This article previously appeared on The Consumer Financial Services Blog and is republished here with permission. 

Allison Hayes

The U.S. Court of Appeals for the Eleventh Circuit recently upheld the district court’s dismissal of a borrower’s amended complaint against a loan servicer alleging claims under the Fair Debt Collection Practices Act (FDCPA)  and the Florida Consumer Collection Practices Act (FCCPA) for leaving a letter in the borrower’s mailbox, posting a letter to his front door, and sending a letter via registered mail offering the borrower various sums of financial assistance if he vacated the property.

The Court held that the servicer’s actions did not constitute a demand for payment under the FDCPA and FCCPA and upheld the district court’s dismissal of the borrower’s complaint.

A copy of the opinion in Kinlock v. Wells Fargo Bank, NA can be found here:  Link to Opinion.

The borrower had a loan with the bank, secured by his residence.  The borrower defaulted and the bank foreclosed in November 2009.  After several delays, including the filing and administration of the borrower’s petition for bankruptcy relief, the property was sold in a foreclosure sale in November 2013.  A writ of possession was issued in August 2014.

After the property was sold, the loan servicer’s employee left a letter in the borrower’s mailbox offering various sums of financial assistance if the borrower vacated the property by a certain date.  The employee returned to the residence the next day and posted the letter on the front door, and the day after that sent the letter to the borrower via registered mail.

The Eleventh Circuit held that the facts asserted in the borrower’s amended complaint failed to state a claim against the loan servicer or any of the other defendants.  The servicer offered to provide the borrower funds if he would vacate the property.  The Court held that these actions did not constitute a demand for payment under the FDCPA and FCCPA.

The FDCPA imposes civil liability on “debt collectors” for certain prohibited debt-collection practices.  In order to state a plausible FDCPA claim, “a plaintiff must allege, among other things, (1) that the defendant is a debt collector and (2) that the challenged conduct is related to debt collection.”  Reese v. Ellis, Painter & Adams LLP, 678 F.3d 1211, 1215 (11th Cir. 2012) (quotation omitted).

The FDCPA and the FCCPA have certain parallels, including nearly identical definitions of “communication,” “debt,” and “debt collector.” 15 U.S.C. §§ 1692a(2), (5)-(6); FLA. STAT. §§ 559.55(2), (6)-(7).

The FDCPA and FCCPA define a “debt collector,” in relevant part, as one who engages “in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6); FLA. STAT. § 559.55(7).

The FDCPA prohibits a debt collector from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.”  15 U.S.C. § 1692e. When determining whether a letter is “in connection with the collection of any debt,” courts look to the language of the letter, specifically to statements that demand payment and mention additional fees if payment is not tendered.  Caceres v. McCalla Raymer, LLC, 755 F.3d 1299, 1302 (11th Cir. 2014).  A demand for payment need not be express.  A demand may be implicit. An example of the latter is a letter that indicates that it is being sent to collect a debt, states the amount of the debt, describes how the debt may be paid, and provides the address to which the payment should be sent and a phone number.  Id. at 1303 n.2.

The FCCPA prohibits anyone, in the course of collecting debts, from using threats or force, and from disclosing information concerning the existence of a debt known to be reasonably disputed. FLA. STAT. §§ 559.72(2), (6).  “Debt” is defined as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.”  FLA. STAT. § 559.55(6).

In ruling upon the servicer’s motion to dismiss, the Court held that even if it accepted all of the borrower’s allegations as true, he nonetheless failed to state a claim.  The servicer offered the borrower money to vacate the property.  The Court held: “While a demand for payment need not be express to fall under the protections of the FDCPA, the facts alleged show no demand of any sort.”

As to the borrower’s FCCPA claim, the Court held that the amended complaint failed to allege facts showing that the servicer was collecting a consumer debt, as defined in the FCCPA.  See FLA. STAT. §§ 559.55, 559.72.  All the facts showed is that the servicer, through its employee, attempted to leave notices informing the borrower that he was eligible to receive financial relocation assistance.  The borrower did not allege that anyone ever asked him for payment for a debt, or told him he had an obligation to pay the servicer for a debt.

Finally, the Eleventh Circuit rejected the borrower’s argument that the district court abused its discretion in failing to grant him leave to file a second amended complaint, holding: “The argument is frivolous.  Filing a second amended complaint would be a futile exercise.”

The Eleventh Circuit affirmed the district court’s dismissal of the borrower’s amended complaint.