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Bell v. Northland Group

United States District Court, E.D. Michigan, Southern Division

April 16, 2018

WILLIAM BELL, Plaintiff,

          Mona K. Majzoub, Magistrate Judge



         William Bell filed this lawsuit because Northland Group sent Bell a debt collection letter for a debt he settled several years ago. (R. 1.) Even though Northland Group ceased to pursue collection or otherwise contact Bell after Bell notified Northland Group that the debt had been settled, Bell now sues pursuant to the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and its Michigan counterpart, the Michigan Occupational Code (MOC), M.C.L. § 339.901 et seq. (R. 1.)[1] Northland Group has moved for summary judgment. For the reasons that follow, Northland Group's motion is denied.


         Around October 2011, Bell received a letter from Kohl's confirming that his Kohl's credit card debt had been settled. (R. 13, PID 94.)

         Nearly six years later, in July 2017, Bell received a letter from Northland Group attempting to collect the debt, stating that Capital One, the entity that issued the Kohl's credit card, authorized Northland Group to collect the debt. (R. 12-3.) Shortly after, Bell sent Northland Group a letter stating that the debt was settled in 2011 and asking Northland Group to send him the authorization it received to collect the debt. (R. 13-3.) Northland Group did not send Bell the authorization, but it did cease all collection actions against Bell. (R. 12, PID 58.)

         Bell claims that Northland Group's attempt to collect on non-existent debt violated three different provisions of the FDCPA: 15 U.S.C. § 1692e(2)(a), §1692e(10), and §1692f(1). (R. 1, PID 4.) Bell also asserts that this same action violated two provisions of the MOC: Michigan Compiled Laws § 339.915(e) and § 339.915(f)(ii). (R. 1, PID 5.) Lastly, he alleges that Northland Group violated Michigan Compiled Laws §339.915(q) by failing to implement a procedure designed to prevent a violation by an employee. (R. 1, PID 6.)


         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is material only if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). When reviewing Northland Group's motion for summary judgment, the court must view the evidence, and any reasonable inferences drawn from the evidence, in the light most favorable to Bell. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citations omitted); Redding v. St. Edward, 241 F.3d 530, 531 (6th Cir. 2001).



         Northland Group asserts that, because it relied in good faith on Capital One's information, it did not violate the FDCPA. Because it asserts that it did not violate the FDCPA, Northland Group stresses that it is not relying on a bona fide error defense which allows debt collectors to avoid liability for a violation if it can show the violation was a result of a bona fide error. Northland Group's argument does not persuade.

         A debt collector can violate provisions of the FDCPA, including § 1692e and § 1692f, even if it relies in good faith on the original creditor. The Sixth Circuit, along with others, holds that the FDCPA establishes a strict-liability regime. See Kline v. Mortgage Electronic Registration Systems, Inc., 704 Fed.Appx. 451 (6th Cir. 2017) (“[The FDCPA] is a strict liability statute unless a debt collector can show that the alleged violation was unintentional and resulted from a bona fide error”); Gamby v. Equifax Info. Servs., LLC, 462 Fed.Appx. 552, 556-57 (6th Cir. 2012) (adopting the reasoning for why the FDCPA requires strict liability in finding that the parallel Michigan Collection Practice Act also imposes strict liability); Kistner v. Law Offices of Michael P. Margelesky, LLC, 518 F.3d 433, 438 (6th Cir. 2008) (“[The FDCPA] imposes strict liability for violations. 15 U.S.C. § 1692k(a). An exception to strict liability exists only where a debt collector commits a violation resulting from a ‘bona fide error.' 15 U.S.C. § 1692k(c).”). Courts have so held because of the statute's explicit bona fide error defense. See 15 U.S.C. § 1692k(c); Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1175-76 (9th Cir. 2006); Kline, 704 Fed.Appx. at 457. Under the bona fide error defense, a debt collector that violated the statute can avoid liability if it can show that the violation was not intentional and was a result of a bona fide error. 15 U.S.C. § 1692k(c); Kline, 704 Fed.Appx. at 457 n.5. Because Congress included that defense, requiring that a violation itself “be knowing or intentional needlessly renders superfluous § 1692k(c).” Clark, 460 F.3d at 1175-76.

         Despite § 1692k(c) and the precedent above, Northland Group maintains that, because it relied in good faith on the information it received from Capital One, it cannot have violated § 1692e and § 1692f of the FDCPA. As support, Northland Group cites Clark, 460 F.3d at 1173-74 and Rudek v. Frederick J. Hanna & Assocs. P.C., No. 08-288, 2009 WL 385804 (E.D. Tenn. Feb. 17, 2009).[2] But Rudek and the section of Clark that it cited concern what is sufficient for a collection agency to comply with § 1692g. See Clark, 460 F.3d at 1173-74; Rudek, 2009 WL 385804, at *2. Section 1692g concerns what information the collection agency has to provide the consumer if the consumer disputes the debt; it does not concern false or misleading representations or unfair practices. See 15 U.S.C. §§ 1692e and 1692f. Northland Group's argument that these cases show that good faith reliance on the creditors likewise puts debt collectors in compliance with the rest of the FDCPA rests on a misreading of the cases. See Healy v. TransUnion LLC, No. C09-0956, 2011 WL 1900149, at *8 (W.D. Wash. May 18, 2011) (finding that the very same argument put forth by the defendant was based upon a misreading of Clark, 460 F.3d at 1174); Gonzalez v. Cullimore, No., 20160373, 2018 WL 1057542, at * 6-7 (Utah Feb. 26, 2018) (finding that Bleich v. The Revenue Maximization Grp., Inc., 233 F.Supp.2d 496 (E.D.N.Y. 2002), a case Northland Group relies on, “incorrectly applied § 1692g's standard to § 1692e-an action the Clark court expressly precluded.”); Clark, 460 F.3d at 1176-77 (explaining that, with respect to § 1692e, “if a debt collector reasonably relies on the debt reported by the creditor, the debt collector will not be liable for any errors” because of the bona fide error affirmative defense and not because the debt collector did not commit a violation of the FDCPA). Because Northland Group's only argument necessarily confuses what is sufficient to comply with §1692g with the rest of the statute, it cannot show that it did not violate the FDCPA as a matter of law when it sent Bell a collection letter falsely representing that he owed on a settled Kohl's debt. And because Northland Group disclaims reliance on the bona fide error defense, the Court cannot ...

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