Appeals Court Vacates $70,000 in Attorney’s Fees in FDCPA Case

The Court of Appeals for the Seventh Circuit has overturned a lower court’s decision in an Fair Debt Collection Practices Act case that awarded a plaintiff’s attorney nearly $70,000 in fees.

The plaintiff had sued two defendants — a debt buyer and a collection agency working on the debt buyer’s behalf — for allegedly violating the FDCPA by filing a lawsuit against the plaintiff in the wrong venue. The lawsuit against the plaintiff was filed in the proper venue at the time it was filed, but a ruling in Suesz v. Med-1 Solutions, which retroactively ruled that lawsuits must be filed in the “smallest venue‐relevant geographic unit where the debtor signed the contract or resides at commencement of suit,” made the original venue now not the correct location. The plaintiffs re-filed the lawsuit in the proper venue the day after the ruling in Suesz was announced, but the defendant filed her own lawsuit, alleging the two companies violated the FDCPA.

A copy of the ruling in the case of Iwona Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC and Midland Funding, can be accessed by clicking here.

Midland settled with the plaintiff for $5,000 plus release of the debt in question. The case against Blatt went to trial and the plaintiff was awarded $200 in statutory damages. The plaintiff was also awarded $69,393.75 in attorney’s fees and $772.95 in costs against the remaining defendant. Blatt appealed the ruling. The Court of Appeals ruled that the settlement with Midland should have mooted the claim against Blatt, and as a result, that claim should have been dismissed and the plaintiff is not entitled to any award.

“Generally, a plaintiff is only entitled to a single recovery for a single injury, regardless of how many defendants could be liable for that single injury, or how many different theories of recovery could apply to that single injury,” the court wrote in its ruling.

Because the FDCPA caps statutory damages at $1,000 “per action,” and not per defendant, and because the lawsuit against Midland and Blatt related to one incident — the filing of the lawsuit in the incorrect venue — the plaintiff is not entitled to separate awards from multiple defendants, the appeals court ruled.

“Therefore, we conclude FDCPA additional damages are not multiplied by the number of defendants where the plaintiff suffered an indivisible harm caused by defendants who did not violate the FDCPA independently of each other,” it wrote.

 

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