By Katalina M. Bianco, J.D.
A consumer who settled her Fair Debt Collection Practices Act claims against a debt collector for $5,000 could not pursue FDCPA statutory damages claims against the debt collector’s law firm, the U.S. Court of Appeals for the Seventh Circuit has decided. Based on the single recovery for a single injury principle, the consumer could not recover from the law firm after having recovered the most the statute allowed from the debt collector, the court said. The consumer’s claim for attorney fees was lost for the same reason (Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC, Aug. 13, 2018, Manion, D.).
Winning in trial court. Debt collector Midland Funding hired the firm of Blatt, Hasenmiller, Leibsker & Moore to collect a claimed $1,330 debt from the consumer. The firm relied on then-binding Seventh Circuit precedent to decide where to file the collection suit, but soon had the rug pulled out from under it by a contrary Seventh Circuit decision on FDCPA venue rules (see Oliva v. Blatt, Hasenmiller, Leibsker & Moore, LLC). The consumer sued both the debt collector and the law firm for violating the debt collection suit venue restrictions.
The consumer settled her claim against Midland Funding, accepting $5,000 for releasing her claims. She did not settle her claims against Blatt, Hasenmiller. However, as that suit progressed, she abandoned her claim for actual damages and proceeded only on her claim for statutory damages. The jury awarded her $200, and the judge added $70,000 in attorney fees and costs.
Losing on appeal. The trial judge was wrong to have rejected the law firm’s argument that the consumer’s claim ran afoul of the single-satisfaction rule, the appellate court said. The consumer’s settlement of her claims against Midland Funding mooted her claim against the law firm because it fully remedied the consumer’s injury. Moreover, with no remaining injury for which to seek satisfaction, the consumer had no claim that could support an award of fees and costs, the court added.
A plaintiff generally can seek only one recovery for an injury, no matter how many defendants could be liable or how many theories of liability might be raised, the appellate court said. The consumer conceded that there was only one violation of the FDCPA—a violation of the venue restrictions—and that her injury could not be divided between the debt collector and the law firm. The two acted together.
The consumer might have been able to continue to sue Blatt, Hasenmiller had her settlement with Midland Funding included a good-faith allocation of the settlement funds to a claim only against the debt collector, the court pointed out. However, the settlement agreement included no such allocation; in fact, it said it resolved all claims arising out of the facts that were covered by the claims raised in the suit. As a result, the $5,000 settlement included the maximum possible award of $1,000 in statutory damages.
The FDCPA’s language also made clear that statutory damages were capped at $1,000 per suit, not $1,000 per defendant, the court added.
The case is No. 16-1578 and No. 17-3335.
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