Collectors Take Their Stand: Seek Sanctions in FDCPA Cases

Many collections companies find themselves spending their time in court responding to boilerplate complaints, only to find that the plaintiff doesn’t actually participate in the litigation yet won’t drop the suit.  Meanwhile, attorney’s fees and court costs continue to build up.  A recent case in California resulted in two debt collectors being awarded more than $13,000 in the form of sanctions against the plaintiff’s counsel.

During the year prior to the sanctions, multiple consumers filed lawsuits of an almost identical nature against various collectors of debt.  The complaints were boilerplate, with allegations associated with reporting activity on the plaintiffs’ credit reports as the basis.  Multiple debt collectors, creditors and debt buyers were named in the suit.  The majority of the cases were dismissed immediately due to the failure of the plaintiff to make a claim or to comply with various rules, in addition to plaintiffs’ counsel not attending discovery meetings. 

One of the dismissed lawsuits made assertions under state laws, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act.  Other than serving the claims, the plaintiff did not take part in the case, resulting in the dismissal of the case.  On behalf of two of the defendants, Issa Moe, an attorney with Moss & Barnett, P.A., filed several motions that sought an award for the various costs and fees associated with the case. 

The court declined to hold the plaintiff responsible for the costs incurred by the defendants; however, due to the actions of the plaintiff’s counsel, which the court regarded as being “unreasonably and vexatiously” conducted sanctions against the counsel totaling $13, 278.50 were awarded.  While sanctions being granted in a case such as this are rare, it is good news for collection lawyers and  debt collectors subjected to such frivolous litigation to know that they have paths they can pursue to recoup their losses.