The Sixth Circuit Court of Appeals recently held that two plaintiffs did not have standing to pursue their FDCPA claim for failure to make a required disclosure where the non-disclosure did not hurt the plaintiffs. The Sixth Circuit reversed the lower court’s entry of summary judgment against the defendants, a foreclosure attorney and his firm, for sending a communication to the plaintiffs regarding their debt without including a disclosure that the communication was coming from a debt collector, in violation of the FDCPA.
In this case, the plaintiffs had defaulted on loan payments in connection with their purchase of a mobile home and property. After reaching a verbal agreement to resolve the debt, the foreclosure attorney sent a letter to the plaintiffs’ attorney confirming that he had received the plaintiffs’ signed deed in lieu of foreclosure, and that no deficiency would be pursued. The letter did not include an FDCPA-required disclosure that the communication was coming from a debt collector. The district court concluded that the violation of the disclosure requirement, in and of itself, was an injury to the plaintiffs that gave them standing to sue pursuant to Article III of the Constitution.
The court of appeals reversed, holding that under the Supreme Court’s decision in Spokeo, Congress’ decision to make the absence of the disclosure an actionable injury did not create an injury in fact for constitutional purposes. Here, the plaintiffs were not actually injured by the failure to include the disclosure, and in fact, the letter had a positive impact on them, because it served as confirmation that they would not be pursued for any deficiency after the sale of the property. Because the plaintiffs had not suffered any harm, they did not have standing to sue.
The case is Hagy v. Demers and Adams, et al., and the opinion is available here.