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Allen v. LaSalle Bank, N.A.

2011 WL 94420 (Ct. App. 3d Cir. 2011) (Unpublished)

FDCPA; ATTORNEYS — Communication from a collection attorney to a consumer’s attorney is a indirect communication to the consumer and must comply with all of the requirements of the Federal Debt Collection Practices Act.

A home was purchased with a 30 year mortgage. After its owner failed to make the last payment due, the loan was declared in default. A law firm brought a mortgage foreclosure action against the owner on behalf of the lender. One month after filing suit, the firm sent a letter to the owner’s attorney with a payoff quote for the remaining principal balance and other charges due to the servicer of the loan. In a second letter to the owner’s attorney, the firm sought attorney fees and costs. The owner filed suit against the law firm in the United States District Court, alleging the firm had violated the Federal Debt Collection Practices Act (FDCPA) by seeking fees and costs in excess of what was permitted under court rule.

The law firm moved to dismiss the complaint, asserting a defense that the owner had failed to state a claim upon which relief could be granted. The law firm asserted that a communication from a debt collector to a consumer’s attorney was not covered by the FDCPA. The lower court granted the motion, finding that a competent attorney would have readily recognized the overcharges the law firm sought and, as the owner’s attorney, protected her from any unfair or unconscionable means used to collect the debt.

On appeal, the Court of Appeals remanded the matter for a determination as to whether the amount sought by the lender’s law firm was expressly authorized by the agreement creating the debt or permitted by state law. The Court stated that the remedial relief in prohibiting unfair or unconscionable means of debt collection under the FDCPA is to be broadly applied regardless of the person to whom the communication was directed. As such, a communication to a consumer’s attorney was found to be an indirect communication to the consumer. The Court found that the lower court did not have the benefit of the owner’s concession that her claims rested upon a provision of the FDCPA that defined the collection of an unauthorized debt as a per se “unfair or unconscionable” debt collection method. Therefore, the only inquiry to be made was whether the amount collected was expressly authorized by the agreement creating the debt or permitted by law.

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