Consumer Finance Litigation

In Shadrach Lewis v. Marinosci Law Group, P.C., No. 13-61676-CIV, 2013 WL 5789183 (S.D. Fla. Oct. 29, 2013), the Southern District of Florida denied a defendant's motion to dismiss and rendered an important decision regarding a notice provision contained in a foreclosure proceeding as being a potential violation of the Fair Debt Collection Practices Act ("FDCPA"). Specifically, the plaintiff alleged that the notice provision, as required by the FDCPA, was nevertheless a violation of 15 U.S.C. § 1692e generally as well as § 1692e(10), in particular, as the statement relating to the deadline for plaintiff to respond to the complaint was false, deceptive, or misleading. Section 1692e(10) prohibits a debt collector from using "any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." This action arose from a state court mortgage foreclosure action. At all times material to the allegations of the complaint, the defendant was a "debt collector" as defined under 15 U.S.C. §1692a(6). As part of the foreclosure proceedings, the plaintiff was served with the state court complaint and summons in the mortgage foreclosure action. Attached to the state court complaint was a "Notice" titled as follows: This Notice is required by the Fair Debt Collection Practices Act (the 'Act'), 15 U.S.C. § § 1692 et seq., as amended. . . . The debt described in the attached Complaint and evidenced by the copy of the attached mortgage note will be assumed to be valid by the creditor's attorney, unless the debtor, within 30 days after receipt of this notice, disputes, in writing, the validity of the debt or some portion of it. The defendant argued, among other things, that foreclosing on a security interest is not debt collection activity under the FDCPA and cited Warren v. Countrywide Home Loans, Inc., 342 Fed. Appx. 458, 460 (11th Cir. 2009) (determining that "the act of foreclosing on a security interest is not debt collection activity for purposes of the FDCPA."). The Southern District of Florida recognized, however, that the validity of the holding in Warren was subsequently called into question by the Eleventh Circuit in Birster v. American Home Mortg., Servicing, Inc., 481 F. App'x 579, 583 n.2 (11th Cir. 2012) and Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211 (11thCir. 2012); see also Santiago v. EverBank, 2013 WL 1176074 (N.D.Ala. Mar. 19, 2013). Thus, the court held that a communication related to debt collection does not become unrelated to debt collection simply because it also relates to the enforcement of a security interest. Accordingly, the plaintiff has sufficiently alleged that the defendant "was engaged in debt collection activity under the FDCPA when it provided the allegedly false, deceptive, or misleading Notice to [p]laintiff." The plaintiff argued that the above "Notice" attached to the complaint in the underlying foreclosure action constitutes a "false, deceptive, or misleading representation" because it incorrectly suggests that a consumer must file a written response within thirty (30) days." Furthermore, the plaintiff argued that "[t]o many consumers[,] this Notice would overshadow the time frame necessary to file a response with the Court as explained in the Summons. Should a consumer wait until the thirtieth day to file a response, they will already be in default in accordance with the Summons." Additionally, the plaintiff argued the notice was deceptive to less-sophisticated consumers because "many consumers believe that they need to file a written response to the Notice with the Court as directed by the Summons. This response from a consumer is then deemed an Answer. Once a consumer has filed an Answer, they have waived many of their legal rights and defenses, including but not limited to: (1) the right to contest service of process; (2) the right to seek a more definite statement; and (3) the right to file a motion to dismiss." Based on the foregoing explanation of the notice provision, the Southern District of Florida held that this notice could be found to be false, deceptive, or misleading. Thus, such representations could be the kind of conduct that was intended to be covered by §1692e(10) or more generally, §1692e. Accordingly, the defendant's motion to dismiss was denied. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.