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Hodges v. Feinstein, Raiss, Kelin & Booker, LLC

A-5903-04T3 (N.J. Super. App. Div. 2006)

LANDLORD-TENANT; EVICTION; ATTORNEYS; FDCPA—A summary dispossess action is an attempt to collect a debt and if an attorney is regularly in the business of filing summary possession actions, it must abide by the provisions of the Fair Debt Collection Practices Act, even it that means inserting the required notices in the eviction complaint.

Two tenants receiving Section 8 housing assistance from the U.S. Department of Housing and Urban Development fell behind on their rent payments on multiple occasions. The leases provided that in addition to rent, the tenants were responsible for “additional rent” such as attorneys fees, late charges, and court costs. The landlord, through its attorneys, filed numerous summary dispossess actions to evict the tenants from the apartments. The summary dispossess actions listed all amounts due, including rent and “additional rent.” However, the complaints categorized all amounts due simply as “rent.” Before final judgment was entered on the eviction actions, the tenants paid the full amounts listed as due. Nothing in the summonses or complaints indicated the tenants only had to pay “rent” and not the “additional rent” to avoid eviction.

The tenants filed this action alleging the law firm violated, inter alia, the Fair Debt Collection Practices Act (FDCPA.) The law firm moved to dismiss the complaint. The lower court ruled that the FDCPA’s definition of “debt collector” applies to law firms who regularly engage in consumer debt collection activity. Finding that this firm was not “regularly” engaged in the collection of debts, the lower court granted the law firm’s motion to dismiss. Further, the lower court found that the landlord was seeking possession of the premises, not collection on a debt. In issuing its decision, the lower court did not conclude that an action for non-payment of rent was equivalent to an a action to collect on a debt. Even assuming that an action for possession would be considered an action to recover a debt, the lower court drew a distinction between a landlord, through its attorneys, asserting its own rights, and the purpose of the FDCPA which, according to the lower court, is to prevent contracted third parties from harassing debtors to enforce the rights of creditors. The tenants appealed.

The Appellate Division reasoned that summary dispossess actions, while being actions pertaining to property and not directed against specific persons, have the same effect as enforcing a lien for outstanding rent. The summary dispossess action forecloses the right of the tenant to possession of the leased premises. Holding there was no difference between actions affecting property and actions directed against people, the Appellate Division held that summary dispossess actions are actions to collect a debt within the FDCPA. The FDCPA applies to attorneys who regularly engage in the practice of filing summary dispossess actions. Therefore, it reversed and remanded the matter to the lower court for a factual finding as to whether this particular law firm “regularly” engages in the filing of summary dispossess actions, and thus qualified as a “debt collector” under the FDCPA.

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