Starting Legal Proceeding within 30-day Validation Period under the FDCPA

In the recent case of Lansing v. Wilford, Geske & Cook, P.A., CIV. 13-1525 RHK, 2013 WL 5587956 (D. Minn. Oct. 10, 2013), a Minnesota federal court held that a law firm’s filing a foreclosure action in state court during the 30-day debt validation period did not violate the FDCPA, even though the filing caused the court administrator to send the consumer a notice of filing case assignment during the debt validation period.  The defendant law firm was retained to foreclose a mortgage debt held by the plaintiff-consumer.  Prior to commencing the proceedings, the firm sent the consumer a letter advising him that it intended to commence foreclosure proceedings, and providing debt validation notice as required by the FDCPA.  The validation notice provided, in part, that “[a]ny future actions taken by our office to begin a foreclosure proceeding do not terminate or limit the thirty-day period to dispute the validity of the debt, or any portion thereof, or your ability to request verification of the debt or the name of the original creditor, as described above.”  Prior to the expiration of the 30-day validation notice, the firm filed, but did not serve, the foreclosure action in state court.  The court administrator served the consumer with a notice of case assignment.  The consumer sued the firm a week after receiving the case assignment alleging the firm violated the FDCAP by filing the state court action that “overshadowed and nullified” the validation notice, misled him by providing conflicting deadlines, and mislead and confused him about his legal rights.

The Minnesota court granted the firm’s motion to dismiss the consumer’s complaint with prejudice because the state court action did not overshadow the validation notice, even though the notice of filing’s 20-day answer requirement was different than the 30-day validation period under the FDCPA.  The court reasoned that the consumer’s complaint was foreclosed by his failure to plead or show that he actually received the complaint within the validation period.  Moreover, the court found the FDCPA does not prohibit a debt collector from starting a foreclosure proceeding during the validation period.  Lastly, the Court held that the language in the firm’s debt validation notice stating that further actions did not terminate the consumer’s FDCPA rights barred the consumer’s claim that the notice of assignment overshadowed or caused confusion regarding the validation notice.

We will continue to monitor decisions impacting FDCPA defense.  If you have any questions about this, or any other matter, please contact Bob Kuderer or Matt Johnson.