Indiana Appellate Court Reverses Summary Judgment in FDCPA Case Involving Bona Fide Error Defense

In a matter involving the bona fide error defense to claims asserted under the Fair Debt Collections Practices Act (FDCPA), an Indiana court of appeals reversed a trial court’s order granting summary judgment in favor of the defendant debt collector holding that the defense did not apply because the mistake at issue was not of fact but of law.

The decision in Rockey v. Med-1 Solutions, LLC involved an alleged violation of the FDCPA arising out of the defendant’s failure to stop communicating with the plaintiff regarding a disputed debt.

In August 2020, the defendant began sending collection letters for unpaid medical bills to the plaintiff at an address it received from the original creditor. However, the plaintiff no longer resided at that address. Rather, the property belonged to her ex-husband, who was also the plaintiff’s attorney. On January 12, 2021, the plaintiff sent the defendant a letter disputing the debt and refusing to pay. The plaintiff’s letter did not update her mailing address. Following receipt of the plaintiff’s letter, the defendant continued its collection attempts, sending her another letter on February 22, 2021 and leaving her three voicemail messages.

The plaintiff then filed a complaint alleging the defendant failed to stop communicating with her in violation of FDCPA § 1692c(c).

The defendant moved for summary judgment, asserting: (i) it was shielded from liability by the bona fide error defense under FDCPA § 1692k(c); and (ii) no violation of the FDCPA had occurred because the collection letter was sent to the plaintiff’s attorney. The defendant’s bona fide error defense was based on the assertion that it had misread the plaintiff’s letter and mistakenly treated it as a dispute and request for validation rather than a refusal to pay.

The trial court granted summary judgment in favor of the defendant, finding that the undisputed material facts established that any violation of the FDCPA was unintentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid the error.

On appeal, the court found that the defendant violated the FDCPA because the collection letter at issue was addressed to the plaintiff not her attorney and the defendant was unaware that the attorney resided at that address. The court also found that the error made by the defendant’s attorney in misconstruing the plaintiff’s dispute letter was a mistake of law in interpreting the letter rather than an error of fact such as sending the letter to an incorrect address. Consequently, the court held that the bona fide error defense did not apply and reversed the grant of summary judgment in favor of the defendant. The court nonetheless remanded the case to the trial court for consideration of the defendant’s assertion that the plaintiff lacked standing because she did not sustain a concrete and particularized injury.

Troutman Pepper's Take:

This case serves as a reminder that a defendant can only take advantage of the FDCPA’s bona fide error defense when the error at issue is a mistake of fact rather than an erroneous legal interpretation.