Sims v. Bank of America (2006) and Mayers v. NYCB (2003)

03 Civ 5837; 06 Civ 5991

Background: These actions challenged a section of the New York Civil Practice Law and Rules concerning the restraint of bank accounts by creditors’ attorneys.  Plaintiffs alleged that this law, as applied to accounts containing only electronically deposited exempt money such as Social Security or SSI benefits, violated the Due Process Clause and the Supremacy Clause of the U.S. Constitution. Defendants were the Chief Judge and the Chief Administrative Judge of the State of New York, banks, and creditors’ attorneys.

NYLAG was co-counsel with South Brooklyn Legal Services in Mayers, which was not a class action.  Defendants moved to dismiss Mayers, which was filed first; their motions were denied.  Defendants then moved for certification of an interlocutory appeal; their motions were again denied. Mayers proceeded to discovery.  NYLAG filed Sims, as a class action, without co-counsel, on the same issue, to avoid risks of mootness. The parties stipulated to class certification in Sims, which was approved by the Court.

Shortly before Plaintiffs were to file a motion for summary judgment, Governor Patterson signed into law the Exempt Income Protection Act, which protects from restraint the first $2500 in an account into which exempt money was directly deposited less than 45 days prior to the attempted restraint.  Because the new law prevents the most serious aspects of the harm complained of in the case, we voluntarily withdrew this case.  The pendency of these two cases was a significant factor in obtaining the passage of the Exempt Income Protection Act.

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