In Powell v. Palisades Acquisition XVI, LLC, the Fourth Circuit Court of Appeals held that the filing of an assignment of judgment in a debt collection action qualifies as debt collection activity that triggers the requirements of the Fair Debt Collection Practices Act (“FDCPA”). In so holding, the Fourth Circuit overturned the decision of the United States District Court for the District of Maryland granting summary judgment in favor of defendants.
Section 1692e of the FDCPA prohibits debt collectors from “us[ing] any false, deceptive, or misleading misrepresentation or means in connection with the collection of any debt.” The Court held that “[i]t is apparent that nothing in this language requires that a debt collector’s misrepresentations be made as part of an express demand for payment or even as part of an action designed to induce the debtor to pay.” The Court further reasoned that “to be actionable under these provisions of the FDCPA, a debt collector needs only to have used a prohibited practice ‘in connection with the collection of any debt’ or in an “attempt to collect any debt.’”
The defendants did not challenge that the assignment of judgment misrepresented the amount of the judgment, but instead claimed that the filing of an assignment of judgment did not qualify as an action taken in connection with the collection of a debt. The Court reasoned that by filing an assignment of judgment, Palisades was able to step into the shoes of the previous debt owner and take advantage of debt collection mechanisms permitted by Maryland law. Thus, the Court unequivocally held that filing an assignment of judgment qualifies as an action taken in connection with the collection of the debt and as a part of an attempt to collect on the judgment debt. This decision broadens the definition of actions taken in furtherance of the collection of the debt. Debt collectors should use caution when filing assignments of judgment to ensure that the stated facts and underlying documentation of the debt comply with FDCPA requirements.