New York Federal Trial Court Provides Madden Relief for Bank Partnerships

In a decision favorable to the continued vitality of bank partnerships, a federal trial court in New York recently ruled in favor of federal preemption on behalf of a national bank and its agent. In Edwards v. Macy’s Inc., 2016 U.S. Dist. LEXIS 31097 (S.D.N.Y. March 9, 2016), the court concluded that federal law preempted a lawsuit raising state law claims under an unfair deceptive acts and practices statute against a national bank and its nonbank partner. In so doing, the court rejected the consumer’s assertion that the U.S. Court of Appeals for the Second Circuit’s decision in Madden v. Midland Funding should allow the claims to proceed against the nonbank partner. Continue reading “New York Federal Trial Court Provides Madden Relief for Bank Partnerships”

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Ohio Considers Regulation of Confessions of Judgment

In a commercial lending context, courts and legislatures have generally assumes that the parties to the agreement have relatively equal bargaining power. Because of this understanding – that a business borrower is more sophisticated than a consumer borrower – regulation has been more “hands off” with regard to the terms commercial loans may contain. One such clause frequently found in commercial loan agreements is a confession of judgment clause, also called a cognovit judgment. A confession of judgment is written authorization by the borrower directing the entry of a judgment against him in the event he defaults in payment.  A confession of judgment clause in a loan agreement permits the creditor on default to appear in court and confers judgment against the borrower. Continue reading “Ohio Considers Regulation of Confessions of Judgment”