Appeals Court Reverses Ruling in Favor of Collection Law Firm

The Court of Appeals for the Sixth Circuit has overturned a lower court’s ruling in favor of a collection law firm that was sued for attempting to collect a debt from the spouse of the actual debtor, ruling that the law firm did not exhaust all of its efforts to collect from the actual debtor first, under state law in Ohio.

A copy of the ruling in the case of Snyder v. Finley & Co. can be accessed by clicking here.

Snyder’s husband was convicted of embezzlement and willful failure to pay taxes and was sent invoices for his legal fees, which he did not pay. The law firm hired Finley to collect on the debt and it filed a lawsuit against the husband and Snyder, under Ohio’s Necessaries Statute, which dictated that a husband was liable to third parties for necessaries, such as food, shelter, and clothing that were provided to his wife. A state court ruled in favor of Snyder and a state Appeals Court denied an appeal from Finley on its claim.

Snyder then filed a suit against Finley, alleging it violated the Fair Debt Collection Practices Act by trying to collect under the claim that she was liable for her spouse’s debt. A District Court judge granted the defendant’s summary judgment motion, which the plaintiff appealed.

The defendant’s problems, according to the Appeals Court, stemmed from an Ohio Supreme Court ruling that was issued less than a year before Finley filed its original collection lawsuit against the husband and wife. The ruling held that nondebtor spouses only become liable if the spouse does not have the assets to pay for his or her necessaries. Thus, the collection efforts against the spouse who incurred the debt must be exhausted before attempting to collect from the nondebtor spouse, the Ohio Supreme Court ruled. That did not happen here, the Sixth Circuit noted, in reversing the District Court’s judgment and remanding with instructions to enter judgment in favor of the plaintiff and for further proceedings consistent with the opinion.

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