Petro v. Lindquist Consulting Inc.
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 2 years 2 weeks ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- No. 22-3051 (3rd Circuit, Feb 07,2024) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Third Circuit affirmed a district court's order dismissing Appellant's Fair Debt Collection Practices Act claim against a debt collector Appellee acting on behalf of a debt buyer. Appellee did not violate the FDCPA by filing a proof of claim in Appellant's bankruptcy case because Pennsylvania's Consumer Discount Company Act, a statute protecting consumers from small-dollar lenders, no longer applied to the debt after the lender charged it off (before selling it). "The CDCA is intended to regulate consumer credit, not ... the collection of consumer debt."
- Procedural context:
- The Third Circuit reviewed de novo the district court's conclusion that Appellee was entitled to a judgment on the pleadings dismissing Appellant's FDCPA claims. In the course of the appeal, the Third Circuit requested and received an amicus curae letter on the issues raised in the appeal from the Pennsylvania Department of Banking and Securities, the state agency charged with enforcing Pennsylvania's Consumer Discount Company Act.
- Facts:
- In 2016, Plaintiff/Appellant Robert Petro obtained a $3,001.76 loan from Lendmark Financial Services, a lender licensed under Pennsylvania's Consumer Discount Company Act ("CDCA"). Pennsylvania enacted the CDCA "to extend credit more readily to consumers by protecting borrowers 'against extortionate interest charges' for 'loans of comparatively small amounts.'" Appellant promised to pay the loan in 24 monthly payments. After Appellant stopped making payments on the loan, the lender charged it off. It then sold the charged-off debt to one debt buyer, who sold it to another. Neither debt buyer was licensed under the CDCA. The second debt buyer hired Defendant/Appellee Lundquist Consulting Inc. to collect the unpaid balance from Appellant. Appellant then filed a bankruptcy petition, and Appellee filed a proof of claim in the case to collect the charged-off account balance. Appellant then sued Appellee in the U.S. District Court for the Western District of Pennsylvania, alleging Appellee violated the federal Fair Debt Collection Practices Act ("FDCPA"). Appellant argued it was unlawful for Appellee to file the proof of claim "because the debt [Appellee] sought to collect originated with a CDCA-licensed lender who sold it to an unlicensed third party, allegedly in violation of the CDCA." The district court granted Appellee's motion for judgment on the pleadings under Fed. R. Civ. P. 12(c), concluding the CDCA's regulatory framework no longer applied after the original lender charged off the debt and, thus, Appellee did not violate the FDCPA in attempting to collect the debt. Appellant appealed this ruling to the Third Circuit.
- Judge(s):
- RESTREPO, SCIRICA, and SMITH
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