The United States Court for the Western District of Virginia recently granted a foreclosure firm's motion to dismiss on the grounds that the firm's representation of a lender did not violate the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.
Factual Background of the Haring Case
In Haring v. McMichael Taylor Gray, LLC, plaintiff, proceeding in forma pauperis, alleged that the law firm and three attorneys violated the FDCPA by threatening self-eviction in violation of § 1692f(6) and for communicating with third parties about the plaintiff's debt in violation of § 1692c. The defendants filed a motion to dismiss the plaintiff's amended complaint.
Court's Analysis of FDCPA Applicability
Although the defendants conceded that "they are normally debt collectors" within the meaning of the FDCPA, the court found that the defendants' eviction actions, at the behest of the lender, did not constitute "debt collection" under the FDCPA because the bank sought only possession, and no monetary damages, related to the property in question.
Distinction Between Foreclosure and Eviction Actions
The court looked to the distinction between a foreclosure action and an eviction action in the Eastern District of Michigan in reaching its decision. See Bond v. U.S. Bank Nat'l Ass'n, No. 09-14541, 2010 WL 1265852, at *5 (E.D. Mich. Mar. 29, 2010) (holding that an eviction post-foreclosure does not concern the collection of a debt as the foreclosure has already ended and seeks possession only). In Haring, the court stated that because the defendants were only seeking possession of the plaintiff's property rather than a debt, the eviction process did not constitute debt collection activity under the FDCPA.
Caution for Foreclosure Firms and Lenders
Despite the positive outcome for the defendants, the court cautioned foreclosure firms. It referred to a "guiding principle" as to whether eviction actions could implicate the FDCPA in that eviction actions could be considered debt collection activities if the action "includes some demand for payment tied to the property at issue (e.g., a utility bill, or damages for unpaid rent)." O'Connor v. Nantucket Bank, 992 F. Supp. 2d 24, 32-33 (D. Mass. 2014).
Accordingly, both lenders and their agents should be mindful of any eviction proceedings that involve the potential for monetary damages, as those could constitute debt collection under the FDCPA and open the door for litigation.
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