Appeals Court Upholds Ruling Denying Defendant’s Request for Relief of Judgment in FDCPA Case

The Court of Appeals for the Ninth Circuit has affirmed a lower court’s ruling denying a debt collector’s motion for relief from a judgment because of “gross negligence” by its attorney for failing to respond to a motion for summary judgment filed by the plaintiff in a Fair Debt Collection Practices Act lawsuit that ultimately saw the plaintiffs awarded nearly $30,000 in attorney’s fees and awards.

A copy of the ruling in the case of Sylvester v. Merchants Credit Corp. can be accessed by clicking here.

The defendant sued the plaintiffs in order to attempt to collect on an unpaid healthcare debt. The plaintiffs, through their attorney, responded to the complaint. The defendant then sent the plaintiffs an “application for writ of garnishment” directly to them, and not their attorney. The plaintiffs filed suit, alleging the defendant violated Section 1692c(a)(2) of the FDCPA, which prohibits collectors from contact consumers known to be represented by an attorney.

The defendant was being represented by an attorney who was going through “significant personal issues,” according to court documents, and ended up filing for bankruptcy protection and surrendering his license to practice law in lieu of being disbarred. The defendant was not aware of these problems and was made aware that the plaintiff had won summary judgment after it received its own garnishment order. It filed a motion to be relieved from the judgment because of the actions of its attorney. A District Court judge denied the motion, which was then appealed to the Ninth Circuit.

Ultimately, the defendant “maintained an active role in the litigation at the district court,” the Ninth Circuit ruled in affirming the lower court’s decision to deny the motion. The defendant even mailed a check to the plaintiffs to satisfy the District Court’s decision just three days after the decision was announced.

“We cannot conclude both that Merchants was aware of the judgment and sent a check
in satisfaction but was also prevented from taking timely action to prevent or correct
the entry of the judgement,” the Ninth Circuit wrote. “There is no showing that counsel’s
conduct was grossly negligent and given counsel’s many pleadings and efforts for
his client, there can be no serious claim of client abandonment.”

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