District of Maryland Sanctions Plaintiff and Her Counsel for Abuse of FDCPA and FCRA

Last week, insideARM wrote about an Eastern District of New York case where a judge called out the abuses of the Fair Debt Collection Practices Act (FDCPA) by plaintiffs and their counsel. It looks like the District of Maryland joins in on doing the same, this time with a suit that claims an FDCPA and Fair Credit Reporting Act (FCRA) violation.

In Miller v. Trident Asset Mgmt., No. 18-CV-2538 (D. Md. Dec. 4, 2019), the court granted the defendant's motion for sanctions, holding plaintiff and her counsel jointly and severally liable. To translate the legalese: When parties are held jointly and severally liable, it means they are both on the hook for the whole amount. The person to whom the amount is owed may go after either or both parties for the full amount, but cannot recover more than the full amount.

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So, What Happened?

Plaintiff's daughter opened a Verizon account under plaintiff's name (with plaintiff's permission). After this, plaintiff and her daughter failed to make payments on the account. The account was closed and credit reported. Despite knowing that this debt is valid, plaintiff disputed the account. Later, a paralegal from plaintiff's counsel's law firm reported that plaintiff was a victim of identity fraud and had no knowledge of the debt. In both instances, Defendant met its FCRA and FDCPA obligations by investigating the disputes and marking the account as disputed.

Plaintiff then filed a lawsuit against Defendant—and similarly filed nine other lawsuits against different defendants for similar issues. The nine other lawsuits were settled, but Defendant defended the claims.

What happened at plaintiff's deposition is best said in the court's own words:

At deposition Plaintiff admitted that the debt was her daughter’s and her daughter used Plaintiff’s name with her permission and defaulted. Plaintiff at deposition also testified that she did not know whether the amount due or the credit reporting was accurate. Even after this admission in deposition, Plaintiff and her counsel continued litigating this claim. Plaintiff in opposing summary judgment changed her story again and denied her signature on the letter to Defendant and disavowed her knowledge of identity theft. Plaintiff’s counsel in his declaration denied knowledge of the false identity theft report until the time of deposition. 

(Internal citation omitted.)

The court was not impressed with plaintiff's fraud upon the court by her flip-flopping positions. However, the court was similarly not impressed with the paralegal. The court noted that the paralegal has helped many of his family members file FCRA actions—likely to get settlements. Plaintiff, while not a family member, is a tenant in a property owned by the paralegal. The court further goes to call out plaintiff's counsel:

It would also be imprudent to ignore the role of counsel in this case, who even after being faced with his client’s admission of the debt, the false reporting of identity theft, and her lack of knowledge of whether the reporting was accurate, continued to press this litigation. In a pattern that has repeated itself in other Alston filings, the failure at litigation has resulted in extensive post-summary judgment motions, styled as motions to alter or amend judgment. This post-judgment litigation resulted in even more attorney’s fees for Defendant, adding the proverbial insult to injury.

Ultimately, the court found that it was obvious from the get-go that there were no FDCPA nor FCRA violations and that plaintiff and her counsel unreasonably prolonged litigation in bad faith. A $190 valid debt that was properly credit reported ended up costing an unreasonable amount in what the court calls a fraudulent lawsuit.

The court states:

There has been extensive litigation in this case over nothing more than an actual and properly reported $190 debt that could have been settled with Defendant for one half that amount. Instead, the Plaintiff opportunist with help from Thomas Alston and/or her counsel turned this frivolous, non-existent claim into an attempt to continue the FCRA/FDCPA money making scheme.

The 37-page long decision extensively discusses the scheme her and the court's reasoning for its decision. 

insideARM Perspective

As we mentioned in last week's article, judges appear to be noticing the litigation dilemma faced by debt collectors that are targeted by frequent-filer plaintiffs' counsel. And it's important to repeat: decisions like this only come when debt collectors defend the lawsuits. As noted in this case, there were nine other defendants who settled similar cases with this plaintiff. Had Trident Asset Management similarly settled, a decision like this—which establishes a record of this type of conduct for future litigation—would not have come to pass. There are, of course, many factors to weigh when deciding to defend or settle a claim, and this should be one of them. Tools like the iA Case Law Tracker can help you research claims you are defending to help you analyze your litigation defense strategy.

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