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From Banking and Finance Law Daily, April 03, 2018

Misleading requests to admit violated FDCPA

By Nicole D. Prysby, J.D.

Because an attorney served a request for admission document in a debt collection action along with the complaint and summons for the action and failed to identify the consequences of failing to respond to the admission requests, his actions violated the Fair Debt Collection Practices Act as a matter of law, held a federal district court in Indiana. Even a sophisticated debtor might have been confused, because the discovery request sought an admission that the debt collector "wins" while at the same time, the debtor was instructed to file a timely answer to the complaint in order to deny that the debt collector wins. In addition, the responses were due to different parties on different dates and the discovery request merely "requested" a response (Patterson v. Howe, March 30, 2018, Lynch, D.).

Background. A consumer challenged a practice an attorney used in debt collection cases filed on behalf of creditors in Indiana state court. The attorney served the summons and complaint along with a document entitled "Requests to Admit" consisting of four statements to which his client sought responses under Indiana Trial Rule 36. The document did not explain the consequences of a failure to serve timely denials.

The attorney filed a lawsuit against the consumer, on behalf of the Indiana Institute of Technology for tuition or fees owed. The Requests to Admit document requested answers within 30 days to questions including whether any defendant is an infant, incompetent, or on active service in the military; whether the material allegations in the complaint are true; and whether there are valid counterclaims to offset the plaintiff’s claim. Trial Rule 36 explains the consequences of failure to deny the requests within 30 days (that the requests would be deemed admitted), but the document supplied by the attorney to the consumer did not include that information.

The consumer claimed that the Requests to Admit violated the FDCPA’s ban on the use of deceptive or misleading statements in the collection of a debt. He argued that he was entitled to judgment as a matter of law that the Requests to Admit violated the FDCPA, in that the requests exceeded the proper scope of a Trial Rule 36 request and that an unsophisticated debtor would not know the consequences of a failure to deny in a timely manner, especially given that the document was served with the summons and complaint.

Trial Rule 36. The attorney argued that because Trial Rule 36 authorizes the requests to be served with the complaint and summons, doing so cannot violate the FDCPA. But the court found that just because the practice was authorized by an Indiana rule did not mean that it was beyond the reach of the FDCPA. While use of the device is authorized, it was the particular manner of use in this case that was the problem. Further, the FDCPA preempts state laws to the extent the state laws are inconsistent. The court also rejected the attorney’s argument that because the requests for admission were not served electronically, they were not "served" and thus could not be in violation of the FDCPA. The FDCPA is not limited to communications "served" under trial rules and nothing in Trial Rule 36 provides that a discovery request is invalid if not served electronically.

FDCPA violated as a matter of law. The court found that the Requests to Admit violated the FDCPA as a matter of law. The court rejected the attorney’s argument that the consumer needed to have provided survey evidence to show that a hypothetical unsophisticated debtor could have found the service of the requests to admit misleading; the consumer was not required to present extrinsic evidence because the communications were plainly deceptive and misleading.

In this case, it was the combination of communications that was misleading, said the court. The summons informed the consumer that he faced a judgment against him if he failed to file a timely answer to the complaint. But the discovery request filed with the summons and complaint merely "requested" that the consumer respond, and the response was separate from the complaint response, due at a different time, and needed to be filed with plaintiff’s counsel and not the court. This could confuse even a sophisticated debtor. And requesting the consumer to admit to the material allegations of the complaint was confusing; the discovery request sought an admission that the debt collector "wins" while at the same time, the debtor was being told to file a timely answer to the complaint in order to deny that the debt collector wins.

The court declined to hold that service of requests for admission on a pro se defendant without explaining that the requests would be deemed admitted after 30 days would always, as a matter of law, be "unfair or unconscionable" or "false, deceptive, or misleading" under the FDCPA. But in this case, the combination of documents served on the consumer at the same time rendered the requests misleading and unfair.

The court also rejected the attorney’s claim that the consumer lacked standing to make his claim because he had not suffered a monetary harm. The court held that a consumer who receives misinformation from a debt collector has suffered a concrete injury in fact because his substantive right to receive truthful information in debt collection communications has been infringed. In addition, the consumer had presented evidence that he was misled by the requests.

The case is No. 1:16-cv-03364-DML-SEB.

Attorneys: Robert E. Duff (Indiana Consumer Law Group) for Mark A. Patterson. Howard Howe, pro se.

MainStory: TopStory DebtCollection Preemption

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