Recently, the Sixth Circuit held a limited liability company is a "person," with standing to sue under the Fair Debt Collection Practices Act ("FDCPA"). Anarion Investments, LLC v. Carrington Mortgage Services, LLC, 794 F.3d 568, 2015 U.S. App. LEXIS 12670 (6th Cir. Tenn. 2015). This decision could lead to suits brought by LLC's and other legal entities, seeking to expand the holding in Anarion.
After a series of transfers from the original borrower and owner of residential real property, Anarion, a limited liability company, held a lease with an option to buy the property. When the original borrower defaulted on his loan, the property went into foreclosure and Anarion sued the defendant mortgage servicer, claiming it made certain misrepresentations in foreclosure notices. The only issue on appeal was whether a limited liability company, with an interest in the subject property, was a "person" under section 1692 of the FDCPA. Section 1692k, provides that "any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person."
In its analysis, the court first turned to the Federal Dictionary Act, which provides that the word "person" includes entities unless "the context indicates otherwise." Next, the court focused on other provisions of the FDCPA wherein Congress specifically limited its application to "natural persons." The court reasoned that since §1692k makes no such express limitation, "person" includes entities.
The court dismissed concerns that its holding would open the door for other legal entities to file suit under the FDCPA stating, "[t]his case is unusual because Anarion brought suit based on an attempt to collect [a] personal debt" from the original borrower.
The dissenting opinion described the majority opinion as "cavalier" and argued the "stated purpose and history" of the FDCPA is to protect natural persons from "abusive debt collection" of consumer debt. The FDCPA defines "consumer" as "any natural person obligated or allegedly obligated to pay any debt." 15 U.S.C. §1692a(3).
The dissent expressed concern that the majority opinion "opens the door to a new class of plaintiffs under the FDCPA" with an utter lack of authority for its holding, stating "[d]espite the thousands of claims that have been brought in federal court since the passage of the FDCPA in 1977, neither the majority nor the parties cite a single instance in which a legal entity has sued as a 'person' entitled to relief under the Act."
Is the majority correct in dismissing these concerns based on the special facts in Anarion? Or is the dissent correct that this decision will open the proverbial flood gates and allow other legal entities to file claims under the FDCPA "enabled by an unprecedented holding that legal entities are 'persons'... ?" Only time, and further judicial interpretation, will tell.
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