Charles Lamirand v. Fay Servicing, LLC

Citation: Not availableDocket: 20-14286

Court: Court of Appeals for the Eleventh Circuit; July 1, 2022; Federal Appellate Court

Original Court Document: View Document

Combined Opinion SummaryCombined Opinion Original

EnglishEspañolSimplified EnglishEspañol Fácil

The Eleventh Circuit Court of Appeals considered the case of Charles and Tracy Lamirand against Fay Servicing, LLC, following a lower court's dismissal of their complaint alleging violations of the Fair Debt Collection Practices Act (FDCPA) and Florida’s Consumer Collection Practices Act. The Lamirands defaulted on their mortgage and entered a settlement agreeing to pay $85,790.99. However, after Fay Servicing took over the loan, the Lamirands received periodic statements indicating that their loan had been accelerated, increasing the amount owed to $92,789.55, and warning them of potential foreclosure.

The Lamirands argued that these statements constituted unfair debt collection practices under the FDCPA, which prohibits misleading debt collection communications. The district court dismissed their claims, reasoning that the statements were not related to debt collection since Fay Servicing was required to send them under the Truth in Lending Act. The appellate court reversed this decision, asserting that there is no inherent conflict between the FDCPA and the Truth in Lending Act and that a periodic statement can serve as both a compliance document and a debt collection communication. They emphasized the need to harmonize the statutes and noted that the complaint plausibly alleged that the statements were intended to collect debt. The court ultimately reinstated the Lamirands' complaint and remanded the case for further proceedings.

The court found that the Lamirands plausibly alleged a claim under the Fair Debt Collection Practices Act (FDCPA) against Fay Servicing regarding its periodic statements, which were deemed attempts to collect a debt. The review of the dismissal was de novo, accepting factual allegations as true. A complaint survives a motion to dismiss if it presents a claim that is plausible on its face, allowing for reasonable inferences of liability. The FDCPA prohibits false or misleading representations and the use of unfair practices in debt collection. The Lamirands argued that Fay Servicing's periodic statements contained false information suggesting they owed a larger amount, potentially misrepresenting their settlement agreement.

The court emphasized that a communication is linked to debt collection if it conveys information about a debt and aims to induce payment. Fay Servicing's statements provided details about the debt, including principal, interest rate, payment due date, and delinquency, while urging payment and warning of consequences for non-payment, such as foreclosure. The inclusion of a detachable payment coupon further indicated an intent to prompt payment. 

Fay Servicing contended that the statements were exempt from FDCPA regulations due to requirements under the Truth in Lending Act (TILA). However, the court rejected this argument, stating that both TILA and FDCPA apply, and emphasized the need to harmonize overlapping statutes rather than favor one over the other. This led to the conclusion that the Lamirands' FDCPA claims could proceed as their statements plausibly aimed to induce payment.

Periodic statements under the Truth in Lending Act (TILA) can serve as a means of debt collection without conflicting with the Fair Debt Collection Practices Act (FDCPA). TILA mandates that servicers send periodic statements, while the FDCPA requires these statements to be fair and accurate if they aim to induce payment. The dual purposes of informing the borrower and collecting a debt can coexist, and a factfinder may conclude that the statements from Fay Servicing sought to collect a debt owed by the Lamirands.

Despite Fay Servicing's argument that their statements were solely informational, the content included persuasive language beyond the standard template provided by the Consumer Financial Protection Bureau (CFPB). For instance, the statements featured commands to “detach” and “return” payment coupons, and extensive details on payment methods that suggest a collection intent.

Fay Servicing's reliance on a CFPB bulletin claiming exemption from FDCPA liability is misplaced, as the bulletin addresses a different provision regarding communication restrictions and does not absolve servicers from the requirement to ensure the accuracy and fairness of debt collection communications. The TILA encourages accurate information dissemination, which aligns with the FDCPA's mandates. Consequently, servicers can be held liable for misleading statements in their periodic statements. Ultimately, both statutes must be adhered to, leading to the reversal of the district court’s dismissal of the Lamirands’ complaint.