11th US COA Says Foreclosure Mills Can Face Damage Awards From Homeowners Under FDCPA If Caught Lying Or Filing False Documents

 

Late last month, the 11th U.S. Court of Appeals gave the FDCPA more power to consumers to hold debt collection law firms and foreclosure mills liable if they get caught misleading or lying to the court. The 11th U.S. COA ruled in Miljkovic v. Shafritz & Dinkin, P.A., (11th Cir. 2015) ruled attorneys and debt collectors are liable under FDCPA if they file false or misleading documents during litigation.

Since several federal courts across the U.S. have ruled that foreclosure mills are considered debt collectors, it would give the homeowner a right to bring a cause of action against the foreclosure mill under the FDCPA.

The court ruled, “[D]ocuments filed in court in the course of judicial proceedings to collect on a debt… are subject to the FDCPA.” And, with a few narrow exceptions, “all litigating activities of debt-collecting attorneys are subject to the FDCPA.”

The issue on appeal was whether the FDCPA applied to debt-collection litigation activities by attorneys. The court rejected Shafritz & Dinkin’s argument that the FDCPA does not apply to representations made by debt-collection lawyers in “formulaic procedural filings” that are not directed to the consumer. The court ruled has ruled in the past, the FDCPA, “applies to lawyers and law firms who regularly engage in debt-collection activity, even when that activity involves litigation, and categorically prohibits abusive conduct in the name of debt collection, even when the audience for such conduct is someone other than the consumer.”

So far, the decision has not departed from Heintz v. Jenkins, where the Supreme Court held in 1995 that the FDCPA applies to the litigating activities of law firms acting as debt collectors.

However, the Eleventh Circuit took it a step further to rule that the only exception provided under the FDCPA to litigation activity is from the making of a § 1692e(11) disclosure in formal pleadings.

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