Attorney Fees Are Not Proper Where Plaintiff Dismisses Claims for Unlawful Debt Collection Practices

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In Tourgeman v. Nelson & Kennard, 2014 DJDAR 587 (2014), the California Court of Appeal for the Fourth Appellate District decided an interesting collection case which resulted in an attorney fee award. The Court of Appeal disagreed with the lower court decision and reversed the trial court award of fees.

In 2012, the plaintiff filed a class action against Nelson & Kennard (NK). The suit alleged improper debt collection practices concerning the purchase of a computer. The plaintiff alleged that NK sent collection letters to consumers that misrepresented the identity of the creditor. The plaintiff sought an injunction to prevent NK from engaging in alleged improper debt collection practices, prospectively.

In response, NK filed a special motion to strike, seeking to dismiss the plaintiff’s lawsuit pursuant to California’s Anti-SLAPP statute. In response, and to avoid the special motion to strike, the plaintiff filed a voluntary dismissal “without prejudice.”

NK then petitioned for attorney fees under the anti-SLAPP statute. The plaintiff objected, arguing that NK would not have prevailed on the anti-SLAPP motion as the cause of action fell into the “public interest” exception of the statute. The trial court disagreed, and awarded NK attorney fees and costs.

The Court of Appeal reversed the decision of the trial court. The Court of Appeal stated that if an action is brought “solely” in the public interest, the anti-SLAPP statute generally does not apply. To satisfy the “public interest” exception, the plaintiff must not seek any relief greater than, or different from, the relief sought for the general public and the action must enforce an important right affecting the public interest. Also, private enforcement must be necessary due to the financial burden on the plaintiff.

When a defendant is successful on an anti-SLAPP motion, the statute authorizes an award of attorney fees and costs to the prevailing defendant. The Court of Appeal noted that here, the plaintiff’s putative class action sought injunctive relief to benefit the general public. As such, this court concluded that his claim was brought “solely in the public interest” and fell squarely within the public interest exception. The Court of Appeal concluded that the attorney fees were not appropriate on this basis.

 

Topics:  Attorney's Fees, Debt, Debt Collection

Published In: Civil Procedure Updates, Civil Remedies Updates, Constitutional Law Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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