Sunday, January 15, 2006

debt collection - "debt collector" - vicarious liability

Flamm v. Sarner & Associates and John Matusavage -- ED Pa. - January 4, 2006

Defendants' motion for summary judgment denied in a case in which Plaintiff sued law firm and Matusavage, whom she alleged was its employee, for M's actions in trying to collect on a judgment for a doctor's bill. Matusavage (M) went to P's employer several times, accused the P of being a "sneaky thief" who had stolen thousands of dollars from the creditor-doctor, that the employer (ER) could be "in trouble" if it had people like P as employees, and that the next time M went to the ER, he would bring a sheriff and P would be arrested.

law firm as "debt collector"
The law firm defendant was held to be a "debt collector" under the Fair Debt Collection Practices Act, 15 USC sec. 1692 et seq, i.e., a person whose principal business it is to collect debt, or who "regularly collects or attempts to collect debts owed to or due to another." The law firm "consistently has a small percentage of debt collections cases....a consistent taking and handling of debt collection cases" The court held that given this and other evidence, a "reasonable jury could find that" the law firm defendants are debt collectors under the FDCPA.

law firm liability for act of employee or indpt. contractor
Plaintiff claimed Matusavage was the law firm's employee. The firm said that M was an independent contractor, and that it was not liable for his actions. The court noted that there is "relatively little case law on the subject of vicarious liability under the FDCPA" but that "there are cases supporting the notion that an entity which itself meets the definition of 'debt collector' may be held vicariously liable for unlawful collection activities carried out by another on its behalf.'" Given this, summary judgment for D on this issue was held to be "inappropriate."

"ascertainable loss" under the state consumer protection law, 73 P.S. sec. 2270.1 et seq.
Defendants claimed that Plaintiff did not suffer an "ascertainable loss of money or property" and thus could not recover damages under the state consumer protection law, now known as Fair Credit Extension Uniformity Act (FCEUA), 73 P.S. sec. 2270.1 et seq. Noting that Plaintiff had stated a claim under the FDCPA, the court summarily rejected this claim, stating that "[i]t remains for [plaintiff] to present to a jury her 'ascertainable damages' for which she may recover 'actual damages or one hundred dollars ($100), which is greater.'"

defamation and civil conspiracy
The court also rejected defendants' summary judgment motion on these issues, noting a "genuine issue of material fact" on the defamation claim, and that "[q]uestions are raised which prevent" such action on the conspiracy claim.

Donald Marritz
MidPenn Legal Services