant
     2  must  be commenced within three years, except as provided in section two
     3  hundred thirteen-a of this article or article 2 of the  uniform  commer-
     4  cial  code  or article 36-B of the general business law. Notwithstanding
     5  any other provision of  law,  when  the  applicable  limitations  period
     6  expires,  any  subsequent payment toward, written or oral affirmation of
     7  or other activity on the debt does not revive or extend the  limitations
     8  period.
     9    §  5.  The  civil  practice  law  and rules is amended by adding a new
    10  section 306-d to read as follows:
    11    § 306-d. Additional mailing of notice in an action arising  out  of  a
    12  consumer credit transaction. (a) At the time of filing with the clerk of
    13  the  proof  of service of the summons and complaint in an action arising
    14  out of a consumer credit transaction, the plaintiff shall submit to  the
    15  clerk  a  stamped, unsealed envelope addressed to the defendant together
    16  with a written notice in clear type of  no  less  than  twelve-point  in
    17  size,  in  both  English  and  Spanish,  and  containing  the  following
    18  language:
    19                        ADDITIONAL NOTICE OF LAWSUIT
 
    20  (NAME OF COURT)
    21  (COUNTY)
    22  (STREET ADDRESS, ROOM NUMBER)
    23  (CITY, STATE, ZIP CODE)
 
    24  (NAME OF DEFENDANT)
    25  (ADDRESS OF DEFENDANT)
 
    26  Plaintiff:
    27  Defendant:
    28  Name of original creditor, unless same:
    29  Index number:
 
    30  Attention: a lawsuit has been filed against you claiming  that  you  owe
    31  money for an unpaid consumer debt.
    32  You may wish to contact an attorney.
    33    You  should  respond  to  the lawsuit as soon as possible by filing an
    34  "answer" which may be done at the court clerk's office listed above.
    35    If you do not respond to the lawsuit, the  court  may  enter  a  money
    36  judgment  against  you. Once entered, a judgment is good and can be used
    37  against you for twenty years, and  your  personal  property  and  money,
    38  including  a  portion of your paycheck and/or bank account, may be taken
    39  from you.  Also, a judgment may affect your credit score and can  affect
    40  your ability to rent a home, find a job, or take out a loan.
    41  You CANNOT be arrested or sent to jail for owing a debt.
    42  Additional  information  can be found at the New York state court system
    43  website.
    44  Sources of information and assistance:
    45  The court encourages you to inform yourself  about  your  options  as  a
    46  defendant  in  this  lawsuit.  In  addition to seeking assistance from a
    47  private attorney or legal aid office, there are  free  legal  assistance
    48  computer programs that you can use online to help you represent yourself
    49  in this lawsuit.
    50  For  further information, or to locate a legal aid program near you, you
    51  may visit the LawHelpNY website or  the  New  York  state  court  system

        S. 153                              3
 
     1  website,  which  has  information for representing yourself and links to
     2  other resources at: ___________________.
     3    (b)  The  face  of the envelope shall be addressed to the defendant at
     4  the address at which process was served, and shall contain  the  defend-
     5  ant's  name, address (including apartment number) and zip code. The face
     6  of the envelope also shall state the appropriate clerk's office  as  its
     7  return address.
     8    (c)  The  clerk  promptly  shall  mail  to  the defendant the envelope
     9  containing the additional notice set forth in subdivision  (a)  of  this
    10  section.  No default judgment based on the defendant's failure to answer
    11  shall be entered unless there has been compliance with this section, and
    12  at least twenty days have elapsed from the date of mailing by the clerk.
    13  No default judgment based on the defendant's failure to answer shall  be
    14  entered if the additional notice is returned to the court as undelivera-
    15  ble.  Receipt  of the additional notice by the defendant does not confer
    16  jurisdiction on the court in the absence of proper service of process.
    17    (d) The chief administrative judge shall issue a  Spanish  translation
    18  of  the notice in subdivision (a) of this section and shall maintain and
    19  publish the URL address for the web page containing  consumer  resources
    20  for unrepresented litigants.
    21    §  6.  Subdivision  (a)  of section 3012 of the civil practice law and
    22  rules is amended to read as follows:
    23    (a) Service of  pleadings.  The  complaint  may  be  served  with  the
    24  summons, except that in an action arising out of a consumer credit tran-
    25  saction,  the  complaint  shall be served with the summons. A subsequent
    26  pleading asserting new or additional claims for relief shall  be  served
    27  upon  a party who has not appeared in the manner provided for service of
    28  a summons. In any other case, a pleading shall be served in  the  manner
    29  provided  for service of papers generally. Service of an answer or reply
    30  shall be made within twenty days after service of the pleading to  which
    31  it responds.
    32    §  7.  Rule  3016  of  the  civil practice law and rules is amended by
    33  adding a new subdivision (j) to read as follows:
    34    (j) Consumer credit transactions.  In  an  action  arising  out  of  a
    35  consumer  credit  transaction where a purchaser, borrower or debtor is a
    36  defendant, the contract or other written instrument on which the  action
    37  is  based  shall be attached to the complaint, however, for the purposes
    38  of this section, if the account was  a  revolving  credit  account,  the
    39  charge-off  statement  may  be  attached to the complaint instead of the
    40  contract or other written  instrument,  and  the  following  information
    41  shall be set forth in the complaint:
    42    (1) The name of the original creditor;
    43    (2)  The  last  four  digits of the account number printed on the most
    44  recent monthly statement recording a purchase transaction, last  payment
    45  or balance transfer;
    46    (3)  The  date  and  amount  of the last payment or, if no payment was
    47  made, a statement that the purchaser, borrower or debtor made no payment
    48  on the account;
    49    (4) If the complaint contains a cause of action based  on  an  account
    50  stated,  the  date  on or about which the final statement of account was
    51  provided to the defendant;
    52    (5) (A) Except as provided in subparagraph (B) of this  paragraph,  an
    53  itemization  of the amount sought, by (i) principal; (ii) finance charge
    54  or charges; (iii) fees imposed by the original creditor; (iv) collection
    55  costs; (v) attorney's fees; (vi) interest; and (vii) any other fees  and
    56  charges.

        S. 153                              4
 
     1    (B)  If  the account was a revolving credit account, an itemization of
     2  the amount sought, by:   (i) the total amount of  the  debt  due  as  of
     3  charge-off;  (ii) the total amount of interest accrued since charge-off;
     4  (iii) the total amount of non-interest charges  or  fees  accrued  since
     5  charge-off; and (iv) the total amount of payments and/or credits made on
     6  the debt since charge-off;
     7    (6)  The  account balance printed on the most recent monthly statement
     8  recording a purchase transaction, last payment or balance transfer;
     9    (7) (A) Whether the plaintiff is the original creditor.
    10    (B) If the plaintiff is not the original creditor, the complaint shall
    11  also state (i) the date on which the debt was sold or  assigned  to  the
    12  plaintiff;  (ii) the name of each previous owner of the account from the
    13  original creditor to the plaintiff and the date on which  the  debt  was
    14  assigned to that owner by the original creditor or subsequent owner; and
    15  (iii)  the  amount due at the time of the sale or assignment of the debt
    16  by the original creditor; and
    17    (8) Any matters required to be stated with particularity  pursuant  to
    18  rule 3015 of this article.
    19    § 8. Subdivision (e) of rule 3211 of the civil practice law and rules,
    20  as  amended  by  chapter  616 of the laws of 2005, is amended to read as
    21  follows:
    22    (e) Number, time and waiver of objections; motion to  plead  over.  At
    23  any  time before service of the responsive pleading is required, a party
    24  may move on one or more of the grounds set forth in subdivision  (a)  of
    25  this  rule,  and  no  more  than one such motion shall be permitted. Any
    26  objection or defense based upon a ground set forth  in  paragraphs  one,
    27  three,  four,  five  and  six  of subdivision (a) of this rule is waived
    28  unless raised either by such motion or in  the  responsive  pleading.  A
    29  motion  based  upon a ground specified in paragraph two, seven or ten of
    30  subdivision (a) of this rule may be made at any subsequent time or in  a
    31  later  pleading,  if one is permitted; an objection that the summons and
    32  complaint, summons with notice, or notice of petition and  petition  was
    33  not  properly  served is waived if, having raised such an objection in a
    34  pleading, the objecting party does not move for judgment on that  ground
    35  within  sixty  days after serving the pleading, unless the court extends
    36  the time upon the ground of undue hardship. The foregoing sentence shall
    37  not apply in any proceeding to collect a debt arising out of a  consumer
    38  credit  transaction where a consumer is a defendant or under subdivision
    39  one or two of section seven hundred eleven of the real property  actions
    40  and  proceedings  law.  The  papers  in  opposition to a motion based on
    41  improper service shall contain a copy of the proof of  service,  whether
    42  or  not  previously filed. An objection based upon a ground specified in
    43  paragraph eight or nine of subdivision (a) of this rule is waived  if  a
    44  party  moves  on any of the grounds set forth in subdivision (a) of this
    45  rule without raising such objection or  if,  having  made  no  objection
    46  under  subdivision  (a)  of  this  rule,  he  or she does not raise such
    47  objection in the responsive pleading which, in any action to  collect  a
    48  debt  arising out of a consumer credit transaction where a consumer is a
    49  defendant, includes any amended responsive pleading.
    50    § 9. Rule 3212 of the civil practice  law  and  rules  is  amended  by
    51  adding a new subdivision (j) to read as follows:
    52    (j)  Additional notice in any action to collect a debt arising  out of
    53  a consumer credit transaction where a consumer is a defendant.
    54    1. At the time of service of a notice of motion any  part  of    which
    55  requests  summary  judgment in whole or in part, where the  moving party
    56  is a plaintiff and the respondent is a consumer defendant in  an  action

        S. 153                              5
 
     1  to  collect  a  debt  arising out of a  consumer credit transaction, and
     2  where the consumer defendant against  whom summary judgment is sought is
     3  not represented by an attorney, the plaintiff shall submit to the  clerk
     4  a  stamped,  unsealed  envelope addressed to the defendant together with
     5  the following additional notice in English and Spanish to be printed  in
     6  clear type no less than twelve-point in size:
     7                              IMPORTANT NOTICE
     8  The  Plaintiff  has  asked  the  Court  to enter judgment against you by
     9  making a Motion for Summary Judgment.  Keep this Notice and the envelope
    10  it came in. The Motion for Summary Judgment  was  separately  served  on
    11  you.  To avoid entry of judgment:
    12  (1) You must appear in court as directed below:
    13  WHERE:  Name of Court, Street Address, Room Number
    14  WHEN:  Date and time
    15  (2) You should oppose the motion IN WRITING.
    16  HOW TO OPPOSE THE MOTION:
    17    (1)  State  the  legal reasons why the court should not enter judgment
    18  against you, including your defenses.
    19    (2) State the facts that support your defenses.
    20    (3) Attach affidavits and/or exhibits to support the facts you assert.
    21    (a) Affidavits are sworn statements of witnesses (including  you)  who
    22  state  facts they know to be true.  The affidavit should state the facts
    23  and how the witness knows them.  Also, the affidavit should explain  any
    24  exhibits.    An affidavit of service is an affidavit that states how and
    25  when papers were served.   An affidavit must be signed  in  front  of  a
    26  notary.  Free  forms  are  available  on the New York State Court system
    27  website at: ____________________.
    28    (b) Exhibits are copies of documents. Exhibits are usually attached to
    29  affidavits.
    30    (4) Have someone (not you or another defendant in the lawsuit) mail  a
    31  copy  of  your  opposition to the plaintiff's attorney before your court
    32  date and have them prepare an affidavit of service by mail.
    33    (5) Bring a copy of your opposition and the affidavit  of  service  to
    34  your court date.
    35    (6) Attend your court date.
    36  IF YOU NEED MORE TIME:
    37  If  you  need  more  time  to  prepare your written response, you should
    38  appear at your court date and ask the judge for more time.  You can also
    39  ask the judge to refer you for legal help.
    40  IF YOU NEED LEGAL HELP:
    41  You may seek legal help from a private attorney or a legal  aid  office.
    42  Some  courts  have  free  legal  assistance  programs for people without
    43  lawyers.  You can find resources on the  New  York  State  court  system
    44  website at: ____________________.
    45    2.  The  clerk  promptly  shall  mail  to  the  defendant the envelope
    46  containing the additional notice set forth  in  paragraph  one  of  this
    47  subdivision  and  note  the  date of mailing in the case record. Summary
    48  judgment shall not be entered based on defendant's failure to oppose the
    49  motion unless there has been compliance with this section and  at  least
    50  fourteen  days  have  elapsed  from  the date of mailing by the clerk or
    51  nineteen days if the plaintiff's notice  of  motion  demands  additional
    52  time under subdivision (b) of rule 2214 of this chapter.
    53    3. The chief administrative judge shall issue a Spanish translation of
    54  the  notice  in paragraph one of this subdivision and shall maintain and
    55  publish the URL address for the  web  page  containing  consumer  credit
    56  resources for unrepresented litigants.

        S. 153                              6
 
     1    §  10. Section 3213 of the civil practice law and rules, as amended by
     2  chapter 210 of the laws of 1969, is amended to read as follows:
     3    §  3213.  Motion  for  summary  judgment in lieu of complaint. When an
     4  action is based upon an instrument for the payment of money only or upon
     5  any judgment, the plaintiff may serve  with  the  summons  a  notice  of
     6  motion  for  summary  judgment  and  the  supporting papers in lieu of a
     7  complaint. The summons served with such motion papers shall require  the
     8  defendant  to  submit  answering  papers  on  the motion within the time
     9  provided in the notice of motion. The minimum time such motion shall  be
    10  noticed  to be heard shall be as provided by subdivision (a) of rule 320
    11  for making an appearance, depending upon the method of service.  If  the
    12  plaintiff  sets  the  hearing  date of the motion later than the minimum
    13  time therefor, he may require the defendant  to  serve  a  copy  of  his
    14  answering  papers  upon  him  within  such  extended period of time, not
    15  exceeding ten days, prior to such hearing date. No default judgment  may
    16  be  entered  pursuant  to  subdivision  (a) of section 3215 prior to the
    17  hearing date of the motion. If the motion  is  denied,  the  moving  and
    18  answering papers shall be deemed the complaint and answer, respectively,
    19  unless  the  court  orders  otherwise. The additional notice required by
    20  subdivision (j) of rule 3212 shall be applicable to a motion made pursu-
    21  ant to this section in any action to collect a debt  arising  out  of  a
    22  consumer credit transaction where a consumer is a defendant.
    23    §  11.  Subdivision  (f) of section 3215 of the civil practice law and
    24  rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
    25  new subdivision (j) is added to read as follows:
    26    (f)  Proof.  On any application for judgment by default, the applicant
    27  shall file proof of service of the  summons  and  the  complaint,  or  a
    28  summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
    29  subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
    30  constituting the claim, the default and the amount due by affidavit made
    31  by  the party, or where the state of New York is the plaintiff, by affi-
    32  davit made by an attorney from the office of the  attorney  general  who
    33  has  or  obtains knowledge of such facts through review of state records
    34  or otherwise. Where a verified complaint has been served, it may be used
    35  as the affidavit of the facts constituting the claim and the amount due;
    36  in such case, an affidavit as to the default shall be made by the  party
    37  or  the  party's attorney. In an action arising out of a consumer credit
    38  transaction, if the plaintiff is not the original creditor,  the  appli-
    39  cant  shall  include:  (1)  an affidavit by the original creditor of the
    40  facts constituting the debt, the default in payment, the sale or assign-
    41  ment of the debt, and the amount due at the time of sale or  assignment;
    42  (2)  for each subsequent assignment or sale of the debt to another enti-
    43  ty, an affidavit of sale of the debt by the debt  seller,  completed  by
    44  the  seller or assignor; and (3) an affidavit of a witness of the plain-
    45  tiff, which includes a chain of title of  the  debt,  completed  by  the
    46  plaintiff  or  plaintiff's witness. The chief administrative judge shall
    47  issue form affidavits to satisfy the requirements  of  this  subdivision
    48  for  consumer  credit  transactions.  When  jurisdiction  is based on an
    49  attachment of property, the  affidavit  must  state  that  an  order  of
    50  attachment  granted in the action has been levied on the property of the
    51  defendant, describe the property and state its value. Proof  of  mailing
    52  the  notice  required by subdivision (g) of this section, where applica-
    53  ble, shall also be filed.
    54    (j) Affidavit. A request for a default judgment entered by the  clerk,
    55  must  be  accompanied  by  an  affidavit by the plaintiff or plaintiff's
    56  attorney stating that after reasonable inquiry, he or she has reason  to

        S. 153                              7
 
     1  believe  that  the  statute  of limitations has not expired.   The chief
     2  administrative judge shall issue form affidavits to satisfy the require-
     3  ments of this subdivision for consumer credit transactions.
     4    §  12.  The  civil  practice  law and rules is amended by adding a new
     5  section 7516 to read as follows:
     6    § 7516. Confirmation of an award based on  a  consumer  credit  trans-
     7  action.  In any proceeding under section 7510 of this article to confirm
     8  an award based on a consumer credit transaction, the  party  seeking  to
     9  confirm  the  award  shall  plead the actual terms and conditions of the
    10  agreement to arbitrate. The party shall attach to its petition  (a)  the
    11  agreement  to  arbitrate;  (b)  the  demand for arbitration or notice of
    12  intention to arbitrate, with proof of service; and (c)  the  arbitration
    13  award,  with proof of service. If the award does not contain a statement
    14  of the claims submitted for arbitration, of the claims ruled upon by the
    15  arbitrator, and of the calculation of figures used by the arbitrator  in
    16  arriving at the award, then the petition shall contain such a statement.
    17  The  court  shall not grant confirmation of an award based on a consumer
    18  credit transaction unless the party seeking to  confirm  the  award  has
    19  complied with this section.
    20    §  13. Subdivision 2 of section 212 of the judiciary law is amended by
    21  adding a new paragraph (aa) to read as follows:
    22    (aa) Not later than  January  first,  two  thousand  twenty-two,  make
    23  available  Spanish  translations  of  the additional notices in consumer
    24  credit transaction actions and proceedings required by section 306-d and
    25  subdivision (j) of rule 3212 of the civil practice law  and  rules,  and
    26  make  available  form affidavits required for a motion for default judg-
    27  ment in a consumer credit transaction action or proceeding  required  by
    28  subdivision (f) of section 3215 of the civil practice law and rules.
    29    §  14.  Subdivision  (c) of section 5019 of the civil practice law and
    30  rules is amended to read as follows:
    31    (c) Change in judgment creditor.  A person other than the party recov-
    32  ering a judgment who becomes entitled to enforce it, shall file  in  the
    33  office  of  the clerk of the court in which the judgment was entered or,
    34  in the case of a judgment of a court other than the supreme, county or a
    35  family court which has been docketed by the clerk of the county in which
    36  it was entered, in the office of  such  county  clerk,  a  copy  of  the
    37  instrument  on  which  his  authority is based, acknowledged in the form
    38  required to entitle a deed to be recorded, or, if his authority is based
    39  on a court order, a certified copy of the order. Upon  such  filing  the
    40  clerk  shall  make  an  appropriate entry on his docket of the judgment.
    41  This subdivision shall not apply when there is a change to the owner  of
    42  a  debt  through a sale, assignment, or other transfer where no judgment
    43  exists.
    44    § 15. This act shall take effect immediately; provided, however,  that
    45  sections  two,  three,  five,  six,  seven, eight, nine, ten, eleven and
    46  twelve shall take effect on the one hundred eightieth day after it shall
    47  have become a law and shall apply to actions and  proceedings  commenced
    48  on  or after such date; and provided, further, that section four of this
    49  act shall take effect on the one hundred fiftieth  day  after  this  act
    50  shall have become a law.
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