Consumer Protection: Eviction action falls outside FDCPA scope

Where defendants were sued under the Fair Debt Collection Practices Act for efforts to evict a woman from a property following foreclosure, the woman’s claims were dismissed because the eviction action did not include some demand for payment tied to the property.

Background

Elizabeth Haring, proceeding in forma pauperis, initiated this action, alleging violations of the Fair Debt Collection Practices Act, or FDCPA, against three lawyers and their law firm for efforts to evict Haring from a property following foreclosure on behalf of their client, U.S. Bank.

Defendants argue that Haring has failed to state a claim under the FDCPA because (1) while defendants are normally debt collectors within the meaning of the FDCPA, they were not acting as debt collectors here, (2) U.S. Bank’s efforts to establish possession of the property that it purchased at a foreclosure auction does not make Haring the “object of collection activity” and (3) Haring has failed to establish that defendants “engaged in an act or omission prohibited by the FDCPA” for any of the three alleged violations.

Debt collectors

Defendants concede that “they are normally debt collectors” within the meaning of the FDCPA but argue that they were not acting as debt collectors with respect to the alleged violations complained of by Haring, because defendants were not seeking to collect a debt. This argument, however, ignores the holistic analysis that courts undertake to determine whether a law firm and its lawyers are debt collectors.

A law firm is classified as a debt collector based on whether it “regularly” engages in debt collection activity. Accordingly, the court need not narrow its inquiry to the specific violations alleged in the litigation. Because defendants concede that “they are normally debt collectors” within the meaning of the FDCPA, the court will not grant defendants’ motion to dismiss on this basis.

Object

Defendants next argue that Haring cannot show that she was the “object of a debt collection activity,” as defendants’ post-foreclosure eviction efforts were not a debt collection, but rather an attempt to establish possession of a property that their client owned. The issue of whether Haring was the object of a debt collection is critical to the court’s assessment of Haring’s claims, as an answer in the negative means that her claims fall wholly outside the FDCPA’s reach.

District courts “have reached varying conclusions” on the issue of whether eviction actions constitute debt collections within the scope of the FDCPA. A guiding principle among those decisions seems to be that an eviction action may implicate the FDCPA where the action “includes some demand for payment tied to the property at issue (e.g., a utility bill, or damages for unpaid rent).” Here, the foreclosure process has ended, and U.S. Bank now seeks possession of the property — with no request for monetary damages — through an unlawful detainer action under Virginia law.

Haring, however, contends that, while U.S. Bank did not seek monetary damages in the eviction actions, those actions still constitute a debt collection activity for two reasons. First, “by operation of law,” U.S. Bank has sought recovery of court costs in the eviction actions. Second, the Virginia statute under which defendants initiated the suits provides U.S. Bank the ability to seek damages against Haring. Haring argues that, while U.S. Bank has not sought damages from Haring in the eviction actions, they could do so, which constitutes a debt collection. The court finds both of Haring’s arguments unpersuasive.

Amend

Haring states that her amended complaint “demonstrate[s] an attempt to harass and bully Haring,” and, “if the Court concludes Haring has not pled enough facts to support her claims related to such harassment and bullying, Haring asks the Court to allow her to amend one additional time.” While it is doubtful that Haring will be able to bring her claims within the FDCPA’s reach, given that she does not allege an attempt to collect a debt, the court will allow Haring to attempt to remedy the deficiencies explained herein by granting her request for leave to amend the complaint.

Defendants’ motion to dismiss amended complaint granted.

Haring v. McMichael Taylor Gray LLC, Case No. 5:23-cv-044, June 10, 2024. WDVA at Harrisonburg (Dillon). VLW 024-3-307. 14 pp.