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SettlePou’s Newsletter

04.13.16

David M ODens2.jpg

David O'Dens Section Head

Focus on Creditor's Rights Division  

SettlePou has an integrated banking and financial services practice that includes new loan origination, defensive litigation and creditor’s rights.

The Firm’s Creditor’s Rights Division takes care of loans that are going, or have gone, bad. Our goal is to turn distressed and non-performing loans into performing loans, but if that cannot happen, to recover the client’s collateral as well as any deficiency or loss.

Representing creditors involves multiple disciplines. We are transaction-based attorneys. Our first approach to any distressed or defaulted loan asset is to see if our client can restructure the loan in some way – via modification or forbearance – so that the borrower can service the debt and hopefully exit the credit. 
 
When restructure efforts fail, Creditor’s Rights pursues collection of the credit. This includes recovery of the loan collateral in order to liquidate the loss for the client. This typically involves the recovery and disposition of personal property and foreclosure of real property. Either way our attorneys think one step ahead to assist our client with the best liquidation scenario. We have often used many out-of-the-box solutions during the recovery process designed to maximize the recovery on the asset. We seek innovative and cost-effective liquidation strategies designed to speed up the recovery time and to maximize collection efforts.
 
Creditor’s Rights also involves handling matters in the bankruptcy court. Bankruptcy representation involves filing our client’s claims, seeking relief from the stay, objections to discharge and representing a creditor’s interest in commercial Chapters 11, 12 and 13 reorganizations and Chapter 7 liquidations.   
 
We also represent clients in litigation. This can be adversary proceedings in a bankruptcy court, arbitration proceedings or traditional litigation in state and federal courts. We also defend lender liability claims brought against our clients. For more than thirty years, Mr. O’Dens has successfully represented clients in over 100 first-chair trials. Recovery does not stop with repossession or foreclosure; we pursue borrowers, guarantors and other obligated parties. Indeed, over the past several years, Mr. O’Dens has obtained two of the largest jury verdicts in the State of Texas involving collection matters.
 
Finally, we handle appeals, including appellate advocacy and briefing in complex litigation. Mr. O’Dens has successfully handled cases before the United States Supreme Court, the United States Courts of Appeal for the Fifth and Tenth Circuits, and Texas and Oklahoma state appellate courts. And, Mr. O’Dens recently argued before the United States Court of Appeals for the Eighth Circuit. He also was an instructor-in-law at his alma mater, Oklahoma City University, where he taught legal research and writing, and appellate advocacy.
 
Creditor’s Rights is staffed by four attorneys and one legal assistant. It is a team-based approach with ability to right-size tasks to the attorneys in the division. Our practice is based upon diligent and informed representation designed to maximize our client’s recovery. Learn more about our Creditor's Right section here: http://www.settlepou.com/services/detail/creditors-rights-bankruptcy

Why Lenders Should Care about the Supreme Court 

By Barry Johnson & David O'Dens

Each year the United States Supreme Court hears only a handful of cases presented to them. It’s rare that the Court agrees to hear a case that affects commercial and consumer lenders.  This year, however,  two cases are before the court which can have a significant impact to the lending community.  And the death of Justice Scalia will impact the decisions of the Court. The first of these cases – decided on March 23 – resulted in a 4-4 decision with no opinion, essentially leaving an important issue undecided. 

In Hawkins v. Community Bank of Raymore, the Supreme Court was asked to decide who an “applicant” is under the Equal Credit Opportunity Act (ECOA). This case involves facts that lenders face every day.  A Husband asked a bank to finance a real estate project. In the course of negotiating the terms of the loan, the Bank required Husband’s wife to guarantee the debt. This is a common loan condition. There was a default and following foreclosure the Bank sued Wife for the deficiency balance. 

The Wife alleged that the Bank violated the ECOA  by requiring her to guarantee her husband’s debt. The trial  court disagreed, holding that the Wife was not an “applicant” for credit, as the ECOA only allows “applicants” for credit to sue. On appeal, the 8th Circuit Court of Appeals agreed with the Bank, and held that the Wife could not sue under ECOA.

The Supreme Court accepted the case late last year to resolve what is called a “circuit split”. A circuit split occurs when two courts of appeal disagree on the same question. Here the 8th Circuit held that a guarantor is not an “applicant”. However another court – the 6th circuit – has held that guarantors are applicants under ECOA and therefore have a right to sue lenders under the statute. 

Oral argument was held before the death of Justice Scalia. On March 23, the Court summarily affirmed the 8th circuit in a 4-4 vote without opinion. The effect of this evenly divided vote is to affirm the 8th circuit’s opinion (meaning that the guarantor cannot sue) but not establishing any “precedent” for future cases.  There still exists a circuit split of opinion meaning that the same case would be decided differently depending upon where the alleged violation occurs.  While oral argument is not a perfect test of the position of a Justice, it seems clear that Justice Scalia would have provided the necessary 5th vote to affirm the 8th circuit’s opinion, and therefore resolve the issue in favor of the lender making that holding binding on all courts. 

A second case, Speko v. Robins, was also argued before the death of Judge Scalia. This case – though it does not directly involve a lender – has a significant impact on consumer lending. At issue in Speko is the ability of a consumer to sue under a federal statute when the consumer has not suffered economic harm.  This issue was presented to the Court a number of years ago in another case which the Court ultimately dismissed as being “improvidently granted”. The Real Estate Settlement Procedures Act, for example, allows a consumer to sue for violations of that act.  The statute, however, is silent as to whether the consumer has to suffer actual harm or damages to sue.  Speko presents an opportunity for the Court to decide whether economic harm is required to sue under RESPA, and other consumer statutes.   

Oral arguments once again would lead one to believe that Justice Scalia would not imply a right of action (suing with no damages) unless that right is clearly expressed in the statute. Now, there is a prospect that for the second time in three terms, the issue will not be resolved by the Court if the Court divides upon ideological lines and resolves the case with a 4-4 vote. 

SettlePou's Rising Stars 

Six of our attorneys have been named Rising Stars in the 2016 Texas Super Lawyers, Rising Stars Edition:  Byron L. Kelley, Katherine L. Killingsworth, John M. Lynch, Michael R. Steinmark, Daniel P. Tobin, and Jeremy J. Overbey. John Lynch earned his first selection to the annual list, and Jeremy Overbey his third. This is Byron Kelley’s fourth time to be selected to the list, and Katherine Killingsworth and Dan Tobin have been recognized five times. This is the sixth time for Michael Steinmark to be recognized. All practice in the firm’s litigation section.

Texas Super Lawyers, Rising Stars Edition is described by the publisher as a listing of “the best attorneys who are 40 or under, or who have been practicing for 10 years or less.” Selection is limited to only 2.5 percent of all lawyers in Texas. The publication is available online at www.superlawyers.com/texas, which also features individual attorney profiles. Also, visit http://www.settlepou.com/attorneys for more information. 

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