A District Court judge granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling that the plaintiff’s claims were barred because they should have been addressed in an earlier case instead of a separate lawsuit being filed.
The background: The plaintiff filed bankruptcy protection in January 2020, listing the debt in question. The debt was discharged in April 2020 when the creditor did not object to the bankruptcy or appear at any hearings.
- Despite the discharge, the debt was later assigned to the defendant, which, through an attorney, filed a lawsuit in Utah state court in December 2022 to collect the discharged debt.
- The state court dismissed the collection lawsuit with prejudice in March 2023, recognizing that the debt had been discharged in bankruptcy and that the defendant had no standing to collect it.
- Following the dismissal, the plaintiff filed the current lawsuit, alleging violations of the FDCPA and the Utah Consumer Sales Practices Act (UCSPA) due to the attempt to collect a discharged debt.
The ruling: The time for the plaintiff to raise her issues was while the underlying collection lawsuit was still proceeding, ruled Judge Dale A. Kimball of the United States District Court for the District of Utah. Under Utah law, the plaintiff should have raised her FDCPA and UCSPA claims in the initial state court action rather than filing a subsequent federal lawsuit.
- Citing a recent Tenth Circuit precedent, the judge emphasized that FDCPA and UCSPA claims related to the filing of a collection lawsuit must be raised in that action and not in a separate proceeding, a concept known as claim preclusion.
- The plaintiff attempted to argue that the defendant had waived its ability to argue claim preclusion because it had not asserted the defense early enough in the proceedings. But Judge Kimball ruled that the defendant could still raise the defense at this stage of the case, given that precedent in the Court of Appeals for the Tenth Circuit was issued after the defendant’s initial response in the case.
