LegalUpdate Christensen

Legal Update: 

Legal Update Chris Christensen Legal Update Breakout Session Charlotte, N.C. July 23, 2007

Electronic Signatures in Global and National Commerce Act (E-SIGN) Cases: 

Electronic Signatures in Global and National Commerce Act (E-SIGN) Cases Collins v. Mo. Elec. Coops. Emples. Credit Union, 2006 U.S. Dist. LEXIS 57116 (D. Mo. 2006) The plaintiff opened an online checking account and subsequently opted-in to receiving banking statements electronically Shortly after opting in to electronic statements, the plaintiff was incarcerated at Millington Federal Prison Camp in Millington, Tennessee While incarcerated, he learned of electronic funds transfers against his checking account Plaintiff brought a lawsuit under the electronic funds transfer act alleging, inter alia, that the credit union failed to provide statements as required by the EFTA According the court, there is no express requirement under the EFTA for written statements, therefore E-SIGN was not applicable and the claim failed

Electronic Signatures in Global and National Commerce Act (E-SIGN) Cases: 

Electronic Signatures in Global and National Commerce Act (E-SIGN) Cases Siebert v. Amateur Ath. Union of the United States, Inc., 422 F. Supp. 2d 1033 (D. Minn. 2006) A "click“ signature on a web page membership agreement which states that any disputes are subject to arbitration Citing a series of “clickwrap” agreement cases and E-SIGN, the Court found that the "click" represents assent to the contract, including the arbitration clause Bell v. Hollywood Entm't Corp., 2006 Ohio 3974 (Ohio Ct. App. 2006) An employee submitted an electronic employment application that included notification of arbitration and an E-SIGN process An electronic employment application with an arbitration provision is enforceable Poly USA, Inc. v. Trex Co., 2006 U.S. Dist. LEXIS 8383 (D. Va. 2006) The use of a company email account to send an email does not necessarily constitute an electronic signature under E-SIGN (15 U.S.C. § 7006) The transmission of an electronic document via eMail was not sufficient evidence of intent to electronically sign the document

Uniform Electronic Transactions Act (UETA) Cases: 

Uniform Electronic Transactions Act (UETA) Cases Brantley v. Wilson, 2006 U.S. Dist. LEXIS 17722 (D. Ark. 2006) Electronic real estate sale contract survives Motion for Summary Judgment Defendant argued the statute of frauds precluded an electronic agreement to buy the property The Court, citing Arkansas’ adoption of the UETA, found that a genuine issues of material fact are in dispute with respect to the statute of frauds Crestwood Shops, L.L.C. v. Hilkene, 197 S.W.3d 641 (Mo. Ct. App. 2006) The tenant expressed a desire to terminate a lease via eMail The tenant argued that the eMail did not constitute consent to conduct business via electronic means The court found sufficient consent to conduct business electronically citing two eMails. One eMail stated “I will be on email only.” The eMail offer to terminate the lease satisfied the statute of frauds

Uniform Electronic Transactions Act (UETA) Cases: 

Uniform Electronic Transactions Act (UETA) Cases Haywood Secs., Inc. v. Ehrlich, 149 P.3d 738, 739 (Ariz. 2007) A typed signature of a judge in the "/s/ Name" format on an electronically filed judgment complies with the requirement that judgments be "signed" The Court based the holding on Arizona cases interpreting the definition of “signed,” but recognized the consistency with Arizona’s Electronic Transactions Act EPCO Carbondioxide Prods. v. Bank One, NA, 2007 U.S. Dist. LEXIS 33719 (D. La. 2007) The assertion that EPCO signed a credit agreement electronically required proof that the parties agreed to conduct transactions by electronic means While the parties had regularly engaged in negotiations electronically, they also negotiated through telephone calls and letters, and there is no indication that they had agreed to contract electronically While the negotiations were conducted electronically, final agreements were reduced to paper None of the documents had an electronic signature

Uniform Electronic Transactions Act (UETA) Cases: 

Uniform Electronic Transactions Act (UETA) Cases Peruta v. Outback Steakhouse of Fla., Inc., 2006 Conn. Super. LEXIS 2679 (Conn. Super. Ct. 2006) (The process of logging-in constitutes a "signed statement" under the Connecticut UETA)

Warehouse Providers and eNotes: 

Warehouse Providers and eNotes In the paper world, the Warehouse Provider commonly takes physical possession of the paper note When the note is sold, the paper note is delivered to the investor before the Warehouse provider is funded Because the note is bearer paper, when the Warehouse Provider decides to deliver the instrument they technically would lose their priority The solution is to accompany the paper note with a bailee letter (“Yes, I am delivering the note, but you are holding it on my behalf”)

Warehouse Providers and eNotes: 

Proposal: Transferees on the MERS® eRegistry system will hold the transferable record as designated custodian for the warehouse lender unless otherwise agreed Until such time as the appropriate value has been given, the transferee will not qualify for the rights of a holder in due course or a purchaser for value Upon paying value the transferee will be entitled to the rights of a holder in due course to the extent it otherwise qualifies for such rights. Warehouse Providers and eNotes

Title Insurance Coverage of Electronic Transactions: 

Title Insurance Coverage of Electronic Transactions Revised Loan Policy (Adopted June 2006) that explicitly includes insurance against the invalidity or unenforceability of the lien of the insured mortgage because of “failure to perform those acts necessary to create a document by electronic means authorized by law.” It is widely agreed that this coverage will insure against invalidity of the insured mortgage because of failure of the promissory note or mortgage to be created in accordance with applicable electronic transactions laws. Notwithstanding publication of the new loan policy form, the 1992 ALTA Loan Policy provides the same insurance by insuring provision 5, which insures against “The invalidity or unenforceability of the lien of the insured mortgage upon the title” Revised closing protections letters that include express reference to assignees and warehouse lenders

Admissibility of Electronic Records: 

Admissibility of Electronic Records American Exp. Travel Related Servs. v. Vinhnee (In re Vinhnee), 336 B.R. 437 (Bankr. Fed. App. 2005) Court refused to admit the creditor's computerized business records for inadequate authentication For purposes of authentication of electronic records, the Court inquiry includes: The identification of the particular computer equipment and programs used, The entity's policies and procedures for the use of the equipment, database, and programs How access to the pertinent database is controlled, How access to the specific program is controlled, How changes in the database are logged or recorded, The structure and implementation of backup systems and audit procedures for assuring the continuing integrity of the database, and Whether records have been changed since their creation.

Admissibility of Electronic Records: 

Admissibility of Electronic Records Lorraine v. Markel Am. Ins. Co., 2007 U.S. Dist. LEXIS 33020 (D. Md. 2007) Managing Discovery of Electronic Information: A Pocket Guide for Judges accessible at http://www.fjc.gov/ There may be multiple ways to authenticate a particular computerized record, and careful attention to all the possibilities may reveal a method that significantly eases the burden of authentication In general, the least complex admissibility issues are associated with electronic documents or records

Questions?: 

Questions? Chris Christensen PeirsonPatterson, LLP 972.720.3253 chrisc@peirsonlaw.com