A California Appeals Court has affirmed the dismissal of a malicious prosecution and unfair debt collection lawsuit against a creditor, the collection agency it used to recover the debt, and the attorneys who took legal action to recover the debt and also affirmed the award of attorney’s fees for the defendants on the grounds the plaintiff did not show a likelihood that the defendants acted with malice.
The Background: In 2008, the collection agency purchased a portfolio of debts, including one owed by an Erick B Larsen. The agency filed a collection lawsuit against the plaintiff — Bruce E. Larsen and listed Erick B. Larsen as an alias — and obtained a default judgment. The judgment was assigned in 2013 to be enforced. It wasn’t until 2020 that the plaintiff began to appear in the proceedings, claiming he didn’t know about the suit or the judgment because he never received the summons and complaint. The plaintiff successfully filed a motion to vacate the judgment.
- The plaintiff then turned around and filed his lawsuit against the defendants, claiming the defendants did not investigate whether the plaintiff was the actual debtor.
- The defendants filed an anti-SLAPP motion, arguing the complaint arose from protected activity. SLAPP stands for Strategic Lawsuit Against Public Participation and anti-SLAPP motions are filed by defendants as a means of obtaining early dismissals of meritless lawsuits.
- A state court judge granted the defendant’s motion and ordered the plaintiff to cover the defendant’s attorney’s fees.
The Appeal: The Appeals Court agreed with the lower court that the company hired to enforce the judgment can not be sued for malicious prosecution because it had nothing to do with the original collection suit. It wasn’t hired until years later.
- As an assignee of the judgment, the company had no obligation to investigate the merits of the underlying claims against the plaintiff, the Appeals Court ruled.
- The company also voluntarily dismissed the underlying action in a timely manner, the Appeals Court noted.
