Minnesota Stat. Section 504B.001 and 15 U.S.C. §1692a – Attorney’s unlawful detainer action to evict tenant is held to be collecting upon a debt subject to the Fair Debt Collection Practices Act (FDCPA) – different result if the owner of the property is seeking the eviction?

In a Memorandum and Order dated July 18, 2017 the United States District Court for the District of Minnesota ruled this month in the matter of Worley v. Engel, Case No. 17-CV-1105 (PAM/SER), that an attorney’s action to evict a tenant (commonly referred to in Minnesota as an “unlawful detainer action” or “UD action”) was subject to the Fair Debt Collection Practices Act, 16 U.S.C. 1692a, et seq. (“FDCPA”), thereby denying the defendant attorney’s motion to dismiss the consumer plaintiff’s claims for failure to state a claim under the FDCPA.

The trial court rejected the defendant’s arguments that he neither qualified as a debt collector under the FDCPA, nor did his act of bringing multiple unlawful detainer actions represent an attempt to collect upon a debt, namely the unpaid rent that served as the basis of the eviction action. The argument was that the UD actions involved only possession of the premises, not the ability to recover the rent. Facing the reality of the practice and effect of UD actions to force payment of the rent, the Court held:

“The FDCPA intends to protect consumers from “abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. § 1692(a). A “debt collector” includes someone “who regularly collects or attempts to collect, directly or indirectly debts owed or due, or asserted to be owed or due another.” Id. § 1692a(6). Minnesota's eviction-action statute explicitly states that an eviction action for nonpayment of rent “is equivalent to a demand for rent.” Minn. Stat. § 504B.291, subd. 1. Because an eviction action is the equivalent to a demand for rent, an eviction action qualifies as an attempt to collect a debt, and Engel, as someone who allegedly regularly files eviction actions (see Am. Compl. ¶ 7.), qualifies as a debt collector under the FDCPA.”

Id., at page 6.

The District Court’s opinion goes on to find that the repeated unlawful detainer actions attempted by the defendant attorney constituted harassing “communications” subject to the FDCPA by the mere actions themselves, without regard to what may have been said during the course of these actions. The Court therefore ruled that the consumer plaintiff’s allegations were sufficient to withstand the defendant’s motion to dismiss for failure to state a claim.

Key facts to this case are the fact that an attorney was bringing the various UD actions, a practice regularly engaged in by that attorney. Also, the attorney represented a limited liability company that managed the rental property for the owner of that property, so that the management was actually acting itself on behalf of another. The actions were not brought by or on behalf of the owner. These facts allowed for the Court to classify the attorney as a debt collector attempting to collect on a debt “owed or due another.”

Obviously, this makes it clear for any management agent and/or attorney for management agents that complaints in UD actions need to include the magic debt-collector disclosures and language to satisfy the FDCPA requirements for communications with a debtor.

However, this case raises the interesting issue and possible alternative strategy based upon the recent U.S. Supreme Court decision issued June 12, 2017 in Henson v. Santaner Consumer USA Inc., 137 S.Ct. 1718 (2017), which by unanimous opinion held that an owner and/or purchaser of debt, even if originated by another, does not constitute a “debt collector” within the scope and meaning of the FDCPA. Consider, in the case of single or other low volume evictions, whether it is best that any UD action complaint should be prepared with the actual owner of the property appearing as the moving party, and signed only by the owner. This could be one further step in to avoid the scope of the FDCPA, but obviously is impractical when dealing with large volume properties being managed and/or non-resident property owners.

By Rick Leighton

Leighton Hetland PLLP

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