Debtor/Creditor

This summary also appears under Consumer Rights

 

Issues: The Fair Debt Collection Practices Act (FDCPA)(15 USC 1692 et seq.); Barany-Snyder v. Weiner; "Unfair practices"; 1692f; Hartman v. Great Seneca Fin. Corp.; Fox v. Citicorp Credit Servs., Inc. (9th Cir.); Federal Express Corp. v. U.S. Postal Serv.; Threats to take an illegal action; § 1692e(5); Gionis v. Javitch, Block, Rathbone, L.L.P. (Unpub. 6th Cir.); Whether state-law violations per se violated the FDCPA; LeBlanc v. Unifund CCR Partners (11th Cir.); "Bona fide error" defense

Court: U.S. Court of Appeals Sixth Circuit

Case Name: Currier v. First Resolution Inv. Corp.

e-Journal Number: 57808

Judge(s): Stranch, Griffin, and White

 

The defendant-debt collection agency (First Resolution) was not entitled to dismissal of the plaintiff-debtor's (Currier) FDCPA claims arising from its filing and failing to release an invalid judgment lien against plaintiff's home while the related state court collection action remained pending. Even though defendant knew that the judgment lien was invalid under Kentucky law, it delayed releasing the lien. Plaintiff sued under the FDCPA, "including the prohibitions against unfair debt collection practices, against collecting an unauthorized amount, and against threatening to take an action that cannot legally be taken." But the district court dismissed her claims, "[f]inding that a violation of state law is not a per se violation of the FDCPA" and that the invalid lien was "not a threat." The court reversed, concluding that "[m]aintaining an invalid lien against a debtor's home falls comfortably within the kinds of practices Congress has identified as unfair under § 1692f of the FDCPA. As First Resolution admitted at oral argument, the judgment lien exposed Currier to publicity and damaged her credit." Thus, she "plausibly alleged an unfair debt collection practice under the broad meaning of § 1692f." Moreover, "[t]he alleged conduct of filing and maintaining an invalid lien for a month can also fairly be characterized as a threat to take an action that cannot legally be taken within the meaning of § 1692e(5)." Any consumer "'would view [the lien] as an actual "attempt" to collect [the debt],'" rendering the attempts "'an ongoing threat' that First Resolution would force the sale of her home or refuse to voluntarily release the lien." Thus, "Currier plausibly alleged a claim under § 1692e(5)." First Resolution argued "the invalid lien was not a violation of the FDCPA because a violation of state law is not a per se violation of the FDCPA." The court agreed that "Congress did not turn every violation of state law into a violation of the FDCPA. But that does not mean that a violation of state law can never also be a violation of the FDCPA. The proper question in the context of an FDCPA claim is whether the plaintiff alleged an action that falls within the broad range of conduct prohibited by the Act." The court noted that if the judgment lien "had been valid under state law for the month that First Resolution held it, we could not say that it was an unfair debt collection practice even though it was coercive in nature. But the same action becomes unfair when accomplished by using a state mechanism that does not authorize it." Additionally, First Resolution was not entitled to "the bona fide error defense." Reversed and remanded for further proceedings.

 

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