Messer Strickler

Victory in the Seventh Circuit in Bona Fide Error Case

Appellate decisions on the FDCPA’s bona fide error defense are rare. Even rarer are those upholding a grant of summary judgment on the bona fide error defense to a law firm.. Messer Strickler is pleased to report another total defense victory in the case of Abdollahzadeh v. Mandarich Law Group, 2019 U.S. App. LEXIS 12887 (7th Cir April 29, 2019).

In Abdollahzadeh, a law firm inadvertently filed a collection lawsuit against a consumer that was outside of the statute of limitations as a result of an inaccurate last payment date transmitted to it from the original creditor through its client. Specifically, the date of last payment reflected a bounced payment, as opposed to a payment that had cleared. When the consumer moved to dismiss, Mandarich Law Group defended consistent with its ethical obligations to argue in good faith that the consumer’s intent to pay extended the statute of limitations. The trial court disagreed and dismissed the matter with prejudice.

Abdollahzadeh, represented by Mario Kasalo, then sued Mandarich in federal court blaming it not only for filing suit but also for defending his motion to dismiss. Mandarich held strong and pointed to its policies and procedures for scrubbing out and closing time barred accounts. Ultimately, it prevailed at the district court level at summary judgment by invoking the bona fide error defense. The consumer appealed.

The Seventh Circuit was “not persuaded” by the consumer’s arguments for reversal. The consumer argued that in order to succeed on the defense, the law firm should have abandoned its client’s claims in response to the consumer’s motion to dismiss. The consumer also insisted that Mandarich should have engaged in independent efforts to valid the debt prior to suit and refrained to relying on its client’s data. Ultimately, the Circuit rejected all of the consumer’s arguments and affirmed the judgment of the district court.

This case is important for two reasons. First, this case affirms that a law firm cannot be faulted for a good-faith argument in a state court collection suit merely because it was ultimately unsuccessful. Second, the simplistic nature of procedures does not lead to the conclusion that the procedures utilized were insufficient. This case will likely provide a road map which can be used by other law firms developing policies and procedures for time-barred debts.

Messer Strickler thanks its client, Mandarich Law Group, LLP, for its resolve and positive contribution to Seventh Circuit precedent.. A copy of the decision can be found here: https://law.justia.com/cases/federal/appellate-courts/ca7/18-1904/18-1904-2019-04-29.html

Messer Strickler Defeats Serial FDCPA Filer in Jury Trial

The team at Messer Strickler, Ltd. is pleased to report a complete defense verdict in favor of its client, Federated Law Group, PPLC (“Federated”), in a case filed by serial FDCPA filer, Michael Savino, Jr. Mr. Savino, represented by prolific consumer attorney Donald Yarborough, filed an action against Federated, a creditors rights law firm, after receipt of a single collection letter. That letter presented Mr. Savino with various options to potentially settle a debt owed to its client.

Specifically, Plaintiff claimed that the statement in the letter stating that Federated “may resolve [Mr. Savino’s account] for $525.98 [was] false, deceptive or misleading” in violation of both §1692e and e(10) of the Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq. (the FDCPA) because Federated could indeed settle the debt for $525.98. According to Plaintiff, Federated’s letter was merely a ruse made in attempt to collect the debt or obtain information about Mr. Savino. Instead of using the word “may”, according to Savino, Federated should have disclosed that it “could” settle the account for $525.98.

In contrast, Federated argued that its letter merely stated the truth concerning a potential option to resolve the account. While Federated could, under certain circumstances, settle the account for $525.98, it was not forced to do so. Of course, while a collector may have settlement authority, nothing in the law requires it to offer or disclose the lowest amount it may take to resolve an account. The FDCPA is  designed to prevent overreaching and egregious debt collection practices, not to deny creditors the right to recover as much as it can on a valid balance.

Notably, Messer Strickler was able to enter into evidence Mr. Savino’s expansive history of suing collection agencies and law firms with the help of Mr. Yarborough. At the time of trial, Mr. Savino had been the plaintiff in no less than three (3) cases filed against debt collectors in the Southern District of Florida. Mr. Savino also admitted on the stand that he had been subject to extensive collection efforts by debt collectors, including a prior collection lawsuit.

Unsurprisingly, a jury of 6 was not fooled by Mr. Savino’s theory. On February 19, 2019, the jury rendered a complete defense verdict in favor of Federated. Messer Strickler congratulates Federated on staying the course and vindicating itself at trial!

Messer Strickler, Ltd. Obtains Unanimous Jury Verdict in Favor of Clients in FDCPA Case: Request for Statutory Interest in “Prayer for Relief” Not an Attempt to Collect an Unauthorized Amount

On April 8, 2015, a jury of seven sitting in the Southern District of California determined that a law firm and its asset purchaser client did not violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”) by including a request for 10% interest in the prayer for relief of a state court collection complaint.  In Hadsell v. Mandarich Law Group, LLP and CACH, LLC, a consumer filed an FDCPA claim against the two companies alleging a myriad of false claims, including that the companies had disclosed the debt to third parties and failed to abide by a request to cease and desist. After success on motions to dismiss and summary judgment, the case proceeded to a jury trial on one sole issue: whether a request for 10% statutory interest in the prayer for relief of a state court complaint violates the FDCPA where the credit card contract in question provided for an 8.9% interest rate. Like many consumer law claims against law firms, this complaint was spurred from a state court collection action on the debt. In late 2011, Mandarich Law Group, LLP filed a state court complaint on behalf of CACH, LLC to collect on a defaulted Bank of America account.  The state court complaint had two counts, breach of contract and account stated.  In the prayer for relief, the complaint requested that the court find that a 10% interest apply under the account stated theory.

Approximately 30 days after the state court suit was filed, the consumer filed suit in the U.S. District Court for the Southern District of California, claiming that the collection action, among other activity, violated the FDCPA. Plaintiff was represented by the San Diego law firms of Hyde & Swigart and Kazerouni Law Group.

The Plaintiff’s focal point during the jury trial was that the defendants intentionally violated FDCPA § 1692(f) and (f)(1) by requesting 10% interest when they were aware of the 8.9% interest rate that was set by the initial contract between the consumer and creditor.  Defendants argued, in contrast, that there was a valid factual basis to pursue the account stated claim and for the Court to assess 10% interest--- the default rate under the California Code---- based on the final charge-off statement on the account.  Further, Defendants’ argued that asking the state court to decide the question of interest was not an attempt to collect an authorized amount as the court had the legal ability to award it under the facts.  The jury unanimously agreed and found that no violation of the FDCPA occurred.

Lead trial counsel for Defendants was Nicole M. Strickler of Messer Strickler, Ltd. For more information on this case or any other FDCPA related issues, contact her at strickler@messerstrickler.com or at 312-334-3442.

Nicole Strickler to Present for NARCA Webinar on Employment Law

Nicole Strickler of Messer Strickler, Ltd. will be presenting in an online webinar for NARCA (National Association of Retail Collection Attorneys) on August 1, 2013 at 2:00 pm CST on employment law. The presentation will be called “Help! Rescuing Your Business from the Problem Employee”. Ms. Strickler is a seasoned speaker before the industry.  She has presented at NARCA spring conference, at Illinois Collectors Association teleseminar and at California Creditors Bar Association spring conference among other events.

Joseph Messer to Present for NARCA Webinar -“FCRA Overview of the Collection Attorneys”

Joseph Messer of Messer Strickler, Ltd. will be presenting in yet another online webinar for NARCA (National Association of Retail Collection Attorneys) on August 15, 2013 at 2:00 CST.  The webinar is called FCRA (Fair Credit Reporting Act) Overview for the Collection Attorneys. Mr. Messer has been presenting before the industry for years.  He is a regular speaker for NARCA conferences and webinars, ACA International’s forums and conventions, and Illinois Collectors Association conferences.  Mr. Messer has also presented for the Chicago Bar Association in the past.