The FDCPA forbids communicating with a consumer “if the debt collector knows the consumer 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 attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer . . .” 15 U.S.C. § 1692c(a)(2). But when is the consumer “represented by an attorney with respect to such debt,” and what action, if any, is necessary to formalize that representation?
U.S. District Judge John Z. Lee of the Northern District of Illinois confronted these issues last week in Holcomb v. Freedman Anselmo Lindberg, 2017 U.S. Dist. LEXIS 42990 (N.D. Ill. March 24, 2014). Holcomb sued the defendant law firm for violating Section 1692g(a)(2) by sending her a copy of a motion for judgment after an attorney had appeared in court on her behalf.
The situation confronted by this defendant is one familiar to many collection attorneys. The law firm sued Holcomb in Cook County Circuit Court, seeking to recover money owed to its client on an unpaid credit card debt. Without filing a formal appearance of counsel, an attorney wrote to the law firm informing it that his firm represented Holcomb and that she disputed the debt. Upon receiving that letter the defendant coded its file for no contacts, noted that the debtor had an attorney, and subsequently mailed the attorney proof if the debt in response to his dispute letter.
At hearings on November 12, 2014, and January 6, 2015, the same attorney appeared for Holcomb. Orders signed by the state court acknowledged that appearance. Nevertheless, “Holcomb’s attorneys did not file a written appearance until January 20, 2015.” On January 8 (two days after the second hearing) the defendant moved for judgment based upon the debtor’s default. It mailed a copy of the motion and notice of motion to Holcomb and a separate copy of each to her attorneys.
In seeking summary judgment on the FDCPA claim the defendant made three separate, but related, arguments. First, it contended that it lacked knowledge of attorney representation because Holcomb’s attorney had not filed a written appearance at the time it mailed the motion to her. Second, it argued that Holcomb was technically proceeding pro se; therefore, it was merely adhering to the service rules for Circuit Court, and thus, its actions were undertaken with “the express permission of a court of competent jurisdiction” as permitted by Section 1692(a). Third, it asserted the FDCPA’s bona fide error defense. The District Court rejected all three arguments, denying the defendant’s motion and granting the plaintiff’s cross-motion for summary judgment.
Rejecting the first defense, the court concluded that “no reasonable jury could find based on the current record that Freedman did not know that Holcomb was represented by an attorney for the purpose of disputing her debt generally and for the purpose of representing her in the state collection case.” Rejecting the arguments concerning the failure to file a formal, stand-alone notice of appearance, the court focused not only on the actual knowledge possessed by the firm but also on the two state court orders, both of which recognized the debtor’s attorney and the fact that the Circuit Court judge addressed both attorneys at the hearing. The District Court further noted that the defendant had not complained of or objected to the lack of a formal appearance; therefore, it waived any complaint as to noncompliance with the appearance rules.
The Court found that the disposition of the first defense largely disposed of the second defense as well. It then rejected the bona fide error defense because the law firm “intentionally sent the court filings to Holcomb, and its decision to do so was based on an erroneous interpretation of the law.”
For collection firms dealing with debt defense attorneys, the lesson is that if the appearance is enough for the state court judge, it is enough for the FDCPA, regardless of whether the debtor’s attorney fully complied with the appearance rules. A collection firm that has doubts should either confirm the representation with the attorney or ask the state court to enforce the appearance rule, but until the attorney confirms the absence of representation or the state court makes a ruling a law firm that relies on technical appearance rules faces the risk of FDCPA litigation.