Stanley L. Crawford v. LVNV Funding, LLC
758 F.3d 1254
| 11th Cir. | 2014Background
- Crawford owed a charged-off Heilig-Meyers debt (last activity Oct. 26, 2001); under Alabama law the 3-year statute of limitations expired Oct. 2004.
- LVNV (and affiliates) purchased the account in Sept. 2001 and filed a proof of claim in Crawford’s Chapter 13 bankruptcy in May 2008, four years after the debt became time-barred.
- Because neither the trustee nor Crawford initially objected, the claim was allowed and payments were made under the Chapter 13 plan to LVNV (or its assignees).
- Crawford later filed an adversary proceeding alleging LVNV’s filing of a time-barred proof of claim violated the Fair Debt Collection Practices Act (FDCPA), §§ 1692e and 1692f.
- Bankruptcy and district courts dismissed Crawford’s complaint; the Eleventh Circuit vacated and remanded, holding LVNV’s conduct violated the FDCPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing a time-barred proof of claim in Chapter 13 constitutes "in connection with the collection of any debt" under FDCPA §§ 1692e and 1692f | Filing a stale proof of claim is a collection activity that is deceptive/unfair because it misleads the least-sophisticated debtor into paying an unenforceable debt | Filing a proof of claim in bankruptcy is not the kind of external collection activity the FDCPA regulates; bankruptcy procedures control claims | Filing a time-barred proof of claim in bankruptcy is a means to collect a debt and violates §§ 1692e and 1692f when it is deceptive or unfair to the least-sophisticated consumer |
| Whether filing a time-barred proof of claim is ‘‘unfair, unconscionable, deceptive, or misleading’’ under the least-sophisticated-consumer standard | The practice is unfair/deceptive because debtors may not know claims are time-barred, memories/records fade, and automatic allowance yields payments to stale claims | The bankruptcy process and automatic allowance distinguish proofs of claim from stale state-court lawsuits | Under the least-sophisticated-consumer standard, filing stale claims in bankruptcy is unfair/deceptive and can mislead debtors into failing to object |
| Whether filing proofs of claim in bankruptcy is preempted by or inconsistent with the Bankruptcy Code / automatic-stay rules | FDCPA prohibitions apply; filing a claim is part of collecting a debt and not displaced here | Treating proofs of claim as FDCPA collection activity conflicts with bankruptcy procedures/automatic stay | The FDCPA and Bankruptcy Code are compatible for present purposes; filing a proof of claim is an (at least) indirect collection means subject to §§ 1692e and 1692f |
Key Cases Cited
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (consumer-protection purpose of FDCPA)
- Heintz v. Jenkins, 514 U.S. 291 (definition of "to collect a debt" includes legal proceedings)
- Kubrick v. United States, 444 U.S. 111 (purpose of statutes of limitations to protect defendants and courts)
- Phillips v. Asset Acceptance, LLC, 736 F.3d 1076 (7th Cir.) (filing time-barred suit is unfair under FDCPA)
- Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir.) (threatened/actual stale litigation can violate FDCPA)
- Castro v. Collecto, Inc., 634 F.3d 779 (5th Cir.) (collecting authority that stale-suit threats may violate FDCPA)
- LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir.) (least-sophisticated-consumer standard for §§ 1692e and 1692f)
- Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir.) (adopting least-sophisticated-consumer standard)
- Owen v. I.C. Sys., Inc., 629 F.3d 1263 (11th Cir.) (FDCPA remedies and enforcement)