Court Awards Attorney Fees to Debt Collector, Finds Plaintiff Filed FDCPA Case in Bad Faith

Yesterday, the Eastern District of Washington did something rare: it awarded attorney fees and costs to a debt collector for defending a Fair Debt Collection Practices Act (FDCPA) case that the consumer brought in bad faith.

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In Vougas v. Suttell and Hammer, PS, No. 2:18-cv-331 (E.D. Wash. Sept. 3, 2019), the creditor obtained a judgment against the consumer for the amount owed on a credit card. The creditor hired Suttell and Hammer, PS (Suttell), a debt collection law firm, to collect on the judgment. Suttell sent a collection letter to the consumer to collect $14,968.09, which represents the unpaid balance on the account. The consumer filed an FDCPA claim alleging that the letter misrepresented the amount of the debt because the letter was silent as to interest or fees. The lawsuit also contained a state law claim for a similar allegation.

The court granted summary judgment in favor of Suttell, finding that there is nothing wrong with the letter it sent. Washington state law requires debt collectors to disclose the amount of the debt by listing the unpaid balance and interest/fees if any exist. The evidence presented in the case showed no indication that Suttell or the creditor ever tried to collect anything other than the unpaid balance—in other words, there was no evidence showing that Suttell or the creditor ever tried or intended to collect interest or fees. The consumer “produced nothing more than 'bald assertions' to controvert that fact.”

The court used the same reasoning to find in favor of Suttell on the FDCPA claim. The court stated that there is no affirmative duty for a debt collector to disclose that interest is not accruing and the consumer failed to cite any authority to show otherwise.

Most notably, the court states:

Given the lack of any authority cited by Vougas or evidence to support that Suttell indeed had violated the FDCPA, or the WCAA, the Court finds that the lawsuit was not undertaken in good faith. 

Due to this lack of good faith, the court awarded attorney fees and costs to the debt collector under section 1692k(a)(3) of the FDCPA.

insideARM Perspective

If cases like this or Vedernikov are any indication, the tides seem to be turning in the courts. The cottage industry of plaintiffs’ counsel has been flooding debt collectors with hypertechnical lawsuits for some time now. Judge Cogan out of the Eastern District of New York recently dubbed these lawsuits as “lawyer’s cases” because the creativity of the claims goes beyond that which a least sophisticated consumer is capable of. Courts now are starting to see that the FDCPA is being used as a means of “debt evasion and to prop profits among the plaintiffs’ bar.” Will these recent rulings stop the hypertechnical “lawyer’s cases?” Probably not, but at least now debt collectors are armed with the knowledge that the courts are starting to see these suits for what they are.

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Trends, such as courts seeing through these hypertechnical claims, are becoming more apparent. You can keep up with it through iA's Case Law Tracker, which allows you to conduct incisive and quick legal research in less time than it takes to pour your morning cup of coffee.