The U.S. Court of Appeals for the First Circuit recently ruled that the federal Fair Debt Collection Practices Act did not control choice of venue in a post-judgment enforcement action to garnish a debtor's wages, as the wage-garnishment action was against the employer and not "against any consumer." Smith v. Solomon & Solomon, P.C., No. 12-2169 (1st Cir. April 24, 2013).
A copy of the opinion is available at: http://www.ca1.uscourts.gov/pdf.opinions/12-2169P-01A.pdf.
A default judgment was entered against a debtor ("Debtor") in a suit filed in New Bedford, Massachusetts by a debt collector law firm ("Law Firm") to recover on a consumer debt. Debtor was an employee of a federal agency with its place of business in Attleboro, Massachusetts. Law Firm filed a second law suit in Attleboro to enforce the default judgment by attaching Debtor's wages.
Debtor then filed a lawsuit against Law Firm, alleging that Law Firm violated the federal Fair Debt Collection Practices Act's venue provision in bringing its second action in Attleboro rather than where Debtor resided or where she signed the underlying contract.
Law Firm moved to dismiss and requested fees and costs, arguing that Debtor's claim ignored Massachusetts trustee process law governing attachment of a debtor's wages. The lower court granted the motion to dismiss but denied the request for fees and costs, Debtor appealed. The First Circuit affirmed.
As you may recall, the federal Fair Debt Collection Practices Act requires "[a]ny debt collector who brings any legal action on a debt against any consumer" to file the action "only in the judicial district . . . (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action." 15 U.S.C. § 1692i(a).
In addition, the trustee process in Massachusetts is "a legal action directed against the third-party trustee, not the consumer." See Smith v. Solomon and Solomon, 887 F. Supp. 2d 334 (D. Mass. 2012); Mass. Gen.L. Ch. 246; Mass. R. Civ. Pro. 4.2. Moreover, in order to attach a debtor's wages, the underlying claim must have been reduced to judgment or be otherwise enforceable by law. Mass. R. Civ. Pro. 4.2(a).
The First Circuit noted that, although the Law Firm's trustee process suit was a "legal action on a debt" within the meaning of the FDCPA, the FDCPA applies only to legal actions brought "against any consumer." Relying in part on an Eleventh Circuit opinion, and determining that the judgment-enforcement action was not "against any consumer," the Court concluded that Law Firm's wage garnishment suit was filed in the proper venue and that Law Firm was thus not liable for violating the FDCPA's venue provision. See Pickens v. Collection Services of Athens Inc., 273 F.3d 1121(11th Cir. 2001).
In so ruling, the First Circuit pointed out that a wage-garnishment proceeding is an action against the garnishee-employer, and that the Massachusetts trustee process scheme required the action to be filed in a county where the trustee, here the government agency, had its usual place of business.
In support of this interpretation, the First Circuit pointed out that the Federal Trade Commission's commentary to the FDCPA provides that "[i]f a judgment is obtained in a forum that satisfies the requirements of [section 1692i], it may be enforced in another jurisdiction, because the consumer previously has had the opportunity to defend the original action in a convenient forum." The Court also observed that Debtor already had a chance to defend against the underlying debt action in a forum that was convenient to her, and that once the action was filed against the trustee, Debtor could have moved for a change of venue.
Pointing out in part that Debtor's interpretation of the FDCPA's venue provision would make it impossible for debt collectors to enforce a prior judgment unless the Debtor resided, or signed the contract, in the same county in which the trustee had its business, the First Circuit affirmed the judgment of the lower court.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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