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United States District Court holds that filing Assignment of Judgment does not constitute an attempt to collect consumer debt under the Fair Debt Collection Practices Act

Powell v. Palisades Acquisition XVI, LLC
No. 13-0219 (D. Md. Jan. 29, 2013)
by Wayne C. Heavener, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In Powell v. Palisades Acquisition XVI, LLC, the United States District Court for the District of Maryland entered summary judgment in favor of a consumer debt collector and its law firm, both of which were sued by a consumer alleging claims under the Federal Fair Debt Collection Practices Act (“FDCPA”), the Maryland Consumer Debt Collection Act (“MCDCA”), and the Maryland Consumer Protection Act (“MCPA”). Writing for the Court, Judge Richard D. Bennet held that filing an Assignment of Judgment pursuant to MD. RULE 3-624 was not a “collection action” within the purview of either the FDCPA or the MCDA. Because the plaintiff consumer alleged no basis for recovery under the MCPA independent of her MCDCA action, all of the plaintiff’s claims necessarily failed as a matter of law.

Aleta Powell (“Plaintiff”) opened a credit card account with Direct Merchants Bank in 1998, which she used primarily to furnish her apartment. Plaintiff recalls that in 2000, she was laid off from her job and started a child care business; she could not recall whether she used her Direct Merchants card for business expenses. Eventually, Plaintiff defaulted on her account, which Direct Merchants charged off on January 31, 2001. Plaintiff’s outstanding balance was $8,205.24. Direct Merchants Bank assigned the debt to Platinum Financial Services Corporation (“Platinum”), which hired the law firm of Wolpoff & Abramson to collect Plaintiff’s debt. Plaintiff and Platinum reached a settlement agreement in 2002, but in 2003 Plaintiff failed to make the agreed upon payments. In 2003, a consent judgment was entered in favor of Platinum in the amount of $8,205.24. In 2007, Palisades Acquisitions XVI (“Palisades”) purchased the judgment from Platinum. The law firm of Fulton, Friedman & Gullace handled the account for Palisades. With post-judgment interest, Plaintiff’s account balance totaled allegedly totaled $15,009.81.

On June 30, 2010, Plaintiff was notified by letter that Fulton, Friedman & Gullace was handling her account, though the letter mistakenly stated that Plaintiff’s balance on the account was only $8,137.81. Plaintiff had mistakenly believed that her debt had been paid in full. On May 29, 2012, Palisades filed an Assignment of Judgment in the District Court of Maryland, which stated that Plaintiff owed a judgment in the amount of $10,497.21 plus attorneys’ fees. The Assignment stated at the bottom that “This is a communication from a debt collector.” Powell filed a Motion to Vacate the Assignment, which the state court vacated on the grounds that Palisades did not produce evidence of a valid assignment. The Circuit Court of Baltimore City affirmed.

Thereafter, Plaintiff filed a Complaint against Palisades, Fulton, Friedman & Gullace, and Does 1–10 (collectively, “Defendants”) in the Circuit Court for Baltimore City, alleging claims under the FDCPA, MCDCA, and MCPA. Defendants removed to Federal court. At the close of discovery, both Plaintiff and Defendants moved for summary judgment.

The District Court granted Defendants’ Motion for Summary Judgment, and held that none of Plaintiff’s claims were viable. As a threshold matter, the Court held that a dispute of material fact existed as to whether Plaintiff’s balance was a “consumer debt” under the FDCPA or the MCDCA because Plaintiff could not recall whether she used her credit card for her childcare business. Even assuming the debt was “consumer debt” under the FDCPA, the Court held that the Assignment of Judgment filed by Fulton, Friedman & Gullace was not a “collection action” under the statute. Therefore, Defendant’s correspondence was not make “in connection with the collection of any debt,” 15 U.S.C. §1692e, and therefore not subject to the statute’s prohibition against a debt collector misrepresenting ownership of a consumer’s debt. The District Court, however, took its analysis one (1) step further, stating that if the Defendants made a misrepresentation under the FDCPA, it was not material because:

Any reasonable consumer in that circumstance would have contested the Assignment regardless of whether the judgment amount was technically correct and regardless of the identity of the debt collector. If information would not affect the least sophisticated consumer’s choice of how to act, it cannot be material.

Powell v. Palisades Acquisition XVI, LLC, No. 13-0219, slip op. at 14 (D. Md. Jan. 29, 2013). For the same reasons, Defendants were not liable under the state version of the FDCPA, the MCDCA. Because Plaintiff’s MCPA claims were based solely upon her MCDCA claims, all Plaintiff’s claims failed as a matter of law. The Court noted, however, that the state courts’ ruling is unaffected by its ruling; “The grant or denial of the parties’ Motions for Summary Judgment has no effect on whether the Plaintiff owes a debt, the amount of any debt, or the creditor to whom any debt may be owed. . . . [T]his Memorandum Opinion merely states that the Defendants have committed no statutory violations.” Id. at 19.