A U.S. Magistrate Judge has ruled that a law firm’s violations of the Fair Debt Collection Practices Act (FDCPA) could not make the firm automatically liable under M.G.L. c. 93A, the Massachusetts Consumer Protection Statute. In McDermott v. Marcus, Errico, Emmer and Brooks, P.C., Judge Marianne B. Bowler initially found after a non-jury trial that the law firm had violated several provisions of the FDCPA in the course of seeking unpaid condominium fees on behalf of a client. The Judge determined that the law firm’s conduct resulting in FDCPA liability was a per se violation of Chapter 93A, pursuant to 940 CMR 3.16, a Massachusetts regulation establishing Chapter 93A liability for violations of “Federal consumer protection statutes….”
In a post-trial motion, the law firm disputed the findings concerning FDCPA liability and also sought reconsideration of the Chapter 93A ruling, arguing among other things that there could be no Chapter 93A liability absent a showing that the law firm’s conduct arose from trade or commerce.
On the law firm’s motion, the Judge ruled that the earlier judgment on the Chapter 93A count should be amended because in the time since the judgment was entered, Massachusetts law had changed with respect to per se Chapter 93A liability. The intervening change in the law came in the Supreme Judicial Court’s recent decision in Klairmont v. Gainsboro Restaurant, Inc., in which the Court held that Massachusetts regulations do not require per se Chapter 93A liability any time a consumer protection statute is violated. Instead, violation of a consumer protection statute can be the basis for per se Chapter 93A liability only where the defendant is engaged in “trade or commerce” as defined in Chapter 93A.
In light of the Klairmont decision, the Judge ruled that the law firm could not be liable under Chapter 93A because it was not engaged in “trade or commerce” while seeking unpaid condominium fees for a client. The Judge explained that the law firm was not acting in a “business context,” as parties do not enter a business relationship merely by becoming adversaries on opposite sides of litigation, and filing a lawsuit by itself is not “trade or commerce.” The Judge also ruled that in its efforts to collect the unpaid condominium fees, the law firm’s conduct was “vigorous and aggressive,” not “deceitful.”
The Judge’s application of the Klairmont decision to the dispute in the McDermott case is significant, because it provides a rationale for excluding Chapter 93A liability for attorneys seeking to collect debts on behalf of clients. The ruling in McDermott places debt collection by attorneys squarely within the scope of lawyerly activities to which Chapter 93A does not apply. Thus, based on the Judge’s reasoning, although attorneys, like others engaged in debt collection, must comply with the requirements of the FDCPA, their violation of the FDCPA cannot by itself result in automatic Chapter 93A liability.