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FDCPA Cases Revived by Appellate Court

On Behalf of | Aug 29, 2012 | Consumer Protection

The 11th Circuit Appellate Court revived three Fair Debt Collection Practices Act cases in one decision the other day.   In Zinni v. ER Solutions, 2012 WL 3641911 three cases were combined for an appeal where the trial court dismissed each of the three cases for the same reason.  In each case, the debt collector made an offer of $1,001 plus reasonable attorneys fees to either be agreed upon by the parties or decided by the court.  The Plaintiffs in each case did not accept the offers.

Defendant Debt Collectors Obtained Dismissal at Trial Court Level: Thereafter, the debt collectors moved to dismiss the case arguing that they tendered everything that could be recovered under a case under the FDCPA.  They claimed that since the FDCPA allows for a recovery of up to $1,000 plus attorneys’ fees, and the collectors tendered all of that plus a dollar, there was no longer a controversy in question.  Article 3 of the U.S. Constitution provides that the courts only hear a case where there is some controversy at stake.  That is, the one suing must be pursuing an actual harm that has occurred.  The collectors argued that since they have complied with the law and provided the complete amount of recovery, no controversy can exist any longer, and the Plaintiff no longer has standing to sue.  Their cases are moot because full payment has been offered.  Following precedent from other cases where it had been found that a full tender moots out any controversy of the case, the court agreed and dismissed all three plaintiffs’ cases.

Appellate Court Finds Controversy Still Exists without Offer of Judgment: Thankfully, the cases were taken up on appeal, and the appellate court disagreed and reversed the decision.  The main reason is that the debt collectors may have offered to settle for a payment of the statutory maximum, but they did not offer to have a judgment taken against them as each of the plaintiffs’ complaints sought.  The plaintiffs each filed a lawsuit seeking a judgment for $1,000 plus fees.  The defending debt collectors offered only to pay the money as a settlement, but not have a judgment taken against them (Federal Rule 68 allows a defending party to offer to have a judgment taken against it for a specific amount).  One main difference is that with a settlement agreement the plaintiff receives a promise to pay .  However, a judgment against a company is a legal right against a defendant which can be immediately enforced by the courts.  It is the plaintiff’s legal right to payment.  This distinction of having a judgment versus a settlement agreement, the appellate court held, is the difference between making a controversy moot or not.

Actual Damages Not Addressed: The FDCPA allows for actual damages to be recovered (15 U.S.C. §1692k(a)(1)).  The issue of actual damages was never discussed in this opinion.  Perhaps the plaintiffs never made a request for any or never demanded any.   Or perhaps the plaintiffs never made the argument to the trial court in the motion to dismiss.  Still, the FDCPA allows such damages.  It is anticipated that debt collectors that want to get out from under FDCPA lawsuits will soon start tendering offers of judgment.  As such, should plaintiffs desire to ignore those offers, it is best that there be a strong, viable claim for actual damages.

SmithMarco, P.C. has been protecting consumer rights with combined experience of over 25 years.  If you are being harassed by a debt collector, treated unfairly, or need assistance in resolving debts, Contact Us for a free case review.