A law firm not specializing in debt collection activity is not a “debt collector” under the Fair Debt Collection Practices Act because it was not “regularly” engaged in debt collection, according to the U.S. Court of Appeals for the Fifth Circuit. The case is Reyes v. Steeg Law.
Plaintiff Nicole Reyes filed a class action lawsuit against Louisiana law firm Steeg Law, L.L.C., alleging FDCPA violations arising out of letters sent by the firm on behalf of the condominium association for the complex where Reyes owned a unit. The letters demanded payment for amounts due to the association within seven days, instead of the 30 days prescribed by the FDCPA. The firm also allegedly continued to communicate with Reyes after learning she was represented by an attorney.
The district court granted Steeg Law’s motion for summary judgment, finding that the law firm did not meet the definition of a “debt collector” under the FDCPA because it was not “regularly” engaged in debt collection activity. Reyes appealed.
The Fifth Circuit began by noting that it had not developed a “bright-line rule” for determining when a law firm qualifies as a debt collector under the FDCPA and further indicated that it would continue to consider a variety of factors on a case-by-case basis.
To reach its decision, the Court analyzed the amount of “debt collection activity” conducted by the law firm. Steeg Law had sent 36 letters related to 34 liens in the year prior to Reyes filing her complaint. Further, about 1.3% of the firm’s overall revenue was “attributable to fees accrued through the representation of condominium associations in perfecting and enforcing liens and recovering delinquent balances,” and representing condominium association clients accounted for 1.5% of the firm’s total billable hours.
Based on these data, the court concluded that “[n]either this court’s precedent nor common sense compel a determination that these circumstances constitute regularly engaging in debt collection activity.” Thus, the district court did not err in holding that Steeg Law was “not a debt collector as defined by the [FDCPA].”