A United States federal judge in Pennsylvania has ruled in favor Enhanced Recovery Company LLC (ERC) and granted their motion for summary judgment in a Fair Debt Collection Practices Act (FDCPA) case where the plaintiff had previously sued ERC regarding the same debt, settled the case, and signed a settlement agreement. The case is Palmer v. Enhanced Recovery Company LLC (Case No. 16-3559, U.S. District Court, Eastern District of Pennsylvania). 

A copy of the court’s Memorandum can be found here.


ERC was referred Plaintiff’s delinquent Sprint account for collection. On October 28, 2015, Defendant sent correspondence to Plaintiff in an attempt to collect the amount that was owed on Plaintiff’s delinquent account. On October 30, 2015, an ERC employee spoke with Plaintiff via telephone, and a recording of the telephone call is part of the record. 

Plaintiff Yvette Palmer first filed a FDCPA lawsuit against ERC in February 2016, in a case captioned Palmer v. Enhanced Recovery Company LLC, Civil Action No. 16-757-BMS (February 2016 Lawsuit). In the that Complaint, Plaintiff alleged, among other things, that Defendant was liable for “unjustified contacts” in violation of the FDCPA. The only contacts that Plaintiff specifically referred to in the February 2016 Complaint were written contacts.

During settlement discussions regarding the February 2016 Lawsuit, Plaintiff’s attorney, Predrag Filipovic, from the I Fight 4 Justice Law Office of Predrag Filipovic, received the recording of the October 30, 2015 phone call which is part of the record in this case. Upon receiving the recording, Mr. Filipovic used it as leverage in the settlement discussions with ERC representative Rocky Landoll, and indicated that, in absence of settlement, he would amend the February 2016 Complaint to include allegations regarding the October 20, 2015 phone call. Shortly thereafter, Plaintiff and Defendant entered into the Settlement Agreement that resulted in the voluntary dismissal of the February 2016 lawsuit.

Pursuant to the settlement agreement between the parties, the February 2016 Lawsuit was voluntarily dismissed on May 9, 2016.

Plaintiff filed her complaint in this current case less than two months later, on June 30, 2016.

In this second lawsuit Plaintiff asserts claims for damages for violation of the FDCPA, alleging that, during the October 30, 2015 phone call, ERC concealed its identity as a debt collector while attempting to collect debt and to obtain information to collect debt. 

In answering Plaintiff’s Complaint, ERC asserted an affirmative defense based on the settlement agreement reached in the February 2016 Lawsuit (the Settlement Agreement).

In the Settlement Agreement, the Parties agreed as follows: 

“Plaintiff Yvette Palmer hereby releases and forever discharges Enhanced Recovery Company LLC d/b/a “ERC”, their predecessors, successors, insurers, assigns, attorneys, employees, agents and representatives, and each of them from any and all claims, demands, obligations, losses, causes of action, damages, penalties, costs, expenses, attorneys’ fees, liabilities, and indemnities of any nature whatsoever, arising out of facts set forth in Plaintiff’s complaint filed against the Defendant in the Action No. 2:16-cv-00757-BMS. (Emphasis added by the court in its memorandum.)

“[The Settlement Agreement] may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any suit, action or other proceeding which may be instituted, prosecuted or attempted in breach of this Agreement.”

The Court’s Decision 

The court agreed with ERC and granted their motion for summary judgment. Per the Memorandum by the Honorable Michael M. Baylson:

“Defendant ERC is entitled to Summary Judgment because under a plain language reading of the Settlement Agreement, the instant lawsuit is precluded, and even if the Settlement Agreement were ambiguous, extraneous evidence shows that the intent of the parties was to preclude Plaintiff’s current claims. 

Looking first at the plain language of the agreement, as is required, the key question is whether the current case “aris[es] out of facts set forth in Plaintiff’s complaint filed against the Defendant in the Action No. 2:16-cv-00757-BMS.”

The language used in Plaintiff’s February 2016 Complaint is broad. The specific instances of “contact” laid out in the complaint reference only the letter sent to Plaintiff’s address, but the language of the complaint is much broader than that, and discusses generally Defendant’s attempt to collect the Sprint PCS debt. Plaintiff now again attempts to bring a claim based on an attempt (by the same defendant) to collect the same debt, anchored by a phone call that took place within two days of the letter described in the February Complaint.

In short, Plaintiff’s February Complaint was based on an attempt by ERC to collect a Sprint PCS debt. Though the June Complaint alleges different specific facts than Plaintiff’s February Complaint, the June Complaint is also based on an attempt by ERC to collect that same Sprint PCS debt. That is, the June Complaint arises out of the same set of facts as her February Complaint. Through operation of the plain language of the Settlement Agreement, Defendant is entitled to summary judgment.

Congress did not intend to allow for seriatim claims or double recovery against the same debt collector for actions taken prior to the first lawsuit regarding the same debt. To allow a plaintiff to seek damages by successive lawsuits would eviscerate the statutory damages limit in the FDCPA and would run contrary to the goals of judicial efficiency. Id. In short, Plaintiff had a reasonable opportunity to litigate her claims, and in fact, has already recovered on her claims.

At best, Plaintiff could argue that the Settlement Agreement is ambiguous as to whether it is intended to include her current lawsuit. However, even if this were the case, Defendant would nevertheless be entitled to Summary Judgment, given the e-mail exchange between Mr. Filipovic on behalf of Plaintiff and Mr. Landoll on behalf of ERC during settlement negotiations. 

The e-mail exchange makes clear that the parties intended the October phone call to be part of the settlement. Even more than that, Plaintiff’s attorney specifically and effectively used the content of the October 30 phone call as a bargaining chip to secure a favorable settlement for his client. Indeed, the e-mails suggest that the Defendant’s willingness to pay more than doubled as a result of those discussions. Now, after benefitting from the October phone call during settlement negotiations and procuring a larger settlement amount than she might have otherwise, Plaintiff attempts to bring another lawsuit based on that same phone call. To allow this lawsuit to go forward would be contrary to the negotiated agreement of the Parties.”

insideARM Perspective 

This is a positive case for the industry. It was a logical, thoughtful decision by a strong judge. To suggest that this plaintiff and her attorney be allowed to benefit from a second lawsuit on the exact same debt and exact same facts as the first lawsuit would be wrong. 

insideARM contacted ERC for a comment on the case. Per Shelly Gensmer, Senior Director at ERC:

“While a settlement agreement is the closing of a matter it should be viewed as a first line of defense for any secondary claims.  This case was cause for review to ensure that ERC has all the necessary protections in place to ensure it brings closure to all claims for any consumer, in any settlement. ERC diligently seeks to follow the laws and regulations that govern its practices. In that effort, ERC must also seek to uphold the laws as they are written, to continue protect the consumer and the industry alike.  Where the lines of the law are stretched to create room for abstruse translation, no one really benefits and there are no real successes. ERC is very pleased that the judge agreed with its position.” 

One other takeaway from this case is an insideARM suggestion that firms conduct a review of the language of their settlement agreements to strengthen their position to defend similar lawsuits aimed a second bit of the apple on the same debt and same activity.

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