In Lisa Bridge v. Ocwen Federal Bank, the Sixth Circuit reversed a dismissal in a FDCPA case brought by pro se plaintiffs regarding their mortgage.
Lisa Bridge, the only person listed on her mortgage, owed monthly payments to Aames Capital Corporation. Her bank, Firstar, refused to honor her April mortgage check. Thereafter, Lisa ordered Firstar issue an “official check” to Aames, but Firstar refused to honor that check as well. Aames then notified Lisa that she was in default and assessed a late fee. Firstar ultimately honored a second “official” check and, additionally, Lisa’s personal check. Therefore, Lisa satisfied April’s payment and paid May’s in advance.
In the meantime, Aames assigned the mortgage to Ocwen, which the Bridges alleged is a division of Deutsche Bank. Ocwen began “dunning” both Lisa and her husband William (who is not listed on the mortgage). Ocwen repeatedly called the Bridges, despite cease and desist requests made to the federal “Do Not Call” directory; threatened foreclosure; assessed monthly late fees; and reported negative information to credit reporting agencies. Further, Ocwen apparently retained a law firm, which sent a foreclosure threat by mail. Plaintiffs Lisa and her husband William Bridge sued Oscwen and Deutsche and related parties under the Fair Debt Collection Practices Act (“FDCPA”). The district court dismissed the Complaint, holding that defendants did not fall within the Act’s definition of “debt collector.”
On appeal, the Sixth Circuit reversed, holding that the Bridges alleged facts sufficient to satisfy the statutory definition of debt collector under the FDCPA (15 U.S.C. § 1692(a)(6)), which requires—in addition to persistent collection efforts intended to harass, oppress, or abuse—that the defendant seek collection of debts “owed or due or asserted to be owed or due another” and utilize interstate commerce in collection efforts. Furthermore, the Court rejected as “disingenuous” and “exemplary of an unsettling trend in FDCPA claims” Ocwen’s argument that plaintiffs’ position that the mortgage was not in default relieves Ocwen of liability under the Act. Although the FDCPA does exclude from the definition of debt collector efforts related solely to a debt which is not in default at the time it is obtained, the Sixth Circuit held that defendants could not “have it both ways”—for years demanding payment on a defaulted mortgage then, for purposes of avoiding liability, denying the mortgage was in default to begin with.
The Court held that “the definition of debt collector pursuant to §1692(a)(6)(F)(iii) includes any non-originating debtor holder that either acquired the debt in default or has treated the debt as if it were in default at the time of acquisition.” This holding, the Court noted, is supported both by the language of the FDCPA itself, which uses the word “asserted to be owed or due another,” and the legislative history suggesting that Congress meant to enact a sweeping reform to a “widespread problem.” These holdings were also applicable to William Bridge because Congress intended to protect family members “who do not owe money, but may be deliberately harassed.” Judge Clay concurred in the judgment regarding one of the defendants, but effectively dissented as to the thrust of the majority’s opinion.