The Third Circuit Court of Appeals this week reversed the dismissal of a class-action case alleging violations of the Fair Debt Collection Practices Act by Bank of America and a law firm. The plaintiff alleged that the bank and firm, when they initiated foreclosure proceedings, assessed fees that had not yet been incurred. The court agreed that including the not-yet-incurred fees in the foreclosure complaint was an attempt to collect a debt that was not owed and, therefore, that the plaintiff’s claim against the law firm was wrongly dismissed.
Specifically, the court held that the plaintiff could proceed under FDCPA § 1692f(1) because the foreclosure complaint attempted to collect a debt not “expressly authorized” by the mortgage contract or permitted by law. However, because the firm did not “threat[en] to take an[] action that cannot legally be taken,” such as falsely threatening to file suit, the court affirmed that the plaintiff had not stated a claim under FDCPA § 1692e(5).
Perhaps most significant, the court held that pleadings—in particular, foreclosure complaints—can form the basis of FDCPA claims.
The court's opinion is here.
