In Gibbs v. Blitt and Gaines, 2014 Ill.1st 123681 (February 11, 2014), the debtor on behalf of a class sued the defendant law firm under the FDPCA. Relying on an earlier appellate decision, _LVNV Funding, LLC v. Trice_, 952 N.E.2d 1232 (2011), which held that a judgment obtained by an unlicensed collection agency is a nullity, the debtor alleged that by filing suit on behalf of an unlicensed collection agency, the law firm violated the FDCPA’s prohibition on the use of false, deceptive, or misleading representations in connection with the collection of a debt. The trial court granted the law firm’s motion to dismiss. The appellate court affirmed noting, first, that _Trice_ did not conclusively hold that a judgment obtained by an unlicensed collection agency was void. The court in _Trice_ remanded the cause to the trial court and upon a petition for rehearing, the court modified its judgment to acknowledge that new constitutional arguments had been raised which the trial court would address on remand. On remand, the trial court determined that the Illinois Act’s provision criminalizing the failure to register as a collection agency is unconstitutional, and that the underlying judgment against the debtor should have been voidable rather than void. (Note that _Trice_ is currently pending on direct appeal to the Illinois Supreme Court). _Trice_, as it now stands, does not sufficiently support the claim that the law firm engaged in actionable debt collection activity by pursuing a frivolous complaint. Furthermore, the attorneys did not violate the Illinois Act because the Illinois Act governs only collection agencies and debt collectors and expressly exempts attorneys. Since the attorneys committed no violation of the Illinois Act, and therefore engaged in no misconduct by filing the complaint, the FDCPA claim could not stand. Finally, the court took note of federal case law which found that the FDCPA section at issue applies only to threats to take action that cannot legally be taken, but not illegal actions actually taken. The trial court’s decision was affirmed.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
