Strict Liability of Fair Debt Collection Practices Act…under question

Leikin and Ingber are excellent collection attorneys.  Over the years, they have garnered a fine reputation for debt collection.  As my colleagues, I hold them in high regard.  I respect the way that they have aggressively pursued debt.  Unfortunatetely, they recently got into trouble with one such tactic as it was found by the 6th Circuit to have violated the Fair Debt Collection Practices Act.As I have discussed below, this case has created a strange state of affairs on the issue of Strict Liability.

In the past few years, L & I has attached a Motion for Summary Disposition to their complaints.  My best guess for this practice is two fold:  One, to immediately put the debtor on notice that L & I is serious about collecting the debt.  By attaching their Motion for Summary Disposition to their complaint, they were implying to the debtor that if he defaulted, that L & I would file the attached motion and obtain a judgment against him.

In Grden v Leikin, Ingber and Winters, Mr. Grden , 643 F.3d 169 (6th cir 20110) received such a complaint with a motion from L & I.  He called L & I for the balance due on his account and was told that it was around $1,000 when in fact, he owed about $500.  Grden file a Fair Debt Collection Practices lawsuit against L & I claiming that it had violated his rights under the FDCPA in 2 regards.  First, attaching a Motion for Summary Disposition to the complaint communicated to Grden that he had already somehow defaulted on the action.  Grden also believed that when he called L & I and was told that he owed $1,000 that this communication was clearly wrong and violated his FDCPA rights as well.

Judge Roberts from United States District Court for the Eastern District of Michigan agreed with L & I and dismissed the case.

The Sixth Circuit Court of Appeals overruled Judge Roberts in one part of its ruling and affirmed her holding in one very important aspect.   The 6th circuit, using the Least Sophisticated Consumer standard that it had previously adopted, found that a consumer could be misled into believing that he had missed a critical date by receiving a Motion for Summary Disposition along with the complaint.  The court found that to be a violation of the FDCPA.  While this was an aggressive move by L & I that with previous eyes, bordered on violating the FDCPA, it is now a clear violation of the act.

What surprised me, however, is the 6th Circuit’s holding that the communication by L & I to the consumer that he owe a $1,000 when in fact, he only owed about $500, was not a violation of the FDCPA.  The court first held that a communication, to come within the ambit of the FDCPA, must be a communication in connection with the collection of a debt.  That is what the statute requires.  The court then properly found that not all communications from a debt collector are necessarily communications in connection with the collection.  OK, I accept that.  The Sixth Circuit held the animating purpose of a communication, to come within the FDCPA, must be to induce payment.  In this case Grden was only inquiring about the balance due and L & I were merely responding to his request.  The Court characterized L & I’s response as “ministerial” and hence held that that communication did not fall within the ambit of the FDCPA.

To me, this case represents the 2nd case to acknowledge that not all communications between a debt collector and a consumer come within the scope of the FDCPA.  What makes this case a bit confusing is that the Grden asked for a balance on his account and L & I responded incorrectly.   I know L & I to be an honorable firm with respectable lawyers.  Everyone makes mistakes an L & I is no different from us in this regard.  BUT….the erroneous communication came from a debt collector AND the FDCPA is a strict liability statute.  So, how do we accord this case with these two premises?  That’s a problem for me.

You see, in Michigan, liability for dog bites is also premised upon strict liability.  Your dog bites me, I sue you, I win.  It’s a very clear and straight forward cause/effect situation.  You cannot defend on the basis that your dog did not mean to bite me.  Indeed, you cannot advance the argument that my butt was in the wrong place and too close to your dog’s teeth so ergo, it was my fault that Cujo yawned and close his mouth on my tush.  Nope.  In Michigan strict liability means (or used to mean) just that.  With due deference to my colleagues George Leikin and Paul Ingber, I am sorry, but this case is good for you, but makes for strange law in Michigan.

Advice to collection attorneys – Do not file Motion for Summary Disposition with your complaints.  Recognize that the FDCPA is a strict liability statute and that you will be held liable for violating it.  Keep in mind that the standard for violating the FDCPA is “the least sophisticated consumer.

If you have questions about credit or collection issues, contact Attorney Gary Nitzkin or call toll free (888) 293-2882 for a free consultation.  For more information about our firm, visit www.creditor-law.com.  For more information about debt collection, follow our blog at www.michigancollectionlawblog.com. statute.

This entry was posted on Friday, August 12th, 2011 and is filed under Collection Agencies breaking the law, Collection Law Firms in the News, Collection Laws Michigan, Debt Collection Laws - Federal . You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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