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It's Time for MSD to Reinvest the $4,000,000 It Skimmed from Smoketown

As far as I can tell, Louisville's Metropolitan Sewer District owes Smoketown at least four million dollars. Let me tell you why. 

On November 16, I went to a community meeting about a building Louisville's Metropolitan Sewer District is building in Smoketown. It's called the "Logan CSO Interceptor Project". CSO stands for "combined sewer overflows. The "CSO Interceptor Project" is a fancy way of saying "catching the wastewater and stormwater before it flows into the Ohio River". 

The site of the Logan CSO Interceptor under construction. This might be a park but current designs call for a two-story brick building. 

The site of the Logan CSO Interceptor under construction. This might be a park but current designs call for a two-story brick building. 

The Logan CSO Interceptor is one of twelve CSO interceptors being built around the city. It's part of MSD's effort to comply with the Federal Consent Decree it entered into with the Environmental Protection Agency after the EPA found Louisville to be grossly and repeatedly out of compliance with the Clean Water Act. Each of the other 11 buildings are being built "to grade". This means that the structure will actually be buried below ground and a park will exist on top of the building. However, the Logan CSO Interceptor will be  a block-long, windowless, two-story building in a part of town that desperately needs green space. 

Aside from feeling the blasting each day from the project in my law offices (one block west of the Interceptor), this November 16 meeting was my first exposure to the project. At the meeting, it was clear that neighborhood sentiment was strongly against the project. 

The meeting opened with remarks from MSD's new Executive Director, Tony Parrott. Mr. Parrott, responding to the dissatisfaction from Smoketown residents, admitted that the Logan project "did not have a good rollout" and lacked "community engagement". The Logan CSO Interceptor was the the first of the twelve CSO structures to be designed and built, Mr. Parrot explained, and he apologized for not developing good partnerships with Louisville Metro and for failing to get community input at the outset on the design of the building. 

During the course of the meeting, we learned that after receiving input from other neighborhoods on their CSO Interceptor projects, MSD decided to bury each of the other 11 structures at grade. It was clear from the comments made by neighbors at the meeting that this was their preferred design, as well. (Imagine preferring a block-sized park to a two-story windowless brick building.) MSD had studied the possibility of doing this for the Logan CSO Interceptor project and determined that burying the facility at grade would have cost an additional $4,000,000. 

As a concession to the neighborhood, MSD is now offering the Smoketown community the opportunity to weigh in on the design of the two-story facade of the building. MSD has agreed to allow the community to spend $700,000 that was previously budgeted for bricks on some alternative facade of which the community approves. 

This is a completely outrageous and unacceptable "concession" from MSD. It provides no new money to a project that by MSD's own admission was created without community engagement and asks the community to sign off on shortchanging the Smoketown community of at least $4,000,000. 

MSD, without community input, decided to cut corners and save money on the Logan CSO Interceptor project. After hearing from other communities, it changed its Interceptor designs on every one of the other projects. These changes—no doubt—increased the cost of each of the other projects. Now, MSD is asking Smoketown to put $700,000 of lipstick on its pig instead of either: 

1) revising the Logan CSO Interceptor project to offer the neighborhood the green space the other 11 projects are offering other neighborhoods, or 

2) offering at least $4,000,000 (the money it skimped on for the Logan CSO Interceptor) to the Smoketown community to use to change the design of Logan CSO Interceptor or devote to other community purposes (like securing other greenspace that the community will no longer have because of MSD's design and community outreach failures). 

Given MSD's admitted shortcomings in its design and community engagement processes, MSD's decision to save $4,000,000 on its facility located in Smoketown can only be seen as shortchanging a neighborhood that is already all-too-familiar with shortchanging. That MSD expects Smoketown residents to be satisfied with a resolution that offers no new money but exchanges brick for some other veneer, is an insult to Smoketown. 

Tonight is the first meeting for residents to sit down with the designers MSD has engaged to redesign the facade of MSD's building. There are already some useful ideas about how the facility can be improved. As the redesign process kicks off, I hope participants from Smoketown will use the "redesign process" to insist that MSD invest the $4,000,000 it siphoned away from the Smoketown community back into the community. Whether the residents want to invest the $4,000,000 into the redesign of MSD's building or insist on that money returning to the neighborhood in the form of a grant to the Smoketown Neighborhood Association is, as far as I'm concerned, up to the residents of Smoketown. 

MSD has admitted its process was flawed. That flawed process led to MSD to decide —without community input—to save $4,000,000 on the Logan CSO Interceptor. After it got input from other communities, it learned that its decision at the Logan site was wrong and invested in more expensive projects in the 11 other neighborhoods. Yet, MSD has not returned to Smoketown to fix its $4,000,000 mistake. 

I urge Smoketown residents participating in the redesign project to insist that MSD reinvest into Smoketown the $4,000,000 it mistakenly decided not to spend on our neighborhood.

Week in Review: Banditry, Funerals, and a New Solo

Expect the Best, Plan for the Worst

Well, in two separate incidents on Wednesday and Wednesday night, Ben Carter Law had a laptop (mine) and TV (ours) stolen from our storefront. Huge bummer. But: we were able to erase the data on the computer remotely and restore from a recent backup when I got another computer on Thursday. I'm telling you this so that you can plan ahead so that a lost or stolen computer doesn't derail your practice. If you are in the Apple ecosystem, make sure your devices are signed up for the "Find My iPhone" service. This allowed me to lock and erase the stolen computer within minutes of its theft. It also allowed me to trace its location to one of two houses not far from our office. Second—and I can't stress this enough: keep recent backups in separate physical locations. I also use BackBlaze to backup to the cloud. An off-site backup and cloud backup: this is the "belt-and-suspenders" approach to backup that your data deserves. 

With a recent backup and cloud storage of our files, I lost no data and almost no momentum in what could otherwise have been a crushing loss. 

Needless to say, we're getting some extra security for the office. 

We actually have good information on who stole the computer. When things go missing around this time of year, I always point the finger first at these two. 

So, while I'm hopeful that we might recover the computer at some point, the TV is like dropping your keys into a river of molten lava. Man, it's gone. 

The courage to fix the things we can

The husband of one of my favorite clients of all time passed away this week. She texted to tell me the funeral arrangements, so I went. At the funeral, both she and her son expressed profound gratitude for our help in negotiating the the mortgage company an alternative to foreclosure. They explained that our help allowed their dad and husband to spend his final months in the comfort of his home and with the knowledge that the home was secure from the threat of foreclosure. 

At my firm, we are confronted daily with a lot of injustices and requests for help from a lot of people. This funeral was a much-needed flotation device in a swirling flood and was a reminder to me that it is not our job to fix every problem. It is only our job to fix the problems we can. Everything else is up to that higher power.

Peter Brackney goes solo

I was happy to learn this week that Peter Brackney has set up his own practice in Lexington. Peter is a great guy to follow on Twitter and will be working in the areas of consumer bankruptcy, business law, and estate planning. 

Do as Greg Belzley does

My friend and an attorney I admire a lot, Greg Belzley, was quoted in the Herald-Leader this week in a story about the state's failure to supervise the medical providers with which it contracts to provide care to Kentucky's prisoners. The situation is appalling and Greg is one of the leading advocates—inside and outside the courtroom—to change the callous, uncaring, inhumane treatment these human beings receive. 

Greg is a shining example of the good work a person of conscience can do when armed with a law license. We should all take a note. 

Week in Review: Office Space, Kids' Book, Systemic Sin, and Wilco

Progress at 902 South Shelby Street

Over the past couple of weeks, the shared office space we are preparing at 902 S. Shelby has come a long way. It's amazing what some paint and carpet did to the space. If you know a young attorney or nonprofit or startup looking for a place to meet clients or customers with a dedicated workspace, please send them this link or have the call (502) 509-3231. We'll have space for 6-7 folks. We're hoping to have it ready by January 1. 

Sermon Podcasts

"But I would like to suggest to you that, while John the Baptist is concerned with personal sin and repentance, he’s also dealing with something much larger: the infrastructure that makes sin native to the system and not just the product of personal choices." – Derek Penwel in last week's sermon at Douglass Boulevard Christian Church.

That notion—that our society can be constructed in a way that "makes sin native to the system"—is as useful as it is dreadful. The best work that the best lawyers do is in cases that challenge and change those systems in which our sin is collected, distilled, and deployed in ways that injure those that can least afford to be injured.

The audio is available for a listen here or in iTunes.

A Great Book for Great Kids

We have had a few friends tell us they're expecting. Insert Howard Dean Scream—YAHHHHH!—here. Spoiler alert: they're all getting A is for Activist from us. 

G is for Grassroots. Sprouting from below. Sharing nutrients, and the water's flow. Below the surface we're all connected. Stronger together—we Grow.

Wilco's Song Exploder

I listened to Jeff Tweedy explain his creative process in this recent episode of "Song Exploder". Like last week's talk about creativity from John Cleese (see last post), Tweedy emphasized being open to discovery. I thought it was really interesting that a big part of his creative process is knowing he has something to say, but understanding that he would uncover it unless he could trick his ego into getting out of the way. Very clever. I continue to be intrigued by what lawyers can learn from other artists about becoming more creative and applying that to their advocacy.

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Underwhelmed by Santa since 2015. 

Underwhelmed by Santa since 2015. 

Week in Review: John Cleese on Creativity, Debt Collection, File Cabinet Keys, and Some Songs

I'm going to begin posting weekly digests of things I learn and discover. Some weeks, it will be heavy on the law, other weeks, it will be podcasts, TV shows, videos, or sermons that resonated with me. 

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Cleese on Creativity

The best thing I saw this week was this video of John Cleese talking in the 80s about what he and scientists have learned about giving yourself the best chance at having creative thoughts. I think lawyers don't work hard enough or give themselves the permission they need to have the time and space necessary for creative work to happen. I learned a lot from this talk. 

Leaving Evernote

For me, Evernote held a lot of promise for being that one spot that everything—legal research, news articles, recipes, etc.—lived. But, I was never able to figure out how to incorporate that promise into my everyday workflows.

If you, like me, are considering getting away from Evernote, you can import all of your notes into Apple's Notes app using this script from Larry Salibra. Pretty nifty. You lose your tags, but they are still searchable as text placed at the end of each note. Like I said, pretty nifty. 

Here's picture of my kid being cute in his duck towel. 

Here's picture of my kid being cute in his duck towel. 

File Cabinet Keys

I recently got a few locking file cabinets that didn't have the keys to the locks. I disassembled the lock cores from the cabinet and was preparing to order new lock cores when I noticed a few letters and numbers etched into the front of the lock cores. I googled those letters and numbers. Turns out, you can just use that letter/number combo to buy replacement keys for filing cabinets and cubicles. I ordered mine from easykeys.com and they arrived quickly via FedEx. 

Fair Debt Collection Practices Act (FDCPA) Developments in Kentucky

I learned about a couple of good decisions from a Kentucky federal court and the Kentucky Court of Appeals on debt collection abuse and the Fair Debt Collection Practices Act (FDCPA).  In Harrell v. Unifund CCR Partners, the Court of Appeals followed the Sixth Circuit Court of Appeals's reasoning in Stratton v. Portfolio Recovery Associates, LLC 77- F.3d 443 (6th Cir. 2014) to hold that if a creditor charges off an account and waives its right to collect interest under the contract with its customer, a third party debt collector cannot seek prejudgment interest without also violating the Fair Debt Collections Practices Act. Important stuff. 

The other case I learned about was Grace v. LVNV Funding, Inc. Essentially, Judge Heyburn ruled that a medical provider's 1.5% per month "service charge" on accounts more than 90 days delinquent was, in fact, not a "service charge" but was instead interest in excess of the 8% rate allowed by law. Because the interest rate was usurious, LVNV Funding violated the Fair Debt Collections Practices Act when it demanded payment on an amount of money that was more than what was allowed by law. Rick Vance at Stites and Harbison wrote a good summary of the impact of Grace on Kentucky's businesses and their collection practices. 

Good Songs 

Loan Modification, Loss Mitigation, and Doing Everything You Can To Save Your Home

If you're behind on your mortgage or facing default on your mortgage payments, and want to keep your home, you should speak to a home preservation specialist or an attorney immediately. The loan modification process (part of a suite of potential alternatives to foreclosure your mortgage servicer refers to as "loss mitigation") is fraught with chances to misstep, which despite your best efforts may cost you your home. Many of those missteps may not be your fault, and without the assistance of counsel or a HUD-certified housing counselor you may not recognize them or be able to prove that your servicer is to blame. 

Since January 2014, many servicers have had to follow regulations that demand they meet strict deadlines and disclose a great deal of information about your loss mitigation application, your eligibility and ineligibility for various alternatives to foreclosure, and your right to appeal their determination of eligibility or ineligibility. If they follow these guidelines, their customers are likely to reach an outcome that is beneficial to them. However, if they do not follow these regulations, servicers may be liable for damages, which, in some cases, could pay a portion or all of a homeowner's past-due payments. 

Unfortunately, even with counsel, fault can be difficult to prove, but there are a few things you can do to protect yourself and help your attorney reach a good outcome. 

1. Never trust that your servicer's advice is in your best interest.

We hear it all the time: servicers tell their customers that they need to be in default in order to be considered for a loan modification. Servicers advise homeowners "not to worry" about the foreclosure lawsuits they file against homeowners, explaining that it's "just something our collections department does". They tell homeowners that all they have to do is keep working on a loan modification and not to respond to the lawsuit. 

Despite providing advice and guidance to its customers, if you're in foreclosure, your servicer will flatly deny any advice it gave was meant to be relied upon, since it is a business and is concerned foremost for the interest of its shareholders, not its customers. That does not mean that it cannot be held to account for advice it has given you or promises it has made, but it does mean that you will be in for a fight if you have followed your servicer's advice to your detriment. Don't trust your servicer without verifying the advice you're getting from the servicer by asking a lawyer or housing counselor about the advice. Following this rule will help protect you from some of the worst abuses. 

2. Keep everything your servicer sends you.

Especially when you're in default and applying for some sort of loss mitigation, you should receive a lot of letters from your servicer. All of them are important, and many are governed by the regulations linked above. You should keep all of these letters. Moreover, since you cannot always trust that a letter was sent on the date it claims, you should keep all of the envelopes these letters come in. The envelope will have a postmark date on it, which can be invaluable when trying to prove a required deadline was not met.

3. Keep a copy of everything you send your servicer.

One of the disclosures your servicer must send you is a notice that your application is not complete. It must outline what documents are missing and give you an opportunity to send them. If you do not provide necessary documentation, your servicer can deny you any loss mitigation option. Keeping a copy of what documents you've sent -- and when and how you sent them -- may protect you and assist you on any appeal of a negative determination.

4. Take notes.

When speaking with your servicer on the phone, make a note of when the phone call took place, who you spoke with, and what advice or guidance the servicer provides you. 

CFPB and You: Proposed New Rules for Payday Lenders

Cash Express in Kentucky

The Consumer Financial Protection Bureau has issued proposed new rules for payday lenders, with the goal of preventing what abuses it can in the industry. I say "what abuses it can prevent" because, unfortunately, the CFPB has no power to control interest rates, which in the payday lending industry reach astronomical highs. One interpretation of Kentucky's payday lending statute allows for an annual interest rate exceeding 400%. So, seeing that almost 80% of borrowers must re-borrow after 14 days because they can't afford the fees, the CFPB took aim at preventing the "debt trap" by going to the "source": people who borrow more than they can afford to pay back.

The proposed rules require that lenders evaluate potential borrowers' ability to repay before they loan to them. The idea is that this will prevent people from continuing re-borrow every two weeks or month because they cannot afford to pay the entire amount. The way this works in Kentucky, a person may go to a payday lender, borrow $500.00 and have to pay back $589.25 in two weeks. Most often, when the two weeks is up, the person cannot afford to pay $589.25, so they bring in that amount but immediately re-borrow another $500.00 (with another $89.25 fee due in two weeks). Left unchecked, that can mean over $2,000.00 solely in fees per year, without the borrower even beginning to pay down their principal balance. The CFPB believes that if lenders can only loan to borrowers that can repay by the due date, it can prevent harm to borrowers who can't. 

For the borrowers who would otherwise be unable to get payday loans, the rules also propose two options that do not require looking at the borrower's ability to repay. The first requires that, if the borrower is unable to repay their loan when due, the lender can provide subsequent loans, but must reduce the principal each time. The second allows the lender to offer two more loans at the same interest rate, but then must provide an "off-ramp" to the borrower wherein they can pay back the principal without additional fees. 

In any of these cases, a borrower could only receive three loans before having to "cool off" and wait 60 days for the next loan. During that time, I do not know where they might turn if they need additional money. Hopefully, not to the even worse option of online lenders.

While these measures may all help if adopted,  my hope is that instead of these "last resorts," people will turn to less onerous means of making ends meet. Payday loans seem quick and easy, but they are anything but.

Identifying Scammers: The IRS Doesn't Make Phone Calls

April 15th is fast approaching and that means that telephone scammers are out in force trying to scare you into giving them money, or worse, enough personal information to steal your identity. Generally speaking, whether a phone call is a scam can be hard to determine. Not so when it comes to IRS impersonators!

NPR reported, straight from IRS Commissioner John Koskinen's mouth, that if a caller claims to be from the IRS, they aren't:

"If you are surprised to be hearing from us, you are not hearing from us," Koskinen said. "Our way of contacting you is by letter."

He went on to say that the IRS will never call you to threaten you for not paying your taxes:

"The last thing you'll ever hear from an IRS agent of any kind is threats that we are about to throw you in jail unless you pay us immediately or put money into a particular account," he said.

So remember, even if they know your name, your telephone number, and the last four digits of your Social Security Number, it's not the IRS calling you. The IRS has made it easy for you. Be sure to tell your friends and family members, especially if they are elderly.

For Sale: Perfectly Good Macbook Air

Ben Carter Law is upgrading its technology, which is a fancy way of saying I'm getting a new computer. Ergo, I'm selling my mid-2011 11" MacBook Air. When I bought it, I maxed out the processor (1.8 gHz), RAM, (4 gig) and hard drive (256 gig), so it is still plenty fast for web browsing, word processing, email, and other common tasks. I'm updating because my computer is the primary tool I use to do my job and so having the newest, fastest, best makes business sense.

New, the computer was $1,700. I'm asking $700.

Technical specifications for the mid-2011 11" Macbook at Apple.com

Monoprice.com: Less Jingle for Your Dongles

I know not everyone is a nerd. This is for you non-nerds. Stop paying tons of money for HDMI cables at Best Buy. Stop paying tons of money for stupid cables, connectors, widgets, and dongles, period. 

If you need to plug something into a piece of electronic equipment and plug the other end into another electronic device or a wall, go to monoprice.com

They even sell guitars. If you want to take the money I saved you on cables and buy yourself a guitar, well, for those about to rock, I salute you

Unlicensed online lenders are illegal in Kentucky

Josh Goodnewt attended a webinar hosted by the National Association of Consumer Advocates last week about what to do to help victims of online lending schemes. This post contains some general information about steps you may want to consider taking if you are tangled up with an online lender. As always, please consult with legal counsel about your particular situation before acting.

Hopefully you found this post before you ever borrowed money from an internet lender, and you’re just searching for information about whether you should get a loan from an internet lender. If so, don’t do it. Unlicensed online lending is illegal in the Commonwealth of Kentucky. And it’s a trap.

Well, actually it’s several traps:

First, before you ever borrow, just putting your information into an internet lender's website opens you up to wrongdoers. The website you give your information to is most often not the lender. Instead, it is a lead generator — meaning you give them information, and they sell it as a “lead” to potential lenders who will then offer you a loan. Once that information is in that lead generator’s hands, they may keep selling it or misuse it and you could lack much of a recourse if they do.

Second, once you get the loan you’re charged exorbitant interest rates so that even if you timely make your payment, you may never actually pay down the principal balance.

Third, you are often required to authorize the lender to take money directly from your account via ACH (automated clearinghouse) transactions or EFT (electronic funds transfer) payments. The lender will continue to withdraw these payments until the balance is paid off. Since the interest rate is so high, you won’t likely be able to pay down the loan and the withdraws will continue perpetually.

Fourth, if you find a way to stop making payments, you’re in for a lot of harassment. Any information you gave that lead generator now may be used to harass or threaten you. They will not necessarily limit to calling you on whatever phone number you left them, but may call your employer if you listed it, or anyone you listed as your references. They may report the debt to credit reporting agencies and damage whatever credit you may have, which may affect your ability to gain future employment or an apartment.

So, hopefully you didn’t open yourself up to any of that! Unfortunately you probably have, and if so there are a few steps you can take.

  1. Withdraw your ACH authorization for ALL DEBITS by notifying the lender in writing. You can mail it to their address or attach it to an email.
  2. Notify your bank immediately that you have withdrawn your authorization for ALL DEBITS from that lender. Tell your bank that these and future debits from that lender are “Unauthorized Debits”
  3. Open up a new bank account at a different financial institution and notify any direct depositors of the new account.
  4. Close the account the lender is debiting.
  5. Dispute with the bank ALL of the debits made by the online lender.

If you have borrowed money from an online lender, following these steps may be your best bet to ending the constant withdrawals. Remember, you have done nothing wrong. If your lender lacks a license in Kentucky, you are being scammed by an illegal lender and you are under no obligation to pay the lender back. KRS 286.4-991.

Unfortunately, there is rarely much that can be done to these scammers. However, if you have any questions about any of the above, feel free to contact us at Ben Carter Law, PLLC.

Use LibreOffice to Access .doc and .wpd Files on a Mac

As a Mac-using lawyer, I often have to solve the problem of how to work with legacy file formats. An awful lot of very good attorneys have done very good work using programs like Microsoft Word (.doc) and WordPerfect (.wpd). When these attorneys are kind enough to send me their pleadings and letters and research outlines in these formats, I use LibreOffice to open them on my Mac. 

From there, I can plagiarize the work of other, smarter attorneys into my new Pages document. (A few years ago, I switched from Word for the Mac to Pages due to stability issues.)

LibreOffice is a project of the The Document Foundation (which has created office productivity programs for spreadsheets and presentations, as well). If you download LibreOffice, I highly recommend you donate to support the Foundation (though I have tried twice in the past few weeks (so that I can practice what I preach here) only to have the process of donating fail...doh!).  

Defining "Consumer Law"

When people ask me what I do, I usually tell them, "I make bad jokes on the internet." When they ask me what I do for money, I tell them I'm a consumer lawyer. If they're not too proud to admit to not knowing what consumer law is, they'll ask, "What is consumer law?" 

Here is a little mailer I sent out to fellow lawyers last year explaining what kinds of cases I handle as a "consumer lawyer".

Somehow, though, I think that just describing the kind of work that consumer lawyers do and the kinds of cases they take misses the point a bit. It gets to the what, but not the why of consumer law. 

But, I recently had the opportunity to speak to about a hundred newly-minted attorneys at the KBA's New Lawyer Program about Kentucky consumer law. My Lebowski-themed presentation about consumer law touched on many of the same areas I listed in the mailer: the Kentucky Consumer Protection Act, debt collection abuse, insurance bad faith, auto fraud, the Kentucky Lemon Law, etc. 

Before I ran through those specific state and federal statutes protecting consumers, though, I gave Kentucky's newest lawyers my freshest take on what consumer law is. I told them that being a consumer lawyer means applying all of your skill, training, and heart to the legal problems that impact low- and middle-income Americans. It means using the laws (common, local, state, and federal) to protect the bottom lines of the most fragile budgets in America. 

Rather than defining consumer law as a kind of case or a particular set of statutes, I want to broaden my definition of consumer law to "practicing law with the goal of helping low- and middle-income American families achieve and sustain financial stability". 

This definition allows me a broader self-concept of "what I do", aligns me more explicitly with the work of allies seeking those same ends through lobbying and public education efforts (rather than my more litigious efforts), and provides me a "North Star" when charting the work I want my firm to do. way forward for my firm. helps me evaluate the direction I want to take my firm. Anything that threatens the financial stability of economically vulnerable people—foreclosure, eviction, abusive debt collection, auto fraud, unfair or misleading business practices, repossession, bad faith claims adjusting from insurance companies—that's what I fight.

Practicing with a goal of helping people avoid the threats to their bottom line motivates me to pay attention to the evolving landscape of threats out there. Every year, it seems, there's a new problem, whether it's vacant and abandoned property, unpaid tax bills on real estate, starter interrupt devices on cars. There's a scammer born every minute. 

Practicing consumer law is much, much broader than using the statutes we typically think of when we think of "consumer law" statutes. It means aligning yourself with  economically fragile families and individuals and using the best, bravest version of yourself to defend them from the flinty-eyed predators stalking your clients and senseless corporate machinery that will consume them without ever thinking once.

You Know You're Not Great. Keep Going.

I think this insight from Ira Glass on why people give up on storytelling is so relevant to the experience of many beginning attorneys and attorneys who are struggling to start their own practices. We see others doing it. We recognize excellence. We know who the "masters" are and know that we are not masterful. 

The impulse when faced with your own clumsiness and inexperience is toward self-deprecation and despair. In this two-minute pep talk, Ira Glass tells us to keep going. The only way to become a master is to keep working. One reason I love being a solo attorney is that I have no choice but to keep working, keep moving forward, even (especially) when my skills fall short of my taste. 

Kentucky Consumer Law Outline

Tomorrow, I have the opportunity to talk for an hour about consumer law at the Kentucky Bar Association's New Lawyers Program. In anticipation of the presentation (and so I didn't have to fill my slides with text), I prepared a non-comprehensive outline about many of the common law causes of action, state laws, and federal statues that constitute "Consumer Law". 

Below is the outline with some hyperlinks, but because the formatting will never be right in this post, here is a .pdf of the Kentucky Consumer Law Outline. Use it instead. In case you thought it might be, I need to say that this consumer law outline is absolutely not legal advice, dummy.  

And, yes, the presentation will have a Lebowski theme. 

I do mind, man. The dude minds. This aggression will not stand, man. 

I do mind, man. The dude minds. This aggression will not stand, man. 

▾    1    Kentucky Consumer Protection Act

    ▾    1.1    Legislative Intent

        1.1.1    KRS 367.120 “The General Assembly finds that the public health, welfare and interest require a strong consumer protection program to protect the public interest and the well-being of both the consumer public and the ethical sellers of goods and services…”

        1.1.2    “The Kentucky legislature created a statute which has the broadest application in order to give Kentucky consumers the broatest possible protection for allegedly illegal acts. In addition, KRS 446.080 requires the statutes of this Commonwealth are to be liberally construed.” Stevens v. Motorist Mutual Ins. Co., Ky. S.W. 2d 819 (1988). 

        1.2    Who is protected?

        1.2.1    Statutory Language

        1.2.1.1    Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by KRS 367.170, may bring an action under the Rules of Civil Procedure in the Circuit Court in which the seller or lessor resides or has his principal place of business or is doing business, or in the Circuit Court in which the purchaser or lessee of goods or services resides, or where the transaction in question occurred, to recover actual damages. The court may, in its discretion, award actual damages and may provide such equitable relief as it deems necessary or proper. Nothing in this subsection shall be construed to limit a person's right to seek punitive damages where appropriate. Ky. Rev. Stat. Ann. § 367.220

        1.3    Who’s Covered in Practice

        1.3.1    A person (not business) who “purchases or leases goods or services primarily for personal family, or household purposes”

        1.3.1.1    But the absence of a finding of a valid contract is not fatal to a claim for unfair trade practices under the KCPA as it would be to a breach of contract claim. Nothing in the KCPA—particularly KRS 367.170 and KRS 367.220—explicitly requires that a binding contract be reached for a purchaser damaged by unlawful trade practices to have a private right of action. Rather, because Piles and Warner qualified as purchasers under the KCPA, they were entitled to sue for any damages resulting from unfair trade practices by Sonny Bishop Cars under KRS 367.220. Craig & Bishop, Inc. v. Piles, 247 S.W.3d 897, 903 (Ky. 2008);

        1.3.2    Renters

        1.3.2.1    In both matters the tenant asserts that the landlord's failure to make needed repairs and his violations of the local housing code constitute unfair, false, misleading or deceptive acts. As a violation of a housing code does not create a cause of action in favor of the tenant, the failure of the landlord to comply with a housing code cannot be deceptive in the absence of an express covenant or agreement that the landlord would comply with such housing code. Likewise, in the absence of a duty or obligation *519  to make repairs to a rental unit, the failure to make such repairs cannot be construed to constitute an unfair, false, misleading or deceptive act. Miles v. Shauntee, 664 S.W.2d 512, 518-19 (Ky. 1983)

        1.3.3    Homebuyers/Homeowners

        1.3.3.1    “That brings us to the violation of the Kentucky Consumer Protection Act, KRS 367.110, et seq. The jury did make a finding of a breach, but with zero damages. We need not get into a discussion as to whether the verdict is an oxymoron because we do not believe that the Kentucky Consumer Protection Act applies to real estate transactions by an individual homeowner.” Craig v. Keene, 32 S.W.3d 90, 91 (Ky. Ct. App. 2000)

        1.3.3.2    Summary: Buyers of “as is” mobile home can still maintain causes of action for fraudulent misrepresentation and KCPA. Elendt v. Green Tree Servicing, LLC (Ky.App. 2014) 443 S.W.3d 612.

        1.3.4    People Seeking the Extension of Credit

        1.3.4.1    A federal court has interpreted case law and the KCPA to determine that the sale of credit, so long as it was purchased for personal use, is covered by KCPA. Stafford v. Cross Co. Bank, 262 F. Supp. 2d 776, 792-3 (W.D.Ky. 2003).

        1.3.5    Purchasers of Insurance Policies

        1.3.5.1    “It is the holding of this Court that the Kentucky Consumer Protection Act provides a homeowner with a remedy against the conduct of their own insurance company pursuant to KRS 367.220(1) and KRS 367.170.” Stevens v. Motorists Mut. Ins. Co., 759 S.W.2d 819, 821-22 (Ky. 1988)

        1.4    What are they protected from?

        1.4.1    Statutory Language

        1.4.1.1    KRS 367.170: (1) Unfair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

(2) For the purposes of this section, unfair shall be construed to mean unconscionable.

        1.4.1.2    “The terms ‘false, misleading and deceptive’ has sufficient meaning to be understood by a reasonably prudent person of common intelligence. Therefore, when the evidence creates an issue of fact, that any particular action is unfair, false, misleading or deceptive it is to be decided by a jury.” Stevens v. Motorist Mutual Ins. Co., 759 S.W.2d 819, 820 (Ky. 1988). 

        1.5    What are they not protected from?

        1.5.1    Not covered: incompetence

        1.5.1.1    “While there can be no doubt Gamble was initially buried in the wrong plot in contravention of the burial contract, ‘[n]ot every failure to perform a contract is sufficient to trigger application of the Consumer Protection Act. The statute requires some evidence of “unfair, false, misleading or deceptive acts” and does not apply to simple incompetent performance of contractual duties unless some element of intentional or grossly negligent conduct is also present.’” Keaton v. G.C. Williams Funeral Home, Inc., 436 S.W.3d 538, 546 (Ky. Ct. App. 2013) quoting Capitol Cadillac Olds, Inc. v. Roberts, 813 S.W.2d 287, 291 (Ky.1991).

        1.5.2    Not covered: “mere breach of promise”

        1.5.2.1    A mere breach of promise does not constitute an unfair, false, misleading or deceptive act. The facts in Miles v. Shauntee indicate that the landlord made assurances of repair which were never significantly honored or fulfilled. This Court cannot hold as a matter of law that such assurances constitute unfair, false, misleading or deceptive acts declared unlawful under the Consumer Protection Act. Miles v. Shauntee, 664 S.W.2d 512, 519 (Ky. 1983).

        1.5.2.2    But, breach of promise to do something in the future is actionable when there is no present intent to perform that future act.

        1.5.2.2.1    An accepted rule is, a misrepresentation, to be actional, must concern an existing or past fact, and not a future promise, prophecy, or opinion of a future event, unless declarant falsely represents his opinion of a future happening.” “One may commit ‘fraud in the inducement’ by making representations as to his future intentions when in fact he knew at the time the representations were made he had no intention of carrying them out.” 

PCR Contractors, Inc. v. Daniel, 354 S.W.3d 610, 614 (Ky. App. 2011) quoting Bear, Inc. v. Smith, 303 S.W.3d 137, 142, 614 (Ky. App. 2010).

        1.6    Damages

        1.6.1    Compensatory Damages

        1.6.1.1    Logical and natural consequences

        1.6.1.1.1    Diminished value

        1.6.1.1.2    Higher repair costs

        1.6.1.1.3    Time missed from work dealing with issue

        1.6.1.1.4    Inconvenience

        1.6.1.1.4.1    Clearly, the inconvenience award was not duplicative of the loss of use award. No loss of use award was permitted for Piles.21 Thus, without an inconvenience award to her, Piles would stand to recover no compensatory damages at all, despite testimony that she had to miss work and suffered difficulties at her job caused by constant telephoning and trips to the dealership. Craig & Bishop, Inc. v. Piles, 247 S.W.3d 897, 907 (Ky. 2008);

        1.6.1.2    Mental and emotional suffering

        1.6.1.2.1    No case that says damages for mental and emotional suffering are available under KCPA. No Kentucky case says they’re not. 

        1.6.1.2.1.1    “Defendants also assert that Plaintiffs are not entitled to mental suffering or emotional distress damages. Kentucky courts have been clear that these types of damages are not recoverable under a contract-type cause of action. See, e.g., Combs v. Southern Bell Tel. & Tel. Co., 38 S.W.2d 3, 5, 238 Ky. 341, 345-46 (Ky.1931). Plaintiffs cite no persuasive authority to the contrary. No Kentucky court has concluded that the KCPA entitles plaintiffs to mental suffering or emotional distress damages. This Court declines to do so now.” Peacock v. Damon Corp., 458 F. Supp. 2d 411, 420 (W.D. Ky. 2006);

        1.6.2    Rescission (equitable relief)

        KRS 367.220 explicitly allows the Court the power to “in its discretion, award actual damages and may provide such equitable relief as it deems necessary or proper.”

        1.6.3    Punitive Damages

        1.6.3.1    KRS 367.220(1): Nothing in this subsection shall be construed to limit a person’s right to seek punitive damages where appropriate. 

        1.6.3.2    Because actual damages will likely be relatively small, punitive damages in consumer cases can be larger than punitive damages in other kinds of cases.

        1.6.3.2.1    “It appears that the amount of the punitive damages award was rationally imposed by the jury to serve the deterrent effect for which punitive damages were designed, especially in consumer protection cases where the economic harm is relatively small.” Craig & Bishop, Inc. v. Piles, 247 S.W.3d 897, 906–07 (2008);

        1.6.3.2.2    The United States Supreme Court has provided three factors trial courts may consider:

1) the degree of reprehensibility of the conduct; 

2) the disparity between the actual harm and the punitive damages, generally expressed as a ratio; and

3) a comparison of penalties that could be imposed for similar conduct in similar analogous cases.   

Paraphrasing BMW v. Gore, 116 S.Ct. 1589, 1598–99 (1996.)

Of these three factors, the first—the degree of reprehensibility of the conduct—is the most important. See State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 419 (2003)

        1.6.4    Attorney’s fees should be included in the damages awarded when determining the reasonableness of the ratio between actual harm and punitive damages.

        1.6.4.1    In Willow Inn, Inc. v. Public Service Mut. Ins. Co., the Third Circuit Court of Appeals included the attorney’s fees into the ratio calculus of an insurance bad faith case (called a Section 8371 action in Pennsylvania). It explained, “Section 8371's attorney fees and costs provisions vindicate the statute's policy by enabling plaintiffs such as Willow Inn to bring § 8371 actions alleging bad faith delays to secure counsel on a contingency fee. Moreover, “one function of punitive-damages awards is to relieve the pressures on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes,” Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 676 (7th Cir.2003), and the structure of § 8371 enlists counsel to perform a filtering function akin to prosecutorial discretion, because rational attorneys will refuse to work on a contingent fee arrangement when their investigation reveals the bad faith allegations of prospective clients to be meritless.” Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co., 399 F.3d 224, 236 (3d Cir. 2005).

        1.6.4.2    The Third Circuit noted that its decision to include attorney’s fees in the ratio analysis “is supported in the case law” and explained that a recent Pennsylvania state court decision also included the attorney’s fees incurred in a bad faith claim in the ratio analysis. This position has also been adopted by the 11th Circuit in Action Marine, Inc. v. Cont’l Carbon Inc., 481 F.3d 1302 (11th Cir. 2007) and Illinois state courts in Kirkpatrick v. Strosberg, 894 N.E.2d 781 (Ill. App. Ct. 2008).

        1.6.5    Attorney’s Fees

        1.6.5.1    KRS 367.220(3) In any action brought by a person under this section, the court may award, to the prevailing party, in addition to the relief provided in this section, reasonable attorney's fees and costs.

        1.6.5.2    The seminal case on the award of fees pursuant to the Kentucky Consumer Protection Act is Alexander v. S&M Motors, Inc., 28 S.W.3d 303 (Ky. 2000). That case holds that the award of fees is in the sound discretion of the trial court. In Alexander, the Kentucky Supreme Court explained that permitting the additional recovery of attorney’s fees in consumer protection cases serves two purposes. First, it is “intended to compensate the prevailing party for the expense of bringing an action under the statute.” The Court continued, “[a] further aim is to provide attorneys with incentive for representing litigants who assert claims which serve an ultimate public purpose (i.e. a deterrent to conduct resulting in unfair trade practices which perpetrate fraud and deception upon the public.)” Alexander at 305.;

        1.6.5.3    Attorney’s fees are determined by using the “lodestar method”

        1.6.5.3.1    In Hensley v. Eckerhart, 461 U.S. 424, 429 (1983), the United States Supreme Court noted that “the most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.”

        1.6.5.3.2    You must keep your time contemporaneously. I suggest using a time-tracking service like Harvest (https://www.getharvest.com/) to capture and track time. 

▾    2    Kentucky Lemon Law (KRS 367.840, et seq.)

    ▾    2.1    Purpose

    •    2.1.1    Kentucky’s “Lemon Law” is intended to accomplish three goals: (1) To protect consumers who buy or lease new motor vehicles that do not conform to applicable warranties by holding manufacturers accountable for certain nonconformities; (2) To limit the number of attempts and the amount of times that a manufacturer or its agents shall have to cure such nonconformities; and (3) To require manufacturers to provide, in as expeditious a manner as possible, a refund, not to exceed the amount in KRS 367.842, or replacement vehicle that is acceptable to the aggrieved consumer when the manufacturer or its agents fail to cure any nonconformity within the specified limits.

Ky. Rev. Stat. Ann. § 367.840

        2.1.2    Note: the Magnuson-Moss Warranty Act (15 USC § 2301, et seq.) may also offer remedies for breach of warranty issues arising from the sale of a new vehicle. 

        2.2    Application

        2.2.1    Kentucky’s Lemon Law applies to new motor vehicles and not to: (a) Any vehicle substantially altered after its initial sale from a dealer to an individual; (b) Motor homes; (c) Motorcycles; (d) Mopeds; (e) Farm tractors and other machines used in the production, harvesting, and care of farm products; or (f) Vehicles which have more than two (2) axles.

Ky. Rev. Stat. Ann. § 367.841

        2.3    Process

        2.3.1    KRS 367.842 outlines the process and rights of consumers afflicted with a “lemon”.

        2.3.1.1    Consumers must give the manufacturer a “reasonable number” of attempts to repair any nonconformity.

        2.3.1.1.1    A presumption that the consumer has given the manufacturer a reasonable opportunity to repair the vehicle if he or she has a) returned the vehicle for repair of the same nonconformity 4 times or b) lost use of the vehicle for the nonconformity for more than 30 days. 

        2.3.1.2    The nonconformity must “sustantially impact” the “use, value, or safety” of the motor vehicle”.

        2.3.1.3    The consumer must report the failure to repair the nonconformity in writing to the manufacturer in the first 12 months or 12,000 miles of use, whichever comes sooner. 

        2.3.2    KRS 367.842(4) requires consumers to particpate in an informal dispute resolution process before filing suit

        2.3.3    Damages

        2.3.3.1    The consumer can choose between replacement of the vehicle or refunding the money he or she paid for the vehicle.

        2.3.3.1.1    Under KRS 367.842(2), “the manufacturer, at the option of the buyer, shall replace the motor vehicle with a comparable motor vehicle, or accept return of the vehicle from the buyer and refund to the buyer the full purchase price. The full purchase price shall include the amount paid for the motor vehicle, finance charge, all sales tax, license fee, registration fee, and any similar governmental charges plus all collateral charges, less a reasonable allowance for the buyer's use of the vehicle.

        2.3.3.2    A court may award reasonable attorney's fees to a prevailing plaintiff. KRS 367.842(9)

▾    3    Kentucky Repossessions

    •    3.1    There is an entire book published by the National Consumer Law Center on protecting consumers from repossession, prosecuting wrongful repossession, and helping consumers recover from repossessions.

        3.2    Reposssessions in Ketucky are governed by KRS 355.9-601, et seq.

        3.2.1    Repossessions must be 1) after default and must not 2) breach the peace.  KRS 355.9-609

        3.2.2    The repossessing business can resell the collateral but only after providing notice to the consumer KRS 355.9-610 and 9-611.

        3.2.3    Remedies for violations of UCC’s repossession provisions are located at KRS 355.9-625. 

▾    4    Usury

    ▾    4.1    Legal rate of interest

    ▾    4.1.1    KRS 360.010 states that the legal rate of interest is 8%

    •    4.1.1.1    On loans of $15,000 or less, the parties can contract for up to 19%, and

    •    4.1.1.2    On loans greater than $15,000, the parties can contract for whatever interest rate they want. 

        4.1.2    Damages under KRS 360.020

        4.1.2.1    The taking, receiving, reserving, or charging a rate of interest greater than is allowed by KRS 360.010, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the creditors taking or receiving the same: provided, that such action is commenced within two (2) years from the time the usurious transaction occurred.

        4.1.3    Often, businesses effectively charge interest greater than the legal or contractual rate by padding the deal with additional charges and fees. You must acquaint yourself with the case law on these statutes to determine whether certain charges are “interest” and therefore usurious. 

▾    5    Federal Laws

    ▾    5.1    Fair Debt Collection Practices Act (FDCPA)

    •    5.1.1    Protects people from abusive debt collection practices

    •    5.1.2    15 USC 41 § 1692, et seq. http://www.law.cornell.edu/uscode/text/15/chapter-41/subchapter-V

        5.1.3    Prohibits false or misleading representations, unfair practices, harrassment or abuse

        5.1.4    Again, the National Consumer Law Center publishes an entire book on this subject and some practitioners focus exclusively on prosecuting these claims.

        5.1.5    Report on Debt Collection from the Center for Responsible Lending: http://www.responsiblelending.org/state-of-lending/reports/11-Debt-Collection.pdf

        5.1.6    Damages

        5.1.6.1    § 1692k allows people to recover their actual damages suffered as a result of the violation, up to $1,000 in statutory damages, and attorney’s fees 

        5.1.7    This area of law is extremely rewarding and challenging. Abuse is rampant and the issues that arise are novel and nuanced.

        5.1.7.1    Conway v. Portfolio Recovery Associates, LLC, 13 F.Supp.3d 711 held that a person stated a cause of action for FDCPA violations when a debt collector that received payments in Virginia sued on the debt in Kentucky. Conway’s attorney argued that the debt collector violated the FDCPA because it sued beyond the statute of limitations of the debt and the Court held that the SOL that applied was Virginia’s (3 years), not Kentucky’s (5 or 15 years).  

        5.2    Fair Credit Reporting Act (FCRA) 15 USC § 1681 et seq. 

        5.2.1    Provides a mechanism for consumers to dispute inaccurate information on their credit reports and imposes penalties on credit reporting agencies and furnishers of credit information for failure to correct inaccuracies.

        5.2.2    FTC’s Summary of Consumer Rights under FCRA: https://www.consumer.ftc.gov/articles/pdf-0096-fair-credit-reporting-act.pdf

        5.2.3    Damages (§ 1681(n))

        5.2.3.1    Actual damages in any amount or statutory damages not to exceed $1,000

        5.2.3.2    Punitive damages

        5.2.3.3    reasonable attorney’s fees

        5.3    Truth in Lending Act (TILA) 15 USC ch 41  § 1601 et seq.

        5.3.1    Standardizes how fees and interest are calculated in consumer finance transactions

        5.3.2    Creates environment in which consumers can comparison shop by requring businesses to calculate the “true cost” of the loan and the “real” interest rate after taking into account fees, charges, and other costs of credit

        5.3.3    TILA’s specific requirements are in the awesome-sounding “Regulation Z”: 12 CFR 226

        5.4    Real Estate Settlement and Procedures Act (RESPA)

        5.4.1    The CFPB’s new Regulation X provides a private cause of action for violations of many of the regulations governing mortgage servicers. Read more here: http://www.consumerfinance.gov/regulations/2013-real-estate-settlement-procedures-act-regulation-x-and-truth-in-lending-act-regulation-z-mortgage-servicing-final-rules/

        5.5    Telephone Consumer Protection Act (TCPA): 47 USC § 227

        5.5.1    The Telephone Consumer Protection Act prohibits obnoxious and costly use of telephones. It limits the circumstances under which businesses can contact consumers and places meaningful restrictions on telemarketers and the use of automated dialing systems (“autodialers” or “robodialers”), text messages, voice recordings, and fax machines. 

        5.5.2    Damages

        5.5.2.1    Actual damages

        5.5.2.2    Statutory damages up to $1,500 per violation

        5.5.2.3    No attorney’s fees under the TCPA

▾    6    Other Causes of Action

    ▾    6.1    URLTA (Uniform Residential Landlord Tenant Act) KRS 383.505

    •    6.1.1    KRS 383.500 requires local governments to adopt URLTA in its entirety and without amendment. As of 2009, the following jurisditions had adopted URLTA’s provisions: Barbourville, Bellevue, Bromley, Covington, Dayton, Florence, Lexington-Fayette County, Georgetown, Louisville-Jefferson County, Ludlow, Melbourne, Newport, Oldham County, Pulaski County, Shelbyville, Silver Grove, Southgate, Taylor Mill and Woodlaw. 

        6.1.2    Remedies include a private right of action

        6.1.2.1    KRS 383.520: (1) The remedies provided by KRS 383.505 to 383.715 shall be so administered that an aggrieved party may recover appropriate damages. The aggrieved party has a duty to mitigate damages. (2) Any right or obligation declared by KRS 383.505 to 383.715 is enforceable by action unless the provision declaring it specifies a different and limited effect.

        6.1.2.2    No decision on whether attorney’s fees are “appropriate damages” under URLTA. 

        6.2    Equitable Estoppel: Fluke Corporation v. LeMaster, 306 SW 3d 55 (Ky. 2010). 

        6.2.1    Under Kentucky law, equitable estoppel requires both a material misrepresentation by one party and reliance by the other party:

The essential elements of equitable estoppel are[:] (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts. And, broadly speaking, as related to the party claiming the estoppel, the essential elements are (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.

        6.3    IIED

        6.3.1    In certain circumstances, unscrupulous businesses’ actions will rise to the level of Intentional Infliction of Emotional Distress.

        6.3.2    Our Commonwealth first adopted the tort of intentional infliction of mental distress in the case of Craft v. Rice, Ky., 671 S.W.2d 247 (1984). In Craft, we adopted Restatement (Second) of Torts, section 46, and recognized the elements of proof necessary for this new tort: 1. The wrongdoer's conduct must be intentional or reckless; 2. The conduct must be outrageous and intolerable in that it offends against the generally accepted standards of decency and morality; 3. There must be a causal connection between the wrongdoer's conduct and the emotional distress; and 4. The emotional distress must be severe. Kroger Co. v. Willgruber, 920 S.W.2d 61, 65 (Ky. 1996)

        6.4    Breach of Contract

        6.4.1    Of course, in many cases, not only will you have KCPA violations and tortious activity, you will also have breach of contract claims. 

        6.5    Insurance Bad Faith

        6.5.1    Kentucky’s Unfair Claims Settlement Practices Act (KRS 304.12-230) supplements common law “bad faith” administration of insurance claims.

        6.5.2    It prohibits specific activities that are unfortunately common during the process of making a claim for coverage including, but not limited to, “failing to acknowledge and act reasonably promptly upon communications”, failing to investigate claims, “failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed”, and “not attempting in good faith to effectuate prompt, fair, equitable settlements of claims in which liability has become reasonably clear.” Reading the entire statute and surrounding jurisprudence is, of course, necessary. 

        6.6    Fraud

        6.6.1    Elements

        6.6.1.1    In a Kentucky action for fraud, the party claiming harm must establish six elements of fraud by clear and convincing evidence as follows: a) material representation b) which is false c) known to be false or made recklessly d) made with inducement to be acted upon e) acted in reliance thereon and f) causing injury. Wahba v. Don Corlett Motors, Inc., Ky.App., 573 S.W.2d 357, 359 (1978). United Parcel Serv. Co. v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999)

        6.6.2    Promises of future performance

        6.6.2.1    An accepted rule is, a misrepresentation, to be actional, must concern an existing or past fact, and not a future promise, prophecy, or opinion of a future event, unless declarant falsely represents his opinion of a future happening.” “One may commit ‘fraud in the inducement’ by making representations as to his future intentions when in fact he knew at the time the representations were made he had no intention of carrying them out.” 

PCR Contractors, Inc. v. Daniel, 354 S.W.3d 610, 614 (Ky. App. 2011) quoting Bear, Inc. v. Smith, 303 S.W.3d 137, 142, 614 (Ky. App. 2010).

        6.6.3    Fraudulent Omission

        6.6.3.1    This subset of “fraud” is a common cause of action in consumer law practice.

        6.6.3.2    To prevail on a claim of fraudulent omission, a plaintiff must prove: (a) a duty to disclose a material fact; (b) a failure to disclose a material fact; and (c) that the failure to disclose a material fact induced the plaintiff to act and, as a consequence, (d) to suffer actual damages. Rivermont Inn, Inc. v. Bass Hotels & Resorts, Inc., 113 S.W.3d 636, 641 (Ky.App.2003). A caveat to the necessary elements under either claim is that “mere silence does not constitute fraud where it relates to facts open to common observation or discoverable by the exercise of ordinary diligence, or where means of information are as accessible to one party as to the other.” Bryant v. Troutman, 287 S.W.2d 918, 920–921 (Ky.1956). Waldridge v. Homeservices of Kentucky, Inc., 384 S.W.3d 165, 171 (Ky. Ct. App. 2011).;

        6.6.3.3    A duty to disclose facts is created only where a confidential or fiduciary relationship between the parties exists, or when a statute imposes such a duty, or when a defendant has partially disclosed material facts to the plaintiff but created the impression of full disclosure. Dennis v. Thomson, Ky., 240 Ky. 727, 43 S.W.2d 18 (1931). Rivermont Inn, Inc. v. Bass Hotels & Resorts, Inc., 113 S.W.3d 636, 641 (Ky. Ct. App. 2003);

        6.6.3.4    Beyond these three situations cited in Rivermont in which a duty arises, Kentucky courts have found other circumstances in which a party may commit fraudulent concealment:

        6.6.3.4.1    A duty to disclose may arise from a fiduciary relationship, from a partial disclosure of information, or from particular circumstances such as where one party to a contract has superior knowledge and is relied upon to disclose same. Smith v. Gen. Motors Corp., 979 S.W.2d 127, 129 (Ky. Ct. App. 1998)

        6.6.3.4.2    We may readily agree with the appellants that mere silence with respect to something related to a transaction is not necessarily misrepresentation and does not itself constitute fraud. However, it is otherwise when the circumstances surrounding a transaction impose a duty or obligation upon one of the parties to disclose all the material facts known to him and not known to the other party. The suppression or concealment of the truth under such circumstances may constitute a means of committing a fraud as well as misrepresentation openly made. Since the beginning of our jurisprudence, the principle has been consistently adhered to that the concealment by a seller of a material defect in property being sold, or the suppression by him of the true conditions respecting the property, so as to withhold from the buyer information he is entitled to, violates good faith and constitutes deception which may relieve the buyer from an obligation or may permit him to maintain an action for damages or to vacate the transaction. Hall v. Carter, 324 S.W.2d 410, 412 (Ky. 1959)

        6.7    Negligent Misrepresentation

        6.7.1    A majority of jurisdictions have adopted Restatement (Second) of Torts § 552, which outlines the elements of negligent misrepresentation as follows:(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. (2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. Presnell Const. Managers, Inc. v. EH Const., LLC, 134 S.W.3d 575, 580 (Ky. 2004)

▾    7    Foreclosure Defense

        7.1    See outline that follows

        7.2    Foreclosure Defense includes helping your client rigorously pursue all loss mitigation options

        7.2.1    http://www.makinghomeaffordable.gov/for-partners/understanding-guidelines/Documents/mhahandbook_41.pdf

Kentucky Car Dealers Using GPS and Starter Interrupt Devices in Greater Numbers

The New York Times wrote a good article a couple of weeks ago on a phenomenon I’m seeing more and more in my car fraud practice: used car dealers are now installing GPS and SID (Starter Interrupt Devices) on the cars they sell. While everyone knows what a GPS does, these GPS devices don’t sit on the dashes of cars and help drivers navigate to their destinations. Instead, they allow dealers and finance companies to track the whereabouts of cars for repossession. 

Meanwhile, the Starter Interrupt Device is less well-known and even more dangerous. It does exactly what it says it does: it allows a dealer or finance company to interrupt (i.e. prevent) the car from starting. Dealers and finance companies can “flip the switch” on the SID remotely. So, they never have to leave their office (and sometimes can deploy it from a smartphone) and with the flip of a digital switch can make a vehicle stop working. (If properly installed, the SID will not stop a vehicle that is in motion, but that does not fix the safety concerns of being stranded.)

Some dealers disclose the existence of these devices to consumers, some don’t. Those who do disclose their use of the device often try to explain that these devices “help locate the vehicle if it is stolen”. While that may be true, the actual purposes are to a) locate the vehicle for repossession and b) incentivize the consumer to make payments by preventing the consumer from using the vehicle if he or she misses a payment. 

The used car industry’s expanding use of these devices raises many potential legal issues that have yet to be litigated in Kentucky. A leading attorney advising the used car industry has described both 1) failing to disclose a GPS or SID and 2) charging consumers for the devices as among the “Ten ‘Worst Practices’ for Dealers”. Failing to disclose the existence of a GPS and/or SID on a new or used vehicle may be a violation of the Motor Vehicle Retail Installment Sales Act. 

Another area ripe for abuse is in the repossession of a vehicle by use of a Starter Interrupt Device. Aside from the safety issues raised by someone crippling a vehicle remotely, a dealer’s use of a Starter Interrupt Device can potentially violate, among other laws, the Uniform Commercial Code and the Kentucky Consumer Protection Act. 

If you discover that a car dealer sold you a vehicle equipped with a GPS or SID unit without disclosing it to you, you need to contact an attorney to explore your legal rights. You can find a consumer attorney in your state at the National Association of Consumer Advocate’s website.  

John Oliver on Payday Loans: "Do Anything Else"

Last night, I had a chance to watch John Oliver's great takedown of one of America's worst industries: the payday loan industry. 

The whole thing is great, but I seriously want a Kickstarter to buy TV time for Sarah Silverman's ad at the end of this clip about the best options for people considering taking out a payday loan. 

In Kentucky, payday loan companies charge an average annual interest rate of 391%. The Kentucky Coalition for Responsible Lending is trying to pass legislation that would cap that interest rate at the still-exorbitant price of 36%. I applied to become a member of KCRL today. You should, too. 

If you are struggling with repaying payday loans or other debts, please contact an attorney to get advice on the best way to gain control over your financial life. 

Technology for a Law Office: 60 Tips in 120 Minutes

Thought Technologies

Equipment        

Technology Hygiene        

Law Practice Management        

Tools for Doing Law

Getting Better

Being Online        

Analog Technologies        

Louisville Jury Refuses to Tolerate Car Dealer's Deceptive Practices

I spent Tuesday, Wednesday, and Thursday of this week trying a car fraud case in Jefferson Circuit Court. It was my first trial as a lead attorney and the first case Ben Carter Law has taken to trial. 

My client, Renay Seals, alleged that the Defendant, Mak Cars, Inc dba Unique Motorsports (Mak Cars also does business in Louisville as Hot Deals on Wheels Used Cars) sold her a car with more than 245,000 miles on it after assuring her that a) the car only had 54,000 additional miles on it beyond the 21,420 on the odometer and b) the car was eligible for a 24 month/24,000 mile warranty. 

Tommie Seals, Renay's son, with the 2006 Dodge Charger the day after Renay purchased it from Mak Cars, Inc. Tommie and Renay would learn the truth about the car—that it had at least 245,000 miles on it and was not eligible for an extended warranty—a month later. 

Tommie Seals, Renay's son, with the 2006 Dodge Charger the day after Renay purchased it from Mak Cars, Inc. Tommie and Renay would learn the truth about the car—that it had at least 245,000 miles on it and was not eligible for an extended warranty—a month later. 

The jury found that Mak Cars, Inc violated the Kentucky Consumer Protection Act and ordered the Defendant to pay Renay: 

  • $13,927.42, the price Renay paid for the 2006 Dodge Charger;
  • $5,000 for the anxiety, humiliation, and frustration Mak Cars's deception caused her; and
  • $245,000 in punitive damages. 

The jury also found that my client was 10% responsible for what happened, which reduces the amount of the judgment for the purchase price and mental suffering by the same proportion. 

There are three great things about this verdict. (Okay, there are a lot more than three, but I want to talk about three here.)

First, Renay is from Louisiana. The only experience she had with Louisville, Kentucky was coming here to look at a car she thought had 21,240 miles on it and getting hosed. With its verdict, the jury said, "What happened to you is not acceptable. It's not how we treat people here." Renay and her son left Louisville yesterday knowing that Louisville, Kentucky has good people in it. 

Second, I had a chance to talk with some jurors after the case. One of them said, "Do you know why we set punitive damages at $245,000?" We had set the maximum amount we could recover at $250,000, so I told her I just thought they didn't want to give the max.

"No, we set it at $245,000 because that was how many miles the car had on it. We thought that would be an appropriate symbol to deter other dealers from doing something like this."

AWESOME. This shows the jury was thinking even harder than I was about this case. Which I didn't think was possible until it was. 

Third, another juror told me that the jury wanted to write on the verdict that Renay had to spend a little bit of the money it ordered Defendant to pay her to return to Louisville and attend Derby next year. This jury was truly appalled that someone from out of town was treated so badly by a Louisville business.

Yesterday was a great day for my client: the jury validated her 18-month fight both out and then in court with a company that had done her wrong. It was a great day for me: it was a scary thing to go to trial on my own for the first time. And, I hope, the jury's verdict will help other Kentucky consumers and their attorneys get fair compensation for wrongs done to them.

Before Renay and Tommie hit the road yesterday, I made them let me take a selfie with them. 

Before Renay and Tommie hit the road yesterday, I made them let me take a selfie with them.