Does There Need to be a Finding of Bad Faith for Attorney Fees or Costs to be Awarded to a Defendant in FDCPA Cases?

There are many reported cases where attorney fees and costs have been awarded to plaintiffs who have been successful in their Fair Debt Collection Practices Act (FDCPA) cases. However, attorney fees and costs awarded to defendant debt collectors who have had to defend a case made in bad faith or with the purpose of harassing the defendant are much less common.

It is clearly stated under the FDCPA, in 14 USC Section 1692k(a)(3), that if a plaintiff does not prevail in his or her lawsuit, and that lawsuit was brought in bad faith or with the purpose of harassing the defendant, then the defendant debt collector may be able to recover for attorney fees and costs.

An example of a case where a defendant was awarded attorney fees was recently decided in the Eastern District of Missouri, Nguyen v. Capital One Bank. In this case, the court found that when the plaintiff brought a FDCPA case with claims that were all time barred by the one year statute of limitations, that they acted bad faith and with the purpose of harassing the defendant. The defendant’s supported their claim of bad faith by showing that the plaintiff’s attorney had significant experience handling this type of case. Therefore the attorney should have known that the claims were time-barred under the FDCPA. The defendant supported this claim by citing the plaintiff’s attorney’s website which showed his class action history and boasted his experience.

Additionally, there is a separate federal law, Federal Rules of Civil Procedure (FRCP) 54(d)(1), which allows the court to award a prevailing defendant the costs it incurred in bringing a lawsuit. The U.S. Supreme Court heard the arguments for a case in November 2012 to determine whether the requirement under the FDCPA meant that FRCP 54(d)(1) did not apply. The case was decided in February 2013.

In its decision for the case Marx v. General Revenue Corp., the Supreme Court ruled that there does not need to be a finding of bad faith or an intention to harass for a court to award costs to the defendant when a plaintiff has not been successful in their FDCPA claim.

The Court decided that the FDCPA’s civil liability provision was not contrary to FRCP 54(d)(1). Rather the civil liability provision simply codified the long-standing authority of the court to award attorney fees and costs when a lawsuit has been brought in bad faith. Therefore, it could not be inferred that it was Congress’ intent to override the FRCP rule with regards to costs.

Therefore, when a defendant prevails in a FDCPA case, they may be able to recover attorney fees and costs under 14 USC Section 1692k(a)(3) if they can show that the plaintiff brought the action in bad faith or with the purpose of harassing the defendant debt collector. However, if there is not a showing of bad faith or intent to harass the defendant, the prevailing defendant may still be able to recover costs under FRCP 54(d)(1). Costs can include court filing fees, deposition costs, and other costs associated with the lawsuit.

Our experienced attorneys here at Krohn and Moss Consumer Law Center have also provided many helpful resources regarding the TCPA and the FDCPA and how telephone debt collectors should act. We have been successfully representing those abused and taken advantage of by debt collectors for years, and have a long list of successful stories to share with you. We offer a FREE CASE REVIEW for you to assess whether we can assist you with your matter. Please do not hesitate to contact us toll free at 1-800-875-3666 or visit our website at http://www.krohnandmoss.com/.