Daily Decision Recap: `Dual Purpose’ Letter Was a Communication under FDCPA; Consumer Wins $15K Slam Dunk Judgment


A summary of recent FDCPA and FCRA cases from ACA. Editor’s note: This article is available for members only.

10/20/2020 9:00

Each week, ACA International’s Compliance Analysts Betsy Clarke, Laura Dadd and Andrew Pavlik compile relevant case summaries for ACA members. Here is a recap of the cases this week. Members may also submit cases for consideration to our compliance team at [email protected]

Court Approves Magistrate Judge’s Recommendation that Consumer’s Complaint Proceed to Trial

In Sullivan v. Experian Information Solutions Inc., the loan servicer objected to the magistrate judge’s report and recommendation that the consumer’s complaint proceed to trial. The consumer alleged that the loan servicer violated the Fair Credit Reporting Act by reporting false information to the consumer reporting agencies and violated the Fair Debt Collection Practices Act by attempting to collect a debt that was no longer owed.

Leading up to the lawsuit, the consumer purchased a home in 1983 and in 2006 he was laid off from his job and fell behind on his monthly mortgage payments. The consumer attempted to negotiate a loan modification with the bank but was unsuccessful. The consumer then filed Chapter 7 bankruptcy and discharged his mortgage debt. To prevent a foreclosure on his property, the consumer signed a Foreclosure Repayment Agreement (FRA) with the mortgage holder at the time. The FRA agreement indicated that the consumer’s mortgage was in default and the mortgage holder would “suspend but not terminate” foreclosure if it received a payment of $5,000 before Dec. 20, 2007 and the consumer agreed to pay the remainder of his default on a schedule. The consumer claimed that he made the initial payment and continued to make timely payments.

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Consumer Wins $15K Slam Dunk Judgment Based on Debt Collector’s Default

A consumer sued a debt collector and alleged the collector violated the Fair Debt Collection Practices Act when the collector repeatedly attempted to collect a debt from the consumer by threatening litigation—even though the statute of limitations on the claim had expired—and threatened the plaintiff's credit score when the debt was not subject to reporting. The consumer served process on the debt collector’s registered agent, the clerk of court entered a default when the debt collector failed to answer, and the consumer moved for a default judgment.

As a matter of law, once the clerk of court has entered a default judgment against a defendant, that party may no longer contest any facts alleged in the plaintiff’s complaint except allegations related to damages. Thus, in considering the consumer’s motion for default judgment, the only task for the court consisted of considering whether the necessarily unchallenged facts constituted a legitimate cause of action. The court must make this determination because a party in default does not admit mere conclusions of law.

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Court Finds ‘Dual Purpose’ Letter Was a Communication Under the FDCPA

A consumer defaulted on a personal loan and the bank that issued the loan sold the debt to a debt buyer. The debt buyer sent a letter to the consumer to provide notice of the change in ownership of the debt as required under Fla. Stat. Ann. Section 559.715. However, the letter also requested payments be remitted to the new owner of the debt.

The consumer sued, contending the letter violated the Fair Debt Collection Practices Act because: (1) the letter did not inform him of his right to dispute the debt as required by Section 1692g; (2) the letter was false, deceptive, and misleading under Section 1692e because it confused and misled him as to the origins and chain of ownership of the debt; and (3) the letter was an unfair and unconscionable means of debt collection in violation Section 1692f because it concealed the debt buyer’s status as a debt collector. In opposition, the debt buyer moved for summary judgment, arguing the letter was not a communication sent in connection with the collection of a debt because the letter’s only purpose was to inform the consumer of a change in ownership of the underlying debt.

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Executor of Decedent’s Estate is a Consumer under the FDCPA

In this case, the debt collector attempted to collect a debt from the consumer’s estate. The debt collector sent the executor of the estate a letter demanding payment in full of $500.95. The letter was addressed to the estate of Marie McAdams, identified an account number and the origins of the debt (Acadian Ambulance Services). The letter specifically requested that the letter be forwarded “to the Executor … of the below estate” for acknowledgement “in writing by return mail.”

The executor responded by mail to the debt collector’s letter and identified himself as “Executor, Estate of Marie McAdams.” The consumer stated in the letter that, “[t]he validity of this debt is hereby disputed,” and requests “copies of the original, unaltered invoices” supporting the alleged debt. He sent the letter by certified mail and requested the debt collector’s signature upon receiving it. The U.S. Postal Service records indicate that the letter was signed for on Dec. 26, 2018. The debt collector claims that it received a copy of the letter on May 7, 2019, after the executor initiated this action, “when a copy of it was emailed to [the debt collector] by [the executor’s] attorney.”  

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