In Tinsley v. Fairway Collections, LLC, the Western District of Washington recently issued an opinion finding that dismissal of a consumer's FDCPA claim was not warranted because she alleged not owing the underlying debt at the time a collection lawsuit was filed against her. The court also found that a consumer does not need to allege that the collection lawsuit filed against her was in bad faith in order to assert a violation of the FDCPA.
In 2017, Tinsley's credit union notified her that someone used stolen checks to attempt to make several purchases on her account. The credit union did not honor the transactions, refunded all fees, and closed the plaintiff's account. In December 2020, Fairway filed suit against the plaintiff, alleging she owed $237.99 for a dishonored check. The check was written after the plaintiff's account was closed by the credit union. The plaintiff retained counsel after being served with Fairway's lawsuit. The plaintiff's attorney contacted Fairway to explain the check was stolen, and the account was closed at the time of the transaction. Her counsel also provided Fairway with written documentation of the account history, fraudulent activity, and account closure. After receiving this information, Fairway continued to demand payment and continued to prosecute the collections suit. The plaintiff subsequently filed suit against Fairway, alleging a violation of the FDCPA and violations of the Washington Consumer Protection Act (WCPA). Fairway then moved to dismiss the plaintiff's complaint, arguing the plaintiff's claims failed as a matter of law, as the plaintiff did not allege the Fairway suit was filed in bad faith, and Fairway's communications with the plaintiff's counsel were not actionable under Section 1692e or Section 1692f of the FDCPA.
The court denied Fairway's motion, as the plaintiff's claims were not based on communications with Fairway and the plaintiff's counsel, but rather Fairway's filing and service of the collections suit. As the plaintiff alleged that Fairway served her personally with the complaint and the complaint contained misrepresentations and false statements regarding the amount the plaintiff owed, the court found that the plaintiff sufficiently stated a claim under the FDCPA.
Fairway further argued that it had a good faith basis for filing the collection suit, and for that reason, the collections suit did not violate the FDCPA. The court found that, as the FDCPA is mainly a strict liability statute, debt collectors are generally liable for violations even if they are not knowing or intentional. Further, the plaintiff's complaint alleged that she did not owe the debt, and the complaint allegations were false instead of alleging that Fairway was unable to readily prove its allegations at the time the collection suit was filed. Because the plaintiff alleged that she did not owe the debt, rather than allege that Fairway was unable to prove that the plaintiff owed the debt at the time the collection suit was filed, the court found that the plaintiff sufficiently stated a claim for relief under the FDCPA in order to survive a Rule 12(b)(6) motion to dismiss.
Looking to the WCPA, the court also denied Fairway's motion to dismiss. The WCPA prohibits unfair or deceptive acts or practices occurring in trade or commerce that impact public interest. The court found that the collection suit caused injury to the plaintiff as she incurred expenses in seeking and retaining counsel in connection with the collection suit. Because (1) the plaintiff alleged that Fairway, as a debt collector, violated the WCPA by attempting to collect a debt that the plaintiff did not owe by filing the collection suit, (2) the WCPA bars debt collectors from attempting to collect amounts not actually owed, and (3) the plaintiff's counsel previously gave Fairway the information regarding fraud on the plaintiff's account, the court found that the plaintiff sufficiently stated a claim under the WCPA to survive a motion to dismiss.
This case serves as a reminder that, in many courts, there is a low bar for sufficiently stating claims under the FDCPA to survive a motion to dismiss. As the plaintiff alleged that she did not owe the underlying debt, not that Fairway was unable to show she owed the debt at the time the collection suit was filed, the court found that the plaintiff sufficiently stated a claim.
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