4th Circuit: Powell v. Palisades Acquisition- Assignment of Judgment was an Action in Connection with the Collection of a Debt

Summary: Ms. Powell incurred a credit card debt original with Direct Merchants. After losing her job, she fell into default and Platinum Financial, the assignee of the debt, obtained a judgment against Ms. Powell. Several years later, Platinum Financial sold the debt to Palisades Acquisition, whose attorney filed an Assignment of Judgment that erroneously stated the outstanding balance owed. Ms. Powell was able to have the judgment vacated due to such errors and then commenced suit against Palisades Acquisition and its attorney, asserting claims under the FDCPA for overstating the balance due in the Assignment of Judgment. The District Court granted summary judgment for Palisades Acquisition, finding that an Assignment of Judgment did not qualify as conduct taken “in connection with the collection of any debt” under 15 U.S.C. § 1692e or conduct taken “to collect or attempt to collect any debt,” under 15 U.S.C. § 1692f, as the “[f]iling an Assignment of Judgment is not an action against a consumer, but rather a request to the court that it recognize a right of the filing party.” Reversing the district court, the Fourth Circuit held that in reviewing the language of the FDCPA, “[I]t is apparent that nothing ... requires that a debt collector’s misrepresentation be made as part of an express demand for payment or even as part of an action designed to induce the debtor to pay.” Instead, the FDCPA allows suit for prohibited practices if such are “in connection with the collection of any debt” or in an “attempt to collect any debt,” which is “a standard significantly broader than that employed by the district court.” Turning then to an analysis of whether an Assignment of Judgment is an action “in connection with the collection of any debt” the Court of Appeals rejected as “too cramped” the conclusion by the district court that an Assignment of Judgment “simply preserves the rights of the assignee by establishing [that it is] the rightful owner of a judgment.” Instead the opinion recognized “the crucial role that the filing of an assignment of judgment plays in giving the assignee access to court-sanctioned enforcement procedures.” Commentary: This decision applies a very broad standard to applying the FDCPA to practices “in connection with the collection of any debt” and includes within the FDCPA any steps taken by debt collectors in obtaining “access to court-sanctioned enforcement procedures.” This would seem to support the position adopted by the 11th Circuit in In re Crawford, where the FDCPA was found to apply to Proofs of Claim filed in bankruptcy cases, and call into question the vitality of the bankruptcy opinions, including those from North Carolina, that took a “cramped” view of the FDCPA and preclude its application to the claims process. For a copy of the opinion, please see: Powell v. Palisades Acquisition- Assignment of Judgment was an Action in Connection with the Collection of a Debt