11th Circuit Decision Addresses FDCPA Mini-Miranda Provision
The Eleventh Circuit panel’s recent 2-1 decision in Daniels v Select Portfolio Servicing, Inc., provides yet another example of the difficulty creditors face when navigating the requirements of the Fair Debt Collection Practices Act (FDCPA). In daniels, the borrower alleged that the creditor’s periodic statements violated certain provisions of the FDCPA by requiring amounts not due. The creditor argued that the periodic statements were not communications “in connection with the collection of [a] debt” sufficient to trigger potential FDCPA liability in the first place because the statements were not only mandated by TILA Regulation Z Section 1026.41 (12 CFR § 1026.1 et seq.) and contained the required information set forth therein, but followed also standard Z-regulation forms for periodic statements. The district court granted the creditor’s request for dismissal and the borrower appealed.
The majority opinion of the Eleventh Circuit spent a great deal of time focusing on the fact that the periodic declarations contained the first of two disclosures required by the so-called “mini-Mirandaprovision – that the creditor “attempts to collect a debt” (15 USC § 1692e(11)). (The second required disclosure is that the communication is from a collection agent.) The periodic statements in question did indeed state: “[t]it is an attempt to collect a debt. The court noted that the FDCPA’s “mini-Miranda” provision requires this first disclosure only for “initial communication.”
The majority considered the creditor’s argument that the court’s decision in Green c. Specialty Lending Service, LLC, 766 Fed. App’x 777 (11e Cir. 2019), mandatory dismissal. The majority distinguishes Green because the periodic statement at issue “did not contain any language beyond what is required by [section 1026.41]» whereas the periodic states in question in daniels contained the first disclosure which is not required by Section 1026.41 for any communication except the first. Because Green itself acknowledged that a periodic statement that complies with Rule Z “may nevertheless include additional wording that constitutes debt collection”, the majority held that Green was distinguishable and rejected the creditor’s argument.
The majority then addressed several points raised by the dissent, including the dissent’s argument that the court was creating a divided circuit on the significance of first disclosure in a communication. He began by addressing the Sixth Circuit’s First Opinion, noting that he acknowledged in a footnote that the version of the FDCPA at issue in it required first disclosure in all communications, not just first, and that the FDCPA had recently been amended. to require first disclosure only in the initial communication. The majority then criticized the three subsequent opinions of the Seventh, Eighth, and Tenth Circuits as failing to recognize that the amended FDCPA at issue no longer required first disclosure in all communications. Finally, he pointed out that neither the Seventh Circuit nor the Eighth Circuit rulings explicitly stated that the inclusion of the First Disclosure was “legally irrelevant.” The creditor requested a reconsideration bench.
One should be aware of two possible mitigating considerations in the daniels opinion. First, the majority emphasized the fact that it was deciding only whether the periodic statements at issue could constitute debt collection communication sufficient to trigger potential FDCPA liability in the first place, and expressing no opinion. on the ultimate merits or even whether the borrower has pleaded a sufficient factual basis for a violation of the FDCPA to survive a motion to dismiss. Second, the fact that the periodic statements included amounts in the total amount owed that a state court had previously found to be due at the end of the loan may have influenced the majority’s decision, in that the statements may have presented better facts than those generally encountered in an allegation of demand for payment of sums wrongfully owed. Creditors should be aware of the potential danger of including “this is an attempt to collect a debt” in written communications after the initial communication. More courts might be willing to conclude that such language “is what it says it is” – an attempt to collect a debt – or at least give the language more weight. If so, rulings in favor of creditors on FDCPA motions to dismiss or claims for breach of bankruptcy injunction, or even rulings on the merits of those claims, may become less likely. .
© 2022 Bradley Arant Boult Cummings LLPNational Law Review, Volume XII, Number 186