Consumer Protection – FDCPA – Injunctive Relief – Debt Cancellation

In a first-impression case, an Alexandria U.S. District Court says the FDCPA does not allow to a mortgage borrower as a private litigant injunctive and declaratory relief that can cancel or extinguish a debt as a remedy for violations of the act, and the court grants the creditor’s motion to dismiss the claim.

In count XIV of plaintiff’s second amended complaint, the count here at issue, debtor Liliana Vitullo seeks a declaratory judgment against the current noteholder, Green Tree Servicing LLC, and argues that because Green Tree has demanded payment of the deficiency on the note, and because the attorney’s foreclosure and sale of the property violated 15 U.S.C. § 1692g(b), a declaratory judgment is necessary to prevent Green Tree from instituting an action to collect the deficiency she owes. She request relief that would cancel or extinguish the debt deficiency she currently owes to Green Tree. Whether such relief is available to private litigants suing for FDCPA violations is a question that has not been addressed by the 4th Circuit.

Notably, the FDCPA is silent as to whether private litigants may seek injunctive and declaratory relief that has the effect of canceling a debt. Where Congress affirmatively grants a particular power to an agency to the exclusion of others, including private litigants, the strong implication is that Congress’s exclusion was purposeful. For example, under the Fair Credit Reporting Act, a statute similar to the FDCPA, courts have found that while the FCRA does not expressly prohibit injunctive relief, Congress’s failure to include injunctive relief as a potential remedy, combined with congress’s express delegation of enforcement of the FCRA to the FTC, clearly indicates that Congress did not intend injunctive relief as a remedy.

These principles, applied to the FDCPA, point persuasively to the conclusion that Congress did not intend to allow private litigants to seek injunctive relief under § 1692k. In expressly authorizing the FTC to seek injunctive relief under § 1692l(a), while electing not to provide the same relief to private litigants in § 1629k, Congress has clearly indicated through the statutory structure that injunctive relief is an FDCPA remedy exclusive to the FTC. Accordingly, Liliana Vitullo is not entitled to an injunction invalidating the foreclosure of the property or barring Green Tree from collecting the deficiency owed.

The same conclusion must be reached with respect to Liliana Vitullo’s request for declaratory relief canceling or extinguishing her debt to Green Tree, albeit on different grounds. The statute’s remedial scheme does not envision, and indeed does not permit, courts to cancel or extinguish debts as a remedy for FDCPA violations.

Litigants suing for FDCPA violations are limited to the damages remedy provided in § 1692k(a) because 1) the FDCPA’s structure – namely the difference in remedies expressly provided in § 1692k(a) and § 1692l(a) – implies that only the FTC is permitted to seek injunctive relief under the FDCPA; and 2) nothing in the FDCPA suggests that a debtor may seek a declaratory judgment under the FDCPA canceling or extinguishing a debt, in lieu of damages.

The court grants Green Tree’s motion to dismiss.

Vitullo v. Mancini (Ellis, J.) No. 1:09cv614, USDC at Alexandria, Va. VLW 010-3-062, 12 pp.