Summary:
Shortly before their divorce, the Plaintiff’s then wife obtained a credit card in his name, without his knowledge. Several years later, the Plaintiff discovered the credit card on his credit report and also began to receive collection letters and calls. These ceased until there was renewed collection activity (which is not described in the opinion) starting in January 2011, in response to which the Plaintiff retained counsel to demand verification of the debt. The Plaintiff’s counsel received a packet of documents and two telephone calls from the Scott Lowery Law Office (“SLLO”), a law firm based in Colorado and Oklahoma. The Plaintiff, himself, never received any communication from SLLO.
The Plaintiff nonetheless alleged that SLLO violated the FDCPA at 15 U.S.C. § 1692e, which prohibits debt collectors from making a false representation of the “character, amount or legal status of any debt” by failing to inform him that the debt could be barred by the Statute of Limitations.
The Court of Appeals described the split between jurisdictions that hold that the FDCPA does not apply to communications between debt collectors and a debtor’s attorney and those jurisdictions that allow such claims if it can be shown that “a debt collector’s unfair or misleading communication would be likely to deceive or mislead a competent attorney.” Finding that North Carolina courts had not adopted either position, the Court of Appeals held that under either the Plaintiff’s cause of action would fail.
Additionally, the Court of Appeals rejected the Plaintiff’s argument that the documents sent by SLLO violated the North Carolina Collection Agency Act (“NCCAA”) at N.C.G.S. § 58-70-115(1), which prohibit seeking acknowledgment of any debt barred by the statute of limitations. Based on the exclusion of licensed attorneys from the definition of “collection agency” in N.C.G.S. § 58-70-15(c)(8), SLLO was not subject to the limitation of N.C.G.S. § 58-70-115.
Commentary:
The logic normally given for the exclusion of attorneys from the NCCAA is that attorneys are otherwise subject to professional ethics and discipline by the appropriate State Bar. SLLO, which appears to be licensed in Colorado and Oklahoma, may or may not have an obligation under State Rules of Professional Conduct to reveal that collection of a debt was barred by the Statute of Limitations. For example, see Colo. RPC 4.1(2012) Rule 4.1[1]- Truthfulness in Statements to Others:
False Statements
[1] A lawyer is required to be truthful when dealing with others on a client's behalf, but generally has no affirmative duty to inform an opposing party of relevant facts. A false statement can occur if the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Omissions or partially true but misleading statements can be the equivalent of affirmative false statements. For dishonest conduct generally see Rule 8.4.
Accordingly, the proper response to this sort of collection action is to file a Complaint with the offending attorney’s State Bar.
Further, it is not clear how SLLO, licensed only in Colorado and Oklahoma, can legally act as attorneys collecting a debt in North Carolina. In fact, as a result of its defense in this case, SLLO could be judicially estopped from maintaining that it did not commit the unauthorized practice of law in North Carolina and should face prosecution by the North Carolina State Bar. While that would not result in money damages for the Plaintiff, I would hazard that SLLO would be less pleased facing such prosecution and discipline.
For a copy of the opinion, please see:
Saddler v. Scott Lowery Law Office- Attorney Not Subject to FDCPA or NC Collection Agency Act.pdf
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