Law firm for landlords is ‘debt collector’ under FDCPA

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Where a law firm drafted, processed and sent delinquent rent notices, that was “debt collection” activity that subjected it to the requirements of the Fair Debt Collection Practices Act.

Background

This matter is before the court on plaintiffs’ motion for partial summary judgment and Senex Law PC’s motion for summary judgment. At issue is whether Senex acts as a debt collector for the purposes of the Fair Debt Collection Practices Act, or FDCPA, in drafting and sending notices of noncompliance to delinquent tenants for its landlord clients.

Signatures

Plaintiffs contend that Senex acts as a debt collector subject to the FDCPA because it regularly engages in debt collection activities by drafting and sending the notices to delinquent tenants. Senex argues that because the notices are reviewed, approved and signed by its landlord clients, the notices are those of the landlord-creditor, and Senex is not subject to the FDCPA for its legal work in drafting the notices and the ministerial task of sending the notices to the tenants.

A number of courts in the Second Circuit have addressed this question, and in so doing have focused on who prepared the challenged notice, rather than who signed or mailed it. The court agrees with the cases decided in the Second Circuit that the electronic signature of the landlord does not immunize Senex from FDCPA liability. The court finds this Second Circuit precedent persuasive, and believes that Senex’s undisputed conduct in drafting, processing and sending the delinquent rent notices is debt collection activity subjecting it to the requirements of the FDCPA.

The court is not persuaded by Senex’s argument that a contrary conclusion is compelled by the Uniform Electronic Transactions Act, or UETA, which requires that electronic signatures be given legal effect. While the UETA gives legal effect to the landlord’s electronic signature, that statute does not excuse Senex from complying with the requirements of the FDCPA for its other debt collection activities separate and apart from the signature.

Senex also argues that summary judgment should be entered for it because plaintiffs originally alleged that Senex, rather than its landlord clients, signed the notices. Following discovery, there is no dispute that Senex’s clients, the landlords, actually electronically sign each notice. Again, Senex’s argument places too much emphasis on the signature on the notices and ignores Senex’s crucial role in orchestrating and implementing the issuance of the notices.

Legal standard

Putting the signature issue aside, the court must next assess whether Senex is a debt collector under the prevailing legal standard. Whether a law firm “regularly engage[s]” in debt collection activity is determined on a “case-by-case basis.” First, there is a pattern of sending out the notices within five to nine days of rent being due. Second, this pattern of activity — together with Senex’s substantial involvement in drafting the notices and the sheer number of notices issued — indicates that the “activity is undertaken in connection with ongoing client relationships with entities that have retained [Senex] to assist in the collection of outstanding consumer debt obligations.”  Third, Senex has systems in place to “facilitate [debt collection] activity.” Plainly, Senex regularly engages in debt collection activity and meets the statutory test as a debt collector.

Ministerial

Finally, Senex argues that its actions are ministerial only, invoking the line of cases holding that entities performing only labeling, stuffing, printing, or mailing services are not debt collectors under the FDCPA. Senex’s argument ignores the fundamental operation of the Senex delinquent rent collection system. Instead of merely serving as a mailing service, Senex provides a turn-key delinquent rent processing system for its landlord clients.

Plaintiffs’ motion for partial summary judgment granted. Defendant’s motion for summary judgment denied.

Lord v. Senex Law PC, Case No. 7:20-cv-00541, May 30, 2023. WDVA at Roanoke (Urbanski). VLW 023-3-283. 19 pp.