Strickler

Hang Up That Telephone: The Importance of Training Collectors to Properly Receive Attorney Information

Recently, United States Magistrate Judge David D. Noce created an important teaching moment for collectors in Istre v. Miramed Revenue Group, LLC et al, a case pending in the U.S. District Court for the Eastern District of Missouri. In Istre, after collection attempts, the plaintiff allegedly placed a call to the collection agency to inform it that he had retained counsel regarding his debts. At the beginning of the call, plaintiff told the agency that he had retained counsel. Instead of ending the call, however, the agency allegedly asked, “Why are you having a lawyer involved in this?” and, “So how are you going to go about this?” Only after plaintiff again stated that he had retained counsel regarding his debt did the agency request the attorneys’ contact information, which plaintiff immediately provided.

Upon these alleged facts, plaintiff alleged various violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692c(a)(2), d, e and f. Defendants filed a motion to dismiss, arguing that by initiating the call, plaintiff consented to the ensuing discussion about his debt. The court, however, agreed with plaintiff that the mere fact that plaintiff initiated the phone call was not conclusive that he thereby consent to the debt collector to the collection attempt. The court further held that without that consent, once notified of legal representation, defendants may only ask for the attorney’s contact information before ending the call. As a result, the court found that plaintiff properly stated a cause of action under 1692c(a)(2), d, and f. However, it granted the motion with respect to 1692e, finding that no misleading statement had been alleged in the complaint.

The decision shows the importance of dissuading collectors from continuing a telephone call after receipt of attorney information. For a full copy of the opinion, see http://scholar.google.com/scholar _case?case=14559722534209738563&q=istre+v.+miramed+revenue+group&hl=en&as_sdt=400006&as_vis=1.

For more information on this subject, and other consumer litigation compliance information, contact Nicole Stricler, 312-334-3442, nstrickler@messerstrickler.com.

Court Rules Collection Law Firms May Use “Account Stated” Cause of Action in California Without Running Afoul of the FDCPA

The use of alternative causes of action, even if such causes of action are inconsistent, is routine in litigation. Legal collection firms are no different. Prudent collection lawyers may assert more than one legal theory as a basis to collect on a defaulted debt in order to ensure their client’s collection of a validly owed amount. Recently, this area of practice has been the subject of attack by consumer attorneys, who allege that the use of alternative causes of action is misleading or deceptive to unsophisticated debtors. In a case filed in the Southern District of California, two clients of MS recently faced such an attack. MS clients, an asset purchaser and law firm, were sued in a federal action alleging that the use of an “account stated” cause of action as an alternative legal theory to collect a defaulted credit card debt was misleading, deceptive, and otherwise unconscionable under the Fair Debt Collection Practices Act, 15 U.S. C. §1692 et seq. Plaintiff argued that Defendants conduct was deceptive because an account stated cause of action requires the creation of a new contract, which never existed in the case.

MS took the offensive in filing an early motion for judgement on the pleadings and arguing that Plaintiff had failed to plead facts stating a plausible cause of action. The Court granted MS’ motion agreeing that the law “embraces the use of common counts to recover unpaid credit card debt.” The Court further found that Plaintiff’s allegations in his complaint relevant to the purpose and merits of the state court suit were nothing more “than conclusory allegations not entitled to the assumption of the truth.” In adopting MS’ arguments as to the frivolous nature of Plaintiff’s claims, the Court noted that it would entertain a defense request for sanctions in the even Plaintiff attempted to file a similarly deficient amended complaint.

To view or download a copy of the opinion click here. Please contact Nicole M. Strickler, (312) 334-3442, with any questions regarding the opinion.