635 F. App'x 640
11th Cir.2015Background
- Prescott defaulted on a mortgage secured by property in Florida; Seterus began servicing the loan and prepared foreclosure proceedings.
- The mortgage/security instrument required borrower to pay fees and expenses "incurred" to protect lender’s interest (including attorneys’ fees) and allowed reinstatement if borrower paid sums due plus "expenses incurred."
- Seterus sent a reinstatement letter quoting a payoff amount that included both incurred and "estimated" attorney’s fees ($3,175) for the period through the quote expiration; the letter identified itself as a debt-collection communication.
- Prescott paid the full reinstatement amount; Seterus later refunded the estimated attorney’s fees but not the estimated inspection fees; Prescott sued under the FDCPA and FCCPA alleging unlawful inclusion of estimated attorney’s fees.
- The district court granted summary judgment to Seterus; the Eleventh Circuit reversed as to FDCPA §§ 1692f(1) and 1692e(2) claims and remanded the FCCPA claim for further consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether including estimated attorney’s fees in the reinstatement payoff violated FDCPA § 1692f(1) (collecting amounts not expressly authorized) | Prescott: Security instrument only authorized payment of fees "incurred," not future/estimated fees | Seterus: Reinstatement clause and "assure Lender’s interest…continue unchanged" authorized charging estimates covering period until quote expiration | Court: Reversed district court; least sophisticated consumer would not read agreement to authorize forward-looking estimated fees; §1692f(1) violated |
| Whether listing estimated attorney’s fees falsely represented lawful compensation under FDCPA § 1692e(2) | Prescott: Demanding estimated fees that contract did not authorize is a false representation of fees lawfully collectible | Seterus: Estimated fees were clearly labeled and provided as a convenience; not a misrepresentation | Court: Reversed district court; even labeled estimates violated §1692e(2)(B) because collector could not lawfully receive them under agreement |
| Whether FCCPA § 559.72(9) claim fails if FDCPA claims fail | Prescott: FCCPA claim parallels FDCPA; charging unauthorized fees also violates FCCPA | Seterus: District court treated FCCPA same as FDCPA and granted summary judgment | Held: Remanded—FCCPA requires actual knowledge by collector that enforcement means are unavailable; record may not establish that issue, so district court should reconsider on remand |
| Whether Seterus is entitled to summary judgment on alternative grounds (not raised below) such as not being a "debt collector" or bona fide error defense | Prescott: N/A (argues Seterus violated FDCPA regardless) | Seterus: Denies status as debt collector; alternatively argues bona fide error (reasonable procedures, mistake) | Held: Court refused to affirm on debt-collector ground (not raised below). Bona fide error unavailable because alleged mistake was legal interpretation (Jerman): defense does not cover errors of law |
Key Cases Cited
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir.) (least sophisticated consumer standard and FCCPA knowledge distinction)
- Kaymark v. Bank of Am., 783 F.3d 168 (3d Cir.) (similar contract-language analysis disallowing collection of not-yet-performed legal fees)
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010) (bona fide-error defense does not cover mistakes of law)
- Bradley v. Franklin Collection Serv., Inc., 739 F.3d 606 (11th Cir.) (§1692f prohibits collection of fees not authorized by agreement)
- Wise v. Zwicker & Assocs., P.C., 780 F.3d 710 (6th Cir.) (seeking fees to which collector is not entitled establishes §1692e violation)
- Elyazidi v. Suntrust Bank, 780 F.3d 227 (4th Cir.) (clarifies that conspicuous labeling of estimates does not necessarily avoid FDCPA liability)