Incorrect Motion For Default Is A Violation Of The FDCPA; Providing The Debtor With An Incorrect Account Balance Is Not

In Grden v. Leikin Ingber & Winters PC, 643 F.3d 169 (June 27, 2011, 6th Cir. 2011) the debtor plaintiff sued his creditor’s law firm under the FDCPA on two theories. First, in a state-court debt-collection action against the debtor, the defendant served him with a motion for default judgment, although he had not missed the deadline for answering the complaint. Second, when he thereafter called the defendant to verify his account balance, he was provided with incorrect amounts. The district court granted summary judgment to the defendant and the Sixth Circuit reversed the finding that the motion for default was not deceptive but affirmed that the defendant’s communications containing the wrong amounts were not covered by the Act. The court agreed with the debtor that a jury could find the motion for default was misleading because it falsely suggested that the debtor had already missed the deadline to respond. The court rejected the defendant’s argument that since the motion merely requested that a judgment be entered upon default the least sophisticated consumer would understand from those two words that he had not already been defaulted. [T]o us those words are an exercise in studied ambiguity. They merely recite the necessary condition for relief, rather than saying anything about whether the condition has already occurred. Thus, there is nothing about the motion for default judgment that would upend the consumer’s natural inclination to think there must be some factual basis for it – i.e., that he has already defaulted. The court, however, disagreed with the plaintiff that the statements containing the incorrect account information was a communication in connection with the collection of a debt because the animating purpose of the communication was not to induce payment by the plaintiff. Although the statements came from a debt collector and stated the balance due, the decisive point is that defendant made the balance statements only after plaintiff called and asked for them. The statements were merely a ministerial response to a debtor inquiry, rather than part of a strategy to make payment more likely. No reasonable jury could conclude that these statements were an attempt to collect a debt.

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