FDCPA Complaint Against a Law Firm Dismissed

On February 11, 2014, in Gibbs v. Blitt and Gaines, P.C. , the Illinois Appellate Court for the 1st District dismissed Plaintiff’s complaint against a law firm accused of violations of the Fair Debt Collection Practices Act (FDCPA).  In Gibbs, Plaintiff appealed from the order of the circuit court dismissing her amended complaint for violations of the FDCPA.  Plaintiff claimed that the trial court erred in dismissing her previous claim because law firms may be held liable for violations under the FDCPA even if the Illinois Collection Agency Act (Illinois Act) excludes attorneys from its requirements.

Background:

In 2008, Blitt & Gaines, P.C. filed a suit against Gibbs on behalf of its client, a debt buyer, to collect an outstanding debt.  The client was not an Illinois-licensed debt collection agency when the suit was filed, but obtained its license before Gibbs was served.  Gibbs filed a class action lawsuit in Cook County based on the collection suit, attempting to hold the law firm liable for filing suit on behalf of an unlicensed collection agency.  Gibbs alleged that the law firm violated section 1692e of the FDCPA by filing suit on behalf of an unlicensed collection agency.  The court granted the law firm’s motion to dismiss holding that “Plaintiff cannot use an inapplicable Illinois statute to manufacture a claim under the FDCPA.”  Gibbs appealed. 

The court’s decision:

Section 1692e of the FDCPA provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”  To support her argument that Defendant was liable under this section, Gibbs relied on LVNV Funding, LLC v. Trice, 2011 IL App (1st) 092773, where the court found that “a complaint filed by an unregistered collection agency is *** nullity, and any judgment entered on such a complaint is void.  [And] the subsequent registration of the collection agency … does not validate a judgment entered on the void complaint.”  That decision, however, was remanded to the trial court, whereby it found that the Illinois Act’s provision criminalizing the failure to register as a collection agency is unconstitutional, and that the underlying judgment against the debtor “should have been voidable rather than void.”  Trice is currently pending on appeal to the Illinois Supreme Court.  Therefore, the court stated that “Trice as it currently stands does not sufficiently support Gibbs’ claim that Blitt & Gaines engaged in actionable debt collection by pursuing a frivolous complaint against her.”

Furthermore, the court found that Blitt & Gaines did not violate the Illinois Act because it is exempted from the requirements of the Illinois Act. 225 ILCS 425/2.03 (West 2012). The court ruled: “Since Blitt & Gaines committed no violation of the Illinois Act, and therefore engaged in no misconduct by filing [its client’s] claim, Gibbs’ contention that the firm violated the FDCPA cannot stand.”  Importantly, section 1692e applies to “threats to take action that cannot legally be taken, but not illegal actions actually taken.” (Citing Fick v. American Acceptance Co., No 3illcv299 2012 WL 1074288 (emphasis added)).

Finally, the court relied on several federal court opinions which held that filing a debt collection suit under various circumstances, without more, is not sufficient to state a claim under the FDCPA.  See, e.g., Williams v. Zicker, Goldberg & Ackerman, LLC, No. 09-6177 (WJM) 2011 WL 843943 (D.N.J. Mar. 8, 2011).  In so finding, the court upheld the trial court’s decision and dismissed Plaintiff’s complaint.

For any questions on this decision, feel free to contact Joseph Messer at (312) 334-3440 or by e-mailing jmesser@messerstrickler.com