FDCPA Caselaw Review for December 2017

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion. 

The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Where insideARM has published a story on the case, a link is provided.

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Here’s a rundown of just a few of the FDCPA cases in the spotlight as 2017 wound to a close.

Ronald Chenault v. Credit Corp Solutions, Inc.

The gist: In the state-level court case that preceded this one, the debt collector lost for failure to produce sufficient documentary evidence to show that consumer owed the debt in question. FDCPA action followed, but the court found that the filing of a lawsuit absent the means to prove the debt was valid is neither harassing nor deceptive.

Barbara Winslow, on behalf of herself and all others similarly situated, v. Forster & Garbus, LLP, Ronald Forster, Esq. And Mark Garbus, Esq.

The gist: Law firm filed suit pursuant to a student loan account and identified a securitized trust as the original creditor rather than Bank of America, the lender. The court found the statement as to the trust's “original creditor” status violated the FDCPA.

Elizabeth K. Atwood, aka Elizabeth King v. Cohen & Slamowitz LLP, Mitchell Selip, Mitchell G. Slamowitz, David A. Cohen

The gist: Law firm brought suit against the consumer, but never took judgment. The case was assigned to a second law firm for post-judgment execution proceedings. The second law firm was not aware that no judgment had been entered, and nonetheless garnished a bank account. Order to show cause (OTSC) was served on the first law firm, which responded and appeared in court. The consumer alleged that the first law firm's response and appearance was a violation under the FDCPA. The court disagreed, and opined that a response to an OTSC is not debt collection activity.

Kraus v. Professional Bureau of Collections of Maryland

The gist: Court found that debt collection activity met safe harbor provisions set forth in Avila, even though dunning letter did not clarify whether or not interest was still accruing. This opinion is important because the court took great exception to the Avila decision and abuse by the plaintiffs' bar. See insideARM articles on this case here and here.

Watson v. ARC Management Group, LLC

The gist: Collection agency was not licensed under state law when it reported a debt to a credit bureau. However, it subsequently obtained the necessary license and the court found that because the agency had cured its default, there was no FDCPA violation.

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Anne Humphreys v. Budget Rent-A-Car System Inc. & Viking Collection Service

The gist: Court found that communications regarding damages to a vehicle sent to a consumer's attorney did not qualify as debt collection activity, and thus did not violate the FDCPA.

Saroza v. Lyons, Doughty & Veldhuis, P.C.

The gist: Plaintiff alleged that a letter in question unlawfully increased the balance due, since costs had yet to be awarded by the state court. The court found that the consumer’s contract with the creditor required the consumer to pay all of the creditor’s court costs. In granting the law firm’s Motion for Summary Judgment, the Court concluded that the letter was not “false” because it accurately included the amount of court filing fees and service fees that had been paid to the Clerk. The Court further observed that the consumer was on notice that he would be responsible for these costs, as a state court lawsuit that was served on the consumer included a request for the amount of the debt, plus court costs.

Christina Altieri, on behalf of herself and all others similarly situated v. Overton, Russell, Doerr, and Donovan, LLP

The gist: This is yet another “reverse Avila” claim ripping up the New York district courts. Judge McAvoy of the Northern District of New York dismissed a reverse Avila claim which alleged that the Avila disclosure was required on a letter due to pre-judgment interest that may accrue on the account as prescribed N.Y. C.P.L.R. § 5001. Read the insideARM article on the case here.

Kyle Spuhler and Nichole Spuhler, on behalf of themselves and all others similarly situated, v. State Collection Services, Inc.

The gist: Collection letter failed to disclose that interest was accruing. Following Avila and Miller in the 7th Cir., the court found that letter failed to contain Safe Harbor language, thus the FDCPA claim was a triable issue of fact.

Deborah Covarrubias v. Zee Law Group et al.

The gist: Law firm recorded a judgment lien on property of debtor's parents. Property had an open line of credit, so when the bank learned of lien, it froze the line of credit. After a bench trial, the court found that law firm's actions constituted a threat to sell plaintiff's home and its actions were liable under the FDCPA. The appeals court confirmed. The facts of this case are unclear and not well stated in this (unpublished) opinion. See an article about this case here.

Paul Laak v. Quick Collect, Inc. and Jesse Conway

The gist: A collection agency had been attempting to collect a debt from a consumer since 2001. At that time, its communications complied with the rules for 1692g notices. Years later, the same collection agency sent the account to an attorney who started garnishment proceedings. The attorney did not include the 1692g disclosure with garnishment. Court held that the debt collection process began with the agency and did not commence anew with the attorney. A second validation notice accompanying the garnishment papers in 2016 would not have served the purposes §1692g(a).

Anastasia Belichenko v. Gem Recovery Systems

The gist: Although the debt collector in this case failed to respond, the court declined to issue a default judgment. The court found that statements, “we will use any collection activity necessary to collect this debt due to our client” and “our policy is to report delinquent account information to TransUnion and Experian Credit Bureaus which may impair your credit rating and your ability to obtain credit in the future” used in the letter in question did not otherwise overshadow the validation notice.

Beverly Heffington v. Gordon, Aylworth And Tami, P.C.

The gist: The consumer filed a claim that a letter (not a first communication) received from a law firm did not indicate interest was accruing. To complicate matters, the law firm that sent the initial letter changed its name. Despite the consumer’s allegations, the court found that the law firm did not obscure its name change to be deceptive, that it clearly communicated its name change, and that its letter referenced the same debt as an earlier-sent letter under the firm’s old name. Court found that §1692g(a) of the FDCPA does not apply to the letter in question, because it was not an initial communication, and that “even if it did apply, the language of the 2016 Letter comports with the statute’s notice requirements." The consumer failed to show a genuine issue as to any material fact, so law firm was awarded summary judgment as a matter of law on the §1692g claim.