Reese v. Ellis, Painter, Ratterree & Adams, LLP

Summarized by Lynn Hinson , Dean Mead Egerton Bloodworth Capouano & Bozarth PA
13 years 10 months ago

Citation:

United States Court of Appeals for the 11th Circuit Case No. 10-14366 (not yet published)

Tag(s):

Ruling:

A complaint that was filed by two borrowers against a law firm stated a claim for relief for damages based on an alleged violation of the Federal Debt Collection Practices Act (15 U.S.C. section 1692e). The Court stated that it reviews de novo a district court's interpretation of a statute. It also reviews de novo the grant of a motion to dismiss under Fed. R. Civ. P. 12(b)(6). As stated by the Court, a complaint must state a facially plausible claim for relief. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The complaint alleged that the defendant law firm had sent the plaintiffs a letter demanding full and immediate payment of all amounts due and threatening to foreclose on the plaintiffs' home that served as collateral for the loan if payment was not made. The complaint also alleged that the defendant firm was a "debt collector," and had made false, deceptive, or misleading representations in violation of 15 U.S.C. section 1692e. The 11th Circuit held that the letter which the defendant firm sent to the defendants was a notice of communication related to the collection of a debt, thereby rejecting the defendant's argument that the threat to foreclose on a mortgage was not an attempt to collect a debt. The Court also held that the defendant law firm could be a "debt collector" based on allegations in the complaint that the firm had sent similar letters to 500 people. The Court found that this allegation was sufficient to consitute regular debt collection within the meaning of 11 USC section 1692a(6). The Court held that the allegations in the complaint stated a claim upon which relief can be granted. It reversed the District Court's dismissal of the complaint under Fed. R. Civ. P. 12(b)(6) based on the finding that the law firm was not a "debt collector," and that the letter sent by the firm was not covered by 11 U.S.C. section 1692e.

Procedural context:

The plaintiffs, which had borrowed money secured by a mortgage on their home, filed a putative class action against a law firm, alleging that the firm was a "debt collector," within the meaning of the Federal Debt Collection Practices Act. The plaintiffs also alleged that a letter sent by the defendant firm violated 15 U.S.C. section 16923. The District Court dismissed the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief could be granted. The basis for the dismissal was that the law firm was not a "debt collector" and that the letter and documents it sent were not covered by 11 U.S.C. section 1692e. The plaintiffs then filed an appeal of the dismissal in the 11th United States Circuit Court of Appeals.

Facts:

The plaintiff homeowners borrowed $650,000.00 from a lender and executed a promissory note and security deed giving the lender a mortgage on property on which they resided. Several years later, the borrowers defaulted on the loan. Following the default, the defendant law firm sent a collection letter to the borrowers. The letter stated, in part, that the lender demanded full and immediate payment of all amounts due and owing. The letter also stated that if full and immediate payment was not made, the lender would conduct a foreclosure sale in accordance with Georgia law. The letter contained the following statement under the signature of a partner of the firm: "THIS LAW FIRM MAY BE ATTEMPTING TO COLLECT A DEBT ON BEHALF OF THE ABOVE-REFERENCED LENDER." The firm also sent the borrowers a document entitled "NOTICE REQUIRED BY THE FAIR DEBT COLLECTION PRACTICES ACT 15 USC 1601 ET SEQ, AS AMENDED." At the bottom of this document was a warning "THIS LAW FIRM IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED BY US WILL BE USED FOR THAT PURPOSE." In addition, the firm sent the borrowers a document explaining that military service members have additional legal rights. At the bottom of that document was the following language: "THIS LAW FIRM IS ACTING AS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT." After receiving the collection letter, the borrowers filed a complaint against the firm in the United States District Court for the Northern District of Georgia.

Judge(s):

Circuit Court Chief Judge Dubina, Circuit Judge Carns and District Judge Forrestor (sitting by designation)

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!