365 F. Supp. 3d 961
D. Me.2019Background
- In 2006 Micks co-signed a private $20,000 student loan for Reginald Birts; she filed Chapter 7 in 2007 and received a general discharge. The parties dispute whether the co-signed loan was discharged.
- Birts defaulted; the loan was charged off in 2009. NCSLT sued both in Minnesota state court in 2013; a default judgment against Micks entered in 2015.
- Gurstel (counsel for NCSLT) began garnishing Micks’s wages on the state-court judgment in 2015–2017. Micks filed a state application to discharge that judgment under Minn. Stat. § 548.181, properly served Gurstel, but Gurstel’s staff failed to timely object. The clerk certified discharge on July 21, 2017.
- Despite the discharge, Gurstel continued garnishments after two employer phone calls informing Gurstel that the employer had court documents indicating Micks shouldn’t be garnished. Gurstel did not obtain the state-court order or consult an attorney or request the employer’s documents.
- Micks sued under the FDCPA (15 U.S.C. §§ 1692e, 1692f) and for conversion. The district court granted summary judgment to Micks on FDCPA liability and denied Gurstel’s motions for summary judgment and sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the co-signed student loan is a "debt" under the FDCPA | The loan proceeds were used for education (personal purpose), so the obligation is an FDCPA "debt." | Because Micks co-signed for an acquaintance, her obligation was not for "personal, family, or household" purposes and thus not an FDCPA "debt." | Loan is a "debt" under §1692a(5); educational use makes it consumer debt. |
| Whether alleged fraud on the state court by Micks defeats her FDCPA claim | Micks reasonably believed or was confused about discharge; she served Gurstel and did not conceal anything. | Micks’s state-court discharge application was fraudulent because she knew the loan wasn’t discharged without an adversary proceeding. | Fraud-on-court does not negate FDCPA remedies; disputed intent precludes summary dismissal on fraud grounds. |
| Whether Gurstel’s post-discharge garnishment violated the FDCPA | Continued garnishment and false statements about the judgment violated §§1692e and 1692f. | Gurstel contends its garnishment was lawful because the debt was not actually discharged; also asserts bona fide error defense. | Undisputed facts show Gurstel garnished under a vacated judgment and made false representations; these conduct elements violate the FDCPA. |
| Whether Gurstel established the FDCPA "bona fide error" defense (15 U.S.C. §1692k(c)) | N/A (Micks argues defense fails as matter of law). | Gurstel asserts (1) mishandling of court mail caused the error; (2) its handling of employer calls was a reasonable mistake of fact or law. | Bona fide error defense fails: (a) mail mishandling was too attenuated to have "resulted from" that error; (b) mistakes of law are not protected; factual investigation after employer calls was objectively unreasonable. |
Key Cases Cited
- Duffy v. Landberg, 133 F.3d 1120 (8th Cir.) (FDCPA covers obligations arising from consumer transactions)
- Bloom v. I.C. Sys., Inc., 972 F.2d 1067 (9th Cir.) (debt characterization focuses on end use of loan proceeds)
- Picht v. Jon R. Hawks, Ltd., 236 F.3d 446 (8th Cir.) (bona fide error defense is narrow; mistakes of law do not excuse FDCPA violations)
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (Supreme Court) (limitations on bona fide mistake defense for statutory misinterpretations)
- Burrage v. United States, 571 U.S. 204 (Supreme Court) (but-for causation framework for "results from" causation analysis)