The Eleventh Circuit Court of Appeals has reversed a lower court’s denial of class certification of a lawsuit filed against a company accused of sending allegedly deceptive collection letters in violation of the Fair Debt Collection Practices Act to individuals after their debts had been discharged in bankruptcy.
A copy of the ruling in the case of Sellers v. Rushmore Loan Management Services can be accessed by clicking here.
The plaintiffs fell behind on their mortgage and had a foreclosure action filed against them. They moved out of the house and filed for Chapter 7 bankruptcy protection. Because they had moved out, the mortgage debt was discharged during bankruptcy.
Two years later, the defendant took over servicing the plaintiff’s loan. It send the plaintiffs monthly statements that included the notations “Payment Due Date” and “Amount Due.” The plaintiffs filed a class-action lawsuit, alleging the statements violated the FDCPA by making false and misleading statements about the legal status of a debt. They sought to include any individual who had received similar letters from the defendant.
But because some of the individuals who had received similar letters had stayed in their house during the foreclosure and bankruptcy process and others, like the plaintiffs, had moved out, a District Court judge denied certification. The judge ruled that the class failed the predominance requirement because individualized inquiries would be needed to determine who stayed in their home and who moved out.
The Appeals Court ruled the District Court erred because it considered the wrong question when seeking to determine if the class met the predominance requirement. What the District Court should have asked, according to the Appeals Court, was if the bankruptcy code precludes remedies available under the FDCPA for a claim that a creditor engaged in false or deceptive conduct by trying to collect a debt in violation of a discharge injunction. And the answer to that question is common to all members of the class, the Appeals Court ruled.
