Steven Demarais v. Gurstel Chargo, P.A.
869 F.3d 685
8th Cir.2017Background
- Demarais incurred a consumer debt to Citibank that was charged off by 2010; no post-charge-off statements were sent to him.
- RAzOR Capital, represented by Gurstel Chargo, sued Demarais in Minnesota state court in June 2014 seeking principal plus post-charge-off interest; Demarais alleges RAzOR had no right to the post-charge-off interest.
- Gurstel Chargo routinely appears at scheduled consumer-debt trials without client representatives, witnesses, or evidence, requests continuances when the debtor appears, and often dismisses or ignores cases rather than seeking default judgments.
- On October 5, 2015 Gurstel Chargo appeared at Demarais’s trial date unprepared; Demarais appeared with counsel, the firm asked for a continuance, and the case was reset to January 4, 2016.
- Gurstel Chargo later dismissed the case with prejudice on January 4; on January 22 it served Demarais (via his counsel) with a letter and discovery requests captioned under the dismissed case, stating it was an attempt to collect a debt and that responses were required within 30 days.
- Demarais sued in federal court alleging violations of the FDCPA (15 U.S.C. §§ 1692e, 1692f); the district court dismissed, and the Eighth Circuit reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing — Article III injury | Demarais: January 22 letter and October 5 appearance caused concrete injuries (risk of mental distress, time and money defending, costs of counsel). | Gurstel Chargo: No concrete injury; counsel received the letter so consumer not affected. | Demarais has standing. §1692f(1) violations and the costs/time defending plausibly allege concrete injuries. |
| Statute of limitations under §1692k(d) | Demarais: October 5 conduct was a discrete FDCPA violation; suit filed within one year of that violation. | Gurstel Chargo: October 5 statements relate back to the original complaint and are time-barred. | Court: Each FDCPA violation is evaluated individually; October 5 alleged violation is timely if plausibly pled. Reverse district court on limitations ground. |
| §1692e(5) — false threat/proceeding not intended | Demarais: Appearing unprepared and seeking continuance was a threat to go to trial the firm did not intend to pursue; caused expense and preparation. | Gurstel Chargo: Appearing/requesting continuance are permissible litigation tactics; no affirmative representation to go to trial; no intent allegation. | Demarais plausibly pled §1692e(5) violation: appearance + continuance request could lead an unsophisticated consumer or competent counsel to believe firm intended to try the case, and pleadings plus practice history support inference firm did not intend to proceed. |
| §1692f(1) — attempt to collect extinguished debt | Demarais: January 22 letter attempted to collect debt extinguished by dismissal with prejudice; stating responses were "required" was improper. | Gurstel Chargo: Letter sent to counsel; unlikely to mislead a competent attorney; plaintiff must show likely deception. | Court: §1692f(1) does not require a showing that anyone was likely misled; an attempt to collect an amount not permitted by law is actionable. Demarais plausibly stated a §1692f(1) claim. |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (standing requires concrete and particularized injury)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing framework)
- Duffy v. Landberg, 215 F.3d 871 (8th Cir.) (letters seeking unauthorized interest violate §1692f(1))
- Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814 (8th Cir. 2012) (FDCPA claims can arise from litigation practices; competent-attorney standard discussed)
- St. John v. CACH, LLC, 822 F.3d 388 (7th Cir.) (holding filing suits without intent to try may not always state §1692e(5) claim)
- Heintz v. Jenkins, 514 U.S. 291 (1995) (FDCPA applies to lawyers engaged in litigation)
- Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (2017) (discusses §1692e and §1692f in context of proofs of claim in bankruptcy)
- Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2017) (small monetary loss can be an injury)
- Powers v. Credit Management Services, Inc., 776 F.3d 567 (8th Cir.) (competent-attorney standard for evaluating deceptiveness in communications)