Mortgage Servicer Defeats Class Certification Over Collection Practices Allegedly Targeting Discharged Mortgage Debts

Carlton Fields

The Middle District of Florida recently denied a plaintiff’s motion for class certification concerning claims that a collection agency illegally and intentionally sent collection correspondence to mortgagees whose debts already had been discharged in bankruptcy proceedings. The plaintiff alleged violations of state and federal consumer protection laws because the debt collector allegedly made continued and repeated communications to him directly — not his counsel — regarding his previously discharged mortgage debt. The plaintiff sought to certify a class of individuals who had filed bankruptcy, surrendered their homes, obtained a discharge, and received communications related to the discharged mortgage from the debt collector after that discharge.

The court agreed with the defendant that the putative class was unfit for certification on ascertainability, commonality, and predominance grounds. All three determinations largely turned on the highly individualized inquiries that would be required for putative class members to assert their potential claims.

First, on ascertainability, the court rejected the plaintiff’s proposed process for discovering all class members as administratively infeasible and requiring a “loan-by-loan review” of all the defendant’s customers. The process would entail determining whether a customer filed bankruptcy, whether his or her debt was discharged, whether the mortgage covered a residence, whether the customer had received communications from the defendant post-discharge, and whether the defendant had actual knowledge that the mortgagee was represented by an attorney.

Second, on commonality, the court found the proposed class failed because actionable conduct turned on a litany of individual issues. For instance, not all of the allegedly improper communication was in the same form and not every communication sent to the proposed class necessarily concerned debt collection. Whether the defendant violated the applicable laws required analysis of the type of communication delivered to each class member as well as the content of such communications.

Finally, on predominance, the court noted the proposed class action required individual inquiries on a broad score of issues. These individual inquiries — whether the mortgage debt at issue was consumer debt for a residence or business debt for a rental or investment property, whether the defendant had actual knowledge of the bankruptcy discharge and still attempted to collect on the debt, and whether the specific circumstances of the attempted collections triggered the bona fide error defense, to name a few — predominated over any common questions and rendered class treatment inferior to individual litigation.

McCamis v. Servis One, Inc., No. 16-1130, 2017 WL 589251 (M.D. Fla. Feb. 14, 2017)

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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