Judge Grants MTD in FDCPA Case Over Alleged Refusal to Honor Payment Plan

Does allegedly agreeing to a payment plan only to back out of it constitute an unfair or deceptive practice under the Fair Debt Collection Practices Act? Not according to a District Court judge in Pennsylvania, who granted a defendant’s motion to dismiss last week, largely because the plaintiff never identified anything the defendant did that was misleading.

A copy of the ruling in the case of Snodgrass v. Tsarouhis Law Group can be accessed by clicking here.

The plaintiff was sued by the defendant for an unpaid debt. A representative from the defendant contacted the plaintiff’s daughter and worked out a payment arrangement. An agreement was sent to the daughter, who executed it, and sent it back to the defendant. After sending in the agreement and the first payment, the defendant allegedly reneged and refused to honor the settlement.

The plaintiff filed suit, alleging the defendant violated Sections 1692e(5), 1692e(10), and 1692d of the FDCPA, by refusing to honor the terms of the agreement.

But under Section 1692e(10) of the FDCPA, what false representation or deceptive means was used to attempt to collect on the debt, posited Judge W. Scott Hardy of the District Court for the Western District of Pennsylvania. The plaintiff never gets specific enough in his complaint to convince Judge Hardy that a false representation was made.

“Plaintiff does not allege that a particular statement made by Tsarouhis’s employee was false or misleading such that it did not actually communicate an offer to settle the lawsuit, nor does he allege any specific action that Tsarouhis took in ‘refusing to honor the settlement agreement,’ nor does he allege what action Tsarouhis should have taken under the terms of that agreement to demonstrate that it was ‘honoring’ it,” Judge Hardy wrote. “Similarly, Plaintiff also does not allege any specific action that Tsarouhis took in ‘abdicating its obligations’ under the agreement, nor does he allege what action Tsarouhis was obligated to take (but did not take) under the terms of the parties’ agreement. In fact, Plaintiff makes no specific allegations of Tsarouhis using false representations or deceptive means at all.”

Not honoring the terms of an agreement is not a false representation or acting deceptively, Judge Hardy ruled. “Not abiding by the terms of a settlement agreement is not, in and of itself – and without additional allegations as to specific violative actions taken or false statements made – use of a false representation or deceptive means,” he wrote.

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