A District Court judge in Maryland has denied a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act and Fair Debt Collection Practices Act, ruling the plaintiff has standing after the defendant allegedly attempted to collect more than what was owed.
The background: The case stems from a rental dispute. The plaintiff rented the property from 2021 to 2023 and later discovered that the landlord lacked a valid Baltimore City rental license for part of that period. Under Maryland law, landlords cannot collect rent during periods when they do not hold a valid rental license.
- In May 2023, the landlord sued the plaintiff to recover nearly $28,000 in unpaid rent. However, the District Court of Maryland for Baltimore City ruled that the landlord could not collect rent accrued during the unlicensed period and dismissed the case with prejudice, reducing the debt to $8,221.93.
- The plaintiff obtained rental assistance to pay this reduced amount, but the landlord refused the payment and hired the defendant to pursue the full, previously dismissed amount.
- The plaintiff alleges that the defendant ignored the court’s ruling and sought to collect the full amount, reporting the disputed $47,575 debt to consumer reporting agencies and threatening to damage her credit. The plaintiff claims these actions led to emotional distress and a decline in her credit standing, including being denied credit.
The ruling: The defendant moved to dismiss the case, arguing that the plaintiff lacked standing and failed to state valid claims under state and federal law. Judge Richard D. Bennett of the District Court for the District of Maryland rejected these arguments, finding the plaintiff had alleged sufficient facts to proceed under the FDCPA and FCRA.
- Judge Bennett wrote that the plaintiff had standing because she alleged “concrete harm including emotional distress” resulting from the defendant’s attempt to collect a dismissed debt. The court cited prior Fourth Circuit rulings supporting standing for emotional and reputational harm from inflated debt demands.
- The judge emphasized that even at the pleading stage, the allegations, including the defendant’s refusal to adjust the reported debt after being notified of the court’s dismissal, were enough to survive the motion to dismiss.
- The judge also ruled that the plaintiff’s state law claims under the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act were not preempted by the FCRA, because they addressed debt collection activity not credit reporting.
- Lastly, Judge Bennett determined the plaintiff had stated a plausible claim under the FCRA for the defendant’s failure to conduct a reasonable investigation after receiving a credit dispute, noting that the plaintiff had provided the relevant court ruling to support her case.
