Products Liability and Injury Lawyer Blog

Boschma v. Home Loan Center, Inc., (Fourth District, August 10, 2011) --- Cal.Rptr.
3d ----, 2011 WL 3486440, 11 Cal. Daily Op. Serv. 10, 237, 2011 Daily Journal D.A.R. 12,103

A couple who refinanced their existing home loan utilizing an "Option ARM" filed an action against the lender, alleging that the defendant's loan documents failed to adequately and accurately disclose the essential terms of the loan, and that the plaintiffs would suffer negative amortization if they made monthly payments according to the payment schedule provided prior to the closing of the loan. Asserting causes of action for fraud and violations of Business and Professions Code section 17200 et seq., the plaintiffs alleged that the defendant utilized a “teaser” interest rate of 1.25 percent for the first month of the 30 year loan which bore no relation to the actual cost of credit, and that the payment schedule did not clearly indicate it was based upon the teaser rate rather than the APR listed on the loan.

The trial court sustained the defendant's demurrer to the second amended complaint without leave to amend, finding that the loan documentation adequately described the nature of Option ARMs, and that the loan documents showed detailed, highlighted and repeated warnings regarding the interest rate changes, adequacy of payments to cover both principal and interest, and the prospect of the negative amortization. The court of appeal reversed, rejecting the defendant's contention that strict compliance with the federal Truth in Lending Act (TILA, 15 U.S.C. § 1601 et seq.) provides a safe-harbor from such claims:

Continue reading "LENDER FRAUD: NEGATIVE AMORTIZATION LOANS" »

Little Company of Mary Hospital v. Superior Court (2008) 162 Cal.App.4th 261, 75 Cal.Rptr.3d 519

A man whose mother died while in the care and custody of a hospital owned by a tax-exempt religious corporation, filed an action for elder abuse against the hospital, seeking punitive damages. The hospital moved to strike the punitive damage, citing Code of Civil Procedure section 425.14, which provides that no claim for punitive damages may be made against a religious corporation unless a trial court first concludes that the plaintiff has evidence which “substantiates that he or she will meet the clear and convincing standard of proof” under Civil Code section 3294.

The plaintiff opposed the motion, relying upon the California Supreme Court’s ruling in Covenant Care, Inc. v. Superior Court (2004), 32 Cal.4th 771, which held that C.C.P. section 425.13, a statute imposing similar requirements in actions against health care providers, was inapplicable in elder abuse cases. The trial court denied the motion, finding that the rationale articulated in Covenant Care to exclude elder abuse-related punitive damages claims from the requirements of section 425.13 applied equally to claims against religious organizations. However, the court of appeal issued a writ of mandate directing the court to strike the punitive damage claim, holding that section 424.14 applies to claims for punitive damages against religious health care providers, even in the context of elder abuse actions:

Continue reading "ELDER ABUSE: RELIGIOUS CORPORATIONS" »