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Filing a Time-Barred Claim an FDCPA Violation?
Dear Gerry,
The Eleventh Circuit holding in Crawford v. LVNV Funding, LLC is a nice, debtor-friendly decision, but may be difficult to apply in the Ninth Circuit due to Walls v. Wells Fargo Bank, NA, 276 F. 3d 502 (9th Cir. 2002). The two cases may be distinguishable because in Walls the debtor sought simultaneously to obtain relief under 524(a) coupled with 105, and the FDCPA, whereas the Crawford debtor was only seeking relief under the FDCPA. However, if a Ninth Circuit debtor were to apply the FDCPA a l Crawford, the Walls decision might lead to defeat.
In Walls the Court was faced with a class action brought against Wells Fargo Bank under both the Bankruptcy Code and the FDCPA. The focus of the FDCPA portion of the action was on Wells Fargo's attempts to collect discharged debts rather than on any predischarge communications with represented persons. The Court held: "Because Walls's remedy for violation of 524 lies in the Bankruptcy Code, her simultaneous FDCPA claim is precluded." Walls v. Wells Fargo Bank, NA, 276 F. 3d at 511. Thus, if there is a bankruptcy form of relief, Walls says that that's all the debtor is entitled to.
My view is that Walls was wrongly decided for at least two reasons:
First, the FDCPA affords a debtor relief that is unavailable under the Bankruptcy Code. For example, the Bankruptcy Code does not address the problems of communications with a represented party, a creditor's mischaracterization of the nature of a debt, or a creditor's failure to verify the validity of a debt before resuming collection activities, whereas the FDCPA does. Thus, the relief available under 15 U.S.C. 1692c(a)(2), 15 U.S.C. 1692e(2)(A), and 15 U.S.C. 1692g(b) has no Bankruptcy Code analogue.
Second, in a case heard two years after the Walls decision, the Seventh Circuit handed down the very well-reasoned opinion, Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir. 2004), in which it explicitly rejected the Walls decision. In Randolph the Seventh Circuit held that the Bankruptcy Code does not preempt an FDCPA action. Instead, the Court held that no federal statute preempts another. Randolph v. IMBS, Inc., 368 F.3d at 730 (citing Baker v. IBP, Inc., 357 F.3d 685, 688 (7th Cir. 2004)). The Court reasoned that because: (a) there is no irreconcilable conflict between the Bankruptcy Code and the FDCPA, and (b) there is no expressed legislative decision that one replaces the other, neither preempts the other.
It will be interesting to see whether the Crawford holding will have any application in the Ninth Circuit.
All the best,
Nick
Nicholas Gebelt
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
Certified Bankruptcy Law Specialist
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The 11th Circuit says so. See the attached article.
Gerry McNally
Gerald McNally
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