Summary Dismissal Victory Achieved by Karen A. Smyth and C. Thomas Ludden in Defense of FDCPA Putative Class Action

Defendant’s Rooker-Feldman motion of a putative FDCPA class action was recently granted in favor of the Defendant-Debt Collection Law firm represented by Lipson Neilson. The Rooker-Feldman doctrine limits the jurisdiction of federal courts by restricting their power to adjudicate appeals from or collateral attacks on state-court judgments and final orders.

The Plaintiff sought to challenge state court orders by filing a FDCPA putative class action in federal court. Plaintiff alleged the amount of post-judgment interest owed and communicated to them by Defendants “exceeded the amount permitted by law.”

The Court agreed with the Defendant law firm that the pleading although artfully worded was appealing the writ of garnishment, the source of his alleged injury. The injuries arose from the execution of the writs, not the purported “false” statement in the writs, as Plaintiff never challenged the writs. The Court also found that the Rooker-Feldman doctrine made intuitive sense. Again, the Court agreed with the Defendant law firm that the Michigan Court Rules afforded the debtor/ Plaintiff the opportunity to challenge the writ as “otherwise invalid.” Mich. R. Ct. 3.101(K)(2)(f). Had the Plaintiff objected to the alleged improper interest being requested in the writ, the state district court is required to schedule a hearing. Mich. R. Ct. 3.101(K)(3). Thus, where parties, such as Plaintiff, are afforded an opportunity to challenge the amount of money that will be garnished, they should do so. “Parties should not sit on their hands, have the money garnished, and then sue in a different forum to recover the difference between the amount of interest collected and the amount owed, and also recover statutory damages, costs and fees for their attorneys.” Finding that it would either have to conclude the writs were invalid or otherwise erroneously issue, the Court applied Rooker-Feldman and dismissed the FDCPA lawsuit.