The U.S. Court of Appeals for the Sixth Circuit recently reversed an award of damages to a debtor under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA), and the Ohio Consumer Sales Practices Act, Ohio Rev. Code § 1345.01 et seq. (OSCPA), finding that debtor failed to establish that debt-collector should have conducted further investigation into debtor's bank account prior to seeking garnishment. A copy of the opinion is attached.
Debt collector law firm Javitch, Block & Rathbone ("JBR") represented a client seeking to collect a debt from Plaintiff. Upon default judgment, Attorney Javitch ("Javitch") had Plaintiff's bank account garnished and signed a statutorily required affidavit in support thereof stating he had a "reasonable basis to believe that…garnishee may have property…not exempt" from garnishment under state or federal law. However, the garnished funds were in fact exempted Social Security payments.
Plaintiff sued JBR, alleging that Javitch did not have a "reasonable basis" for the assertions in this affidavit, as then required under Ohio law, and therefore violated the Sections 1692e and 1692f of the FDCPA and Sections 1345.02 and 1345.03 of OCSPA by filing a false affidavit. A jury found in favor of Plaintiff and awarded damages, and the District Court awarded attorneys' fees. The Sixth Circuit reversed the judgment and remanded.
The Court began by stating that "any conclusion that Javitch's investigation was unreasonable…requires a conclusion that additional investigation was possible and, under the circumstances, compelled by that reasonableness standard." At trial, it was shown that Javitch signed the affidavit on the basis of a JBR investigation which included calls to the Plaintiff, examination of public records, and ordering a credit report. Plaintiff argued "only one additional investigative step that Javitch could have taken: subpoenaing [Plaintiff's] bank records from her bank." However, there was "unanimous testimony that issuing a bank subpoena in the context of filing for a non-wage garnishment was of uncertain legality," and there was no "evidence that it had ever been done previously." Based upon this, the Plaintiff "did not establish that a reasonable attorney would have conducted additional investigation" under both federal and state standards of reasonableness. Accordingly, JBR was entitled to judgment as a matter of law.
Ohio Rev. Code § 2716.11, which addresses the affidavit requirement, has since been amended to remove the "reasonable basis" requirement.
Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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RWutscher@kw-llp.com
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