The Supreme Court recently heard oral argument in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, et al. The Court will decide whether a debt collector can avoid liability for mistakes of law under the “bona fide error” defense, which can shield debt collectors from liability for unintentional violations in certain instances.
Here’s the facts of the case: Ms. Jerman’s home was being foreclosed on by Countrywide and in connection with the foreclosure, the lawyers for Countrywide [Carlisle, et al.] included a purported validation notice in Countrywide’s complaint against Ms. Jerman. The validation notice provided, among other things, that “the debt described herein will be assumed to be valid by the creditor’s law firm unless the debtor(s). . . within thirty (30) days after receipt of this notice, dispute, in writing, the validity of the debt or some portion thereof.” Ms. Jerman disputed the debt alleged in the complaint and requested verification of the debt from Countrywide. Countrywide notified Defendants that the mortgage had been paid in full. Countrywide also dismissed the complaint. Ms. Jerman then filed a class action on the ground that Carlisle violated the FDCPA by representing erroneously that a debt will be assumed valid absent a written dispute. The trial court granted summary judgment in favor of Carlisle on the grounds that it was shielded from liability by the bona fide error defense. The Sixth Circuit Court of Appeals affirmed.
Stay tuned for the Supreme Court’s decision.