If Consumer Doesn't Dispute, Creditor Can Also Assume Debt is Valid, Says M.D. Florida (Citing 11th Cir. Case that Already Disposed of the Issue)

Here's a quick little case law hit for you. Consumer attorneys are grasping at straws, and the courts are having none of it. Take, for example, a case out of the Middle District of Florida.

In Lorenzo v. Durham v. Durham, LLP, No. 2:20-cv-109 (M.D. Fla. Apr. 6, 2020), a consumer—represented by one of those "frequent filer" attorneys based in New York—filed an FDCPA lawsuit alleging that a collection letter is misleading. Why? Because in the validation notice, it stated that unless the consumer disputes the validity of the debt in 30 days, "the debt will be assumed to be valid by the creditor and by this Firm." (Emphasis added.)

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According to the consumer, the FDCPA only allows the debt collector to assume the validity of an undisputed debt. Stating that the creditor may do so as well allegedly goes too far.

The court put a hard stop to this case by granting the defendant debt collection law firm's motion to dismiss—essentially cutting the case off before it gets to the costly litigation stage of discovery.

According to the court, the letter would not mislead the least sophisticated consumer. Specifically, the court calls out an old Eleventh Circuit from 2014—Caceres v. McCalla Raymer, LLC— which already addressed and disposed of this type of claim. In Caceres, the allegation was identical: the consumer claimed that a collection letter that stated the creditor will assume an undisputed debt is valid.

The Eleventh Circuit sided with the debt collector, stating that the "debt collector is obviously the agent of the creditor...the least sophisticated consumer would think that if the debt collector was entitled to assume the debt is valid, the creditor would have the right to do the same."

Following the Eleventh Circuit's logic, the court here dismissed the claim.

insideARM Perspective

Are we surprised to see the resurgence of a claim that has already been decided by a binding appellate court decision? No. It's happened many times before, most recently in the Second Circuit on the whole interest disclosure issue. The Second Circuit had to issue several decisions on the issue siding with debt collectors and even that didn't stop the claims being filed by the many "frequent filers" within that jurisdiction.

It's time that debt collectors strike back. Rule 11 of the Federal Rules of Civil Procedure calls for sanctions against an attorney if they file a claim that is not warranted under existing law or if they file a claim for an improper purpose, such as "to harass, cause unnecessary delay, or needlessly increase the cost of litigation." Motions for sanctions should be filed liberally.

With this particular case, for example, directly on-point, binding circuit precedent already said that this claim doesn't hold water and there is no FDCPA violation. A simple legal research query that even a law student could do would have disclosed that. Despite this, the claim was filed anyways—likely in an effort strong-arm settlements out of debt collectors who simply cannot afford to defend each and every claim that comes through their door since they won't recover their legal fees even if they win on the merits. If that doesn't violate Rule 11, I don't know what does.