Civil Litigation

How Late is Too Late to Raise the Bona Fide Error Defense?

On March 22, 2013, the United States District Court for the District of Maryland addressed whether a debt collector can raise the bona fide error (“BFE”) defense for the first time on summary judgment.  In Dorris v. Accounts Receivable Management, 2013 U.S. Dist. LEXIS 40122, a consumer brought suit against Accounts Receivable Management (“ARM”) under the Fair Debt Collection Practices Act (the “FDCPA”), the Maryland Consumer Debt Collection Act (“MCDCA”) and common law invasion of privacy.  The consumer alleged that ARM made unlawful and harassing collections calls to him and his mother.  More specifically, between July 7, 2010 to August 6, 2010, ARM called the consumer’s cell phone fifteen (15) times.  On July 26, 2010, ARM placed a call to a number that belonged to the consumer’s mother.  During that call, ARM: (1) confirmed that it was trying to reach the consumer regarding a “bill”; and (2) refused to discuss the amount of the bill without the consent of the consumer. Later that day, the consumer spoke with ARM and instructed the debt collector to remove all contact numbers from the file except for his cell phone number.  According to the consumer, ARM called the consumer’s mother a second time during which ARM allegedly used profane and insulting language (the “Second Call”).  ARM disputed the existence of the Second Call to the consumer’s mother.

The parties filed cross-motions for summary judgment and the consumer filed a motion to strike ARM’s BFE defense.  While the Court addressed a litany of issues on the cross-motions for summary judgment, its ruling on the motion to strike the BFE defense is notable.  In summary, the consumer claimed that the first call to the consumer’s mother violated the FDCPA because a debt collector is prohibited from communicating with a third party in connection with the collection of any debt, except to obtain location information, “without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a post-judgment judicial remedy.”  The recording of the first call to the consumer’s mother reflected that ARM stated that it was “calling in reference to [an] account” that was forwarded to its office.  When the consumer’s mother asked whether ARM was calling “about a bill,” ARM responded “yes.”  The Court found that this communication constituted a disclosure of the consumer’s debt.  In response, ARM argued that its liability was excused by the BFE defense.  The consumer moved to strike the BFE defense because ARM: (1) raised the defense for the first time on summary judgment; (2) failed to previously plead this defense in a separate suit filed by the consumer’s counsel; (3) failed to amend its answer to include the defense; and (4) precluded the consumer from discovery on the defense under the auspices that it would not be used in this action.

In addressing the motion to strike the BFE defense, the Court noted that several courts have permitted debt collectors to raise the BFE defense for the first time on summary judgment upon a finding that the plaintiff would not be prejudiced by its admission.  However, the consumer claimed he had been prejudiced and cited correspondence and discovery between the parties indicating that ARM had not raised and would not rely upon the BFE defense.  The Court found that permitting ARM to proceed with the BFE defense would be especially prejudicial to the consumer considering the Court’s previous denials of the consumer’s motion to compel documents related to this defense.  Consequently, the Court granted the consumer’s motion to strike the BFE defense.

The Court sustained the motion to strike the BFE defense, not because of the timing, but because of the consumer’s inability to explore the merits of the affirmative defense in discovery.  ARM did not raise the BFE defense in its responsive pleadings and failed to disclose information related to the defense in discovery.  ARM went so far as to contest a motion to compel the production of documents on the grounds that it was not relying on the BFE defense.  In summary, if a debt collector intends to rely on an affirmative defense, the consumer must be given an opportunity to explore the merits of the defense in discovery.  Raising the BFE defense for the first time after the close of discovery is too late.

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