Judge Grants MSJ For Plaintiff in FDCPA Case Over Post-Judgment Interest

A District Court judge in Connecticut has granted summary judgment in favor of a plaintiff who filed a Fair Debt Collection Practices Act suit because a judgment holder applied the highest post-judgment interest rate allowed by state law, even though the order did not specify the interest rate that could be applied.

A copy of the ruling in the case of Ceraldi v. Linda Strumpf and U.S. Equities Corp. can be accessed by clicking here.

The defendant obtained a judgment in state court for an unpaid credit card debt owed by the plaintiff. The defendant was awarded with a judgment for the full amount owed, plus “post judgment interest pursuant to General Statutes Sec. 37-3a and General Statutes Sec. 52-356d(e)” A specific interest rate was not mentioned.

The defendant began charging post-judgment interest on the amount owed at a rate of 10% per year, the maximum amount allowed by state law. The plaintiff filed suit, alleging the defendant violated the FDCPA by using false, deceptive, or misleading representation or means in connection with the collection of any debt.

Judge Janet Hall of the District Court for the District of Connecticut agreed with the plaintiff, saying the unilateral imposition of post-judgment interest at 10% per year, which was not awarded, is a “clear violation” of the FDCPA.

The defendant attempted to use the FDCPA’s bona fide error defense, arguing that it “erroneously believed that application of post-judgment interest at a rate of ten percent was neither false nor misleading because they relied on the state court’s judgment and Clarification Order, which explicitly provided for post-judgment interest at a rate of ten percent.”

But Judge Hall ruled the bona fide error defense does not apply because “the FDCPA violation resulted from the defendants’ mistaken belief that, absent a rate of post-judgment interest expressly set by the state court, defendants were entitled to set a rate at the maximum amount allowed under the statute.” In Connecticut, a default interest rate can not be applied when a court fails to include it in a ruling.

Judge Hall did grant a motion for summary judgment in favor of the defendant in relation to the application of pre-judgment interest and attorney’s fees.

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