I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
Every week, AccountsRecovery.net brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.
Judge Grants MSJ in FDCPA Case
Perhaps a case study on what you sometimes need to avoid filing a motion to dismiss and instead proceed to seeking summary judgment because one document can make all the difference… A District Court judge in New Jersey has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case because the plaintiff could not substantiate claims that the collection agency attempted to collect and furnished information about a utility debt to a credit reporting agency that were allegedly incurred after the plaintiff sold the house. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: Simply saying “I don’t owe the debt” is not enough to support a claim against a collection agency that it is violating the Fair Debt Collection Practices Act. The burden of proof on such an action still lies with the plaintiff. The consumer in this case presented no evidence to the Court that the obligation being collected consisted of utility charges incurred after the date of the sale of the house in question. Since the only evidence showed that the charges were for a timeframe in which the consumer owned the home, summary judgment for the collection agency was warranted. The ARM industry is seeing more and more claims that the consumer does not owe the debt with nothing more than the consumer’s say so. While it may cost to defend against these claims, there are certainly strong motivators to do so when the claims are so obviously frivolous.
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FDCPA Suit Survives Dismissal on Claim That ‘Base Rent’ Could Mislead Consumers
A District Court judge in New Jersey has partially granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act suit related to a rental dispute, allowing a claim over the amount the defendant said was owed in “base rent” to proceed because a least sophisticated consumer may not have understood that the defendant was referring to the total amount of rent that was due. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: While this opinion begins with promising news (the defendant was able to dismiss all but one of the FDCPA claims), these are the types of cases that keep debt collection attorneys up at night. What appears to be an inadvertent error in a simple debt collection pleading (listing several months past due rent as “base rent” for one month), could now turn into multi-thousand-dollar boon for a consumer attorney. Landlord-tenant cases require careful and detail-oriented review as they are likely to be more scrutinized than a typical credit card debt collection case. Debt collection attorneys must remember that every statement in the complaint (or any debt collection) must be true; if it is not true, then it is false. While much of the law deals in gray areas, the FDCPA does not. If something is not true, then it likely violates the FDCPA.
Collection Operation Wins Partial Appeal in Prejudgment Interest Case
A Washington Appeals Court has granted an appeal filed by a collection operation to require a state court judge show his math on how he determined the amount of attorney’s fees to award plaintiffs in a case that alleged the collection operation was illegally charging prejudgment interest on the unpaid debt. More details here.
WHAT THIS MEANS, FROM JUSTIN PENN OF HINSHAW CULBERTSON: Too often fee petitions are merely eyeballed as a last impediment on getting a case of the docket when in reality, they are often the reason for the case’s existence. Attorney fee petitions are often tedious and painful to oppose, and judges generally do not like spending their time pouring over time records to address each challenge to each time entry (some as little as six-minutes). This case presents the common result of a trial judge treating the fee award as a cost decision and a litigation afterthought without any substantive explanation as to the basis for the Court’s findings in awarding fees. It also gives a nice roadmap of what trial judges must do to ensure that the fee award is reasonable, explaining that judges must take an active role in assessing the reasonableness of fee awards. Of particular note, among other helpful guidance, the appellate court explained that the just must discount hours spent on unsuccessful claims, duplicated effort, or otherwise unproductive time. In addition, the appellate court instructed that judges should not simply accept unquestioningly fee affidavits from counsel. And perhaps most helpful is the appellate court’s requirement that the judge enter findings on the specific objections raised by defendant.
Judge Denies Early Judgment in FDCPA Case Over Cease Letter, Interest Claim
You don’t often see plaintiffs seeking motions for judgment on the pleadings in a Fair Debt Collection Practices Act case so that makes this a little unusual, but a District Court judge in Minnesota has denied the motion, ruling that whether the plaintiff has standing to pursue her suit or not could not be resolved at this point in the proceedings. More details here.
WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: The District of Minnesota’s denial of the consumer’s motion for judgment on the pleadings in Stekly v. I.Q. Data International provides two noteworthy takeaways. First, it should be evident by now that federal courts are growing weary of FDCPA letter cases clogging their dockets and secondly (and tied to the first) how you plead a case matters.
In Stekly, the consumer moved for judgment on the pleadings as to two of their letter claims. Motions for judgment on the pleadings are assessed under the same standard as a motion to dismiss and are appropriate only where there are no material issues of fact and the movant is entitled to judgment as a matter of law. The district court denied the consumer’s motion because: (a) based upon the pleadings, the plaintiff had not yet established Article III standing and (b) because the collection agency’s Answer contained sufficient denials of the plaintiff’s allegations to create issues of fact.
In determining that standing had not yet been established, the court noted that the Complaint’s allegations did not sufficiently and specifically “tether” any specific injuries to the two specific FDCPA claims at issue (violations of 1692c(c) and 1692f) and as importantly, that the defendant had sufficiently and plausibly denied allegations of damages. Of note, the court cited to two recent decisions from the Seventh and Eighth Circuits, respectively, which cast doubt that a collection letter, without more, can create a sufficient injury in fact to support standing. The court additionally denied the consumer’s motion because of factual issues raised by the denials contained in the collection agency’s answer (including whether the plaintiff was a consumer). While the decision is a “win” for industry, it’s important to remember that motions for judgment on the pleadings are preliminary in nature and that the denial of the motion simply means the case continues forward.
Court Says Landlord May Qualify as Collector Under False-Name Exception
A District Court judge in Pennsylvania has denied a defendant’s motion to dismiss a Fair Debt Collection Practices Act case against the owner of an apartment building, ruling, at this stage of the proceedings, that the FDCPA’s false-name exception applies and the owner “is properly considered” a collector under the FDCPA, while also ruling the owner of the company should remain a defendant, as well. More details here.
WHAT THIS MEANS, FROM BROOKE CONKLE OF TROUTMAN PEPPER LOCKE: While the FDCPA generally applies to third-party creditors, the Abramov v. Bullard, et al. case exemplifies the exceptions in the statute. In Abramov, the Eastern District of Pennsylvania denied a motion to dismiss, finding that a landlord who listed one business entity in a lease agreement, yet attempted to collect a debt under the name of a separate entity, qualified as a “false name exception” under the FDCPA. Even though the landlord provided information to the plaintiff suggesting that rental payments should be submitted to a related entity, the district court found that the least sophisticated consumer “would have assumed that [the] property management company – which had a dissimilar name and had never been explicitly identified” was independent from the landlord. The case exemplifies the compliance challenges under the FDCPA, and the traps for the unwary.
I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
