The Fourth Circuit Court of Appeals recently issued a decision that could help your clients who have received settlement offers on their Fair Debt Collection Practices Act (FDCPA) claims.
Shortly after Margaret Warren's husband passed, she learned that her husband had an overdue personal VISA credit card account at Branch Banking & Trust Co. (BB&T). Warren tried to obtain the signature card on the account, which was listed only under her husband's name. BB&T, however, had started sending Warren statements bearing both her and her husband's name. Not knowing better, she started making payments.
After Warren ceased the payments, she began to receive communications from Sessoms & Rogers (S&R), a law firm and self-described debt collector "engaged in the collection of debts," regarding the BB&T debt.
S&R sent her an initial collection letter, which stated that BB&T retained the firm "to assist them in the recovery of the debt that you owe them." The letter informed Warren that she was "in default under the terms of [her] credit agreement," and that the "entire balance [was] due and payable."
An S&R representative also began calling Warren about the debt, but did not identify himself in his phone messages as a debt collector.
Warren disputed the debt and filed a FDCPA lawsuit against S&R, claiming that the defendants violated FDCPA provisions that govern communications in connection with collection of a debt by "communicating with [her] when they knew she was represented by an attorney" and "by failing to notify [her] in subsequent communications that the communication was from a debt collector."
Warren also alleged that S&R used "false, deceptive, or misleading representations or means in connection with the collection of any debt."
The next month, S&R filed an Offer of Judgment, proposing a settlement with Warren. Warren did not accept, so S&R moved to dismiss, contending that Warren's FDCPA claim had "been mooted and must be dismissed for lack of subject matter jurisdiction" because they offered her, pursuant to Rule 68, "all the relief to which" she was entitled.
The district court granted S&R's motion. The Fourth Circuit Court of Appeals reversed the district court, holding that the defendants' offers to compensate Warren for her alleged actual damages did not moot her FDCPA claim.
If Warren had made a specific demand in the amended complaint for actual damages, and the defendants offered that amount or more, the offer of judgment would have mooted Warren's action. Here, she did not, so her FDCPA claim survived.
The lesson from Warren's case? Sometimes, it's better not to articulate demands for actual damages in your complaint.
- Warren v. Sessoms & Rogers (Fourth Circuit Court of Appeals)
- 3rd Circuit Says Debt Collection Attorney Violated FDCPA (FindLaw's Third Circuit blog)
- FDCPA Laws: What Happens To Decades Old Debt? (FindLaw Law & Daily Life)