Monday, April 6, 2015

FYI: Fla Trial Court Holds Payment Statements to Be Mailed to Borrower's Counsel, TILA Does Not Preempt FCCPA On This Narrow Issue

A trial court in the Sixth Judicial Circuit in and for Pasco County, Florida recently denied a mortgagee’s motion to dismiss a borrower’s complaint that alleged a violation of the Florida Consumer Collection Practices Act (“FCCPA”) for sending monthly mortgage statements directly to the borrower while the borrower was represented by counsel.


In sum, the trial court determined that the borrower had stated a cause of action for a violation of the FCCPA, as the TILA servicing rule requiring periodic statements (12 CFR 1026.41) does not preempt the FCCPA’s bar on directly communicating with borrowers in connection with the collection of a debt while they are represented by counsel.


A copy of the opinion is attached.


The borrower filed a complaint against her mortgagee alleging that it had violated the FCCPA when it mailed a monthly mortgage statement directly to her while she was represented by counsel.  The borrower further asserted that she had retained counsel with respect to the mortgage debt, and that the mortgagee had knowledge that the borrower was represented by counsel.


As you recall, the FCCPA generally prohibits a debt collector from “communicat[ing] with a debtor if [the debt collector] knows that the debtor is represented by an attorney with respect to [the] 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.”  Fla. Stat. § 559.72(18).


In response to the borrower’s complaint, the mortgagee moved to dismiss, stating that “[c]ontrary to [the borrower’s] allegations, the mailing of the monthly mortgage statements is not a violation of the FCCPA[.] To the contrary, the mailing of the monthly mortgage statements is required by 12 CFR 1026.41 … 12 CFR 1026.41 preempts the FCCPA, and therefore, [the mortgagee’s] compliance with 12 CFR 1026.41 is not a violation of the FCCPA … as a matter of law”


Accordingly, the question facing the trial court was whether “compliance with both [12 CFR 1026.41] and [the FCCPA)] is a physical impossibility.”  15 U.S.C. 1610(a)(1); see Ting v. AT&T, 319 F. 3d 1126, 1136 (9th Cir. 2003).  The mortgagee argued that “the requirements of 12 CFR 1026.41 reflect an impossible conflict with the prohibitions contained in [the FCCPA], resulting in 12 CFR 1026.41 preempting [the FCCPA].


However, the trial court held that 12 CFR 1026.14 and the FCCPA did not present an impossible conflict, because the mortgagee could comply with both statutes by simply sending its monthly mortgage statements to the borrower’s attorney instead of directly to the borrower.


As a result, the court held that the FCCPA was not preempted by the federal requirement to send a monthly mortgage statement to the borrower.  Therefore, the trial court denied the mortgagee’s motion to dismiss and ordered the mortgagee to answer within twenty days.




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


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: