Judge Rules Settlement Does Not Entitle Plaintiff to Attorney’s Fees

Obtaining a settlement in a Fair Debt Collection Practices Act case does not necessarily make you the prevailing party and entitle you to attorney’s fees, a District Court judge in Texas has ruled in a case that was remanded back from the Court of Appeals for the Fifth Circuit.

A copy of the ruling from Judge Robert Pitman, who was newly assigned to the case of Ozmun v. Portfolio Recovery Associates, can be accessed by clicking here.

Judge Pitman was assigned the case after the original judge — Judge Sam Sparks — took senior status. It was Judge Sparks who, back in 2019, ordered the plaintiff’s attorneys in this case to pay $164,000 in fee’s and costs to the defendants because this case was “manufactured.” Judge Sparks didn’t like that the case took up two years of his time over a dispute of $57. The plaintiffs appealed the ruling and the Fifth Circuit reversed the award, saying there is nothing in the FDCPA or state law in Texas that authorizes the aware of attorney’s fees in a case and the bad faith that Judge Sparks saw was made “in the absence of any evidence.”

The case was remanded back to the District Court level and assigned to Judge Pitman to determine if the plaintiff’s were entitled to have their attorney’s fees covered because they were the prevailing party in the case by virtue of obtaining a settlement. But looking at the ruling in Tejero v. Portfolio Recovery Associates, in which the Fifth Circuit determined that settling a case did not entitle the plaintiff to have his attorney’s fees covered, Judge Pitman opted to follow suit.

“Because a settlement does not qualify a litigant as a prevailing party, the Fifth Circuit concluded that a settlement does not qualify as a successful action,” Judge Pitman wrote. “This Court will follow suit and find that Ozmun — having reached a private settlement that did not entail judicial relief-is not entitled to an award of attorney’s fees under Section 1692k(a)(3).”