The Court of Appeals for the Tenth Circuit has affirmed a summary judgment ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act because it was not licensed as a collection agency when it filed a lawsuit to collect on an unpaid debt.
A copy of the ruling in the case of McMurray v. Forsythe Finance can be accessed by clicking here.
The plaintiff purchased a vehicle and defaulted on making the loan payments. The vehicle was repossessed and sold, yielding a deficiency balance that was sold to the defendant. The defendant filed a lawsuit in Utah state court seeking to collect on the balance. The plaintiff responded to the suit, but not to the ensuing summary judgment motion, and the defendant was awarded a default judgment.
The plaintiff then filed a class-action lawsuit of his own in Utah state court, which the defendant removed to federal court. The suit accused the defendant of violating the FDCPA and state law in Utah because it was not licensed as a collection agency when it attempted to collect on the debt. The district court granted summary judgment for the defendant on the grounds of claim preclusion.
The plaintiff argued that the alleged injury occurred when the defendant filed the lawsuit to collect on the debt as an unlicensed collection agency, but the time to raise that argument was during the initial collection lawsuit, the Appeals Court ruled. “Because McMurray’s claims before this Court arose from the same transaction as his Utah state court claims, they could and should have been raised in the Utah state court action,” the Appeals Court wrote.