In Helman v. Bank of America, 15-13672, 2017 WL 1350728 (11th Cir. April 12, 2017) the Eleventh Circuit Court of Appeal clarified important issues regarding the use of periodic mortgage statements after a bankruptcy discharge. In Helman thee debtor sued Bank of America after he received a periodic mortgage statements required by the Truth in Lending Act for his mortgage which he had discharged in bankruptcy. The statements he received were qualified by Bank of America in important ways, including being labeled as “FOR INFORMATIONAL PURPOSES” and containing a disclosure that Bank of America’s records indicated the debt was discharged in bankruptcy and that therefore the debtor had no personal obligation to repay the debt. Despite these disclosures, the debtor argued that periodic statement violated the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) insofar as it allegedly purported to attempted to collect a debt when no legal right existed to do so, and/or was misleading to the least sophisticated consumer because it suggested personal liability.

The district court dismissed these claims and the Eleventh Circuit affirmed. The Eleventh Circuit found that the FDCPA did not apply to Bank of America with respect to the periodic statements because Bank of America was not a debt collector. Specifically the Eleventh Circuit found that the parties did not dispute that Bank of America originated the debt at issue, and therefore Bank of America was not acting as a debt collector but rather as the original creditor seeking to collect its own debt.

However, since original creditors are not except from the FCCPA, the Court required other grounds to affirm the district court’s dismissal of that claim.

With respect to the FCCPA claim, the Court found that the periodic statement unambiguously disclosed to the debtor that it was not seeking to collect the debt from him personally but rather merely was disclosing information about the mortgage lien no real property which survived his personal bankruptcy discharge. The debtor argued that even though these disclosures were made to him, the least sophisticated consumer might be confused, including by statements qualifying the disclosures as applicable to one “currently a debtor in bankruptcy” since the debtor’s bankruptcy case was now over.

In rejecting this argument, the Eleventh Circuit declined to limit the universe of information available to the debtor to the periodic statement itself, and held that the information available to the least sophisticated consumer would also include information gleaned from the consumers experience in the bankruptcy process itself. Furthermore, the Court found that the limited ambiguity posited by the consumer as grounds for access to the FCCPA’s prohibition on “misleading” attempts to collect a debt, when taken together with the entirety of the information provided to the consumer, was insufficient to plausibly allege a misleading attempt to collect a debt because that ambiguity did not obviate the numerous unambiguous disclosures made to the consumer that the debt was discharged in bankruptcy and not collectable against him personally.

In rendering this holding, the Court stated that: “Such a conclusion—that a single potentially ambiguous communication would override a series of clear and unambiguous communications to the contrary—is exactly the type of ‘bizarre or idiosyncratic interpretation of collection notices’ to which we have refused to give protection even under the least sophisticated consumer standard. We likewise decline to do so here.”

This case is helpful both for those crafting periodic statements for borrowers with discharged debts but also for those who face efforts by the consumer bar to stretch the “least sophisticated consumer” standard beyond its breaking point. The Eleventh Circuit’s Helman opinion recognizes, again, that the least sophisticated consumer standard is not carte blanche to treat every ambiguity as a misleading or otherwise actionable under the FCCPA/FDCPA.

A copy of the opinion can be found here.