Power of CFPB Being Checked by Court
In April the Consumer Financial Protection Bureau ("CFPB") suffered its first major loss in court. The case, entitled
Consumer Financial Protection Bureau v. Accrediting Council for Independent Colleges and Schools
involved a Civil Investigative Demand (CID) issued by the CFPB. Similar to a subpoena on steroids, a CID is a form of investigative subpoena provided to several federal agencies charged with policing and enforcing federal laws.
This case involved a CID issued in 2015 to Accrediting Council for Independent Colleges and Schools ("ACICS"), a company that accredits for-profit colleges. ACICS refused to comply with the CID on the ground that the investigation requested information from ACICS unrelated to a consumer financial product or service. As such, they argued that the CFPB did not have authority to investigate in this area.
The CFPB brought this case to try and force ACICS to comply with the CID. The court found for ACICS, holding that the CFPB had no authority to investigate ACICS's accreditation process.
Another case challenging the CFPB's authority,
PHH Corporation v. Consumer Financial Protection Bureau, was also argued this month in court. This case challenges both the enforcement power of the CFPB and the validity of the CFPB in general. If successful, PHH's case could force a major change in the makeup of the agency moving forward.
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Case of the Month
This case involves a dispute over the ownership of a property owned by Kenneth Liebler before his death. Liebler's daughter, Melanie Carne, as successor trustee to the Kenneth Liebler Irrevocable Trust dated December 21, 2009 (the "2009 Trust"), filed a petition in probate court to confirm the validity and assets of the 2009 Trust. In particular, Carne sought to confirm that the real property located on Via Regla (the "Via Regla Property"), had been properly transferred to the 2009 Trust. The 2009 Trust states, "I transfer to my Trustee the property listed in Schedule A, attached to this agreement," and lists the Via Regla Property in Schedule A. The 2009 Trust is signed by Liebler as grantor.
Liebler's grandson, Dillon Hasting, filed an opposition to the petition. Hasting was a beneficiary of a previous trust created by Kenneth Liebler in 1985 (the "1985 Trust"). In his opposition, Hasting argued that Liebler had not effectively transferred the Via Regla Property into the 2009 Trust because Liebler had failed to execute a deed transferring the property to the trust. It is common practice for a deed to be recorded transferring title to real property into a trust.
Hasting also argued that Liebler had not properly transferred the Via Regla Property to the 2009 Trust because Liebler was not the legal owner of the property at the time of the purported transfer to the 2009 Trust. Instead, Hasting argued that Liebler held legal title to the Via Regla Property as trustee of the 1985 Trust, and the 2009 Trust contained no language indicating that Liebler was acting as the trustee of the 1985 Trust at the time of the purported transfer to the 2009 Trust.
The trial court ruled for Hasting on the grounds stated above. The appellate court overruled the trial court. They concluded that the language in the 2009 Trust quoted above was sufficient to convey the Via Regla Property to the 2009 Trust and that Liebler was not required to execute a separate deed in order to effectuate such conveyance. They further concluded that, because at the time the 2009 Trust was created, the 1985 Trust was a revocable inter vivos trust, and Liebler was the sole trustee who owned no interest in the Via Regla Property as an individual, Liebler's signature on the 2009 Trust was sufficient to "to convey good title" to the Via Regla Property from the 1985 Trust to the 2009 Trust. This case buttresses the value of a trust and its ability to effectuate the intentions of its drafters, even when technical errors are present.
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Senate Bill 3 Raises California's Minimum Wage
Leading the way, as California often does, the state is the first to raise the minimum wage for employees to $15.00 per hour. Pursuant to Senate Bill 3, approved and filed on April 4, 2016, the minimum wage will rise to $10.50 per hour on January 1, 2017 for businesses with 26 or more employees, and then rises each year until reaching $15.00 per hour in 2022. This plan also recognizes the contributions of small businesses - those with 25 or fewer employees - to California's economy and allows additional time for these employers to phase in the increases.
The purpose of the plan is to increase the minimum wage over time, consistent with economic expansion, while providing safety valves - known as "off-ramps" - to pause wage hikes if negative economic or budgetary conditions emerge. The Governor can act by September 1 of each year to pause the next year's wage increase for one year if there is a forecasted budget deficit (of more than one percent of annual revenue) or poor economic conditions (negative job growth and retail sales).
Once the minimum wage reaches $15.00 per hour for all businesses, wages could then be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the national Consumer Price Index.
This law will also impact the salary exemption rates for many occupations. Employees who are exempt must meet the salary exemption test of twice the minimum wage. Thus, as the minimum wage rises, the minimum pay for exempt employees also goes up.
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Upcoming Speaking Engagements
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May 10, 2016 - The Inland Gateway Association of Realtors - Realtor Round Table
May 11, 2016 - Santa Clarita Valley Escrow Association - Dinner Meeting
May 17, 2016 - Riverside County Escrow Association - Dinner Meeting
May 21, 2016 - Escrow Training Institute - Class: When Escrow Meets the Courts
For inquiries or questions about any of these events, please email info@relawapc.com.
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