Source: https://www.severson.com/consumer-finance/9th-cir-says-misstatement-in-debt-collection-complaint-was-material-under-fdcpa-says-rosenthal-act-defenses-still-apply-despite-acts-incorporation-of-fdcpa/
Timestamp: 2019-12-09 08:31:19
Document Index: 172306548

Matched Legal Cases: ['§ 1788', '§ 1788', '§ 1692', '§ 1788', '§ 1788', '§ 1788', '§ 1788', '§ 1692', '§ 1692', '§ 1788', '§ 1788', '§ 1788', '§ 2', '§ 2', '§ 2', '§ 2']

9th Cir. Says Misstatement in Debt Collection Complaint was Material under FDCPA; Says Rosenthal Act Defenses Still Apply Despite Act's Incorporation of FDCPA | Severson & Werson
9th Cir. Says Misstatement in Debt Collection Complaint was Material under FDCPA; Says Rosenthal Act Defenses Still Apply Despite Act’s Incorporation of FDCPA
In Afewerki v. Anaya Law Group, 2017 WL 3567829, at *4–5 (9th Cir. 2017), the Court of Appeals for the Ninth Circuit held that a misstatement of the debt in a debt collection complaint was material.
We agree and conclude that Anaya Law Group’s $3,000 overstatement of the principal due in the state court complaint,2 exacerbated by the statement of an inflated interest rate, was material. Just as in Powell, the fact that the debt collector corrected its mistake after the debtor challenged it does not mean that a less sophisticated debtor would have been so lucky. Unlike the debtor in Donohue, who was served with a complaint that was correct in stating the amount owed, the least sophisticated debtor in Afewerki’s position would not have had the option to avoid the lawsuit by simply “pa[ying] the accurately stated sum to settle [the] debt.” 592 F.3d at 1034; see also id. (“[A]pplying an incorrect rate of interest would lead to a real injury….”). Rather, the least sophisticated debtor in Afewerki’s position, concerned that he had been sued, may well have simply paid the amount demanded in the complaint and would have overpaid by approximately $3,000. There are other circumstances in which the errors in the complaint Anaya Law Group filed might have impacted the least sophisticated debtor. One circumstance discussed by the district court and the parties is the possibility that the state court case could have proceeded to default judgment. Contrary to Anaya Law Group’s argument, it is not certain that LAFCU would have been required to submit copies of its accounts or otherwise would have proved that the amount it sought was correct prior to entry of a default judgment. The Appellate Division of the Los Angeles County Superior Court has held that a credit card company attempting to collect a debt from a customer need not submit documentary evidence in order to obtain a clerk’s default judgment for a definite sum. HSBC Bank Nev., N.A. v. Aguilar, 205 Cal.App.4th Supp. 6, 141 Cal.Rptr.3d 206, 211 (App. Dep’t Super. Ct. 2012). This decision could have guided proceedings in the Los Angeles County Superior Court had Afewerki’s case proceeded to default judgment. Thus, the least sophisticated debtor in Afewerki’s position might not only have been misled as to the amount owed, but could also have had a judgment for an inflated amount entered against him. For these reasons, we conclude that the incorrect statement of the principal due in the state court complaint, which was further inflated by the incorrect interest rate, was material.
The Court of Appeals held, however, that as to the Rosenthal Act, however, the debt collection could cure the error within 15 days.
Afewerki argues that legislative history documents suggest that, in approving § 1788.17, the California legislature intended to remove the § 1788.30(d) defense. . . .Section 1788.17 makes debt collectors “subject to the remedies in Section 1692k” but says nothing about defenses. Section 1788.30(d) is a defense, not a remedy. To be sure, there are remedies included in 15 U.S.C. § 1692k that were not available under the Rosenthal Act prior to enactment of § 1788.17. . . . But, again, these are remedies, not defenses. Furthermore, as we explained in a previous decision, § 1788.17 did not delete § 1788.30, but rather nullified some of § 1788.30’s limitations on remedies to the extent that those limitations did not apply to the remedies described in § 1692k. Gonzales, 660 F.3d at 1065. There is nothing in § 1692k that would suggest nullification of § 1788.30(d)’s defense for cured violations. Accordingly, it appears to us that the defense provided by § 1788.30(d) remains available under the Rosenthal Act. “California, of course, remains free to tell us if, in this respect, we [a]re wrong.” Evans v. Chavis, 546 U.S. 189, 200, 126 S.Ct. 846, 163 L.Ed.2d 684 (2006). In the absence of such direction, however, we conclude that Defendants are not liable under the Rosenthal Act because Defendants cured the violation within fifteen days of discovering it. Cal. Civ. Code § 1788.30(d). On this basis, we affirm the district court’s grant of summary judgment to Defendants as to the Rosenthal Act claim
CEB Prac. Guide § 2A.07 -- Statutory Background and Pre-emption -- California's Partial Adoption of the Federal FDCPA CEB Prac. Guide § 2A.34 -- Communications with the Debtor -- False or Misleading Representations CEB Prac. Guide § 2A.34B -- False or Misleading Representations (Legal Status of Debt or Charges) CEB Prac. Guide § 2A.60 -- Defenses -- Statutory Safe Harbor for Bona Fide Errors -- 15 Day Right to Cure FDCPA (Fed & State)