The United States Court of Appeals for the Eleventh Circuit
ruled that the federal FDCPA can apply to a law firm that serves a
demand for payment and notice of intent to foreclose upon a
defaulted mortgage borrower. The plaintiffs, defaulted mortgage
borrowers, alleged that the defendant, a foreclosure law firm,
violated the FDCPA by sending a notice that contained
"misrepresentations." The trial court granted the law
firm's motion to dismiss, holding that the law firm was not a
"debt collector" within the purview of the FDCPA, and
that sending the foreclosure letter was not an attempt to collect a
debt but instead was merely an attempt to enforce a client's
Reversing the trial court, the Eleventh Circuit held that the
law firm's letter could be both an attempt to enforce a
security interest and to collect a debt, and, therefore, that
plaintiffs had adequately pled a claim for violation of the FDCPA
– a ruling that lends support to plaintiffs seeking to
hold law firms liable for their role in the foreclosure process.
While holding that the FDCPA is not per se inapplicable to
a foreclosure law firm, this opinion may be of limited significance
beyond the early pleading stages of case. The Eleventh
Circuit's based its ruling in part upon the very
plaintiff-friendly pleading standard applied to a motion to
dismiss, and thus did not examine the actual merits of
plaintiffs' allegation that the law firm's foreclosure
notice contained "misrepresentations." Click here for the opinion.
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