California Court of Appeals Rules on Evidentiary Standard for Attributing an eSignature to the Signer

On April 22, the California Court of Appeals, Second District, reversed a trial court decision denying a defendant employer’s petition to compel arbitration pursuant an electronically signed arbitration agreement with an employee. Espejo v. S. Cal. Permanente Med. Grp., No. BC562377 (Cal. App. Apr. 22, 2016). In the proceedings below, the employer offered declarations describing its electronic contracting procedures with employees. The procedures described in one of those declarations included an email sent to the plaintiff at the email address he provided, which included a hyperlink to a landing page where he could access his employment agreements for review and execution. After clicking on the link, the employee then had to a log in using unique credentials securely provided to the plaintiff by the employer. Once logged in, the plaintiff was presented various employment agreements (including the agreement containing the arbitration clause) and had to manually type in his name to sign the agreements. Upon signing the agreement, the employer’s system finalized the document by imprinting the date, time, and the IP address from which the plaintiff electronically signed the agreements. The employer’s declarant further stated that the plaintiff’s name could have only been typed into the signature pages of the agreements by someone using the plaintiff’s unique user name and password. In opposition to this evidence, the plaintiff only stated that he did not recall executing the agreement containing the arbitration clause and denied that the employer had met its burden to attribute the signature to him under the state UETA.  Read more…

LinkedInFacebookTwitterGoogle+Share

New York AG Schneiderman Opines on Legality of Electronic Signatures for the Purposes of Online Voter Registration

This week, New York AG Schneiderman issued an opinion regarding the legality of online voter registration, including the use of electronically affixed handwritten signatures. The opinion is in response to a February 8 letter from Suffolk County seeking the AG’s opinion as to “whether State law permits Suffolk County to implement online voter registration through the use of an electronic signature or whether the signature requirements of N.Y. Election Law § 5-210(5)(d)(xi) require signatures to be handwritten or ‘affixed by hand.’” AG Schneiderman opined that because Election Law § 5-210(5)(d)(xi) does not specifically require a signature written with ink on a voter registration application, the law does not preclude an electronically affixed signature. In accordance with the Election Law, AG Schneiderman commented that the electronic signature must be of a “quality and likeness to a signature written with ink,” and that an applicant completing an online registration application must either (i) print and mail the application to the local board of elections, or have a third party print and mail the application; or (ii) personally appear at the local board of elections.

LinkedInFacebookTwitterGoogle+Share

Florida Fourth District Court of Appeals Rules in Bank’s Favor in Foreclosure Action Based on an eNote

On April 20, a Florida District Court of Appeals issued an opinion affirming a lower court’s final judgment in favor of a bank (Bank) in a foreclosure action against borrowers who signed a mortgage note electronically (eNote). Rivera v. Wells Fargo Bank, N.A., No. 4D14-2273 (Fla. App. April 20, 2016). In the proceedings below, the Bank had presented a sworn certificate of authentication which articulated, among other things, the Bank’s role as servicer of the eNote for Fannie Mae, and describing the Bank’s practices and systems used for the receipt and storage of authoritative copies of electronic records and for protecting electronic records against alteration. The Bank also provided evidence from the same system records and the records of MERSCORP, Inc., as provided for in the terms of the eNote itself, showing that the eNote was last transferred to Fannie Mae and that the authoritative copy of the eNote was maintained in the Bank’s systems as Fannie Mae’s custodian. On appeal, the borrowers challenged the adequacy of the Bank’s demonstration that the eNote had properly transferred to Fannie Mae, thus challenging the Bank’s standing to enforce the eNote and foreclose the mortgage as Fannie Mae’s authorized representative.  Read more…

LinkedInFacebookTwitterGoogle+Share

New York Supreme Court Reverses Lower Court’s Ruling in Foreclosure Case; Observes eNote and Transfer History Sufficient under ESIGN

On April 13, the New York Supreme Court, Appellate Division, Second Department issued an opinion reversing a lower court order dismissing a foreclosure action against a borrower who signed a mortgage note electronically (“eNote”). New York Community Bank v. McClendon, 2016 N.Y. Slip Op. 02790 (N.Y. Supp. April 13, 2016). In the proceedings below, the lower court had granted the borrower’s motion to dismiss the foreclosure complaint for lack of standing, accepting the argument that the plaintiff mortgagee lacked standing because it could not produce a chain of valid assignments of the eNote from the original lender to itself. In opposition to the motion to dismiss, the mortgagee had submitted, among other things, a copy of the eNote and a print out of an electronic record of the transfer history of the eNote (“Transfer History”) showing a chain of transfers from the original lender to itself. The court observed that the eNote qualified as a “Transferable Record” under Section 201 of the Electronic Signatures in Global and National Commerce Act (“ESIGN”) and that a person is in “control” of a Transferable Record if “a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.” Citing the UCC, the court further observed that the holder of the eNote would have standing to foreclose and that any person with “control” of the eNote is its holder. After establishing this legal framework, the court concluded that the Transfer History, together with the eNote, were sufficient to establish that the plaintiff mortgagee had control of the eNote under ESIGN and therefore had standing to foreclose as the holder. According to the court, because these rules governing Transferable Records applied to the eNote, the failure of the plaintiff mortgagee to produce proof of assignment was “irrelevant” and the complaint should not have been dismissed for lack of standing.

LinkedInFacebookTwitterGoogle+Share

Pennsylvania Court Upholds Department of Banking’s Cease and Desist Order Against an Unlicensed Internet Lender

Recently, the Commonwealth Court of Pennsylvania upheld the Pennsylvania Department of Banking and Securities’ (Department) enforcement action against an unlicensed internet lender and loan purchaser for alleged violations of Pennsylvania law. PA Dep’t. of Banking and Sec. v. Autoloans, LLC  (Pa. Commw. Ct. Jan. 2016). The Department conducted an investigation of consumer complaints and found that in order to secure a loan with the respondents, consumers were required to (i) complete an online loan application, providing highly detailed personal information; (ii) electronically sign the loan documents and a power of attorney, which made the “lienholder the attorney-in-fact for purposes related to the motor vehicle to secure the loan”; and (iii) install a GPS tracker on the motor vehicle, as required by the contract. On June 24, 2015, the Department issued an “Order to Cease and Desist, Prohibit, Pay a Fine and Provide Restitution” (Order) against the respondents for alleged violations of the Loan Interest and Protection Law (LIPL), the Consumer Discount Company Act (CDCA), and the Pawnbrokers License Act (PLA): “[T]he Department alleged that Respondents violated the LIPL because they are not licensed in Pennsylvania or any other jurisdiction of the United States to provide loans to consumers, to engage in pawn brokering or to collect interest in excess of 6%. It further alleged that Respondents violated the CDCA and the PLA by providing loans to consumers using their motor vehicles as security without a license.” The Court granted the Department’s petition to enforce the Order, citing a 2009 case in which the Court ruled in favor of the Department’s right to enforce the LIPL and the CDCA. Read more…

LinkedInFacebookTwitterGoogle+Share