The Utah Court of Appeals has overturned the dismissal of a Fair Debt Collection Practices Act case against a collector that was sued for obtaining default judgments against a pair of plaintiffs on the grounds that it was not licensed properly in Utah when it filed the collection lawsuits and obtained the judgments, ruling the judge dismissed the case too prematurely, before all the facts needed to make a determination were submitted.
The Background: The defendant filed debt collection lawsuits against the plaintiffs in 2020. In both suits, it asserted it was organized and operating pursuant to the laws of Utah. Neither of the plaintiffs responded to the suit and the defendant obtained default judgments.
- In October 2021, the plaintiffs filed their lawsuit, accusing the defendant of violating the FDCPA and state law in Utah. The claimed that when the lawsuits against them were filed, the defendant was not properly registered and bonded to be operating in Utah. The plaintiffs claimed they did not respond to the underlying collection suits because they believed the defendant had the legal right to sue since it claimed to be operating in accordance with state laws.
- A state court judge granted the defendant’s motion to dismiss, ruling that the defendant was properly registered and bonded, and even if it wasn’t, the conduct in question was not actionable.
The Appeal: On appeal, the plaintiffs argued that both of the reasons why the suit was dismissed were incorrect, which the Appeals Court agreed with.
- The defendant argued it was a dba of another company at the time the underlying collection lawsuits were filed, and that company was properly registered and bonded.
- Ultimately, whether the proper paperwork was filed is a fact-based question that, at this stage in the proceedings, need to be inferred in favor of the plaintiffs. The plaintiffs should be entitled to proceed to discovery to explore whether the paperwork was accurate or not at the time the lawsuits were filed, the Appeals Court ruled.
