Florida makes telemarketing more difficult and costly for violators

On June 29, 2021, Florida Governor Ron DeSantis signed into law Senate Bill 1120 or the Florida Robocall Bill.  This bill not only expands Florida’s preexisting telemarketing restrictions, but also removes certain exceptions for previously lawful communications and allows parties to seek statutory damages through private litigation.  The law became effective on July 1, 2021.  Penalties for violations range from $500 to $1,500 per call or text in violation of the statute.

Even before the Florida Bill’s enactment, Florida regulated by statute how and when a “telephone solicitor” may engage in “telephonic sales call[s],” including any “telephone call, text message, or voicemail transmission to a consumer for the purpose of soliciting a sale …, or obtaining information that will or may be used for the direct solicitation of a sale.” Fla. Stat. § 501.059(1)(f)–(g).  Pursuant to the statute, it is unlawful to “make or knowingly allow a telephonic sales call to be made if such call involves an automated system for the selection or dialing of telephone numbers or the playing of a recorded message when a connection is completed to a number called.” § 501.059(8)(a).  This restriction is much broader than the definition of an “automatic telephone dialing system” under the federal Telephone Consumer Protection Act (TCPA), recently clarified by the U.S. Supreme Court in Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021).

The new law creates a rebuttable presumption that calls made to a Florida area code is made to a Florida resident or to a person in Florida at the time of the call. CS for SB 1120 § 1 (amending Fla. Stat. § 501.059(8)(d)).  Interestingly, the law does not address what happens when the Florida resident is on vacation in another state or staying temporarily in a second here in New England.

This private right of action is not limited to autodialer and recorded messages claims. Instead, it applies to any “violation” under § 501.059, including the statute’s preexisting restrictions on calls to persons who either registered their phone number on the state’s do-not-call list or made a do-not-call request directly to the caller; calls disguising the callers voice; and calls that fail to transmit the caller’s or seller’s originating and redialable telephone number. Fla. Stat. § 501.059(4), (5), (8)(c)–(d).

General telemarketing practices are also impacted by this bill.  For example, the amendments reduce permitted telemarketing hours to between 8 a.m. and 8 p.m., instead of between 8 a.m. and 9 p.m., and prohibit a telemarketer from calling a consumer regarding the same subject more than three times in a 24-hour period. CS for SB 1120 § 2 (amending Fla. Stat. § 501.616(6)). The amendments also make it unlawful to use technology that deliberately displays a different caller identification number. Id. (amending Fla. Stat. § 501.616(7)(b)). These restrictions apply even without the use of an autodialer or recorded message.  However, they do allow for the private right of action.

These changes demonstrate Florida’s commitment to limiting unwanted calls to Florida residents and make it harder for businesses to contact their customers.  Florida is indeed providing a roadmap for other states to follow.  Will the New England states follow suit?  Only time will tell, but this law has more teeth and gives more rights than the federal TCPA.

Requirements for Repossession Notices in Massachusetts for Auto Loans

Requirements for Repossession Notices in Massachusetts for Auto Loans

On March 12, 2020, the United States District Court for the District of Massachusetts in Piazza v. Santander Consumer USA Inc., found that the borrowers’ allegations of a violation of the Motor Vehicle Retail Installment Sales Act (“RISA”) against Santander Consumer USA Inc.’s (“Santander”) could withstand a Motion to Dismiss.  What exactly is required under RISA to give notice to consumers whose motor vehicles have been repossessed?

Factual Background

Between July 2017 and July 2018, the borrowers entered into two loan agreements with Santander for the purchase of two motor vehicles.  Between December 2018 and January 2019 Santander repossessed both vehicles due to defaults.  After the repossessions, Santander sent each of the borrower a notice advising them of their intent to resell their vehicles.  These notices stated the following:

We will sell the Vehicle at a private sale sometime after [date] . . . . The money that we get from the sale (after paying our costs) will reduce the amount you owe. If the net proceeds at the sale, after expenses, does not equal your unpaid balance, and if the total unpaid balance exceeds $2,000, you may owe us the difference, subject to applicable law (including Mass. Gen. Laws. ch. 255B § 20B).

Plaintiffs allege in Count I of their complaint that these pre-sale notices violated Article 9 of the Uniform Commercial Code (“UCC”), as adopted by the Massachusetts legislature, by incorrectly describing their potential liability for a deficiency.  Shortly thereafter, Santander filed a motion to dismiss Count I.

The Law

Two Massachusetts statutes are relevant to the sale of a repossessed motor vehicle.  The Uniform Commercial Code (“UCC”) and RISA.  The UCC governs defaults in secured transactions.  Williams v. Am. Honda Fin. Corp., 98 N.E.3d 169, 179 (Mass. 2018).  Pursuant to the UCC, after a repossession but before the sale of a motor vehicle, a lender must provide written notice containing a “description of any liability for a deficiency of the person to which the notification is sent.”  Mass. Gen. Laws ch. 106, § 9-614(1)(B).  The UCC calculates a deficiency using the proceeds of a “commercially reasonable” sale.  Id. at § 9-615.  The UCC also provides lenders with a form notice.  This notice is referred to as a “safe harbor” notice.  The safe harbor notice includes the following language:

The money that we get from the sale (after paying our costs) will reduce the amount you owe.  If we get less money than you owe, you (will or will not, as applicable) still us the difference.  If we get more money than you owe, you will get the extra money, unless must pay it to someone else.

Mass. Gen. Laws ch. 106, § 9-614(3) (emphasis added in bold).

However, the UCC calculates the deficiency using the proceeds of a commercially reasonable sale.  RISA calculates the deficiency using the fair market value of the vehicle.  Please see the relevant language below:

If the unpaid balance of the consumer credit transaction at the time of default was two thousand dollars or more the creditor shall be entitled to recover from the debtor the deficiency, if any, resulting from deducting the fair market value of the collateral from the unpaid balance due and shall also be entitled to any reasonable repossession and storage costs, provided he has complied with all the provisions of the section.

Mass. Gen. Laws ch. 255B, § 20B(e)(1) (emphasis added).  This conflict between the UCC and RISA is resolved by a related subsection in RISA which states that its provisions displace the UCC to the extent that the UCC imposes different obligations related to repossessions of motor vehicles.

The defining case in Massachusetts on this this issue is, Williams v. American Honda Finance Corp., 98 N.E.3d 169 (Mass. 2018); see also Williams v. American Honda Finance Corp., 907 F.3d 83 (1st Cir. 2018) (analyzing facts in light of the SJC’s responses to certified questions).  Here, the Supreme Judicial Court (“SJC”) concluded that “the notice that is required by the [UCC] is never sufficient where the deficiency is not calculated based on the fair market value of the collateral and the notice fails to accurately describe how the deficiency is calculated.”  Williams, 98 N.E.3d at 179.  While the parties agreed that the words “fair market value” were not required in the pre-sale notice, they disagreed as to the exact requirements.

“In Williams, the SJC set out a clear standard for a sufficient description of the deficiency calculation in pre-sale notices to debtors.  Specifically, the SJC stated that notices ‘must describe the deficiency as the difference between the fair market value of the collateral and the debtor’s outstanding balance because this is what is required by [RISA].’ Williams, 98 N.E.3d at 179. The SJC determined that using the UCC’s safe harbor language, without describing the deficiency with reference to the fair market value of the vehicle, ‘is inconsistent with Massachusetts law.’ …

 

The Court’s Ruling

 

The District Court found that while the pre-sale notice was not required to include the words “fair market value”, it was required to “describe” the method of calculation in a way that “signals to the debtor that the fair market value will be used to determine the deficiency.”  As a result, the District Court found that the borrowers claims could withstand the Motion to Dismiss.  The key takeaway from this case is to follow the language of RISA as promulgated by the SJC in Williams.

Commercial Insurance Policy Does Not Cover Restaurants’ Loss From COVID19 Stay At Home Orders

On December 21, 2020, the Superior Court/Business Litigation Session in Verveine Corp. v. Strathmore Insurance Company decided that a commercial property insurance policy did not cover loss of income incurred by restaurants as a result of COVID19 stay at home orders issued by Governor Charlie Baker.  What exactly transpired in this case?

On March 15, 2020, in connection with the COVID19 pandemic, Governor Charlie Baker issued an order “prohibiting gatherings of more than 25 people and on premises consumption of good or drink”.  Because of the Governor’s Orders, the plaintiffs could not use their restaurants at full capacity, i.e., no indoor dining.

Plaintiffs relied on two sets of provisions in the insurance policies.  The first set of provisions appear in the ‘Business Income (and Extra Expense) Coverage’ section.  The second major provision relevant to coverage is each insurance policy’s Civil Authority Provision.  The coverage dispute between the parties centered on the meaning of the phrase “direct physical loss of or damage to property” as used in the Business Income and Extra Expense provisions, and similarly, the meaning of “damage” that prohibits access to the premises as used in Civil Authority provision.  The Business Income and Extra Expense Provisions of the Strathmore Policies conditioned coverage on proof of “direct physical loss of or damage to property.”

The Defendants took the position that these words unambiguously required that the physical state of the property in question must be altered in order for there to be coverage.  This position was in line with the majority of recent cases across the country that have dealt with this issue involving the COVID19 pandemic.  Plaintiffs alleged that the limitations imposed on the use of their properties because of the Governor’s Orders constituted a “physical loss” within the meaning of these provisions.  The Plaintiffs further alleged that they parties clearly contemplated and understood that the properties would be used and accessed as dine-in restaurants and that because they no longer could that this was the “direct physical loss.”  The Court disagreed.

In ruling on the Motion to Dismiss, the Court stated that the “Complaint here does not alleged that that the COVID19 virus was actually present in plaintiffs’ restaurants, resulting in physical contamination of the premises.  Rather, it alleges that the loss of income for which they seek coverage was the result of the Governor’s Orders that prevented plaintiffs from using the premises as intended.  Plaintiffs’ actual property remains the same as it was pre-pandemic, and patrons and employees were not prohibited from entering the premises as long as the Governor’s Orders were followed.”

But was this case wrongly decided?  The keystone issue in this case was the interpretation of the “direct physical loss or damage”.  The provision was ambiguous at best.  In Massachusetts, when there is ambiguity in an insurance policy it must be resolved in favor in the policyholder.  Unfortunately, this is part of a nationwide trend of Courts rejecting claims for business interruption coverage at the motion to dismiss stage.  This decision does not bode well for small business owners seeking damages related to the COVID19 pandemic.

Eviction-Moratorium-in-Massachusetts-Extended-to-October-17-2020

Eviction Moratorium in Massachusetts Extended to October 17, 2020

Eviction Moratorium in Massachusetts Extended to October 17, 2020

On July 21, 2020, Massachusetts Gov. Charlie Baker extended a moratorium on evictions and foreclosures for two months due to the ongoing coronavirus pandemic and historic unemployment levels in Massachusetts. The moratorium, originally set to expire on August 18, now remains in place until October 17 and puts on pause “non-essential” eviction cases against residential tenants and small businesses in housing court due to COVID-19. This moratorium includes “no-cause” evictions, non-payment of rent evictions and “for cause” evictions. The only exceptions to the moratorium are evictions due to criminal activity or lease violations threatening public safety. It was estimated that over 20,000 eviction cases would have been filed on August 18, 2020 when the original moratorium was set to expire.
In his letter to House Speaker Robert DeLeo and Senate President Karen Spilka, Governor Baker wrote he was “confident that this action, coupled with federal assistance, helped to slow the spread of COVID-19 while minimizing the impact to date on vulnerable families and on our housing market. He further wrote that the extension will “provide residents of the commonwealth with continued housing security as businesses cautiously re-open, more people return to work and we collectively move toward a ‘new normal.”’
The moratorium does not mean tenants or homeowners do not have to stop paying rent or mortgages, but rather prevents them from being forcibly removed during the coronavirus pandemic except in certain cases where a tenant has broken the law. The law also prevents landlords from imposing late fees or from alerting a credit agency if the tenant cannot pay because of COVID-19.
The moratorium also puts a pause on residential foreclosures. The law requires lenders to approve a requested forbearance of up to six months if a homeowner is experiencing hardship due to COVID-19. Mortgage lenders and borrowers can also agree to alternative payment plans for the forbearance payments.
While this is good news for tenants, this does not bode well for small landlords without many residential units that rely on these rent payments to make ends meet, especially in areas of the Commonwealth such as the tip of Cape Cod where many landlords are indeed considered small with four or fewer rental units.

FREQUENTLY ASKED QUESTIONS

Are all evictions banned in Massachusetts?

No. Only “non-essential” evictions are banned.

What is considered a “non-essential eviction”?
  • Nonpayment of rent
  • Eviction of a homeowner after a foreclosure sale
  • No fault and no cause
Are there exceptions to the moratorium on evictions?

Yes, there are two major exceptions. First, criminal activity that impairs the health and safety of other residents, health care workers, emergency personnel, persons lawfully on the property or the general public (“others”). Second, lease violations that may impact the health and safety of others. There are no other exceptions.

What happens if my renter was in default of the lease prior to the pandemic, can I move forward with eviction?

No.

Can I send a Notice to Quit?

No unless its an essential eviction.

Will the Housing Court accept my eviction papers during the moratorium?

If it is a a non-essential eviction, the answer is no.

Can the Sheriff conduct a physical move out from the rental unit?

No. A physical move out by the sheriff is not allowed. However, if you are pursuing an essential eviction, you can seek the assistance of the Sheriff.

Can a Landlord Conduct a Physical Move Out?

No, this is NEVER allowed. Do not change the locks. Do not lock out the tenant. Do not turn off the utilities.

Does this mean my tenant can live rent free?

Renters are obligated to pay rent. However, judgments based upon breached residential leases are rarely paid.

Can the Security Deposition be applied to unpaid rent?

No. Do not do this. There are some exceptions to this, but you should discuss them with your attorney

Can the tenant stay in the apartment even if the lease is up?

Yes.

If I sent a Notice to Quit before the moratorium do I need to send a new one when the moratorium is lifted?

No. The notices do not need to be reissued.

Can landlords get foreclosure protection because their tenants are not paying rent?

If it is an owner occupied building with four units or less you are entitled to foreclosure protection. The mortgage holder may not:

  • Publish notice of a foreclosure sale
  • Sell the property
  • Enter the property
  • Start foreclosure proceedings
  • File a complaint related to the foreclosure.
Can landlords get a mortgage forbearance?

If the property is owner occupied with four units or less, the mortgage service or lender must accept requests for forbearance

  • Up to 180 days;
  • No additional fees or interest may be charged;
  • No negative credit reporting
  • No balloon payments due at the end of the forbearance
  • Any missed payments will be due at the end of the loan term not at the end of the moratorium.