Aleta Powell v. Palisades Acquisition XVI, LLC
2014 U.S. App. LEXIS 23833
| 4th Cir. | 2014Background
- Powell, a Baltimore credit card debtor, had an $8,205.24 debt owed to Direct Merchants Bank, defaulted, and the debt was assigned to Platinum Financial which sued in 2001 in Maryland court.
- Powell agreed to a payment plan, then a 2003 Maryland consent judgment for $10,497.21 was entered including principal, interest, and fees; post-judgment interest applied.
- Platinum sold the judgment to Palisades, which, via Fulton Friedman & Gullace, LLP, filed an Assignment of Judgment in 2012 to enforce the debt; the Assignment misreported the total amount and Powell’s payments.
- The Assignment indicated Palisades as the owner and included a “debt collector” designation, but attached bills of sale were insufficient to prove ownership; Powell challenged the Assignment as a misrepresentation and error.
- The Maryland court vacated the original judgment due to defective attachments and lack of records; Powell then sued in federal court alleging FDCPA, MCDCA, and MCPA violations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing an Assignment of Judgment constitutes FDCPA debt collection activity | Powell argues filing the Assignment was debt collection activity implicating the FDCPA. | Palisades argues the Assignment was a state-law mechanism to enforce a judgment, not an FDCPA collection action. | Yes; filing the Assignment is debt collection activity under the FDCPA. |
| Whether misrepresentations in the Assignment were material under FDCPA §1692e | Powell contends misrepresenting the amount and payments was material and deceptive. | Defendants contend the errors were clerical and immaterial. | Material; misstatements about the amount and payments were actionable. |
| Whether misrepresentation of ownership violated FDCPA §1692e and §1692f | Powell asserts false ownership statements violated the FDCPA and related provisions. | Defendants contend ownership was true and the statements were not actionable. | Ownership representation was not false; materiality of the amount/payments controls. |
| Whether the bona fide error defense applies to the FDCPA claim on remand | N/A on appeal; remand to evaluate defense. | Defense can apply if error was bona fide and not due to intentional violation. | Remanded to consider the bona fide error defense. |
| Remainder of state-law claims (MCDCA/MCPA) viability | Powell argues violations of state collection statutes based on misrepresentations. | Defendants argue no knowledge or reckless disregard in enforcement. | Affirmed for state-law claims. |
Key Cases Cited
- Sayyed v. Wolpoff & Abramson, 485 F.3d 226 (4th Cir. 2007) (summary-judgment in debt collection action subject to FDCPA)
- Gburek v. Litton Loan Servicing LP, 614 F.3d 380 (7th Cir. 2010) (FDCPA scope can cover communications to induce payment)
- Donohue v. Quick Collect, Inc., 592 F.3d 1027 (9th Cir. 2010) (materiality required for false FDCPA statements)
- Hahn v. Triumph P’ships, 557 F.3d 755 (7th Cir. 2009) (materiality requisite for FDCPA false representations)
- Miller v. Javitch, Block & Rathbone, 561 F.3d 588 (6th Cir. 2009) (false but non-material statements not actionable)
- Russell v. Absolute Collection Servs., Inc., 763 F.3d 385 (4th Cir. 2014) (least sophisticated consumer standard; materiality required)
- TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (1976) (defining materiality standard in disclosures)