In Hernandez v. Apple Auto Wholesalers of Waterbury Llc, No. 3:17-cv-1857 (VAB), 2020 U.S. Dist. LEXIS 86672 (D. Conn. May 18, 2020), Judge Bolden certified an FTC Holder Rule question to the Connecticut Supreme Court.

The FTC Holder Rule language “preserves a consumer’s right to assert the same legal claims and defenses against the assignee of a credit contract as that consumer could have asserted against the assignor.” Rivera v. Berlin City’s Vt. Remarketed Autos, Inc., No. 2:19-CV-00159, 2020 WL 289464, at *3 (D. Vt. Jan. 21, 2020) (quoting Pierre v. Planet Auto., Inc., 193 F. Supp. 3d 157, 174 (E.D.N.Y. 2016)); see also In re Lewis, 506 F.3d 927, 930 n.7 (9th Cir. 2007) (noting that the FTC’s Holder Rule “requires purchase money loan agreements to contain a notice to all loan holders that preserves the borrower’s ability to raise claims and defenses against the lender arising from the seller’s misconduct” (citing 16 C.F.R. § 433.2(a))); Turner v. CIT Grp./Sales Fin., Inc., 154 F. App’x 2, 3 (9th Cir. 2005) (“As a matter of contract, any claims or defenses that the [buyers] could assert against the seller [ ] are also valid claims or defenses against [the contract holder].”); Taylor v. Quality Hyundai, Inc., 150 F.3d 689, 694 (7th Cir. 1998) (“[T]he Holder Notice [ ] allow[s] the debtor to raise many claims and defenses against the assignee that he or she may have against the original seller.”).1 The Holder Rule “was promulgated in order to cure business practices that ‘separated the buyer’s duty to pay for goods or services from the seller’s reciprocal duty to perform as promised . . . [and where] [c]reditors dunned consumers and collected debts despite the consumers’ claims [*10]  and defenses against the sellers.” Diaz v. Paragon Motors of Woodside, Inc., 424 F. Supp. 2d 519, 544 (E.D.N.Y. 2006) (alterations in the original) (quoting Fed. Trade Comm’n, 57 Fed. Reg. 28814, 128815). Where a claim against the seller fails, the claim must also fail against the credit holder. Id. Neither the Second Circuit nor any Connecticut court, however, has substantially addressed the relationship between the FTC Holder Rule and state laws regarding assignee liability. In Connecticut, one Superior Court has analyzed assignee liability under the FTC Holder Rule alongside its analysis under Section 52-572g. Jacques v. A Better Way Wholesale Autos, Inc., No. CV-17-6013046-S, 2019 WL 254304, at *1, *3 (Conn. Super. Ct. Jan. 17, 2019) (“The second and fourth counts respectively allege breach of written warranty and breach of implied warranty against Wells Fargo as the assignee or holder of the contract pursuant to the contract terms, which incorporate the Federal Trade Commission’s ‘holder rule,’ and also pursuant to General Statutes § 52-572g. . . . [T]he second and fourth counts may not be stricken because assignee or holder liability is authorized by General Statutes § 52-572g ‘limited to the amount of indebtedness.'” (citing Tirado, 2008 WL 902506)). In that similar case, a plaintiff buyer sued a car dealership as well as a financial company assigned the contract. Id. But that court did not squarely address whether the limit on assignee liability was governed by the FTC Holder Rule or Section 52-572g, or whether these limits applied cumulatively. See also Tirado, 2008 WL 902506, at *16 (finding assignee liable for outstanding indebtedness under the retail installment contract under Section 52-572g without addressing potential liability under the FTC Holder Rule language incorporated into the contract). In any event, no Court of Appeals, district court within the Second Circuit, or Connecticut state court has addressed whether a holder’s reassignment of a loan before the filing of a lawsuit negates that holder’s liability under the Holder Rule or under any state assignee liability laws. It appears that few courts at all have addressed the issue. And no court has addressed the relationship between the FTC Holder Rule and Conn. Gen. Stat. § 52-572g. Nor, as explained above, have any courts addressed the effect of such reassignment on assignee liability under Conn. Gen. Stat. § 52-572g. Mr. Hernandez argues that Westlake is liable under both Conn. Gen. Stat. § 52-572g and the FTC Holder Rule. Pl.’s Mem. at 17. Mr. Hernandez argues that Section 52-572g does not “condition [assignee] liability upon a defendant presently holding the contract.” Pl.’s Mem. at 20. He argues that the statutory “language contemplates that there may be multiple holders, each of which may be liable for seller misconduct.” Id. He argues further that Westlake’s liability under Section 52-572g was triggered when he made prior written demand for his claims upon Apple Auto. Id. at 21. But Westlake argues that it “had nothing to do with Apple Auto’s actions” and that Mr. Hernandez cannot recover against Westlake because, by the time Mr. Hernandez filed this lawsuit, Westlake had reassigned the Contract back to Apple Auto. Westlake Mem. at 4, 9. In Westlake’s view, however, because Westlake reassigned the Contract back to Apple Auto before Mr. Hernandez filed his lawsuit, and Westlake never received any money under the Contract, “there can be no remedy under Conn. Gen. Stat § 57-572g[.]” Westlake Mem. at 9. Westlake argues that it was no longer a “holder in due course” at the time Mr. Hernandez filed this lawsuit, and “[t]here is no Connecticut or Federal case law interpreting Conn. Gen. Stat. § 52-575g as applying to ‘former holder.'” Id. at 9, 11 (emphasis in the original).