In a non-precedential ruling, the Court of Appeals for the Third Circuit upheld a district court decision to grant summary judgment in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act.
The plaintiffs – a condominium owner and his children – lapsed on payments owed to a condominium agency, established a monthly payment plan, and ultimately filed for bankruptcy. The bankruptcy discharged some of the fees, but the balance owed to the condominium agency continued to accrue, and the plaintiffs never resumed the monthly payments.
The defendants – a New Jersey law firm and an attorney – filed a claim of lien, with an outstanding balance of $10,137.38. A Certificate of Amount of Unpaid Assessments, prepared by the condominium agency, included $10,814.91 in assessments but also mentioned the $8,364.48 that had been discharged in the bankruptcy.
The plaintiffs then filed a lawsuit under the Bankruptcy Code and the FDCPA, claiming the bankruptcy had discharged all debt under the monthly payment plan, and that the defendants’ efforts to collect that debt were coercive and misleading and violated certain guarantees of specificity.
The defendants filed a motion for summary judgment, and the district court fully granted the motion. The district court held that the plaintiffs’ repeated requests for verification did not create an FDCPA violation; that their coercion arguments were redundant of the arguments that the bankruptcy had discharged all future monthly payments; that the varying numbers from the defendants did not establish falsity; and that the amount on the Certificate was irrelevant because the Certificate was prepared by the condominium agency, which was not a party.
On appeal, the plaintiffs raised several errors they believed the district court had committed, but the Court of Appeals held none had merit. Specifically, the Court held that 11 U.S.C. § 523(a)(16) directly applied to the post-discharge payments at issue here and thus, the debts were not discharged; the various debt balances were prepared at different points in time and consistent with the accrual of interest and monthly accumulation of unpaid balances; and there was no issue of fact as to the authorship of the Certificate.
This case highlights the importance of early dispositive motions where the undisputed facts demonstrate a defendant did not violate any sections of the FDCPA. It also confirms that a collector may present varying debt balances at different points in time, if appropriate, and this will not be considered “misrepresentation” of the amount of debt due under the FDCPA.
Troutman Sanders’ Consumer Financial Services practice group advises clients nationwide on debt collection compliance issues and litigation, including the FDCPA and various state law equivalents.