A District Court judge in California has denied a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act and Rosenthal Fair Debt Collection Practices Act case, ruling that the debt buyer defendant had the right to control the actions of the collection law firm defendant and can be held vicariously liable under the RFDCPA, while also partially granting the plaintiff’s motion for summary judgment that the collection law firm defendant meets the definition of a debt collector under the Rosenthal Act.
The background: The case arose from an attempt to collect a debt owed by the plaintiff, who had defaulted on a loan that was later purchased by the defendant, a debt buyer. The debt buyer referred the plaintiff’s account to a collection law firm to pursue legal action. In October 2020, MLG filed a collection complaint against the plaintiff in the San Diego Superior Court.
- The plaintiff’s attorney filed a response to the suit in December 2020, but the collection law firm did not receive a copy of the response until June 2021. In the interim, it sought a default judgment and contacted the plaintiff directly, not knowing he was represented by counsel.
- The plaintiff subsequently filed a lawsuit against both the debt buyer and the collection law firm, alleging violations of the FDCPA and RFDCPA. The court previously granted and denied parts of a special motion to strike under California’s anti-SLAPP statute, dismissing some claims while allowing others to proceed.
The ruling: In this ruling, Judge Anthony J. Battaglia of the District Court for the Southern District of California, denied the debt buyer’s motion for summary judgment, finding that there was sufficient evidence to suggest that the debt buyer could be held vicariously liable for the actions of the collection law firm under the RFDCPA. The court noted that the relationship between the debt buyer and the collection law firm, as well as the level of control the debt buyer had over the collection law firm’s actions, could potentially establish vicarious liability.
- Additionally, the court granted the plaintiff’s motion for partial summary judgment in several key areas. The court ruled that the collection law firm qualifies as a “debt collector” under the FDCPA, and that both the debt buyer and the collection law firm qualify as “debt collectors” under the RFDCPA. The court also found that the plaintiff is a “consumer” and that the debt in question constitutes “consumer debt” under both statutes.
- However, Judge Battaglia did not grant summary judgment in favor of the plaintiff on the issue of whether the defendants violated the FDCPA and RFDCPA, stating that this issue must be resolved at trial. The court also rejected the defendants’ affirmative defenses of bona fide error, lack of standing, unclean hands, and others, except for the collection law firm’s bona fide error defense, which will also be resolved at trial.
