Court Rules Collector Owes Finder’s Fee

The Court of Appeals for the Third Circuit has overturned a summary judgment ruling in favor of a collector, ruling that it does owe a finder’s fee to a company it hired to help it secure a contract to collect on debts owed to the federal government.

A copy of the ruling in the case of Fed Cetera v. National Credit Services can be accessed by clicking here.

The defendant entered into an agreement with the plaintiff to help it secure contracts to collect on debts owed to the federal government, in exchange for a finder’s fee. The defendant was invited to bid on a contract to collect debts on behalf of the Department of Education, for which it signed a contract to do so in 2014. The defendant did not begin performing work on the contract until late 2016. The defendant refused to pay finder’s fee, arguing that it did not begin performing the work until after the agreement between the plaintiff and the defendant had expired. The plaintiff sued, and a District Court ruled in favor of the defendant.

The defendant appealed the ruling and the Third Circuit reversed the ruling, determining that the agreement had been consummated and that the plaintiff owed the finder’s fee. The case was remanded back to the District Court. Again, the defendant filed a motion for summary judgment, and again, the District Court judge ruled in favor of the defendant. And again, the plaintiff appealed the ruling to the Third Circuit.

The underlying agreement between the two parties specifies that a finder’s fee is owed whenever a “fee transaction is consummated” and defined “fee transaction” as

the subsequent consummation of any contract with any Federal government agency for which [National Credit] has been invited to compete, and is later awarded a contract to perform, which both parties herein expressly agree shall have arisen due to any “teaming” or “subcontracting” engagement Finder may have facilitated in advance of any such award of a contract by a Federal government agency.

Regardless of when the work orders started, the fee transaction was consummated during the agreement period, the Third Circuit ruled.

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