By Chris Bruce
A servicing unit of Nationstar Mortgage must face a claim that it violated the Fair Debt Collection Practices Act in connection with a failed cell phone signal tower lease transaction, a federal judge said Aug. 8 ( Johnson v. Nationstar Mortgage LLC , W.D. Ky., 17-cv-00074, 8/8/17 ).
The ruling means the case likely will test application of a 2011 decision by the U.S. Court of Appeals for the Sixth Circuit on when communications by debt collectors are covered by the FDCPA. Under the Sixth Circuit case, Grden v. Leikin Ingber & Winters PC, 643 F.3d 169 (6th Cir. 2011), the key is whether the communication’s “animating purpose” is to collect payment on a debt.
The Aug. 8 decision involved a cell phone company wanted to lease part of a Hawesville, Ky., property owned by John and Lisa Johnson for a signal tower. Because the property was subject to a Nationstar mortgage, the agreement required ’permission from the Dallas, Texas-based company. The leasing plan fell through after Nationstar Mortgage LLC told the cell phone company that the Johnsons were behind on their loan payments, which wasn’t true.
Chief Judge Joseph H. McKinley U.S. District Court for the Western District of Kentucky dismissed most of their claims. However, he denied Nationstar’s motion to dismiss the Johnsons’ claim that the company violated the debt-collection law by communicating to a third party information that was either known to be false or that should have been known to be false.
The Johnsons said Nationstar Mortgage LLC’s communication was “in connection with the collection” of a debt as the FDCPA requires because collecting debt is the company’s business. Nationstar Mortgage LLC disagreed, saying the communications came in the context of the cell phone tower leasing negotiations and therefore isn’t covered by the FDCPA.
McKinley said it’s too soon to dismiss the FDCPA claim, saying the Johnsons “plausibly alleged” that the communications were aimed at collecting debt. He also said a decision on whether the “animating purpose” of the communication is left to jurors, not the court.
“Dismissal of the FDCPA claim on the grounds that the communications were not attempts to collect a debt is inappropriate at this early stage,” McKinley said.
Nationstar didn’t immediately respond to a request for comment on the ruling.
The Johnsons are represented by Russell L. Wilkey of Wilkey & Wilson in Owensboro. Nationstar is represented by Christy A. Ames and Jennifer A. Pekman of Stites & Harbison in Louisville.
To contact the reporter on this story: Chris Bruce in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
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