ST. LOUIS – The U.S. District Court for the Eastern District of Missouri, Eastern Division has denied a debt collector’s request to grant it summary judgment in a lawsuit it claims the plaintiff’s attorney knew was “frivolous.”
The plaintiff claimed that a collection letter including third-party fees violated the Fair Debt Collection Practices Act.
The court agreed that the plaintiff and his attorney believed they had a plausible case, even though the plaintiff agreed that “cause for the dismissal could have been determined from better investigation of the law and the facts prior to filing suit.”
Judge Audrey G. Fleissig wrote in the court opinion, “Defendant has failed to persuade the court that the decision to dismiss this lawsuit with prejudice based on the case law in this circuit and plaintiff’s deposition testimony that he was not confused by the convenience fee is simply an attempt to avoid an adverse judgment on the motion for summary judgment, thereby warranting sanctions."
Plaintiff Curt Majors filed his lawsuit against Professional Credit Management Inc. in January 2017, alleging that Professional Credit violated the Fair Debt Consumer Practices Act when it sent a collection letter that included fees he says he did not agree to. Major’s complaint states the debt collector included fees for charges made by credit card cards that would be collected by a third party, which “constituted deceptive, misleading, and unfair debt collection practices,” the opinion states.
According to the opinion, following a conference call in June 2017 with the court and Majors to attempt to resolve a dispute regarding a discovery made during Major’s deposition, Professional Credit filed for summary judgment in September 2017. In its motion for summary judgment, Professional Credit claims it could not be sued for violating the FDCPA because Majors stated in his deposition that he understood the terms and conditions of the credit card.
The debt collector stated that Majors testified in his deposition that he “was not confused by the language contained in the debt collection letter stating that a convenience fee would be charged by a third party processor if he used his credit card…the collection letter clearly disclosed that a third party processor, not defendant, would have collected the convenience fee…and defendant cannot be held to have violated the FDCPA where a third party would have collected such a fee,” according to the opinion.
Majors and his attorneys filed a motion to dismiss his lawsuit without prejudice in October 2017. Professional Credit opposed the motion and requested monetary sanctions from the plaintiff, claiming “it incurred substantial costs defending this litigation and seeks sanctions against plaintiff’s counsel for filing a frivolous lawsuit.”
Professional Credit claimed that Major’s attorney has a history of filing similar “frivolous” lawsuits and that the attorney knew that based on the law and facts that his client had a meritless case.
Fleissig stated, “Defendant failed to present evidence sufficient for the court to find that plaintiff’s counsel acted in bad faith by filing a lawsuit he knew to be frivolous.”
Fleissig further stated that although some circuits have ruled that it is not an FDCPA violation when a debt collector has a third party collect a debt, the 8th Circuit has not ruled on this issue, and Majors in fact pointed out several cases where the circuit has ruled that these third party fees can be an FDCPA violation.
Fleissig noted that “as defendant itself argues, there is already case law in this district supporting defendant’s argument that a collection letter such as defendant’s does not violate the FDCPA. Therefore, defendant cannot show that it would be prejudiced by the court granting Plaintiff’s motion to voluntarily dismiss with prejudice.”
The court issued an order to deny Professional Credit’s request for sanctions and summary judgment and granted Majors’ dismissal.
U.S. District Court Eastern Division of Missouri, Eastern Division case number 4:17-cv-00270-AGF