New York City Debt Collection Defense Attorney

Class Action Accused North Star Capital Acquisition of Abusing Legal Process with Deceptive Stipulations Sent with Initial Complaints

New York-based debt buyer, North Star Capital Acquisitions, failed to convince a federal court that its practice of sending consumers, with its initial complaint, a "Stipulation for Entry of Final Judgment Execution Withheld" was not deceptive. This "stipulation," sent with a cover letter, essentially sought to bind the consumers to admit each allegation in the debt collector's complaint, waive critical defenses, and agree to an exorbitantly high post-judgment interest.

A class of consumers fought back and countersued North Star[1], and its client, Capital One Bank, alleging that the "stipulations" constituted an abuse of process, and further violated the Fair Debt Collection Practices Act (FDCPA) and a similar Florida consumer statute.

The court rejected North Star's legal position that the "stipulations" were protected under the litigation immunity doctrine.

The court also let stand the consumers' abuse of process claim finding that the stipulations "were arguably not being used for the purpose of which service of the summons and complaint are designed."

Regarding the consumers' FDCPA claims, the court found that the letter and stipulation were given an "official imprimatur" that was not warranted and could confuse the least sophisticated consumer. The evidence brought out in the case tended to prove that the letter with stipulation caused apprehension amongst the debtors, making them feel as if they had no alternative but to agree to the Stipulation.

In 2011, a settlement in this case was approved by the district court, and the class was awarded the sum of $700,000.

[1] North Star Capital Acquisition, LLC v. Krig (M.D. Fla. 2009)