Tuesday, April 14, 2015

FYI: Fla Circuit Court (Appellate Division) Holds Flyer That Did Not Contain Info Specific to Borrower or Loan Was Not "Debt Collection" Under FCCPA, No "Actual Knowledge" By Mortgagee of Borrower's Counsel

The Appellate Division of the Circuit Court of the Sixth Judicial Circuit in and for Pasco County, Florida recently affirmed a lower county court’s ruling that two communications sent from a mortgagee directly to a borrower represented by counsel did not violate the Florida Consumer Collection Practices Act (“FCCPA”).


In so ruling, the Court held that the communications at issue — an advertisement for a loss mitigation workshop, and a letter issued in order to comply with the Home Affordable Modification Program (“HAMP”) — did not constitute attempts to collect a debt, and that the borrower failed to meet the “actual knowledge” requirement under the FCCPA.


A copy of the opinion is available at:  Link to Opinion


A mortgagee filed a foreclosure action on June 23, 2010, after which the borrower obtained counsel.  However, the borrower’s counsel did not file a notice of appearance in the foreclosure action, and instead sent two letters to counsel for mortgagee, informing that he had been retained to represent the borrower.  The mortgagee maintained that it did not receive these letters or acquire actual knowledge that the borrower retained counsel in the foreclosure action at any time prior to the proceedings in this case.


On August 31, 2011, the borrower received communications from the mortgagee advertising a locally-sponsored workshop to assist homeowners in preservation of their property. The communication was addressed to “[Mortgagee] Mortgage Customer,” and did not contain any information to identify the borrower or the mortgage loan, such as an address, account number, or balance, nor did it request any payment on the loan.


A subsequent letter was sent from the mortgagee to the borrower on September 7, 2011, providing contact information for questions relating to loss mitigation, but again, did not request payment from the borrower. Mortgagee argued this communication was issued in order to comply with the requirement under HAMP that a creditor assign a relationship manager to be a single point of contact for the debtor during delinquency and the default resolution process.


The borrower filed suit in county court alleging that the mortgagee’s communications violated the FCCPA by attempting to collect a consumer debt after having actual knowledge of the borrower’s representation by counsel.  The mortgagee argued: (i) that the communications did not attempt to collect a debt, and; (ii) that it lacked actual knowledge of borrower’s representation by counsel.  The trial county court granted summary judgment in favor of the mortgagee.  This appeal to the circuit court followed.


As you may recall, section 559.72(18), Fla. Stat. provides that, “[i]n collecting consumer debts, no person shall…Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within 30 days to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication.”


The borrower relied on language in both communications which states: “This is an attempt to collect a debt. Any information obtained will be used for that purpose . . . .” to support its argument that the communications were attempts to collect the debt.   The mortgagee did not dispute that is a “debt collector” pursuant to the statute, but claims the communications were not attempts to collect consumer debt.


The appellate division of the circuit court agreed with the trial court’s findings that: (i) the mini-Miranda language was required under the federal Fair Debt Collection Practices Act (“FDCPA”), and did not alone constitute a basis for holding that the communication was a debt collection communication, and; (ii) that the communications were not attempts collect the debt, because their “animating purpose” was not to induce payment by the borrower.  Gburek v. Litton, 614 F. 3d 380 at n.3 (7th Cir. 2010) (including a disclaimer that a communication is “an attempt to collect a debt . . . does not automatically trigger the protections of the FDCPA, just as the absence of such language does not have dispositive significance.”) citing Lewis v. ACB Bus. Servs., Inc., 135 F. 3d 389, 400 (6th Cir. 1998)), Grden v. Leikin Ingber & Winters, PC, 643 F. 3d 169, 173 (6th Cir. 2011) (“for a communication to be in connection with the collection of a debt, an animating purpose of the communication must be to induce payment by the debtor.”). 


As to the requirement of “actual knowledge,” the mortgagee argued that even if it received notice that the borrower was represented by counsel, any such notice was insufficient because the borrower was notified by letter to contact the mortgagee’s foreclosure counsel regarding the pending litigation, and to contact the mortgagee directly regarding any debt collection matters, because its foreclosure counsel had no authority to act as its agent for matters related to debt collection.


Although the issue was mooted by the finding that neither communication constituted an attempt to collect the debt, the Court affirmed the lower court’s ruling that the borrower did not meet the “actual knowledge” requirement under the FCCPA.


Lastly, the borrower appealed the trial court’s award of attorney’s fees to the mortgagee pursuant to Fla. Stat. § 559.77(2) for failure to raise any justiciable issue of law or fact.  Although the appellate division of the circuit court acknowledged that the trial court’s award of attorney’s fees was in error because the mortgagee did not request fees in any pleading, the borrower failed to file a post-judgment motion to correct the error, and the appellate division of the circuit court upheld the award of fees, finding that the trial court’s ruling did not amount to a fundamental error based upon the facts.


Accordingly, the Court upheld the trial court’s order granting summary judgment and awarding attorney’s fees, and remanded to the trial court for a determination of a reasonable award of appellate attorney's fees.






Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@mwbllp.com


Admitted to practice law in Illinois



NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at: