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Debt Collector Awarded Attorneys’ Fees and Costs in Unique FDCPA Case

Posted By USFN, Friday, January 09, 2015
Updated: Wednesday, September 23, 2015

January 9, 2015 

 

by Courtney McGahhey Miller
Wilson & Associates, PLLC – USFN Member (Arkansas, Tennessee)

The Eighth Circuit Court of Appeals recently upheld a district court ruling that a defendant collection agency was entitled to over $30,000 in attorneys’ fees and costs for an FDCPA case that was found to have been brought in bad faith and for the purpose of harassment. (The Eighth Circuit is comprised of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.)

In Scroggin v. Credit Bureau of Jonesboro, Inc., 973 F. Supp. 2d 961 (E.D. Ark 2013), Brandon Scroggin sued the Credit Bureau of Jonesboro (CBJ) for violations of the Fair Debt Collection Practices Act (FDCPA) and the Arkansas Fair Debt Collection Practices Act (AFDCPA). In his complaint, Scroggin accused CBJ of contacting him in relation to a delinquent medical bill after receipt of a cease and desist letter, as well as for leaving a voicemail that was heard by a guest in his home.

After a jury trial in the Eastern District of Arkansas, it was found that CBJ violated the FDCPA and AFDCPA twice. However, the jury did not award Scroggin any actual or statutory damages for the violations. CBJ filed a motion for attorneys’ fees and costs, alleging that the lawsuit had been brought in bad faith and to harass.

The FDCPA provides that a court may award to the defendant attorneys’ fees and costs “on a finding by the court that an action … was brought in bad faith and for the purpose of harassment ...” [emphasis added] 15 USC 1692k(a)(3). The AFDCPA allows the same when there is a finding that an action was brought in bad faith or for the purpose of harassment. Ark. Code Ann. § 17-24-512(a)(3)(B). In Scroggin, the District Court found bad faith and an intent to harass, ultimately awarding the fees and costs to CBJ.

Throughout the District Court case, Scroggin posted thousands of comments on websites and message boards expressing his hatred of CBJ and discussing his attempt to bait them with a vague cease and desist letter that simply stated, “I refuse to pay this debt because I don’t think I owe that because I was only there [at St. Bernard’s Medical Center] for an hour and then left after I started feeling better.” CBJ filed a motion for dismissal and an order of civility based on the numerous online comments. The motion was denied for First Amendment reasons, but the plaintiff was warned that any future posts would be allowed as evidence.

Scroggin’s many online posts and comments continued, making it clear that the cease and desist letter he sent was purposefully ambiguous, and was intended to prompt CBJ to make contact with him to explain why he owed the debt. His online comments also advised other forum members on how to solicit a violation from a debt collector. His posts included: statements acknowledging that his claims for actual and statutory damages were insincere, as well as offered advice on how to manipulate a claim for damages. His posts went on to discuss his intent to force the defendant to trial, notwithstanding its impact on his damages. He also boasted that the FDCPA essentially allowed him to continue his action for his own entertainment, and to harass CBJ and its counsel. Additionally, Scroggin sent several emails directly to CBJ’s counsel that were in bad faith and harassing in nature.

The District Court determined that the plaintiff’s behavior and comments — as a whole —demonstrated dishonesty, hatred, ill will, and a spirit of revenge. The court stated that Scroggin’s intent was to annoy CBJ persistently, with no legitimate purpose, and found that the lawsuit “was never about the plaintiff seeking legitimate redress for what he perceived to be violations of statutes meant to protect consumers but was a vehicle for Scroggin to pursue a vendetta against CBJ and for his own entertainment ...” Id. at 977.

A debt collector who violates the FDCPA and AFDCPA is liable to the prevailing plaintiff for the costs of the action, together with reasonable attorneys’ fees. 15 USC 1692k(a)(3) and Ark. Code Ann. 17-24-512 (a)(3)(A). However, attorney fees may be denied for bad faith conduct on the part of the plaintiff. The court looked to one of the purposes of 15 USC 1692k(a)(3), which is “to thwart efforts of a consumer to abuse the statute.”

In its ruling, the court stated that “it would be a legal mockery to conclude that although Scroggin flagrantly manipulated and abused the judicial process and the FDCPA and AFDCPA in his vendetta against CBJ, thereby wasting valuable judicial resources, he is nevertheless shielded from liability for attorneys’ fees and costs under 15 U.S.C. § 1692k(a)(3) and Ark. Code Ann. § 17-24-512(a)(3)(B) simply because of CBJ’s two technical violations of the FDCPA and AFDCPA that resulted in no harm and only occurred because of Scroggin’s trickery.” Id. at 980.

In reliance upon 15 USC 1692k(a)(3), as well as its own inherent power, the District Court awarded attorneys’ fees and costs to CBJ. The decision was affirmed in August 2014 by the Eighth Circuit Court of Appeals in an unpublished opinion.

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