A District Court judge in Minnesota has awarded 25% of the attorney’s fees sought by the plaintiff in a Fair Debt Collection Practices Act case, ruling the plaintiff’s request unreasonable for a number of reasons. The judge awarded $11,566.63 in fees, significantly less than the $46,163.50 requested by the plaintiff’s attorneys.
The background: The case stemmed from attempts to collect on a 2007 mortgage loan. The plaintiff inherited a property from his father in 2020. The property had two mortgages – one from 2004 and another from 2007. The plaintiff claimed he had paid off the 2004 loan, and argued that the 2007 loan was no longer valid due to a procedural issue: while the creditor had served a collection complaint in 2011, it never filed the complaint with the court. Under Minnesota state court rules, this meant the action was “deemed dismissed with prejudice.”
Despite this, the creditor and its law firm sent collection letters to the plaintiff between May and November 2023 attempting to collect on the 2007 loan. The plaintiff filed suit in May 2024 against both the creditor and its law firm, alleging FDCPA violations including false representation of the debt’s amount and legal status, threats of unlawful property seizure, and using deceptive practices.
The law firm defendant made a $3,000 offer of judgment in July 2024, which the plaintiff accepted. The offer excluded attorney’s fees, which would be determined by the court. The plaintiff voluntarily dismissed claims against the creditor.
The ruling: In significantly reducing the requested fees, Judge Eric C. Tostrud of the District Court for the District of Minnesota cited several key issues:
- The plaintiff sought to recover all fees from just one defendant despite suing two parties and attributing equal responsibility to both
- The case involved minimal court activity – no discovery, no substantive motions practice, and was resolved within months
- The attorneys continued billing for drafting the complaint even after it was filed
- The $3,000 recovery was modest compared to both the alleged injuries and the plaintiff’s initial $65,000 settlement demand
The court applied a 50% reduction to account for the two-defendant issue, and an additional 15% reduction for the other inefficiencies and issues. The ruling serves as a reminder that courts will scrutinize fee requests in FDCPA cases for reasonableness, even when the underlying case settles quickly.
