A District Court judge in Georgia has denied a defendant’s motion for sanctions in a Fair Debt Collection Practices Act case that went all the way to summary judgment before the plaintiff voluntarily dismissed the suit, which was over the defendant’s failure to remove a dispute from the plaintiff’s credit report.
A copy of the ruling in the case of Herald v. LVNV Funding can be accessed by clicking here.
The plaintiff sent multiple letters to the defendant disputing the debt, which the defendant reported to the credit reporting agencies. Eight months later, the defendant received a letter from Credit Repair Lawyers of America requesting the dispute comment be removed from the account. The defendant did not remove the dispute because it believed the letter was part of a scam.
The plaintiff filed suit, accusing the defendant of violating the FDCPA by falsely representing the character, amount or legal status of the debt by reporting credit information that was known to be false. Both sides moved for summary judgment, which came down to whether the plaintiff had standing to sue. The plaintiff testified during his deposition that the dispute hindered his ability to get the lowest mortgage rates, but admitted he had never actually applied for a mortgage. Before the judge could rule on whether the plaintiff had standing, he dismissed the suit, claiming the decision was based on recent opinions from other jurisdictions that resulted in dismissal of claims like his. The defendant then filed a motion for sanctions.
The defendant argued that sanctions were warranted because the plaintiff’s claim that he was unable to obtain a mortgage was factually untrue. But, according to Chief Judge Marc T. Treadwell of the District Court for the Middle District of Georgia, that doesn’t necessarily mean the claim was filed in bad faith.
“This conclusion is bolstered by the fact that LVNV never responded to Herald’s alternative standing argument that the alleged FDCPA violations were analogous to common law defamation; the Court never ruled on the merits of Herald’s claims; and it was undisputed that LVNV failed to remove the dispute notification from Herald’s account, despite receiving a letter requesting its removal,” Judge Treadwell wrote. “As a result, the Court is not convinced that Herald’s claims were brought in bad faith and that Herald’s counsel should be sanctioned for pursuing this litigation.”
