August 10, 2022

McGlinchey’s Commercial Law Bulletin is a biweekly
update of recent, unique, and impactful cases in state and federal
courts in the area of commercial litigation. We’re pleased to
expand our Commercial Law Bulletin from its previous coverage of
Ohio case law to include additional areas in McGlinchey’s
footprint.

Ohio

Fair Debt Collection Practices Act

Snyder v. Finley & Co.,
L.P.A.
, 6th Cir. No. 21-3997, 2022 U.S. App.
LEXIS 16512 (June 15, 2022)

In this appeal, the Court of Appeals for the Sixth Circuit
reversed and remanded the District Court for the Northern District
of Ohio’s decision, finding the debt collector violated the
Fair Debt Collection Practices Act (FDCPA) by suing plaintiff to
recover her husband’s criminal-defense legal fees under
Ohio’s Necessaries Statute because the lawsuit was contingent
on the debt collector’s claim against the husband, and when
they sued plaintiff, the debt collector had not satisfied the
prerequisite to collect from her.

The Bullet Point: At issue in this dispute was
whether the debt collector violated the FDCPA, 15 U.S.C.S. §
1692e, when it sued plaintiff to recover her husband’s
criminal-defense legal fees under Ohio’s Necessaries Statute.
Specifically, the debt collector filed a debt-collection lawsuit
jointly against plaintiff and her husband, asserting a
spousal-obligation-to-support claim under Ohio’s Necessaries
Statute. R.C. § 3103.03. The trial court granted judgment in
favor of plaintiff, and plaintiff subsequently filed this federal
FDCPA lawsuit, claiming that by filing a debt-collection claim
under the spousal-obligation-to-support theory without an arguable
legal basis, the debt collector engaged in debt-collection
practices prohibited by the FDCPA. The district court resolved the
parties’ cross-motions for summary judgment in favor of the
debt collector. Plaintiff appealed, arguing the debt
collector’s lawsuit against her and her husband was
“objectively baseless” and thus violated the FDCPA. The
FDCPA provides that a debt collector may not use any false,
deceptive, or misleading representation or means in connection with
the collection of any debt. 15 U.S.C.S. § 1692e. An FDCPA
violation occurs when a debt collector’s representation or
action is materially false or misleading, and had the purpose of
inducing payment by the debtor. This is an extraordinarily broad,
strict-liability statute, and courts view any alleged violation
through the lens of the least sophisticated consumer.

On appeal, the Court analyzed the debt collector’s lawsuit
against plaintiff and her husband as Section 1692e applies to
debt-collection efforts utilizing the legal process. As the Court
explained, merely advancing an ultimately unsuccessful claim for
relief does not, in and of itself, rise to an FDCPA violation.
Rather, an FDCPA violation occurs when a material misstatement
about state law in a court filing is “false, deceptive, or
misleading” at the time it is made. When evaluating an alleged
FDCPA violation in a legal action, “a lawyer does not
‘misrepresent’ the law by advancing a reasonable legal
position later proved wrong.” Instead, courts must determine
“whether the legal contention was objectively baseless at the
time it was made, making it legally indefensible or groundless in
law.” That would include, for example, “misquoting a
case, relying on a statute no longer in existence, . . . invoking
an overruled decision,” “claim[ing] that a one-year
statute of limitations runs for two years,” “say[ing]
today that the [FDCPA] does not apply to attorneys collecting
debts,” “suing on a time-barred debt,” and
“filing a writ of garnishment against a debtor current on his
payments.”

In this matter, the debt collector sought to hold plaintiff
liable for her husband’s outstanding legal bills via Ohio’s
Necessaries Statute, as it permits creditors to collect certain
debts from one spouse incurred by the other. R.C. § 3103.03.
However, there are conditions precedent to collecting from a
spouse. Specifically, the Ohio Supreme Court has held that the
Necessaries Statute “does not impose joint liability on a
married person for the debts of his or her spouse.” Rather,
“[a] creditor must . . . first seek satisfaction of its claim
from the assets of the spouse who incurred the debt” and must
show that the debtor-spouse is “unable to pay” for a
nondebtor-spouse to be liable under the Necessaries Statute. Here,
the debt collector’s claim against plaintiff was contingent on
its claims against her husband. But when the debt collector filed
its lawsuit against plaintiff, it had not satisfied the
prerequisites to collect from her. There was no finding that its
claims against the husband were meritorious or that he lacked the
assets to pay for those claims. The debt collector was required to
“first seek satisfaction of its claim from” the husband
and was prohibited from filing a joint-liability suit against
plaintiff and her husband without clearly stating that its claim
against plaintiff was contingent. If “misquoting a case,
relying on a statute no longer in existence, . . . invoking an
overruled decision, [or] . . . suing on a time-barred debt”
runs afoul of the FDCPA, asserting a claim against a party under
circumstances in which a state supreme court has explicitly held
that the party cannot be held liable certainly does as well.
Consequently, the debt collector’s lawsuit violated the
FDCPA.

Communications Decency Act

Holmok v. Burke, 8th Dist.
Cuyahoga No. 110900, 2022-Ohio-2135

In this appeal, the Eighth Appellate District affirmed the trial
court’s decision, agreeing that defendant’s retweeting of a
tweet did not make her the publisher or speaker of the tweet and
defendant was immune from liability under the Communications
Decency Act (CDA).

The Bullet Point: In this matter, plaintiff
filed a complaint for defamation against defendant following her
retweeting of a tweet purportedly about plaintiff. Specifically,
plaintiff alleged in his defamation claim that by retweeting an
allegedly false tweet, defendant published a false statement about
plaintiff to her 938 Twitter followers. In doing so, plaintiff
contended that defendant acted with malice and that he suffered
embarrassment, anxiety, and emotional distress and incurred costs
for counseling. Defendant filed an answer raising several defenses,
including immunity under 47 U.S.C. 230, the federal CDA. The trial
court subsequently granted judgment in favor of defendant, and
plaintiff appealed.

The CDA establishes immunity “‘against causes of action
of all kinds'” for interactive service providers and
users. Section 230(c)(1) of the CDA states, “No provider or
user of an interactive computer service shall be treated as the
publisher or speaker of any information provided by another
information content provider.” 47 U.S.C. 230(c)(1). Unlike
interactive computer service providers or users, however, Section
230(c)(1) does not extend immunity to information content
providers. Furthermore, the CDA expressly preempts civil claims
under state law. 47 U.S.C. 230(e)(3). The CDA defines an
“interactive computer service” as “any information
service, system, or access software provider that provides or
enables computer access by multiple users to a computer server,
including specifically a service or system that provides access to
the Internet and such systems operated or services offered by
libraries or educational institutions.” 47 U.S.C. 230(f)(2).
An “information content provider” is “any person or
entity that is responsible, in whole or in part, for the creation
or development of information provided through the Internet or any
other interactive computer service.” 47 U.S.C. 230(f)(3).

Plaintiff argued on appeal that defendant was not immune under
the CDA because she was ‘an information content provider’
because she created and sent her own content and further developed
information that others created. The Court rejected this
contention, finding that defendant’s alleged retweeting of a
tweet does not convert her from a “user” into an
“information content provider.” It was further noted that
courts across the country have routinely found that Twitter falls
within the CDA’s definition of an interactive computer service.
Consequently, the allegations in the complaint related to
defendant’s claim that she used Twitter to retweet, making her
a user of an interactive computer service. As the Court explained,
the act of retweeting can fall outside the immunity provided by the
CDA when a user couples the retweet with his or her own added
speech. The D.C. District Court recently noted that “[w]hile
section 230 may provide immunity for someone who merely shares a
link on Twitter,* * * it does not immunize someone for making
additional remarks that are allegedly defamatory.” Likewise,
other courts have explained that CDA immunity can be lost by
“substantively alter[ing] third-party content or becom[ing]
directly involved in the alleged illegality”.

Here, defendant retweeted a tweet and added a handle tag to
another account. The Court found that defendant did not
substantively alter or add to the tweet’s content when she
added the handle tag to another account. Consequently, defendant
could not be “treated as the publisher or speaker,” under
the CDA, of the tweet and “no liability may be imposed under
any state * * * law that is inconsistent with [Section 230].”
47 U.S.C. 230(e)(3). Plaintiff further argued defendant was liable
to defamation because she “published false accusations
against” him. The elements of a defamation claim are:
“(1) that a false statement of fact was made; (2) that the
statement was defamatory; (3) that the statement was published; (4)
that the plaintiff suffered injury as a proximate result of the
publication; and (5) that the defendant acted with the requisite
degree of fault in publishing the statement.” However, under
the CDA defendant could not be “treated as the publisher or
speaker” of the original tweet; accordingly, plaintiff failed
to allege an actionable statement published by defendant.
Therefore, the trial court did not err when it granted defendant
judgment on the pleadings dismissing the defamation claim.

Waiver of conditions precedent

Wsb Rehab. Servs. v. Cent. Accounting
Sys.
, 1st Dist. Hamilton Nos. C-210454,
C-210467, 2022-Ohio-2160

In this appeal, the First Appellate District affirmed in part,
reversed in part, and remanded the trial court’s decision,
agreeing that as defendants waived plaintiff’s failure to
perform the condition precedent, which was not a breach and did not
trigger the anti-waiver clause in the parties’ agreement,
defendants were obligated to continue paying plaintiff for services
it provided.

The Bullet Point: A condition precedent is an
act or event that must occur before performance obligations arise.
An unsatisfied condition precedent can excuse performance under a
contract and is a defense to a breach-of-contract claim. But a
party may waive a condition precedent by performing under the
contract despite the nonfulfillment of the condition. As the
appellate court explained, a condition precedent “may be
waived by the party to whom the benefit of the condition runs * * *
expressly or by implication, and the key to its application in a
particular case is a showing of some performance pursuant to the
terms of the contract.” To establish a waiver, the party
alleging it “must prove a clear, unequivocal, decisive act of
the party against whom the waiver is asserted which amounts to an
estoppel on his part.”

Here, defendants paid plaintiff’s invoices for seven years
despite the invoices not containing the name of the therapist and
the time spent providing therapy. As such, the trial and appellate
courts determined defendants waived the invoice requirement.
Moreover, it was noted that plaintiff provided the information that
defendants claimed was missing from the invoices via a direct data
link between the parties’ medical record systems. Defendants
also argued that despite not enforcing the invoice requirement for
seven years, the anti-waiver clause in the agreements allowed them
to begin enforcing said requirement and relieved them of the duty
to pay plaintiff for non-performance of said requirement.

Generally, anti-waiver provisions allow a party to waive a right
in one instance without relinquishing rights to enforce other
contract provisions. Here, the anti-waiver clause provided
“the waiver by either party of a breach or violation of any
provision of this Agreement shall not operate as, or be construed
to be a waiver of any subsequent breach of the same or other
provision hereof.” The appellate court explained that if a
contractual provision is a promise, a party’s failure to
perform constitutes a breach of contract. On the other hand,
“a party’s failure to fulfill a condition precedent * * *
is merely a fact or event – it is not a promise that can be
breached.” Simply stated, nonperformance of a condition
precedent is not a breach of contract. Rather, it excuses
performance under a contract or renders the contract unenforceable,
but it does not affect the validity of the contract. In this
matter, plaintiff’s failure to perform the invoice requirement
– a condition precedent – did not constitute a breach
or violation of the agreements. The anti-waiver clause between the
parties was limited to breaches or violations of the agreements.
Because plaintiff did not breach or violate the agreements, the
anti-waiver clause was never triggered and defendants were
obligated to continue paying plaintiff for services it
provided.

Florida

Premature Summary Judgment Ruling

Sacramento v. Citizens Prop. Ins. Co., No.
3D20-1790 (Fla. 3d DCA June 22, 2022)

The Third District concluded that a trial court’s order
granting summary judgment was premature because it was entered
while the noticed deposition of a key witness was pending.

The Bullet Point: Under Florida law, if there
is a pending deposition that would most likely raise a genuine
issue of material fact, discovery is considered ongoing and summary
judgment is premature.

At issue in this appeal was whether a trial court’s summary
judgment ruling was premature. The appellant argued summary
judgment was premature because the noticed deposition of a key
witness was still pending. The appellee maintained summary judgment
was proper because no formal motion for continuance was filed. The
Third District disagreed with the appellee, reasoning that while it
would have been better practice to file a written motion for
continuance, a trial court cannot ignore a pending deposition of a
witness whose testimony would most likely raise a genuine issue of
material fact. Key to the court’s analysis was the fact that
the appellant’s attorney’s practice had been delayed by the
COVID-19 pandemic and subsequent office closures, the
appellant’s attorney had contacted the appellee’s attorney
requesting that the summary judgment hearing be rescheduled, and
the appellee had cross-noticed the outstanding deposition, thereby
“defeating” its own summary judgment motion. Therefore,
because the trial court was “fully aware of the pending and
noticed deposition that would potentially shed light on the
causation issue central to the outcome of the case,” the
summary judgment was premature. Accordingly, the Third District
reversed the trial court’s order granting summary judgment.

Financial Disclosure from a Nonparty

Tallo v. Illes, et al., No. 3D21-1206 (Fla. 3d
DCA June 22, 2022)

The Third District reviewed the considerations that must be
examined by a trial court prior to compelling financial disclosure
from a nonparty in a postjudgment context.

The Bullet Point: Before a trial court can
compel financial disclosure from a nonparty in a postjudgment
context, a proper predicate must be laid. When a judgment creditor
seeks to discover the personal financial information of a nonparty,
the creditor bears the burden of proving the information sought is
relevant or reasonably calculated to lead to the discovery of
admissible evidence. The matters relevant for postjudgment
discovery are those that enable the judgment creditor to collect a
debt or those that encompass information identifying or leading to
the discovery of assets available for execution.

This appeal stemmed from the trial court compelling postjudgment
financial disclosure from the petitioner, the spouse of a judgment
debtor and nonparty to the underlying proceedings. The Third
District reviewed the considerations and determined the trial court
compelled financial disclosure in the absence of any proper
predicate. Because the order involved financial discovery, it was
irremediable on appeal. Accordingly, the Third District ruled that
the trial court departed from the essential requirements of the
law.

Vacate a Foreclosure Sale

GGG Found. and Trust LLC v. HMC Assets, LLC,
No. 1D21-2879 (Fla. 1st DCA June 15, 2022)

The First District affirmed a trial court’s decision to
overrule a borrower’s objection to a foreclosure sale.

The Bullet Point: In this appeal, the First
District reviewed a trial court’s court decision to overrule a
borrower’s objection to a foreclosure sale. Generally, a trial
court has large discretion in deciding whether there are equitable
grounds to vacate a foreclosure sale. The party seeking to set
aside a foreclosure sale based on the inadequacy of the sale price
must show that the inadequacy resulted from a “mistake,
accident, surprise, fraud, misconduct, or irregularity upon the
part of either the purchaser or the person connected with the
sale.” The First District concluded the trial court reasonably
found the appellant did not prove the grounds for relief and failed
to show that the sale price was inadequate. Accordingly, the First
District held that the trial court did not abuse its discretion in
overruling the objection to the sale.

The Apex Doctrine

DecisionHR USA, Inc. v. Mills, No. 2D21-3468
(Fla. 2d DCA June 17, 2022)

The Second District quashed a trial court’s order denying a
motion for a protective order because the trial court did not
follow the requirements of the apex doctrine, codified in Florida
Rule of Civil Procedure 1.280(h), in ruling on the motion.

The Bullet Point: A trial court must follow the
requirements of the apex doctrine in ruling on a motion for
protective order that seeks to preclude the deposition of a
corporate officer. Under the apex doctrine, the party resisting the
deposition carries the burden of both persuading the court that the
would-be deponent is high-level and must produce an affidavit or
declaration explaining the officer’s lack of unique, personal
knowledge of the issues being litigated. If those showings are
made, the trial court must issue an order preventing the
deposition, unless the party seeking the deposition demonstrates
three factors: (1) that it has exhausted other discovery, (2) that
such discovery is inadequate, and (3) that the officer has unique,
personal knowledge of discoverable information.

In this petition, the petitioners sought review of the trial
court’s order denying their motion for protective order, which
sought to preclude the respondents from deposing an undisputedly
high-level corporate officer. The Second District granted the
petition and quashed the trial court’s order, concluding the
trial court did not follow the requirements of the apex doctrine.
The Second District reasoned that the trial court neither addressed
the sufficiency of the officer’s affidavit nor evaluated
whether the respondents demonstrated the requisite three factors.
Further, the Second District found that the petitioners met their
burden under the apex doctrine, but the respondents failed to
demonstrate that they exhausted other discovery and that it was
inadequate, and they fell short of demonstrating that the officer
had unique, personal knowledge of discoverable information.
Therefore, the Second District ruled that the trial court should
have issued an order preventing the deposition, and it concluded
that the trial court departed from the essential requirements of
law by denying the motion for protective order.


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