In Louis v. Deshmukh, Civil Action No. 21-19902 (D.N.J. July 27, 2022), the District of New Jersey denied a motion to dismiss a putative class action, asserting claims under the Fair Debt Collections Practices Act (FDCPA) based on statements made in the pleadings in an earlier state court litigation.

Plaintiff Cathelene Louis incurred a debt to a dentist, which was referred for collections to defendant Amit Deshmukh, doing business as Desh Law LLC (Desh Law). Desh Law filed suit in New Jersey state court, seeking to recover the outstanding balance, as well as costs and attorneys’ fees.

Following settlement of the collections action, the plaintiff filed suit in federal court, alleging that Desh Law’s state court summons and complaint contained false, deceptive, and misleading language in violation of FDCPA Section 1692e and Section 1692f. Specifically, she asserts that the balance Desh Law sought to collect included a collection fee that was neither authorized by her agreement with the dentist’s office nor permitted by law.

Desh Law moved to dismiss the claims, asserting that (1) the plaintiff’s claims are barred by a mutual release that the plaintiff and the dentist executed in settlement of the state court action; (2) the plaintiff’s claims are barred by New Jersey’s entire controversy doctrine; (3) the plaintiff’s claims are asserted against an improper party; (4) the plaintiff fails to sufficiently plead damages; and (5) the state court summons and complaint are not communications subject to the FDCPA.

The court refused to dismiss the complaint because of the mutual release, finding that the plaintiff’s claims are not based on the agreement and that her complaint does not reference the mutual release or any of its terms. It further held that, even considering the argument that the plaintiff’s claims are barred, a determination concerning the scope of the mutual release would require further discovery.

Concerning the entire controversy doctrine — a New Jersey rule that bars later-filed claims that a party could have asserted in a previous case — the court held that the plaintiff’s FDCPA claims arise out of a set of facts different from those at issue in the previous collections action.

Further, the court rejected Desh Law’s argument that it is not a proper party, and the plaintiff should have brought her claims against the dentist to whom she owed the underlying debt. Specifically, the court held that (1) the complaint adequately alleges that Desh Law is a debt collector under the FDCPA; and (2) the plaintiff’s claims could not have been asserted against the dentist because the statute does not apply to a creditor. Similarly, the court refused to dismiss the complaint based on Desh Law’s assertion that the plaintiff failed to plead any ascertainable damages from the debt collection activity. In rejecting this argument, it held that a showing of actual damages is not required to state a claim under FDCPA Section 1692e or Section 1692f. The court further held that the plaintiff’s allegation that she “suffered an informational injury” and “a risk of economic injury” due to Desh Law’s actions are sufficient to sustain her FDCPA claims.

Finally, the court rejected the argument that the state court summons and complaint did not qualify as communications to which the FDCPA applies. It noted that formal pleadings are communications governed by the statute, except to the limited extent that Congress exempted them from the requirements of FDCPA Section 1692e(11) and Section 1692g(d). Because the plaintiff does not assert her claims under these sections, her complaint states an actionable claim under the FDCPA.