A lot has changed since George Gerro filed an action seeking a declaration that the California finance lender's license issued to BlockFi Lending LLC  was both void and improperly issued: Blockfi has filed for bankruptcy; the Department of Financial Protection suspended Blockfi's lender's license; Blockfi ceased business operations pursuant to its confirmed plan of reorganization; and Christopher Schultz, the named defendant, is no longer the DFPI Commissioner.  Yet, like the celebrated case of Jarndyce v. Jarndyce, the case drones on.

The legal issue at the bottom of the case is whether the Financial Code Section 22009, which defines "finance lender", permits the DFPI to issue a lender's license to Blockfi.  The plaintiff is arguing that Blockfi "violated" Section 22009 because it took possession and used personal property collateral.  

Earlier this month, the Second District Court allowed the case to continue despite all of the ensuing changes.  In Gerro v. Shultz,  2024 WL 3384893 (Cal. Ct. App. July 12, 2024), the Court held that the plaintiff should be allowed to amend his complaint based on taxpayer standing pursuant to California Code of Civil Procedure Section 526a(a).  Let's hope that Gerro will not also become a "scarecrow of a suit".

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