A District Court judge in Maryland has denied a defendant’s motion to dismiss claims it violated the Fair Debt Collection Practices Act by not clearly itemizing the fees it was attempting to charge the plaintiff, ruling that the plaintiff plausibly alleged the defendant’s practices were misleading or deceptive from the perspective of the least sophisticated consumer.
The background: The case revolves around a series of charges assessed by the defendant while servicing the plaintiff’s mortgage. After falling behind on his mortgage payments due to a reduction in income, the plaintiff entered bankruptcy proceedings and eventually settled his arrearages. However, the defendant continued to charge the plaintiff for “recoverable corporate advances,” fees the plaintiff argues he had already paid through his bankruptcy settlement.
- The defendant’s continued billing of fees, some of which stemmed from the previous company that was servicing the loan, included attorney fees, title costs, and other foreclosure-related costs. The plaintiff contended that the line item “recoverable corporate advances” on his mortgage statements lacked clarity, making it impossible for him to verify what the fees were for, thus violating the FDCPA. Despite repeated attempts by the plaintiff to resolve the issue through letters and complaints, Rushmore failed to rectify the billing errors.
The ruling: In denying the motion to dismiss the FDCPA Section 1692e claim, Judge Brendan A. Hurson of the District Court for the District of Maryland found that the plaintiff plausibly alleged the defendant’s practice of labeling fees as “recoverable corporate advances” was materially misleading as to the character and status of the debt. The court noted that while debt collectors may not have an affirmative duty to itemize, they are obligated to avoid practices that would mislead an unsophisticated consumer.
- The judge determined that the vague “recoverable corporate advances” line item could have obscured the fact that the defendant was charging fees the plaintiff allegedly already paid during bankruptcy. The court also found that the defendant’s eventual itemization, provided over a year after the plaintiff’s initial inquiries, was not sufficiently clear to merit dismissal of the claim.
- Judge Hurson granted the motion to dismiss the claim that the defendant violated Section 1692f of the FDCPA, finding that it was not sufficiently “separate and distinct” from the 1692e claim. However, the court allowed the plaintiff’s state law claims under the Maryland Consumer Debt Collection Act and Maryland Consumer Protection Act to proceed, as they were derivative of the surviving FDCPA claim.
