STATE OF NEW YORK ________________________________________________________________________

10795

IN ASSEMBLY

July 10, 2020 ___________

Introduced by COMMITTEE ON RULES -- (at request of 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, Reyes, Ortiz, Cahill, Cook, Cymbrow- itz, Epstein, Gottfried, McDonough, Perry) -- read once and referred 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. LBD00927-15-0

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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

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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.

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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

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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.

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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

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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-one, 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. This act shall take effect immediately; provided, however, that 30 sections two, three, five, six, seven, eight, nine, ten, eleven and 31 twelve shall take effect on the one hundred eightieth day after it shall 32 have become a law and shall apply to actions and proceedings commenced 33 on or after such date; and provided, further, that section four of this 34 act shall take effect on the one hundred fiftieth day after this act 35 shall have become a law.