The United States Court of Appeals for the Eleventh Circuit ruled that the federal FDCPA can apply to a law firm that serves a demand for payment and notice of intent to foreclose upon a defaulted mortgage borrower. The plaintiffs, defaulted mortgage borrowers, alleged that the defendant, a foreclosure law firm, violated the FDCPA by sending a notice that contained “misrepresentations.” The trial court granted the law firm’s motion to dismiss, holding that the law firm was not a “debt collector” within the purview of the FDCPA, and that sending the foreclosure letter was not an attempt to collect a debt but instead was merely an attempt to enforce a client’s security interest.
Reversing the trial court, the Eleventh Circuit held that the law firm’s letter could be both an attempt to enforce a security interest and to collect a debt, and, therefore, that plaintiffs had adequately pled a claim for violation of the FDCPA – a ruling that lends support to plaintiffs seeking to hold law firms liable for their role in the foreclosure process. While holding that the FDCPA is not per se inapplicable to a foreclosure law firm, this opinion may be of limited significance beyond the early pleading stages of case. The Eleventh Circuit’s based its ruling in part upon the very plaintiff-friendly pleading standard applied to a motion to dismiss, and thus did not examine the actual merits of plaintiffs’ allegation that the law firm’s foreclosure notice contained “misrepresentations.” Click here for the opinion.