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