New York City Debt Collection Defense Attorney

8th Circuit Rejects FDCPA Claim over Collection Lawyer's alleged misrepresentations in a State-Court Collection Lawsuit

The lesson in Hemmingsen v. Messerli & Kramer, P.A.[1] is that collection lawyers are afforded leeway to bring cases, make allegations – and lose – without violating the FDCPA. A blanket rule otherwise, the Eighth Circuit reasoned, "would run contrary to the Act's "apparent objective of preserving creditors' judicial remedies, as well as the principal that the right of access to the courts is an aspect of the First Amendment right to petition the Government for redress of grievances."

The courts disfavor follow-on litigation that increases the cost of dispute resolution. The decision here emphasized the importance of allowing lawyers to present testimony in litigation without fear of liability, and the availability of ordinary litigation sanctions as a remedy for fraudulent litigation tactics.

These holdings, however, are within the context of an FDCPA case that should not have been brought (in my opinion). Without clear deceptive falsities, or other clear, independent FDCPA violations (i.e. venue violation), lawyers are allowed a degree of litigation immunity to bring claims even if they cannot produce the evidence to succeed.

This decision recognized that courts have struggled following Heintz v. Jenkins (a U.S. Supreme Court decision ruling that collection lawyers are subject to the FDCPA) to define the extent to which lawyers' misrepresentations in court filings violate the FDCPA. The court flatly rejected the district court's overly broad theory that false statements not made directly to a consumer debtor are never actionable, correctly recognizing that collection attorneys make representations "in a wide variety of situations" and many representations not made directly to the consumer can come to the consumer's attention and affect his or her defense of a collection claim. Therefore, every case deserves a case-by-case analysis.

The facts of Hemmingson were essentially as follows: an ex-wife of a debtor was named as a co-defendant in a credit card debt action brought by Discover Bank. She won summary judgment against Discover arguing that she never applied for, used, benefitted from, nor paid for the card, and pointed out that Discover lacked any evidence to the contrary.

However when she sued Discover's lawyers for violating the FDCPA for misrepresenting her involvement, Discover retrieved a check she made out to Discovery evidencing a payment for the debt at issue. This evidence appears to have eviscerated her FDCPA claim.

The court also noted the ex-wife plaintiff's lack of reliance on the alleged misrepresentations since she vigorously challenged her involvement. But the plain text of the FDCPA does not set forth reliance as an element of the FDCPA. This reliance dicta will sure be used defense lawyers claiming that it is.[2]

[1] --F.3d --, 2012 WL 878654 (8th Cir. March 16, 2012)

[2] Some statements in this blog entry, including the heading, are taken from NCLC Reports, Debt Collection and Repossession Edition, Volume 30, March/April 2012.