A District Court judge in New Jersey has denied a plaintiff’s motion for judgment notwithstanding the verdict in a Fair Debt Collection Practices Act case, ruling the jury did not act unreasonably when it ruled that the defendant had proved that it had reasonable procedures in place to scrub accounts to ensure the plaintiff had not filed for bankruptcy protection.
The Background: Back in 2021, the plaintiff accused the defendant of violating the FDCPA. Both sides moved for summary judgment, which were both denied. The defendant argued it was entitled to the FDCPA’s bona fide error defense. The judge ruled that the defendant did not prove it had procedures in place to prevent the error which occurred.
- During the trial, the defendant called one witness. The witness testified to the procedures the defendant had in place to prevent this kind of violation of the FDCPA.
- Q. Now, with respect to debts that have been discharged in bankruptcy, what’s the policy?
A. Okay. So the policy generally is . . . after we identify who actually owns the property, then we perform a bankruptcy search on that placement. That’s . . . the only bankruptcy search that we perform at initial placement. That’s a legitimate protocol. - So to dovetail that, because I don’t want to specifically focus on the fact that we perform a bankruptcy search when there are -we also require that our clients notify us of any bankruptcies because usually they’ll provide – there’s three ways, primary ways, that we get alerted to bankruptcy filings.
So one is our client gets served with bankruptcy papers, the initial filing. And then our client [is] required to send it to us based on our agreement . . . with the client. So they need to send us all legal notices, not just bankruptcy notices. So there could be a foreclosure matter. There could be a tax issue. There could be land use matters. They need to send us everything. So as part of that process, they need to send us and notify us of any bankruptcy proceedings. So that’s one way that we receive notice of the bankruptcy. …. - Second is we get a phone call or a letter from counsel who filed bankruptcy. They say, hey, we filed bankruptcy, stop all your collection action, period. That’s something that we will get alerted on. Or we actually are named as a recipient of the bankruptcy notices in the bankruptcy presumably with our correct address. Here, that didn’t actually happen.
- The jury ultimately ruled in favor of the defendant. One of the questions the jury was tasked with answering was, “Do you find that Defendant Cutolo Barros, LLC proved by a preponderance of the evidence that Cutolo Barros, LLC followed its policy and procedure with respect to Plaintiff Nick Delcore?” to which the jury answered “Yes.”
The Ruling: The plaintiff filed his motion, arguing the jury should not have been able to answer that question based on the evidence that was presented. The defendant failed to present evidence it performed a bankruptcy search on the plaintiff’s records, the plaintiff claimed.
- The defendant’s argument was that the plaintiff failed to prove that the defendant did not perform a search and that it has a number of policies to avoid collecting a debt that was discharged in bankruptcy.
- Ultimately, “the Court cannot find that the jury acted unreasonably in answering Question 3 affirmatively because it was reasonable for the jury to infer from evidence of Defendant’s standard policies that Defendant applied those policies in Plaintiff’s case,” wrote Judge Michael A. Shipp of the District Court for the District of New Jersey.
