Appeals Court Overturns Dismissal of Collection Suit, and Dismissal of Collector as Named Defendant

The Court of Appeals for the District of Columbia has reversed a lower court’s ruling dismissing a Maryland Consumer Debt Collection Act case, determining that an employee of the defendant should continue as a named defendant in the case, and that the defendant should not have continued to contact the plaintiff directly after being notified that he was being represented by an attorney.

A copy of the ruling in the case of Scott v. FedChoice Federal Credit Union and Alexandria Kelly can be accessed by clicking here.

The plaintiff obtained a credit card from FedChoice and later defaulted on the unpaid balance after suffering health problems. The credit union and Kelly attempted to collect on the unpaid debt by sending letters, making phone calls, and having conversations in person with the plaintiff when he visited the institution in person. The plaintiff filed suit, alleging the defendants violated the MCDCA by disclosing in a letter that legal proceedings may be instituted against him if the account was not settled within five days of receipt of the letter because a decision had not yet been made, by contacting the plaintiff after being notified that he was being represented by counsel, and by calling the plaintiff and threatening legal action even though the defendants knew the plaintiff was in the hospital and on medication.

A District Court judge sided with the defendant and granted its motion to dismiss, also ruling that Kelly should be dismissed from the case as a named defendant. The plaintiff appealed the ruling.

The Court of Appeals agreed with the lower court that mentioning legal action may be instituted if a settlement was not reached did not violated the MCDCA, but disagreed with the lower court on the other two items.

Regarding being represented, the claims made by the plaintiff were strong enough to survive a motion to dismiss, ruled the Appeals Court. The MCDCA incorporates the Fair Debt Collection Practices Act into its statute, including Section 1692c(a)(2), which prohibits collectors from communicating directly with consumers when they are represented by an attorney. At one point, during a conversation with the plaintiff, when told that he was being represented, Kelly allegedly said that she would continue to communicate directly with the plaintiff.

As well, during one of the calls, Kelly called the plaintiff and was informed that he was in the hospital. Kelly noted that the plaintiff sounded like he was on some type of medication, but nonetheless demanded that he make a payment. “… the allegation that Kelly demanded payment from Scott in a phone call after learning he was then in the hospital and ‘sounded like he was on some type of medication’ plausibly could state a claim of abuse or harassment in violation” of the MCDCA, the Appeals Court wrote.

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